The Fall of Karen Dolan

DA John Morganelli announcing report

Updated 2:31 pm:Karen Dolan, an elected member of Bethlehem City Council, violated the public trust. She placedthe interests of her nonprofit, the Illick's Mill, over and above the interests of the people she was elected to represent. She ignored a $128,000 debt she ran up with the City. She intimidated everyone who stood in her way. She would do whatever it took, including explosive rants, to advance the cause of a nonprofit in which she herself was financially interested. She is not fit to serve in public office. Moreover, she engaged in repeated violations of the state Ethics Act.

These are the conclusions of the Northampton County Investigating Grand Jury, which yesterday released a blistering, 62-page report. It is the product of 20 witnesses, including former Mayor John Callahan and an accountant who was never informed that her nonprofit was in debt. It is the product of 49 exhibits, in which Dolan herself threatens to do "everything I can" to prevent the City from forcing her nonprofit to pay for utilities,

It is a tale of arrogance.

The Grand Jury has recommended that she resign from office within the next 14 days. It has referred prima facie violations of the Ethics Act to the Ethics Commission for a determination whether criminal sanctions should be imposed, which include third degree felonies. It has recommended that Bethlehem adopt internal policies to prevent anyone in City government from engaging in conflicts of interest. It wants the Illick's Mill to pay what it owes. And it wants non-profits that deal with the City to provide periodic proof that they still are nonprofits, and that they are paying their bills.

So ends a tale in which Dolan provided multiple explanations to multiple people about her ethical misconduct, including accusations of politics and the use of social media to vilify those who exposed her. In the end, when she had an opportunity to speak to the Grand Jury, she clammed up and took the Fifth.

The $127,959 Debt

Karen Dolan

Morganelli's interest in this matter, like the Industrial Steel Museum,is the result of several news accounts, as well as complaints from citizens like Steve Antalics, who had publicly called for a Grand Jury to investigate the $127,959 debt that was mysteriously written off by the City. As the layers of the onion peeled away, they exposed a woman who misused grant money that was supposed to pay for money advanced by the City for improvements at the mill. At one time, it was just $30,000, and Dolan promised to pay the money once other grants came in.

That never happened, and the debt snowballed. The City attempted to collect the debt, even threatening to suspend services. Finally, a Morning Call news account quoted Mark Sivak, a business manager, as stating that the Illicks Mill owed the City $127,000.

Dolan left a lengthy voice mail for Sivik, stating, "How dare you put the Illick's Mill out there, that they owe the money!" He was blasted with "who does he think he is!" and the City should be paying her for all the work she's done.

Though Mayor John Callahan stated the City was in financial trouble, he decided to write the debt off. "I didn't have much choice," he shrugged. He denied that Dolan made any attempt to persuade him to write it off, but the Grand Jury did not find Callahan's testimony credible because other witnesses testified to receiving intimidating phone calls and emails from Dolan.  

Business Administrator Dennis Reichard stated that though the debt was written off, but the debt was not excused and the City never wrote to Illick's Mill, telling the non-profit that he debt was forgiven.

The NonProfit Tax Returns

When Dolan's nonprofit lost its tax exempt status for failure to file tax returns for three years in a row, she blamed her accountant. But he testified he never could prepare these returns because Dolan failed to provide him with the necessary information. He added that Dolan never disclosed her debt to the City, which should have been included in these tax returns. The returns as filed presented an inaccurate picture to the public and potential donors. His testimony was corroborated by an employee in his office, who stated Dolan failed to supply the necessary information.

Alcohol Use at Mill

Although a City Ordinance bans the use of alcohol beyond a 7% limit at the Mill, Dolan misled a wedding event planner into believing that the Mill was exempt. Dolan also conducted a few weddings herself, and collected miney for that above and beyonf her salary as Executive Director.

Conflicts of Interest

The Grand Jury lists specific instances in which Dolan engaged in conduct for the pecuniary benefit of Illick's Mill that conflicted with her duties as a member of Council:

• Instead of paying down the debt owed to the City, Dolan used grant money for other Mill expenses, contrary to assurances that she made in 2008.
• When she received a bill for the $127,959 debt to the City in 2010, she called the City's Public Parks Director and told him she was unwilling and unable to pay the money. 
• In 2010, she badgered a City employee who had publicly revealed the debt owed by the Mill to the City.
• Dolan misrepresented that funds were unavailable to the City while simultaneously demanding a salary at The Mill based on increased revenue projections. 
• Dolan improperly influenced a financially distressed City to waive this debt.
• Dolan regularly participated in City business that impacted on the Mill. She ignored requests for a new lease from 2010-2013. She influenced City Administrators to assume responsibility for utilities. She voted for two City budgets that included line items for heating oil at the Mill. She represented the Mill at meetings with City officials. As Chair of the parks Committee, she attempted to ease restrictions on alcohol in City parks, which would favorably impact the Mill. She threatened to close the Mill if alcohol rules were not eased. She threatened to close the mill again over a lease proposed by Mayor Bob Donchez.

She put the interests of the Illicks Mill ahead of the interests of the people of Bethlehem. For at least the past four years, she intimidated and harassed City officials to effectuate public policy that would benefit the Mill and herself.

I sent an email to Dolan, requesting a response, but have none and expect none.

The Morning Call is reporting that Dolan intends to resign. She reportedly has no comment on the Grand Jury report.

In April, she was a lot more cocky, denying she had done anything wrong:

Although the recent false accusations, innuendo, and attacks against our non-profit have been outrageously untrue, we know that no one can protect themselves against unethical bloggers and those who act on the principle of repeating lies so that eventually they become “the truth.” In today’s 24-hour news cycle and atmosphere of vicious and unsubstantiated on-line accusations, we understand what Warwick meant in Henry VI: “What fates impose, that men must needs abide; It boots not to resist both wind and tide.” (Loose translation: Don’t fight what you can’t change.)

In July, she stated, "I hope ruining my life's work was enough evil for the Gang of Jerks."

But she declined to speak to the Grand Jury, and her husband is talking for her now.