First charges revealed in feds’ Local 98 probe, with contractor’s guilty plea
George Peltz, owner of Berlin, N.J.-based MJK Electric, pleaded guilty to counts including tax evasion, failing to pay payroll taxes, theft from employee benefit funds, and making unlawful payments to a union official.
The first criminal charges in the long-running FBI investigation into the Philadelphia region’s largest Electricians union local were revealed Monday, as a New Jersey electrical contractor with extensive ties to labor leader John J. “Johnny Doc” Dougherty admitted to unlawfully providing thousands of dollars in benefits to an unnamed union leader.
George Peltz, owner of MJK Electrical Corp., with offices in Philadelphia and Berlin, Camden County, pleaded guilty to counts including tax evasion, failing to pay payroll taxes, theft from employee benefit funds, and making unlawful payments to a union official.
He told a federal judge that between 2012 and 2016, he provided an Electricians Local 98 officer — named in court filings only as “Official 1” — with nearly $57,000 in home and office improvements at no charge.
That work included security systems installed at a business co-owned by the official and the installation of large-screen TVs in homes of the official and the official’s relatives.
Peltz also acknowledged giving the same official $4,500 in gift certificates to Boyd’s, the Chestnut Street clothing store, in 2013 and 2016.
Federal law prohibits employers from providing goods and services to union officials unless those transactions are carried out at fair market price.
Monday’s court proceeding came as federal authorities prepared to reveal the results of their wider probe into the operations of Local 98 of the International Brotherhood of Electrical Workers — an announcement that sources familiar with the investigation said could come within days.
Those sources, who were not authorized to discuss the case publicly, have described a multipronged investigation examining the methods by which the union has exerted its considerable clout in labor relations and politics in Philadelphia and across the state.
Over the last several years, agents have scrutinized everything from Local 98′s voluminous political spending to allegations of work-site intimidation and misspending of union funds. The Inquirer and Daily News reported in 2017 that agents had tapped the phones of key union officials, including business manager Dougherty and City Councilman Bobby Henon, who holds a paid position with the union.
The involvement of Peltz — a longtime contractor and an established figure in the building trades — came to light after agents went to his office in 2016 as part of a series of coordinated FBI raids on more than a dozen offices and homes connected to Local 98, its officers, and key allies.
Court filings surrounding Peltz’s plea Monday said that he had not struck any agreement to cooperate with the investigation or testify against any other union members who may be indicted.
“He accepts responsibility,” his attorney, Barry Gross, said. “He will pay restitution, and he wants to move on with his life.”
A Local 98 spokesman declined to comment Monday on Peltz’s guilty plea.
According to the company’s website, Peltz founded MJK in 1994 along with business partner Michael J. Jones, who was not charged Monday.
With Jones, an African American, serving as president, the company has benefited in the years since from city rules requiring a certain percentage of contract work to be awarded to minority-owned businesses.
During the 2016 Democratic National Convention, MJK handled some work at the Wells Fargo Center, with Peltz the on-site representative. On its website, the company says it handled convention and trade show work at the Philadelphia Marriott Downtown and the Convention Center.
The company is also one of the largest recipients of what are known as “market recovery funds” from Local 98, receiving more than $1.3 million since 2012, according to the union’s financial statements.
The payments are meant to subsidize labor costs for union contractors to help them compete with nonunion employers. But their use by Dougherty’s union has drawn scrutiny from federal investigators, sources familiar with the scope of the investigation have said.
During Monday’s court appearance, Peltz also admitted to a host of other crimes tied to more than $1.6 million in business and personal income he admitted to hiding from the IRS between 2012 and 2015.
That total included $101,000 in MJK revenue that prosecutors said he spent on himself in those years to pay college tuition for a family member, golf fees, fitness club dues, hotel and travel expenses, and more than $30,000 in purchases at Boyd’s.
At work, Peltz instructed his bookkeeper to keep all payments for less than $10,000 off MJK’s official ledgers, according to his plea documents. He would then cash those checks and pay some employees — who were Local 98 members — under the table.
He also instructed his staff to keep separate ledgers of employee overtime and weekend work pay, which he also doled out in cash. But even as he did so, he was cheating his workers, prosecutors said.
Peltz’s cash overtime payments were “approximately half of the regular hourly rate, so the employees’ union wages were undercut,” his plea documents state.
As a result of that underreporting of hours, MJK’s payments to its employee benefit plans — which were based on the number of hours worked — consistently fell below what he should have paid. In total, he admitted to shorting the funds $464,000 between 2012 and 2015.
Immediately after the 2016 FBI raids, prosecutors said, Peltz instructed his bookkeeper to start reporting all employees’ full wages to the company’s payroll service.
He will face up to five years in prison for each of the four counts to which he pleaded guilty Monday at a sentencing hearing scheduled for May.