Kenyatta Johnson

Philadelphia City Councilman Kenyatta Johnson, who represents District 2. PHOTO COURTESY OF JARED PIPER/PHILADELPHIA CITY GOVERNMENT

Federal prosecutors in Philadelphia handed down criminal charges on Wednesday against City Councilman Kenyatta Johnson and his wife, political consultant Dawn Chavous.

The result of a five-year-long probe, the 22-count indictment alleges a tangled quid pro quo involving Johnson, Chavous’ consulting firm, and Universal Companies, a prominent nonprofit developer and charter-school operator founded by music producer Kenny Gamble, who was not charged.

Johnson and Chavous each face two charges of fraud that carry maximum sentences of 40 years in prison and $500,000 fines, among other penalties. Both maintain their innocence and have vowed to fight the federal charges.

“First, let me be clear: I am innocent,” Johnson said in a written statement. “I did nothing wrong. I am the victim of overzealous federal prosecutors who have spent the last five years looking for something to charge me with. If charged with any crime, I will be pleading not guilty.”

At the core of the case, prosecutors allege that Universal offered Chavous more than $66,000 in consulting work in return for her husband’s help in preserving the nonprofit’s ownership over several valuable pieces of real estate. One of these properties, the historic Royal Theater, was later sold, allegedly to pay off Universal’s debts.

Chavous allegedly used the lucrative side work to help pay off her and Johnson’s mortgage, loan, and credit card debts, according to court documents unsealed Wednesday.

“To have your work, ethics, and integrity challenged is devastating,” Chavous said in a written statement. “I’m confident when this is over, the facts will reveal that I have done nothing wrong and my name and my family’s name will be cleared so we can put this behind us.”

In addition to Johnson and Chavous, the indictment also names former Universal CEO Abdur Rahim Islam and Shahied Dawan, the CFO of Universal, as defendants in the case. Both were charged with racketeering, fraud and other counts alleging they “stole” $463,000 in fraudulent bonuses. Both are scheduled to surrender later in the week.

“In essence, this indictment charges that Universal Companies was hijacked by Islam and Dawan and turned into a criminal enterprise,” said Jennifer Williams, First Assistant U.S. Attorney.

The indictment ties the defendants to a costly scheme to expand Universal’s charter school operations to the city of Milwaukee. Former Milwaukee Public Schools Board President Michael Bonds was convicted last May of taking $18,000 in bribes from Universal execs for work on the expansion.

Wednesday’s indictment now asserts that Universal paid Chavous to influence Johnson to use his office to boost the value of the nonprofit’s South Philadelphia real estate holdings, which were later sold to pay off debts related to the expansion plan.

“We have three people pretending their motives were civic-minded when in fact they were conspiring to enrich themselves,” said Christian Zajac, Assistant Special Agent in charge of the FBI in Philadelphia.

Universal posted a $200,000 loss in 2013 related to the Milwaukee charter school plan. That same year, Dawan advised Islam in an email that the nonprofit could sell the asset to cover this shortfall –– the former Royal Theater building on South Street.

The organization purchased the historic building for redevelopment in 2000, but it had fallen into disrepair and faced a takeover threat via a conservatorship petition filed by a local developer. This legal mechanism allows interested groups to takeover blighted and disused properties through a court order.

But in 2014, while his wife was retained as a Universal consultant, Johnson introduced a zoning bill in council to alter the parking requirements and height maximums for the property. This new activity had the side effect of forcing the withdrawal of the petition lodged against the long-vacant building.

The nonprofit later sold the decrepit theater for approximately $3.7 million, according to the indictment. Ori Feibush, Johnson’s former rival for his Second District seat, bought the building and is redeveloping it into apartments.

The charges also cover another scheme involving Johnson that was allegedly intended to preserve Universal’s control of other valuable properties on the 1300 block of Bainbridge Street.

The company had purchased the properties for $3 from the city for a redevelopment plan that never materialized. After nine years of vacancy, the city triggered a reversion clause to clawback the land –– but officials now say Chavous and Johnson intervened again on Universal’s behalf.

The indictment states that Chavous warned the company about the reversion plan in 2014, the same month the company paid the consultant some $18,000.

Later, Johnson said he would not support the reversion, in essence allowing Universal to maintain control over parcels that today have a rough market value around $3 million.

Johnson’s approval, in this instance, was not legally required. But prosecutors described these actions as an exercise in “councilmanic prerogative,” City Council’s informal control over many major land-use decisions in their districts.

Throughout this time, prosecutors said Chavous’ consulting position was design to influence Johnson to act on behalf of the nonprofit’s real estate interests.

“Johnson never made an attempt to recuse himself from these matters even though his wife was on the Universal payroll,” Williams said. “They profited greatly from these properties, thanks to Johnson’s efforts.”

Johnson and Chavous have said they will plead not guilty. Pre-empting the indictment, the three-term Democrat issued a statement yesterday calling himself “a victim of overzealous federal prosecutors.” The councilman has indicated that he will not resign his post over the criminal charges.

“I will keep fighting for you regardless of what happens with this federal case,” Johnson told his constituents in a written statement. “I will not let it stop me from keeping up the fight for our community and advancing our shared agenda.”

Johnson is now the second sitting lawmaker facing federal charges — an ignominious state of affairs that hasn’t been seen in City Council the 1980s. The indictment comes almost a year to the day after prosecutors charged Councilman Bobby Henon and members of the Local 98 electricians union with allegedly misusing union funds, among other offenses.

The indictment lands just weeks into Johnson’s third term in office representing South Philadelphia’s 2nd District. He was elected as a Pennsylvania state representative in 2008, before making his run for Council in 2011. He has survived Democratic challenges in his last two elections.

Dawan and Islam also face charges stemming from their alleged self-enrichment using Universal funds. The indictment alleges the pair “stole” $463,000 from the nonprofit, disguised as bonuses or per diems. Both men face a statutory maximum of 285 to 300 years in prison and some $4 million in fines.

U.S. Attorney William McSwain has recused himself from this prosecution because his former law partner is representing one of the defendants.

Chavous released a statement to the Tribune:

This is without question one of the most difficult situations I’ve ever faced. To have your work, ethics, and integrity challenged is devastating.

My work in education, and in particular, my record and advocacy for school choice and charter schools is well documented and began over 2 decades ago - long before I ever met my husband. To have it implied that I received any financial benefit as a result of my marriage and not my own work ethic is simply untrue. It impugns my reputation and worst, it relies on the old trope that women only owe their success to the men in their lives.

I believe that my faith in God and my knowledge that I am innocent of all charges will get me through this. Thank you to everyone who has reached out with supportive calls and messages. I greatly appreciate it.

I’m confident when this is over, the facts will reveal that I have done nothing wrong and my name and my family’s name will be cleared so we can put this behind us.

(1) comment

ima-ki

Why do our young men men of color subsequently end up being indicted for corruption after being elected to office. Many end of doing time in jail. I don't know if councilman Johnson is innocent or guilty; however, this scenario happens too often.

Pride comes before destruction and a haughty spirit before a fall.

They begin doing good things in the community. And then things began to go down hill. They should be forewarned as to the consequences by what has happened to those who have gone before them. The LOVE OF MONEY is the ROOT of ALL EVIL.

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