DA: Bethlehem Contractor Fraudulently Lists Employees as Subcontractors

Kevin Lott, Carpenters Union

In what he believes to be the first ever criminal prosecution on a county level, District Attorney John Morganelli announced on Monday that he intends to charge Bethlehem construction firm Salukas and White with a scheme to defraud workers of decent wages and the government of taxes by deliberately misclassifying employees as subcontractors. He also plans to charge Mark White, a principal in that firm, with perjury and false swearing before a Northampton County Investigating Grand Jury.

Marganelli is acting on a recommendation of that Grand Jury, which heard testimony from employees and subcontractors who say that the firm paid close to a million dollars to two middlemen who would recruit day laborers and pay them in cash. Between 2001 and 2013, Salukas and White paid Tony's Drywall and Leauber Drywall  $884,254 to recruit and pay workers, in cash, far below the minimum wage standard in the construction industry. The middlemen took a ten per cent cut. According to Morganelli, this practice allows companies like Salukas and White "to compete unfairly against firms who play by the rules." It deprives the government of tax revenue. Even worse, it harms workers.

"This practice is going on right now with the same company,"  said Kevin Lott, business agent for LV Carpenters Union Local 600. "It's so refreshing to see somebody do something about it." Lott accused Salukas of "exploiting people" who will end up on welfare when they turn 65 because they will be unable to collect social security. "It's a shame on every level."

Morganelli also plans to make the Grand Jury's findings known to the IRS, Northampton County members of the state legislature, Governor Tom Wolf and Pa. Executive Deputy Secretary of Labor Robert V. O'Brien. .

Feds Investigating Pay-to-Play AND Pay-to-PLA

Although the federal investigation into Allentown and Reading certainly encompasses pay-to-play, it also extends into pay-to-PLA.. Here in the Lehigh Valley, Project Labor Agreements are fairly common for municipal projects. But they are far more controversial in Berks County, where the Republican Commissioners passed a measure last year to ban them.

Before his sudden departure on a midnight train to Georgia, Miked Fleck was one of the area's biggest advocates of PLAs. In Easton, where he was a member of City Council, he promoted legislation requiring them for any municipal project over $250,000. His companion, Allentown Mayor Edwin "Fed Ed" Pawlowski, has boasted that "I led the charge to have every major project in Allentown done using a PLA. They contribute to the local economy and give back so much to the community. Using a PLA really is an easy choice for any community that cares about local business and local jobs.”

In addition to these arguments in support of PLAs, they tend to make construction sites safer. The chief argument against them is that they drive up construction costs.

At this time last year, Fleck and Reading Mayor Vaughn Spencer were pushing an ordinance that would require a project labor agreement for all city projects costing over $5 million. Unions, which donated $18,950 to Spenser in 2014, with more to come this year, wanted in on a $150 million renovation of the sewage treatment plant, the $330 million BioNitrogen fertilizer plant and other projects like the former Reading Outlets, owned by developer Alan Shuman. Fleck, who incidentally was working for the trades unions, organized a jobs rally to pressure Reading's City Council, which is less of a rubber stamp than the one in Allentown.

Developer Alan Shuman, who was opposed to being forced into a PLA, spoke forcefully against it at Reading City Council meetings.

He would see his $14 million reconstruction of The Reading Outlet Center go up in smoke. The property was torched on October 18, 2014. The feds have declared it an arson, and are offering an $85,000 reward for information that will lead them to the culprit. Interestingly, most of this reward money has been pledged by the Associated Builders and Contractors Inc., Keystone Chapter. That group is strongly opposed to project labor agreements. Obviously, their reward and the federal involvement are indications that trades unions are under suspicion.

"We don't do that sort of thing anymore," one union official told me. There's certainly no need for it in The Lehigh Valley, and it's extremely difficult to get an arson conviction. But let's be realistic. Just a few months ago, former Ironworkers union boss Joe Dougherty was convicted in Philadelphia, City of Brotherly Love, of racketeering, arson and extortion.

