2015 Top Story - Fed Ed Investigation No Witch Hunt

Blogger's Note: 2015 was a year with a lot of political corruption stories. A year with a lot of investigatory reporting. For New Year's Day, I'll publish the biggest story of them all. The Fed Ed investigation. When news of the FBI raid on City Hall first surfaced, many ran to Pawlowski's banner and decried the whole thing as a witch hunt. I thought it was important to tell readers that this was completely untru. My story, which was published on July 6, 2015, is below.

Allentown Mayor Edwin Pawlowski has had little to say about a federal grand jury investigation that appears to be targeting him. The feds also are reported to have raided his political consultant, Mike Fleck, a few weeks prior to visiting City Hall. According to some sources, they are looking at various professional services contracts and their connection to campaign contributions received by Pawlowski. They  also reportedly are very interested in Pawlowski's mancave at his residence, where the permitting process was more than a little fishy. He apparently never received a bill for the work done there by Stellar Construction, a city vendor. I've heard they are also looking at the numerous holidays he has taken at the homes of his rich friends

It's important to note at the onset that Pawlowski has been charged with nothing, and is innocent until proven guilty. Unethical behavior and criminal behavior are two different things. But this investigation is no witch hunt. The feds didn't just wake up one morning and decide to raid his home. It's pretty clear that they have sources inside City Hall. Just as obviously, they have sources among the numerous developers and vendors who have been strong-armed by Pawlowski over the years.

It's time to review some of the questions I've raised about him over the years. More than anyone, I consider him responsible for the death of democracy in what has become an urban growth regime. Instead of serving the people, his masters are those with money. His NIZ is nothing more than a publicly funded Potemkin Village in the City's downtown, surrounded by square miles of blight and poverty. That's no renaissance. It's a tale of two cities within one. One for the beautiful people, and one for everyone else.

I. Pawlowski's Discriminatory Gentrification

My animosity towards King Edwin started in 2007, when I learned of his discriminatory gentrification attempts in the downtown, where he was sweeping the poor out of the way to make room for the pretty people. At that time, his solution to Allentown's many problems was, of all things, fine dining. He thought a Johnny Mañana's (with an ñ, damn it!), propped up with all kinds of public dollars, would turn everything around. The hell with more cops.

In 2008, once Johnny Mañana's KOZ classification expired, it tried to sell and then closed. It lasted just ten months. At least $50,000 in public money went down the drain, along with a few avocados.

Pawlowski engineered the elimination of LANTA bus stops in 2007, then refused to even meet with the minority businesses who were impacted. They were later described by one of his sycophants as a "cancer." But what really frosted me was when he sicced his enforcement goons on a 75 year-old Zee Weikel, for daring to have an occasional yard sale so she could go out with her lady friends once in a blue moon.

Things got worse for downtown merchants in 2008, when he gave Hamilton Street merchants just 90 days to replace solid gates outside their storefronts with mesh. This would cost between two and seven thousand dollars, and expose merchants to vandalism and break-ins. Merchants on 7th Street were, for some reason, spared. Obviously, he was trying to make things harder for these small merchants.

For tenants, he increased the annual license fee for apartment units from $16 to a whopping $75 per unit in 2010, a 468% increase that would be passed on to people who were already struggling with climbing PPL bills. Pawlowski critic Scott Armstrong observed, "Ed Pawlowski's unit fee increase is a tax on Allentown's poor. When Ed rode into town as an advocate for low income housing, people took him at his word that he was sincere. Time and experience have proven he wasn't."

II. The NIZ

The reason for Pawlowski's dismissive attitude towards Allentown's working poor began to take shape in 2011, when he got rid of Karen Beck Pooley at the Redevelopment Authority. Her husband Jeff groused,

"Anyone who’s walked around center city lately has seen the orange tide of 'unfit for human habitation' stickers. Foreclosures are piling up—more than half of all “sales” in the city’s three historic districts last month were bank or Fannie Mae foreclosures. According to the Census Bureau’s American Community Survey, median income in the residential neighborhoods around Hamilton has taken a sharp dive over the last ten years.

"And yet the mayor is doubling-down on flashy, big-ticket economic development."

That big ticket economic development is the NIZ, which stands for Neighborhood Development Zone. ironically, nothing about it benefits Allentown's neighborhoods. There never has been a community benefit agreement, despite many promises. It should be called the MIZ, or Millionaire Development Zone.

It was announced in a breathless and swooning headline by The Morning Call screaming, "Arena could change face of Allentown." Dr. Steve Thode, the only voice of reason, likened the project - which will simply steal existing jobs in Bethlehem and Easton - to "rearranging deck chairs on the Titanic." It was a gigantic TIF on steroids, in which over 130 non contiguous acres would be redeveloped using state tax monies as well as the EIT from any person who worked inside the NIZ, regardless where they happened to live. It is a Sherwood Forest in which Ed Pawlowski could steal from the poor and give to the rich, i.e. NIZ developers J.B. Reilly and Joe Topper. Those diverted tax monies would include cigarette taxes that would otherwise fund children's CHIP programs.

