First defendant in feds’ case against ‘Johnny Doc’ and Local 98 gets 18-month sentence

A New Jersey electrical contractor and longtime ally of labor leader John J. Dougherty was sentenced Monday to 1½ years in prison, making him the first defendant punished in a long-running federal probe of operations at the Philadelphia region’s largest Electricians local.

George J. Peltz, co-owner of MJK Electrical Corp., with offices in Philadelphia and Berlin, Camden County, admitted earlier this year to providing Dougherty nearly $57,000 in home and office improvements at no charge between 2012 and 2015.

During roughly the same period, Dougherty — widely known as “Johnny Doc” — and his union, the politically powerful Local 98 of the International Brotherhood of Electrical Workers, aided Peltz in landing millions of dollars in work. That sum included $2.1 million from Comcast Corp. that federal prosecutors say Dougherty and City Councilman Bobby Henon personally negotiated.

Like others in Dougherty’s orbit who have faced indictment over the years, Peltz, 67, of Ocean City, N.J., did not agree to cooperate with investigators or to testify against any Local 98 officials when he pleaded guilty in January to counts including making unlawful payments to a union official, tax fraud, and theft from an employee benefit fund.

In court Monday, he apologized before a standing-room-only crowd of family and friends and handed over four checks totaling $958,000 as restitution for a litany of unrelated offenses. Those included hiding more than $1.6 million in business and personal income from the IRS, and cheating his employees out of overtime wages and nearly $500,000 he owed to their union benefit fund.

“I’m so deeply sorry,” he told U.S. District Judge Jeffrey L. Schmehl. “I can’t tell you how sorry I am for this lapse in judgment.”

Schmehl shot back, citing what Assistant U.S. Attorney Paul Gray had described earlier as a “systematic fleecing of [Peltz’s] own company.”

“This is not an aberration. This is not isolated conduct,” the judge said. “This was systematic and deliberate stealing of money. It is not a lapse in judgment.”

Still, Schmehl cut Peltz a break. The 18-month sentence was a little more than half of the 30-month term that prosecutors said he deserved. It also fell six months short of the low end of what federal sentencing guidelines recommended.

Peltz’s sentence, coming months before Dougherty, Henon, and seven other Local 98 officials are set to stand trial, could serve as an early indicator of how severely Schmehl intends to punish those higher-profile defendants if they ultimately are found guilty.

Facing charges ranging from political bribery to embezzling union funds, each has maintained innocence.

In explaining Peltz’s sentence, the judge cited the contractor’s acceptance of responsibility and the numerous testimonials he received describing the contractor as an attentive father, understanding boss, and generous friend.

But it was his loyalty to one friend in particular — Dougherty — that first attracted FBI scrutiny.

The two met as young apprentice electricians in the early days of their careers. Peltz eventually left to launch MJK Electric with partner Michael J. Jones in 1994, and Dougherty rose to the head of their union. But they always kept an eye out for one another.

With Jones, an African American, serving as company president, Peltz’s company has benefited from city rules requiring a certain percentage of government contract work to be awarded to minority-owned businesses.

And as one of Local 98′s favored minority contractors, MJK won work not only from Local 98 but also in high-profile city projects like construction of the Barnes Foundation, the lighting of Boathouse Row, and some of the setup work surrounding the 2016 Democratic National Convention at the Wells Fargo Center.

When Comcast was renegotiating its franchise agreement with the city in 2015, prosecutors say Dougherty and Henon threatened to block any new contract unless the cable giant steered a percentage of its work laying fiber optic cables to Peltz’s company — at a 125 percent markup from Comcast’s standard rate.

Comcast caved and paid MJK more than $2.1 million for work done over the next year.

Peltz’s firm also raked in more than $3.2 million from Local 98 between 2010 and 2016 in what are known as “market recovery funds” — making it the union’s single largest recipient of such payments. The funds are meant to subsidize labor costs for union contractors and help them compete with nonunion employers.

In court Monday, Peltz’s lawyer, Barry Gross, maintained that the free home improvements his client gave to Dougherty and several Dougherty family members during the same period were not intended as bribes in exchange for the union boss’ continued generosity. Instead, the attorney described them as gifts to people he considered as close as family.

Peltz charged nothing to Dougherty, his father, and his daughter for the big-screen TVs and security systems his company bought and installed at their respective homes at a cost of $27,000. And when Doc’s Union Pub — a South Philadelphia bar owned by Dougherty and other union officials — needed new LCD displays, MJK installed them at only a fraction of their $30,000 cost.

Federal law prohibits employers from providing goods and services to union officials unless those transactions are carried out at fair market value.

“What Mr. Peltz did was wrong,” Gross said Monday. “He has admitted it. He’s accepted responsibility. He’s drained most of his assets and his retirement plans [to pay restitution]. He’s ready to move on.”

In addition to incarceration, Schmehl sentenced Peltz to pay a $10,000 fine and serve two years’ probation upon his release. He is scheduled to surrender for prison in July.