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Apartment stay draws U.S. interest

The use of a developer's property is now part of a broader criminal investigation of John J. Dougherty.

In late 2004, labor leader and Pennsport Civic Association president John J. Dougherty got a favor from a prominent developer.

Dougherty's wife was recovering from a stroke and the Doughertys were having their house remodeled. They needed a place to stay. The developer, Peter DePaul, gave the Doughertys the use of his $3,000-a-month apartments in the Dockside at Penns Landing.

Dougherty later declared on a financial-disclosure form that he was there for "10 to 20 days."

The arrangement has drawn the attention of federal authorities already investigating Dougherty for potential tax and labor crimes, according to sources familiar with the matter.

The use of the apartment is now part of a broader criminal investigation of Dougherty, who is the leading candidate for the State Senate seat being vacated by Vincent J. Fumo.

Federal agents are trying to determine if Dougherty was truthful on the disclosure forms about the length of his stay at the Dockside, sources said.

DePaul, who recently testified before a grand jury, isn't suspected of any criminal wrongdoing.

The Blue Bell developer is now an investor in the proposed Foxwoods casino, planned for a riverfront site in Dougherty's Pennsport neighborhood. DePaul joined the casino venture after Dougherty's stay.

The casino, opposed by many in the neighborhood, has become a major issue in the First District campaign.

DePaul's lawyer, Mark Sheppard, said his client has cooperated with authorities but he declined to elaborate.

"This will advise you that Mr. DePaul cannot affirm any matters occurring before a federal grand jury, as such matters are confidential," said a letter from Sheppard and attorney Richard A. Sprague.

Dougherty's lawyer, Henry Hockeimer, and his campaign spokesman, Frank Keel, declined to comment. Neither Dougherty nor DePaul responded to requests for interviews.

The grand jury, court records show, is investigating whether Dougherty violated tax laws and a labor law that prohibits union leaders receiving gifts from contractors who employ union workers.

(The labor law apparently would not apply to the apartment matter because DePaul's development company does not directly employ electrical union employees, according to people familiar with the issue.)

Last year, the grand jury indicted Dougherty's childhood friend, electrical contractor Donald "Gus" Dougherty Jr., on 100 felony counts, including two allegedly involving John Dougherty's properties.

According to the indictment, Gus Dougherty illegally provided John Dougherty with $115,000 worth of electrical work for his home. Gus Dougherty submitted a bill only in June 2006, after federal agents searched the contractor's home.

The indictment also alleges that Gus Dougherty sold the union leader a Shore house for $24,000 below market value.

John Dougherty, who has repeatedly said he has done nothing wrong, was not charged for receiving these alleged gifts. Still, U.S. Attorney Patrick L. Meehan said the investigation would continue into what he called "sweetheart deals."

John Dougherty disclosed the apartment stay on a form called "an LM-30," available on a Labor Department Web site.

In the 2005 report, filed in mid-2006, John Dougherty listed the apartment in a section for money or gifts "received from any employer or from any labor relations consultant to an employer."

The Dockside, which became the first apartment building to rise on the Penns Landing waterfront, is a 16-story building shaped like a ship, and features 242 luxury units, most with dramatic views of the Delaware River.

A person close to Dougherty said that the couple mostly stayed with relatives during renovations, and used the Dockside apartment infrequently.

Other sources said that DePaul told the authorities that Dougherty asked for use of the apartment in late 2004, shortly after Dougherty's wife became ill and while the couple's home was undergoing a $400,000 renovation.

According to a person with direct knowledge of the renovations - who spoke on condition of anonymity because the case is before a grand jury - the project began in September 2004 as a way to make the home more accessible for Dougherty's ailing wife.

Prosecutors in court documents allege the project was "stripped down to the studs," with work "well beyond accommodating the house for the needs of anyone with a debilitating illness."

The project, including hardwood floors, new masonry and a porch, was mostly completed by February 2005.

Other financial-disclosure documents for 2004 and 2005 - required to be filed by members of the city's Redevelopment Authority (RDA), of which John Dougherty is chairman - could not be obtained this week.

On Wednesday, Thursday and again yesterday, The Inquirer requested these documents from Frank Keel, a spokesman for both the RDA and the Dougherty campaign. He promised to provide them, but, as of late last night, had not.

DePaul, who has built about 6,000 homes and apartments with more than 5,000 units, first surfaced as a Foxwoods investor in December 2005, months after Dougherty stayed in the apartment.

The casino is a hot issue in the First District State Senate race, and has left Dougherty in an awkward political position.

As a union leader, Dougherty supports casinos as a way to generate jobs. But members of his Pennsport Civic Association oppose the casino, fearing it will bring traffic, crime and noise.

In his campaign, Dougherty walks a line between the two constituencies, explaining that he generally supports casinos - and insists that Foxwoods satisfy neighborhood concerns. If it can't, he said, he may not support Foxwoods' plans to build in Pennsport.

"I am not anti-casino, I am pro-neighborhood," he said when he launched his campaign at a rally in Pennsport last month.

Daniel Hunter, an organizer with Casino-Free Philadelphia, said the fact that Dougherty was close enough to DePaul to receive a free stay at Dockside raised the question of whether Dougherty could separate his friendship from what is good for Pennsport.

But a bigger issue, Hunter said, was Dougherty's role as a leader of a union whose members have been advocating an immediate start to construction of the two waterfront casinos: Foxwoods and SugarHouse in Fishtown.

On Tuesday, Gus Dougherty is scheduled to plead guilty to 98 of the 100 charges against him, including the theft of $869,000 from a union benefits plan, bribery of a bank executive and a multimillion-dollar tax dodge.

But in a sign that Gus Dougherty is unlikely to cooperate with authorities investigating John Dougherty, the contractor will stand trial next month on the two remaining charges - those that involve the union leader.

Following a pretrial conference yesterday, U.S. District Judge Eduardo Robreno unsealed several documents in the case.

The lawyers involved in the trial - Gus Dougherty's lawyer, Eric Sitarchuk, and Assistant U.S. Attorney Anita Eve - declined to comment.


Contact staff writer John Shiffman at 202-350-9314 or jshiffman@phillynews.com.

Inquirer staff writer Michael Matza contributed to this article.

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