Gus Dougherty is charged with making illegal payments to the union leader in connection with the sale of a Jersey Shore condo in 2003 for more than $20,000 less than fair-market value and $115,600 of free renovations in 2004 and 2005 to the union leader's personal residence in the city's Pennsport section.

Federal law bars a contractor from giving anything of value to an officer of a labor organization that represents the contractor's employees.

Gus Dougherty has pleaded not guilty to the charges and is to stand trial next week. John Dougherty has not been charged in the case and has denied any wrongdoing.

The two Doughertys are not related although they have been pals since childhood.

The defense has subpoenaed the union leader to testify but defense lawyer Eric Sitarchuk submitted a letter to the court yesterday from John Dougherty's attorney that he would plead the Fifth Amendment if he weren't given immunity, but would testify if he got immunity.

The feds say they are "pursuing" an ongoing criminal investigation of the union leader.

Sitarchuk tried to persuade U.S. District Judge Eduardo C. Robreno to grant the union leader immunity.

He argued that John Dougherty's testimony was both "exculpatory and essential" to the defense.

Sitarchuk said John Dougherty would testify that he paid fair-market value for the condo and the work done at his home.

"If a jury believed that testimony, your Honor, they would acquit," he said.

Sitarchuk said the feds could demonstrate "no countervailing interest that would outweigh" his client's need for the union leader's testimony.

Assistant U.S. Attorney Paul Gray argued that giving the union leader immunity to testify would "impinge" on the feds' ability to possibly prosecute John Dougherty on matters which "go beyond" what was charged in the Gus Dougherty indictment.

"I won't recount it here in open court, but it is there," he said, adding that "this circuit has recognized that this is a legitimate government interest and the judiciary should not be intruding on that" except in very limited circumstances.

Prosecutors and defense attorneys also sparred over other issues, including whether the government could call a witness who appraised the condo for $230,000 - $24,000 above the sales price.

Defense attorneys said the appraiser, James Carr, should not be permitted to testify because he was an apprentice at the time the appraisal was done and not certified by New Jersey.

The feds said the defense was trying to keep out the only appraisal done on the condo after Gus Dougherty made improvements to it.

Judge Robreno suggested the government find another appraisal expert who was certified in 2003 and who could testify to the fair-market value of the condo at the time it was sold.

The feds also want Robreno to let them introduce other evidence - hundreds of thousands of dollars in job- subsidy payments to Gus Dougherty's firm, Dougherty Electric, that were authorized by John Dougherty and that Gus Dougherty allegedly skimmed for himself.

Prosecutors said the evidence shows Gus Dougherty had a "motive to enrich" the union leader.

Sitarchuk said letting jurors hear that evidence, which didn't result in charges, would unfairly taint Gus Dougherty in the minds of jurors.

Robreno said he would rule on the matters later.

Gus Dougherty pleaded guilty last month to 98 counts of theft, bank bribery, tax evasion and related charges. *