Thursday, January 30, 2014

Steel Museum Mismanagement Exposed by NorCo Grand Jury

A Northampton County Grand Jury has cast a glaring spotlight on a pattern of mismanagement, conflicts of interest and excessive salaries at the Steel Museum on Bethlehem's south side. It's a disgusting display of pigs at the trough, being fed in part by public tax dollars. They include former Steel execs who had a very soft landing after the Bethlehem giant went belly up. But they also include a who's who of local big shots like Lee Butz and Charles Marcon, who slopped at the trough like the biggest porker you'd ever see.

This Grand Jury investigation started in reaction to Express Times and Morning Call articles raising disturbing questions about the lack of progress at the National Museum of Industrial History, located at the site of the Bethlehem Steel Plant. Formed in 1997, this Museum was projected to attract up to three million visitors per year.

Seventeen years later, despite the infusion of $17-19 million in both public and private funds, it hasn't even opened.

CEO Stephen G. Donches, the Bethlehem Steel Corporation’s Vice President of Public Affairs, has received almost $2.5 million dollars in salary and benefits over the past 12 years. According to forensic auditors, it's double what should be paid to the CEO of a similarly sized non-profit organization.


Wages
Retirement
Total
2002
$   135,000.00
$  17,629.00
$   152,629.00
2003
$   180,000.00
 $  18,801.00
$   190,801.00
2004
$   180,000.00
$  16,739.00
$   196,739.00
2005
$   180,000.00
$  22,526.00
$   202,526.00
2006
$   180,000.00
$  21,689.00
$   201,689.00
2007
$   180,000.00
$  22,206.00
$   202,206.00
2008
$   177,220.00
$  27,061.00
$   204,281.00
2009
$   176,194.00
$  29,815.00
$   206,009.00
2010
$   181,460.00
$  23,179.00
$   204,639.00
2011
$   179,420.00
$  24,031.00
$   203,451.00
Total
$1,749,294.00
$223,676.00
$1,972,970.00



It did not stop with Donches. According to the Grand Jury, "The Museum was a resting place for soon to be unemployed officials of the Corporation who continued to benefit from high paying salaries, retirement benefits, and other benefits at the expense of the organization."

While paying his pals, Donches reportedly "exploited" potential donors with "overly optimistic and unrealistic expectations as well as public statements by Mr. Donches as to the near opening of the Museum despite Board direction that donors be cautioned as to the viability of the Museum."

Where did Donches get his money? About $9 million came from Priscilla Payne Hurd, and former Bethlehem Steel Boss Hank Barnette kicked in just under $1 million. The Museum also received $70,000 in federal funds from the Institute of Museum and Library Services; a state RCAP grant of $1.4 million; and another $10,000 from the state DCED (Department of Community and Economic Development). All artifacts had been donated by the Smithsonian at no cost to the Museum.

With this money, Donches also took care of board members.

The most outrageous example of this is with Lee Butz, Chairman and largest shareholder at Alvin H. Butz, Inc., and regular campaign contributor to anyone in power.

Before becoming a Museum board director, the Butz company was doing work for the Museum, and had been paid $810,977.00.

After being placed on the Board, when Butz clearly had a conflict, his company was paid another $2 million for various constructions projects.

Interestingly, investigators are unable to find any discussions in the minutes of Board meetings concerning a contract awarded to Alvin H. Butz Incorporated prior to the actual signing of the contract on May 27, 2008. In fact, at a meeting just two days after this contract was supposedly signed, not a word was said during another meeting.

Other Board members benefited as well, although their transgressions are minor by comparison to Butz.

L. Charles Marcon, the Board Chair and another blueblood, thought nothing of bidding on construction work at the Museum.

The Museum has funds on deposit with what was then called KNBT Bank, and it just happened that Director Daniel G. Gambet was connected to that bank.

According to the Grand Jury, "[t]he Museum lacked transparency and the Board routinely granted lucrative salaries and retirement benefits which were out of line with similarly missioned and sized non-profit organizations."

