Investigating Grand Jury Aims at Dolan NonProfit

Illick's Mill

Northampton County District Attorney John Morganelli empanelled his fourth Investigating Grand Jury on April 25. Although their work is done in secrecy, their selection, or voir dire, is done publicly. This gives you an idea about what matters might be under review. Morganelli asked 110 prospective jurors whether any of them were familiar with any of a number of unsolved homicides or the Easton School District, subjects he had already discussed before. But then he quizzed them about their knowledge of the Gertrude B. Fox Environmental Center, known to most of us as Illick's Mill. He even canvassed them on their knowledge of Bethlehem City Council and its Parks Department. It's clear that this new Grand Jury, which began taking testimony as soon as they were sworn in by Supervising Judge Michael Koury, will be looking into possible mismanagement and conflicts of interest involving Bethlehem City Council member Karen Dolan and her connections to a nonprofit at the Mill.

Morganelli has used the Grand Jury before as a tool to expose mismanagement at area nonprofits. In January, a previous investigating Grand Jury issued a scathing report about the National Museum of Industrial History, calling it a "resting place for soon to be unemployed officials" at Bethlehem Steel. Executive Director Steve Donches resigned.

Why would an investigating Grand Jury want to review Fox Environmental Center? That nonprofit, like the National Museum of Industrial Steel, has been plagued by allegations of mismanagement. To make matters worse, its Executive Director, Karen Dolan, may have violated the conflict of interest provisions of the Ethics Act.

• She voted to approve two City Budgets that included payments to her nonprofit, where she was a compensated Executive Director.
• Late last year, she pushed for raises to Parks Department employees, who were providing her free services.
• As Parks Chair, she proposed easing alcohol regulations in City parks, where her nonprofit was hosting as many as 20 weddings a year.
• She used the authority of her office to block a new lease requiring her nonprofit to pay rent.

These conflict of interest transgressions are no minor matter. They formed the basis for the Bonusgate prosecutions under then Attorney General Corbett.

It all starts with Illick's Mill, one of the City's treasures. An old 1856 grist mill, it is the centerpiece of a park along the Monocacy Creek. This park was established by the FDR administration during the Great Depression. Today, that historic mill is known as the Fox Environmental Center. It's a nonprofit that, until recently, was under the direction of Karen Dolan. A member of City Council since 2006, she managed to snag an appointment as the Parks Committee Chair.

Between 2001 and 2009, Dolan worked to restore the old mill. She used a steady supply of labor in the form of Liberty High School students. After all, she was teaching there. Her husband was a teacher at Bethlehem Vo-Tech, and that school soon began helping with the project, too. The City of Bethlehem also provided a lending hand.

According to the nonprofit webpage, over $1.3 million was raised to restore the mill. How much of that is public money is anybody's guess. The most recent 990 (that's a nonprofit tax return) is from 2007. It lists at least $121,000 in public funding in that year alone. But what about subsequent years? Guidestar, an online repository for nonprofit financial records, has nothing beyond 2007. Where are those records?

Perhaps even more troubling than the missing 990s is that Dolan's nonprofit owed $128,000 to Bethlehem. It was reported that way in several city audits. Then suddenly, in 2012, it was just written off in a City audit with no explanation.

"We're not the National Museum of Industrial History," Dolan stated during a February interview at the Mill. "We've done everything by the book always."

When asked to provide the nonprofit tax returns, Dolan handed over financial statements, insisting they are just as good.

When pressed on the matter, Dolan admitted that her nonprofit failed to file 990s in 2008, 2009 or 2010. She blamed her accountant, although she was the Executive Director. She went on to say that, at one point, she even executed a Power of Attorney to her accountant.

Eventually, her nonprofit status was revoked by the IRS on 5/15/11. It remained revoked until 5/15/12. She had to re-apply for non-profit status.

Dolan insisted during this interview that she raised no money during this time period. But research reveals that in an August 15, 2011 interview with The Express Times, Dolan clearly was raising money during the time that her nonprofit status was revoked. She claimed to have a $170,000 budget, and was opening the Mill for weddings at $1,200 per event.

In the meantime, she ran up a $128,000 debt to the City for improvements to the facility that were supposed to be repaid from grant money. The City used a special account, its nonutility capital fund, for these improvements. This is borrowed money. This means taxpayers are on the hook for as much as twice the $128,000 spent.

Steve Antalics

"It looks like the money disappeared and no one seems to know," City watchdog Steve Antalics said at an April 15 City Council Finance Committee meeting. "This is our money. We want to know what happened to our money."

"Anyone care to answer that?"

Mayor Bob Donchez did, announcing that there were 90-pages of documents related to invoices owed by Dolan's nonprofit. They have recently been released to City Council.

One of those documents is a 2010 Memo from Parks and Public Works Director Ralph Carp to Dolan, concerning the $128,000 debt. Carp told Dolan there would be no additional services from the City until that debt was settled.

Another is a memo to the file, made by a Parks Department employee, after she was instructed to stop sending utility bills to Dolan's nonprofit.

The City not only wrote off the $128,000 debt, but began providing utilities at no cost to Dolan's nonprofit. This was contrary to the lease.

On City Council, Dolan has voted for two City budgets that included $11,000 for heating oil at the Illick's Mill. As a compensated Executive Director her votes appear to violate the Ethics Act. Section 1103(a) states, "No public official or public employee shall engage in conduct that constitutes a conflict of interest." The Act defines "conflict of interest" as the "[u]se by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated."

At the last budget cycle, Dolan also pushed for payraises for Parks Department employees. This raises the question whether this was some sort of quid pro quo for her special privileges.

In reaction to all the ethical questions surrounding the Mill, Mayor Bob Donchez recently asked his legal department to prepare a new lease for the Mill, one that would require some rent and a contribution towards utilities.

Dolan responded, "I will do everything I can to prevent this lease from going to Council,"  in an April 12 email to the Mayor.

After this email became public, Dolan resigned as Executive Director at the Fox Environmental Center, blaming politics.. But she is still on City Council and still chairs the Parks Committee.

Dolan, in February, claimed that her nonprofit was paying utilities. That appears to be untrue. There are numerous unanswered questions. Why did the City continue furnishing services after the 2010 warning? Did the Mayor let her off the hook? If so, why? Who made the decision to write off the debt? Who made the decision to begin supplying her free heating oil? Why was that decision made? Why did she suddenly start advocating for wage hikes in Parks?

Citizen activist Steve Antalics has previously called for a Grand Jury investigation into the mismanagement of the Fox Environmental Center (Illick's Mill) under the stewardship of City Council member Karen Dolan. His wish appears to have been granted. It will now be up to the Investigating Grand Jury to peel away the layers of the onion and find out exactly what happened..