Fed Ed Paid Atiyeh $1.4 Million For Property Appraised at $580,000

Abe Atiyeh a few years ago, in Bethlehem  zoning spat.

Around this time last year, colorful entrepreneur Abe Atiyeh purchased the assets of a company that has a billboard deal with Allentown at 13 different locations. It was a sudden turnaround. Previously, Abe had been on the warpath over this and several other matters, including the controversial Neighborhood Millionaire Improvement Zone. When news of peace broke, Mayor Edwin Pawlowski, aka Fed Ed, denied that there was any "deal that was made here, per se, and in any way, shape or form."  But that was untrue. Atiyeh had hired Fed Ed's political consultant Miked Fleck to be his business consultant. Very obviously, a deal was made.

On Friday, I told you that Fed Ed spent $1.4 million to buy two Atiyeh properties the City did not need. Atiyeh walked away with a $999,000 capital gain that certainly would help him make the purchase. But guess what? Fed Ed actually paid him $820,000 more than these properties were worth. The City's own appraisal valued the two properties at just $580,000.

By paying Atiyeh nearly three times what these properties were actually worth, it appears that Fed Ed deprived Allentown citizens of their right to honest services.In some contexts, this can be viewed as a federal crime.

Raymond C Geiger, Jr., who is a well-respected certified general appraiser, was hired by Allentown and submitted a report on January 23, 2014, a few months prior to the City's purchase. (You can read it here). He valued the Basin Street property at $360,000 and the Martin Luther King, Jr. Highway property at $220,000. The City never bothered to get a second opinion.

Julio Guridy, Cynthia Mota and Edwin Pawlowski

Basin Street property - $360,000. - Geiger makes clear that the billboard easement on this property is not part of his valuation. Atiyeh first purchased the Basin St tract  in 1996 from RJ Gorman Railroad for $200,000. Over 18 years, he was unable to develop it. He sold it to Isaam Elias in 2005 for $350,000, but Elias was unable to do anything with it, either. He conveyed it back to Atiyeh in 2012 for $350,000, the same sum Abe had been paid for the property.

Atiyeh provided a plan for a flea market at the site, but Geiger notes that "there is no evidence of demand for such use or the financial feasibility of such use. If it were a viable use, the question is why take eighteen years to develop it? No development plans have ever been approved."

Geiger observes that the site is low-lying and "extremely flood prone." Most of the land is "100% undevelopable." Before doing anything on the property, it would need six feet or more of fill, compacting and a one-year settlement period.

Martin Luther King, Jr. Highway Property - $220,000. - Atiyeh purchased this old fertilizer company in 2007 for just $51,000, before the prior owner received an Act 2 release from environmental liability. That was subsequently obtained, and obviously makes the property more valuable than it was when Atiyeh bought it.

Geiger could see signage on the property soliciting "storage use." In addition, Atiyeh provided him with plans for a three-story office building. Geiger thinks that use is unlikely. "Such use would compete directly with the rising offices in the NIZ and as such would not have a favorable cost-value relationship. I note, no development plans have ever been submitted or approved.".

Like the Basin Street property, this one is also "extremely flood prone. Much of it is within the 100-year flood plain and 100% undevelopable. About two acres can be developed, but would require 10 feet of fill, compacting and a one-year waiting period. In Geiger's view, development here is at a "disadvantageous cost-benefit."

After receiving nearly three times what these properties are worth, Abe began throwing his money at anyone that Miked Fleck or Fed Ed directed him to support. He really has no choice. He has a three year contract for those billboards, and would like to see that contract renewed and perhaps expanded. So in some ways, Atiyeh is a victim here, too. If he does not pay, he does not play.

Fed Ed and Miked Fleck were the predators. The biggest victims, of course, are the people of Allentown. The Mayor and City Council both have a fiduciary duty to safeguard the public's funds. City Council, with the exception of Jeanette Eichenwald, rubber stamped this proposal. I have no idea if they were provided with or looked at Geiger's appraisal. In fact, Ray O'Connell actually complimented the Administration. Cynthia Mota, who may have worked for Atiyeh and testified on his behalf in a zoning dispute, voted in favor of the purchase.

The first duty of a public official should always be to the people. The Romans would say semper pro populus - always for the people. In Allentown, that has been perverted.

Others will decide whether this denial of the right to honest services is criminal.