The recent news of the arrest of Donald Dougherty, a once highly respected electrical contractor in the greater Philadelphia area, shocked citizens and members of the International Brotherhood of Electrical Workers. He pleaded guilty last week on Thursday, January 21st to one count of filing a false federal income tax return and one count of theft of employee benefit funds.
Just how egregious were his financial crimes of concealment?
Donald Dougherty, the owner and operator of Dougherty Electric, Inc. currently owes the Internal Revenue Service $92,913 for misappropriated funds that were falsely claimed as business deductions. He used this $92,913 for personal expenditures instead.
Not only did he falsely claim using this close to $100,000 in funds under the false pretense of business expenses but he also failed to make $266,000 dollars in union payments to the members of the International Brotherhood of Electrical Workers. This is a massive violation of the collective bargaining agreement between Pittsburgh’s Local 5 Union and Dougherty Electric, Inc.
Donald Dougherty has a repeated pattern of malfeasance.
Unfortunately, back in 2007 Dougherty was also indicted for filing false income tax returns, tax evasion, bank fraud, unlawful payment to a union official, and stealing employment benefit funds.
He will be forced to pay restitution for the prior offenses alongside repayments owed in the new charges against him. The following calls to action were made by prosecuting attorneys Paul L. Gray and Frank R. Costello, Jr. respectively.
His wife was also in on this long term scheme when Dougherty “hired” her for a no-show position at his company Dougherty Electric, Inc. in which she collected a generous salary of $166,400 each year.
Even more suspicious just weeks before landing this “job” within the company his wife outwardly purchased an expensive condominium nestled alongside the Jersey Shore with panoramic waterside views that were worth $900,000.
In November of 2015, an anonymous tip was sent to the IRS over discrepancies in corporate records questioning the validity of his wife’s position in the company and also revealing electrical renovations were done on this condominium using free labor from union workers employed at his company.
Once Dougherty received this letter he amended his tax returns slightly but still wrote off his wife’s bogus salary and repairs to her car as legitimate business expenses with the help of his crooked accountant Michael McKale.
The husband and wife duo also duped representatives at Wells Fargo Bank into believing they needed help refinancing their mortgage under the false pretense they could no longer afford to pay for their expensive South Philadelphia home valued at 1.7 million dollars. The bank agreed to a one-time payment of $900,000 to aid in settling the mortgage.
However, it was later revealed they were extremely solvent, to the tune of 2 million dollars of personal income on file. Turns out that this bank loan was used to pay off the high price point of Mr. and Mrs. Dougherty’s vacation spot on the Jersey Shore.
Mr. Dougherty pleaded guilty to the aforementioned crimes against his employees, banking officials, and union members of the International Brotherhood of Electrical Workers before the United States District Court Judge Michael M. Baylson. His attorney Jennifer Arbittier Williams settled on a plea agreement between the prosecuting attorneys, government agencies, and Donald Dougherty that he would make full restitution for all of the pending cases against him.
An accomplice to his financial misdeeds is also under fire and being prosecuted for aiding Donald Dougherty in falsifying tax documents.
His accountant who was privy to his fraudulent actions, Michael Mckale, will be subject to the penal ramifications of tax fraud. Most parties that engage in tax crimes such as tax fraud and tax evasion have the potential to face up to 5 years in federal prison and a fine of $100,000. On top of the fine for federal tax fraud and evasion, the guilty party is usually responsible for paying back the misallocated funds in full to the victims of this crime.
With the 2021 tax filing season upon us IRS Criminal Investigation Special Agent in Charge, Thomas Fattorusso urges everyone to consider this case a cautionary tale for those considering tax fraud as an easy means to get ahead and fund their lavish lifestyles on the backs of hardworking people. He heeds this warning in the following press release next.
“Engaging in an elaborate scheme to willfully underreport taxable income is a felony. Today, Donald Dougherty admitted he broke the law by cheating on his taxes. As we approach tax filing season, those who might consider filing false tax returns should be aware of the negative consequences; which could include being branded a felon for life and a lengthy prison sentence.”
A crime of this nature rarely goes unpunished and Dougherty will have a hard time coming back from this prosecution with his reputation and former job title intact.
Thanks to the tireless work done out in the field by the Internal Revenue Service Criminal Investigation Division, the Federal Bureau of Investigation, and the Employee Benefits Security Administration branch of the Department of Labor the collateral damage inflicted upon union members and others employed by Donald Dougherty will be rectified in court.
The most recent case against him including the long history of financial crimes aided and abetted by his buddy and accountant since 2007 these two face some pretty grave consequences for their actions. Dougherty is looking at 200 years in prison, 5 years parole, and a $9,250,000 fine while McKale will likely serve a maximum sentence of 14 years imprisonment, 3 years parole, and a fine of $1,000,000 to compensate victims that suffered losses over unchecked corruption and greed.