Though the Grand Jury believes there is insufficient evidence for a criminal prosecution, it has recommended that Donches resign or be fired. It also wants  the Board to review their own conflicts of interest, and the Jury is asking the state Attorney General's Charitable Trusts Section to determine whether to dissolve the museum. Finally, it is suggested that the Board consider suing Donches civilly.

You can read the Grand Jury Report in its entirety here.

44 comments:

Anonymous said...

I have been screaming this for 10 years. What takes so long to fix this kind of crap?

Zovar of Planet Kloznit said...

When you're anonymously screaming can anyone hear you?

Anonymous said...

Stop the government handouts!

Anonymous said...

Is the sleazy ED related to Mayor Bob? What a terrible ripoff.

Anonymous said...

I am still waiting to see the materialization of the kool half million of federal subzidy allocation to a pocket by were
i reside? The summer of the allocations the firemen hosed the kids down twice and one night movie was played, that in no way was worth $500,000 dollars? I am sure the allentown administration has paperwork of the expences though? NOT

Anonymous said...

It is really upsetting that the Museum of Industrial History is not in operation after all these years. When the Steelworkers' Archives resumes its walking tour this spring and announces when its planned Motorized Steeple and Steel would be scheduled. Please don't think the Archives and those who run the NMIH are linked. The Archives are a bunch of former workers who want to preserve the legacy of those who have worked in Steel.

Anonymous said...

Assholes like @7:51 who feel the need to savagely make assumptions... if only they had half a brain!

Anonymous said...

What assumptions 10:59? Are they related or not asshole? Why defend this travesty? If you had half a brain you would be lucky.

Anonymous said...

Time for you to take your meds or have sex with your gay lover!

Bernie O'Hare said...

To clarify, they are NOT related and don't even spell their last names the same way. It is irresponsible to make this suggestion with absolutely no basis.

Anonymous said...

Bernie , what or who prompted the Grand Jury ? Shame on this group , especially Lee Butz. Doesn`t he have enough money yet after controlling nearly all the construction projects at the colleges , hospitals , counties, the arena in the Lehigh Valley for the past 25 years? Plus doesn`t he have his office in a tax free KOZ ? How much is enough ?

Anonymous said...

This is disgusting. I hope some people who scream about government and praise the private sector as being pure, realize no system is pure.

These were Corporate partnership types that just fleeced the public using a non-profit cover. So much for the unions destroying the steel, these characters make the unions look like pikers.

It is an appalling display of greed and arrogance of poor. I hope people see that some of our fine upstanding citizens who give each other awards can be no more than common crooks.

Very sad. I hope this gets a full investigation by any and all authorities and the fact that some of the players are big shots with lots of clout and money does not deter real justice.

Anonymous said...

Daniel Gambet is supposedly a priest in the Catholic Church, yet behaves like a crook. I guess the other crooks had his blessings to pillage the coffers of the taxpayer and donors. I hope other boards in the Valley re-examine who is on their board memberships and give crooks like Lee Butz the boot.

Anonymous said...

This shit isn't against the law???????
WTF!!!!!!!!!!!!!!!!!

Anonymous said...

I just shake my head.

Anonymous said...

And people think that Bethlehem Steel died from foreign competition . . . .Bwaahhhhhhhhhhhhhhhhhhhhhh!

Anonymous said...

now you know why the steel went under. When GE had a member on the board the Steel could only by GE products. When Westinghouse got on the board the Steel could only buy from Westinghouse. Prudential Insurance board member got the Hourly insurance and Met Life got the Salary. The Board members sucked the dollars out of the Steel

Anonymous said...

Sue all the bastards. Keep giving contracts to Butz you putz

Anonymous said...

I knew when I saw that Daniel Gambet had donated to Ed Pawlowski's Mayoral campaign that he was crooked, so I'm not suprised to see he was wheeling and dealing with the Steel Museum. Does Gambet even live in Allentown or is he one of those evil suburban boonie residents that Pawlowski often criticizes. Funny, he'll take their campaign donations!