Would the feds move Miked Fleck out of town because he dimed the Penguin? Not likely. But if he did something that really pissed off the unions, like implicate them in an arson after taking all their money and even screwing union leaders out of a Sky Box at the PPL Arena, well that's different. The criminal charges filed against LV Building Trades Prez Jim Reilley for an assault on Fleck's brother-in-law is an indication that unions are angry about something.

Union Agent Opposes Signs at Faulkner Chevrolet Cadillac

Francis Loughney travels 26 miles to Hanover ZHB  

One of the reasons I love to cover zoning hearing boards is because it's an opportunity for an opinionated asshole like moi to be relatively innocuous. Even if I have an opinion, and I always do, I can simply tell you what happened.

Now unions have always been pretty controversial. But you rarely see them at zoning hearings. That's why Ken Kraft, a business agent with IUPAT AFLCIO AbBCDEFG, could sit on Bethlehem's Zoning Hearing Board.

But something strange happened last night in Hanover Township.

Although he lives in New Tripoli, 26-miles away, Francis Loughney was at the Hanover Township Zoning Board. He made this trip to oppose an application for four wall-mounted signs requested by Faulkner Chevrolet Cadillac at 298 Stoke Park Road.

It should have been a snoozefest. I mean, who really gives a shit about 4 wall-mounted signs saying things like "Chevrolet" or "Cadillac"?

Loughney did. Dressed neatly, he questioned every witness. He even attempted to interrogate Faulkner's attorney, Tom Maloney. Citing concerns about safety and lighting, the New Tripoli resident urged zoners to deny the appeal. But when Maloney had a few questions of his own, Loughney refused to answer him.

"Isn't it true that you've opposed this project from the beginning?" asked Maloney.

"I don't have to answer that question," snapped Loughney. "You're not a judge."

Loughney objected to Maloney's tone, but ZHB Solicitor Ted Lewis told ruled there was nothing wrong with Maloney's tone or his question.

"Aren't you a member of the Carpenters' Union?" asked Maloney.

"Proud member," corrected Loughney, who is also a business agent and organizer for the Carpenters' Union.

"Isn't that one of the reasons why you're here? asked Maloney, who wanted to know Loughney's role in an earlier union protest at the Faulkner construction site.

Loughney refused to answer Maloney, which prompted the barrister to wonder why zoners should believe anyone who won't answer questions.

Faulkner's Attorney, Tom Maloney

Sitting with Loughney was another carpenter's union member, Joseph Farrell. He actually does live in Hanover Township. Unlike Loughney, he answered Maloney's questions, and told him he had no part in picketing the site and was never opposed to the project. "I just hate all those signs," he explained in a lilting Irish brogue. "They're killing the Township."

Faulkner was eventually given a green light for three of the four wall-mounted signs requested.

Sam Borrelli, President at Faulkner Chevrolet Cadillac, was a bit puzzled by the union opposition. He claimed that both nonunion and union labor was being used at the construction site. In addition to giving work to the low bidder, Borrelli told me he's motivated to use businesses that buy his cars. "It's all about dealing with people who deal with us."

When unions picketed his site, Borrelli states he even allowed them to pitch a tent on his property. But after being leafleted by union members, some customers complained directly to the Township, which then ended the party because there was no permit.

As he was leaving, Loughney declined to respond to Borrelli's statements. But he vowed he will return.

Maloney, who is about 18 feet tall, was going out the door after Loughney, but I suggested he should wait a few minutes.

"Give them some time to slash your tires," I advised my former Constitutional law professor.

I recognized Loughney, who does seem like a decent chap despite his little tiff with Maloney. In March, Loughney was one of about thirty trade union members who asked Hanover Supervisors to withdraw a controversial lawsuit holding up a hockey arena in Allentown. They worried about all the constructions jobs, and spoke eloquently. But Supervisors were just as worried and just as eloquent about their tax dollars being diverted. The Township did drop the lawsuit, but not until that state agreed that it would no longer use township taxes to fund the arena and other projects in Allentown.