Feds charge Philly City Councilmember Kenyatta Johnson with using his office to enrich himself and his wife

Philadelphia City Councilmember Kenyatta Johnson twice came to the rescue of a financially struggling nonprofit desperate to hold on to its real estate holdings in his district — but his assistance, federal authorities said Wednesday, always came at a price.

In a 43-page indictment, prosecutors charged the three-term Democrat and his wife, Dawn Chavous, with accepting more than $66,750 in bribes in 2013 and 2014 from two executives at Universal Companies, the South Philadelphia community development charity and charter school operator founded by the renowned music producer Kenny Gamble.

In exchange, investigators said, Johnson intervened on the nonprofit’s behalf, protecting some of its properties from seizure and passing legislation that substantially increased the resale value of one.

But as prosecutors described it Wednesday, the Universal executives allegedly behind the payoffs — former chief executive officer Abdur Rahim Islam and ex-chief financial officer Shahied Dawan — were hardly innocent victims of a shakedown by a corrupt elected official. Rather, said First Assistant U.S. Attorney Jennifer Arbittier Williams, this was how they had operated for years.

“It all boils down to this," she said at a Center City news conference announcing the case. “Two businessmen wanted a corrupt advantage. They wanted to pay to play, and the indictment charges that they found willing partners here in Philadelphia … Kenyatta Johnson and his wife, Dawn Chavous."

Wednesday’s indictment capped rumors that had swirled around Johnson, 46, and Chavous, a 40-year-old political consultant and charter school advocate, since news of the joint FBI-IRS investigation surfaced four years ago in court filings in an unrelated civil case.

It also makes Johnson, whose district includes South and Southwest Philadelphia, the second member of Council currently facing charges that threaten to send him to prison.

Last year, federal prosecutors charged Councilmember Bobby Henon in a political bribery case involving labor leader John J. “Johnny Doc” Dougherty. And like Henon, who is expected to take his case to trial in September, Johnson and Chavous vowed to fight back in court.

“This whole process, for the whole five years, has been nothing but intimidation and bullying by the U.S. Attorney’s Office,” he told about 100 supporters who gathered Wednesday afternoon at a South Philadelphia recreation center. “It’s insulting to my wife, as a pawn, as a way to get to me.”

Chavous’ attorney, Barry Gross, scoffed at allegations that Universal gave her a no-show consulting gig in 2013 to hide bribe payments sent to her husband. He said she was not at Johnson’s afternoon rally because she was working.

“The charges are wrong, offensive, and downright sexist,” Gross said. She is “a graduate of Ursinus College who also holds a master of science from the University of Pennsylvania and … is a recognized expert in the field of charter schools and school choice.”

» READ MORE: Johnny Doc case: Which city councilman needed a soda tax ‘hug’? Kenyatta Johnson, sources say.

Johnson and Chavous each face two federal bribery counts that carry maximum penalties of 20 years behind bars.

Islam, 62, and Dawan, 68, face additional charges of racketeering conspiracy, wire fraud, and tax evasion stemming from more than $500,000 they allegedly embezzled from Universal over two years to enrich themselves and to fund a separate bribery scheme involving the former school board president in Milwaukee, where Universal operated two charter campuses.

All four are expected to make their first appearances in federal court this week.

Gamble, half of the famed duo Gamble and Huff, founded Universal in 1993 with his wife, Faatimah, and has served as its face ever since. Prosecutors did not accuse him of involvement in Islam and Dawan’s crimes. Instead, they said, the crimes were committed behind the music producer’s back.

“Universal Companies was hijacked by … Rahim Islam and Shahied Dawan, and turned into a criminal enterprise to commit these crimes of greed with the support and necessary corruption of … Kenyatta Johnson [and] Dawn Chavous,” Williams said.

A spokesperson for Universal described dealing with the fallout of Islam’s and Dawan’s alleged crimes and prosecution as the “most profound” challenge the organization has faced.

“While we respect the right of our former executive officers to defend themselves, we cannot ignore the seriousness of the indictments brought against them or the open wounds that have been left on our organization," a statement from Universal read. “We are dedicating ourselves to restore not just our reputations, but our lifelong commitment to the same goals as [our] founders.”

Much of the indictment focuses on misdeeds by Islam and Dawan. But the details involving Johnson’s actions on Universal’s behalf quickly reignited debates over city land policies and the much-criticized custom of councilmember prerogative, the tradition through which individual members of Council hold final approval over nearly all land-use decisions in their districts.

That was the tool Johnson allegedly used to exert control over the fate of Universal-owned land, including his intervention to secure a 2014 rezoning ordinance for the site of the Royal Theater on South Street.

» READ MORE: Inside the FBI investigation into Philly Councilman Kenyatta Johnson, his wife, and Kenny Gamble’s nonprofit

Before the passage of Johnson’s legislation, Universal had struggled for 14 years to redevelop the site — a historic African American movie palace that through years of neglect had become a blighted eyesore.

The structure was on the verge of collapse when the nonprofit purchased it for $286,252 in 2000 with plans to revive it as an entertainment venue. And despite receiving nearly a half-million dollars from city, state, and federal coffers between that year and 2011, Universal made little progress.

Efforts to sell went nowhere due to potential buyers’ doubts about the economic viability of developing the site under its zoning restrictions at the time. The building’s condition grew so bad that in 2013, a neighbor filed to strip Universal of its ownership under Pennsylvania’s Blighted and Abandoned Property Conservatorship Law.

In response, the nonprofit abruptly changed course. It hired Chavous as a consultant to its charter school operations, and turned to Johnson for help getting the Royal site rezoned for mixed-use development featuring apartments and retail space.

Prosecutors said Wednesday that Chavous did next to nothing for the money Universal paid her under her consulting contract before Johnson’s rezoning ordinance was passed.

According to the indictment, “Chavous’ consulting business provided the vehicle to disguise bribe payments to her husband.”

Despite Johnson’s support and the zoning change he pushed through Council, Universal’s efforts to redevelop the Royal stalled out again. But with its more desirable zoning, the nonprofit sold the property within a year for $3.7 million — nearly 15 times what it originally paid.

Prosecutors also alleged Wednesday that Islam and Dawan paid Chavous $18,000 when Universal was in danger of losing its ownership of a parcel of properties at 13th and Bainbridge Streets. The nonprofit had bought them in 2005 at a cut-rate price of $3 under a contract with the Philadelphia Redevelopment Authority that required it to build 109 single-family homes on the site within 18 months.

But by 2013, the land remained undeveloped, was strewn with trash, and was the subject of complaints from neighbors. When the authority began the process to revoke Universal’s ownership for failing to uphold the original contract, Chavous called Islam and Dawan to warn them.

The pair allegedly issued the check to her days before Johnson again exercised his councilmember prerogative to keep the land under Universal’s control.

In separate statements responding to Johnson’s indictment Wednesday, Mayor Jim Kenney and Council President Darrell L. Clarke each stressed that Council had passed legislation last fall to reform how public land is sold. The custom of councilmember prerogative, however, remains firmly in place.

As for Johnson’s future, Clarke resisted calls for the councilmember’s resignation, saying that the charges “must be taken seriously [and] everyone is entitled to their day in court.”

The mayor adopted a more circumspect tone.

“Whatever [Johnson] decides to do next,” he said, “I hope he considers the impact these proceedings have on his ability to serve the residents … who elected him to office.”