Eventually, the lawsuits began. Approximately 18 impacted municipalities sued, along with developer Abe Atiyeh.

It took state lawmakers to resolve the impasse. Since they created the flawed law to begin with, that was only right. On June 30, 2012, every single Lehigh Valley state legislator approved changes to the NIZ law, removing the provision that would authorize the diversion of municipal EIT and changing the definition.

Lehigh Valley House Republicans Reps. Julie Harhart (R-Lehigh/Northampton), Gary Day (R-Berks/Lehigh), Joe Emrick (R-Northampton), Marcia Hahn (R-Northampton), Ryan Mackenzie (R-Berks/Lehigh) and Justin Simmons (R-Lehigh/Northampton) issued a joint statement, calling their vote "a symbol of state government working with local municipal officials, who in this case expressed deep concerns about the impact of losing their local tax revenue."

As the arena went up, along with all the pretty buildings, Allentown did nothing about homeless people seeking shelter during the brutal winter of 2014.

But the NIZ enabled the urban growth regime to expand. NIZ developers J.B. Reilly and Joe Topper poured $50,000 into the campaign coffers of a little known Bangor Mayor running for Northampton County Executive. That Mayor, John Brown, defeated Bethlehem Mayor John Callahan, who had been a mild critic of the NIZ.

Now J.B. Reilly is seeking a reduction in the one tax he actually does owe - property tax.

Given the immense amounts of money flowing into and out of the NIZ, it is virtually impossible to believe that no federal laws are being broken. The temptation is too great.

III. Code Enforcement as Both Carrot and Stick

In addition to the NIZ,  I would soon learn that Pawlowski used code enforcement as a way of punishing political enemies.He did it to a building owner who dared sport a digital billboard that featured an ad from Lou Hershman. Then Pawlowski came out with his own digital billboards. I would eventually learn from people inside that office that he sometimes would send his code goons to inspect people he disliked. Now nobody will say this on the record, but I heard it from several sources. But when it came to himself or people he liked, he winked at code requirements.

Consider the case of a hedge funds manager who needed the city's blessing for some in ground pool he wanted at his mansion. Managing Director Francis Dougherty fired off an email to one of his underlings, demanding quick action. "This is a favor for tim holt. Our action on tim's behalf means money from air products later."

If this is not clear enough, look at how Pawlowski handled his own home improvements in what I called Permitgate.

IV. Permitgate

In the Summer of 2010, Pawlowski decided to build a mancave at his downtown home. He never bothered to get a permit, something I was able to confirm with a visit to the Lehigh County Assessor's office. He had routinely shut down businesses that failed to get permits, but was himself above the law. In addition to visiting assessors, I also filed a Right-to-Know with the City.

A few days after I reported this failure, Pawlowski had a permit hanging on his front door. Turns out it was more than a mancave. A new kitchen and other improvements were also involved, and the work had actually started in December. "Stellar Construction installed the Anderson Windows and doors," chirped Lady Macbeth Pawlowski on Facebook. Is this the very same Stellar Construction that contributes heavily to King Edwin's campaigns and is rewarded with City contracts? Yep.

The City did respond to my Right-to-Know request a day after its answer was due and without all the permits I knew had been issued.

In the meantime, Lady MacBeth Pawlowski defriended about 60 people on Facebook, but dumped the wrong people. She eventually killed her page and started over. Pawlowski quickly snuck out and got two more permits.

Naturally, Pawlowski's hand-picked Ethics Commission, in a vote behind closed doors, cleared him of all wrongdoing even though he never obtained the required permits and underestimated the cost of the work.

It's good to be King.

V. Cronyism

Despite 39 union layoffs in City Hall, Pawlowski hired Dale Wiles in 2010 as an Assistant City Solicitor. He had absolutely no experience practicing law, but his wife was a partner of the City Solicitor and he was a Democratic committeeman who contributed regularly to Pawlowski. He also hired City Council President Ray O'Connell's son, who had been jobless for three years before Pawlowski put him to work.

VI. Pay-to-Play Campaign Finances

1. Who Gave $8,000 to Latinos for a New Lehigh Valley? - Right out of the gate, Pawlowski's campaign finances have been shady. In October 2005, when he was running for Mayor for the first time, he received checks for $5,000 and $3,000 from a PAC called Latinos for a New Lehigh Valley. So far, so good. That sure is a lot of Latino support. But just who in the Lehigh Valley's Latino community donated $8,000? Where did the PAC get its money? I asked to see its report.

There is none. Despite being registered in Lehigh County as a PAC for many years, Latinos for a New Lehigh Valley filed no campaign finance report at all in 2005. Or 2006. Or ever.