I knew along that Lee "take a friendly walk downtown" Butz was a corrupt, greedy hypocrite. I'd love to know more about inside details of this story and some of the other board members. Nice coverage!

Anonymous said...

Ted Harlan $80 K a year to make 5 entries into quick books once a month. How can I find a job like that?

Anonymous said...

Bernie I was worried about you last night. I almost called Angle to go looking for your body in his all terrain vehicle.

Anonymous said...

Supposedly free taxpayer dollars are intoxicating, regardless of residence or party.

Fred Windish

Anonymous said...

How can this shit not be criminal? Looks like a duck, walks like a duck...

Anonymous said...

Butz is the longest standing member of self serving pigs>he routinely donates to only institutions that fatten him with contracts.

Yet polite people routinely fondle his ego. He is pure pay for play private sector style. His cover is the trades unions. He merits a grand jury investigation, state investigation and federal investigation all by himself.

He asks for a helipad on his roof top caslte and gets it because sacred heart can use it..hint hint who gets the construction projects for sacred heart? Butz is a king of pigs.

Anonymous said...

Rev Gambet draws 30k or so a year for a couple weeks of work as trustee for Trexlex Trust.

Must be nice to be in the club.

Anonymous said...

This appears to be as vile as is possible, and just a cash cow to supplement the retirement plans of a bunch of former Steel employees and some buddies.

What is worse, it probably spells doom for the museum. Who would want to donate now?

Anonymous said...

I think an extended field trip to the Museum of Incarceration would be instructive.

Anonymous said...

This is really no different that what that couple did to Linny Fowler when they fleeced her out of a couple million. I believe they received lengthy prison sentences.

Bernie O'Hare said...

10:40, it was a long night and I don't think I'll ever be the same.

Anonymous said...

2:10 gets it!

Anonymous said...

Butz is the only construction company used at DeSales University. I wonder how many request for quotations are sent out for those construction jobs?? Probably only one.

Anonymous said...

They basically supervise the construction not do it. Kinda like getting paid for watching.

Anonymous said...

this should prompt the state to look into all non-profits and Boards that get large sums of money. Not a lawyer but agree with all the folks that say this is criminal.

Also agree about the couple that scammed Linny Fowler, they got jail. Of course they were black and poor. These guys will toast each other at the Saucon Valley Country Club and say "Oh well, on to the next project." This is one of the reasons people in this country feel there is a class system based on money.

Anonymous said...

The entire board should be investigated. Don't stop at Donches.

Donches is the easy mark here. Butz, Marcon etc. are just as guilty of the mismanagement.

Anonymous said...

If these guys are examples of the "job creators", now I understand. Were do I apply?

Anonymous said...

Father Gambet was DeSales prez and awarded non bid construction management deals to Butz. So does Lehigh. So does Lehigh and Northampton County. On and On..all slop private and public lead to the Butz pig pen. Yet all bow to this moron as sharp as a butter knife.

Anonymous said...

Donches and Harlan were two of the biggest "yes-men", do-nothing, sacks-of-crap that ever inhabited the upper ranks of BSCO. They had lots of practice for their new roles at the ghost museum. Let them rot in civil prison since they committed no CRIME.

Anonymous said...

Jail for the entire board!

Anonymous said...

Bernie check back to an article that was written by Express Times reporter Lynn Olanoff on July 18 2008 where Donches states that the 1.7 million dollar project should be wrapped up by Nov 2008.

Anonymous said...

anon 4;46 pm...Butz had no work from Northampton Couny in the past 8 years.

Anonymous said...

When colleges and universities award no bid major construction contracts, it no wonder why tuition increases every year. Butz is also very involved with the DeSales theater group -- he it their "official photographer".

Bernie O'Hare said...

11:28, It is the ET articles that got the DA going on this matter.

Anonymous said...

Where was the Von Beef Barron during all of this? He is going to get his fat ass handed to him during the next election.

Bernie O'Hare said...

Much as I would love to tag him for this, it's not an area where he would be required to exercise any oversight.