The absence of a report tells me that the real source of that money is NOT Lehigh Valley Latinos. I suspect Hizzoner used the Latino group to create the false impression that he is wildly popular among Latinos, and to prevent you from learning the identity of his real donor.

I called Ed DeGrace, who was supposed to be in charge of this group, and asked him to identify the source of the money he funneled to Pawlowski.

"I've got nothing to say to you," DeGrace said, and then hung up.

He won't be able to hang up on the feds.

2. 2008 report is full of pay-to-play. - In 2008, Pawlowski would be late in filing a campaign finance report in which he reported receiving $108,000 in 2006 and 2007 from city vendors and contractors.

This included $13,500 from Zaworski and Sons, who was rewarded with a favorable KOZ classification that enabled it to offer $220,000 townhouses with an added incentive - the buyer would pay no local, real estate or state taxes. The Gross McGinley law firm contributed $5,600, and ended up with $138,000 in legal fees. Tom Williams at City Line Construction donated $12,000, and ended up with $62,376.74 in city work.Portnoff Law gave $1,000, and then raked in $89,848.86 for its tax collection services.

Can you say pay-to-play?

Over $18,000 of the money reported eventually went into King Edwin's pocket.

Pawlowski was eventually fined the maximum - $270 under our toothless election laws - for filing his report late. He then illegally tried to use campaign funds to pay it.

3. Pawlowski Files Finance Report Falsely Claiming No Contributions. - Later that year, he would file a campaign finance report that falsely claimed to have no contributions and no expenses, something refuted by other reports showing he had received at least $18,550. When he finally filed a corrected report, it showed that he had raised a whopping $108,588, mostly from city workers, developers, contractors, consultants and lawyers who do business with the city.

In 2009, The Morning Call's Jarrett Renshaw entered the fray, with an article detailing Pawlowski's pay-to-play practices. Pawlowski, after incredibly admitting the use of business cards supplied by city vendors to solicit campaign contributions, went on to claim he's beyond suspicion because he graduated from bible college. As Scott Armstrong noted at the time, "Ed seems to use his Moody Bible degree and his "Christianity" as both a vote getter and a 'get out of jail free card.'"

4. Union shakedowns. - A few months after claiming he was too holy to engage in pay-to-play, Pawlowski was actually shaking down unions for $2,000 donations, suggesting some sort of quid pro quo. His solicitation took credit for very specific pro-union activities that left me wondering whether he is a mayor or union agent.

He then filed a post primary report showing that he raked in $20,000 in just one month. This included $2,500 from Bennet Toyota, which also supplied two cars and a minivan on election day. They had been giver $4.5 million in grants and loans to move into the old Exide plant. He went on to defend his strong-arm tactics a few months later with a video claiming that "[i]t helps us attract more businesses to the community."

5. Pawlowski scours homeless shelters for campaign workers. - He finished 2009 with a campaign finance report that failed to list where $8,000 in cash went on election day, and was ordered to amend his report. He did so, but still refused to itemize the $8,000 in cash he spent on election day. He was ordered to do so, and when he finally did, we learned that he had combed homeless shelters and had sent petty thieves to Allentown neighborhoods to promote his candidacy and knock on doors.

6. The Marcel Groen connection. - In 2010, Allentown began calling itself the "City Without Limits," something that Pawlowski's campaign finance reports already made abundantly clear. In fact, Pawlowski's connections to political power broker Marcel Groen came under scrutiny in a riveting piece by Morning Call scribe Jarrett Renshaw. At that time, Groen and Pawlowski were both pushing for a $28 million waste-to-energy plant that ultimately never got off the ground. Groen called Pawlowski a "visionary," and for good reason. His firm had received $350,000 from Pawlowski between 2006 and 2010 for legal work that obviously could not be performed by the cronies in the Solicitor's office.

Don Cunningham bluntly stated that with Green, "it's about money and business." He does not stop there, but adds this. "So anyone that wants to run statewide must go through Montgomery County if they want to advance themselves. ... Clearly Pawlowski has developed that type of business and political relationship with Marcel."

What Cunningham is saying, if you read not so closely between the lines, is that Pawlowski is willing to sell out Allentown for a higher office.

7. NIZ Contributions. - In 2011, though he wasn't running for anything, Pawlowski raked in $238,265 in campaign contributions, including $40,900 from NIZ board members and beneficiaries. By themselves, NIZ developers J.B. Reilly and Joe Topper would dole out $88,725 in 2011 to politicos they wanted in their pocket.

12:30 pm Update: According to Allentown activist Richard Fegley, Pawlowski is supposed to release another statement at 1:45 pm.

3:45 pm Update: I looked at a Fegley Facebook post from Friday, and concluded erroneously that he was referring to a statement today.