City Hall Officials in Allentown and Reading Plead Guilty in Public Corruption Case
PHILADELPHIA—Dale Wiles, 48, of Allentown, PA and Eron Lloyd, 35, of Reading, PA, both pleaded guilty today to conspiracy charges, announced United States Attorney Zane David Memeger. At the time of their respective offenses and until earlier this month, Wiles and Lloyd were public officials in Allentown and Reading, respectively.
During his guilty plea hearing, defendant Dale Wiles admitted the following:
Wiles was an attorney and an Assistant City Solicitor for the City of Allentown whose duties included the coordinating of certain Allentown municipal projects to attorneys in the private sector. One of these projects was the City of Allentown’s 2014 contract for the collection of delinquent real estate taxes and municipal claims (“the revenue collection”). Wiles was tasked with recommending a law firm to the City of Allentown’s Purchasing Agent. Wiles then formed a committee, comprised of himself and two other officials (“the revenue committee”).
In response to a request for proposals (RFP) created by the revenue committee, several competitors submitted proposals for the revenue collection contract, including entities identified here as Law Firm #1, Law Firm #2, and a partnership between a revenue collection company and Law Firm #3 (“the Partnership”). Wiles and the other revenue committee members graded each of these proposals using pre-established criteria which were consistent with the representations in the RFP and memorialized these scores on preprinted government forms (“the score sheets”). The original three score sheets reflected that the committee members had given the highest aggregate scores to Law Firm #2 and Law Firm #1, and that none of the committee members had concluded that the Partnership’s proposal would be the most advantageous to the City. The committee members discussed the proposal and agreed that Law Firm #2’s proposal would be the most advantageous to the City.
Before the committee could recommend Law Firm #2’s proposal to the Purchasing Agent, however, another Allentown official, identified here as Public Official #4, intervened in order to steer the contract to the Partnership so that the Partnership and its affiliates would then provide money, including campaign contributions, to Public Official #3 and his campaign operatives. Public Official #3 was an elected official in Allentown who had authority over Public Official #4 and Wiles. Wiles learned from Public Official #4 that the contracting process was being corruptly manipulated in order to steer the 2014 revenue collection contract to the Partnership. Wiles understood that Public Official #4 was acting with the approval of, and for the benefit of, Public Official #3, and that Wiles was expected to help create the false impression that the Partnership had won the contract on the merits. Thus, rather than quit or risk termination, Wiles joined and assisted the conspiracy, taking certain overt acts to help achieve its objectives.
For example, to help Public Official #4 create the false impression that the Partnership’s proposal was advancing on the merits, Wiles created a new version of the score sheet on which he had documented his actual evaluation of the proposals submitted in response to the RFP. The false score sheet contained, among other things, artificially inflated scores for the Partnership which did not reflect Wiles’ actual evaluation but were created to help the corrupted award process withstand future scrutiny. And like other members of the conspiracy, Wiles engaged in repeated acts of obstruction of justice in order to help conceal the conspiracy. In 2014, and then again in 2015, Wiles concealed certain score sheets and other records from a federal grand jury after learning that these documents would be responsive to federal grand jury subpoenas. Wiles also lied to FBI agents in order to conceal material facts about the award of the revenue collection contract to the Partnership, including the steps that he and Public Official #4 took to ensure that the Partnership was awarded the 2014 revenue collection contract.
During his guilty plea hearing, defendant Eron Lloyd admitted the following:
Public Official #1 was a Reading public official who had the power to sign into law ordinances that had been passed by City Council. Public Official #1 was also a candidate in the Democratic Party’s primary election, scheduled for May 19, 2015. Lloyd reported to Public Official #1, as both a public official and as a member of Public Official #1’s campaign team.
On numerous occasions, Public Official #1 solicited, demanded, and received campaign contributions from parties who sought to receive or had previously received, favorable official action, including the awarding of contracts, from the City of Reading (“the vendors”). Public Official #1, directly and through Lloyd and others, communicated to certain vendors that they were expected to provide him with campaign contributions in return for past or prospective official action by the City of Reading. Public Official #1 caused and attempted to cause certain municipal staff, including Lloyd, to take official action favorable to certain vendors who had provided, or were expected to provide, campaign contributions benefiting Public Official #1.
To limit the influence of money on candidates seeking public office, Section 1012 of Reading’s Code of Ethics established limits on campaign contributions to, and certain reporting requirements for, certain political candidates. To limit the influence of money on public officials in Reading, Section 1006(H) of the Code of Ethics prohibits the awarding of “no-bid contracts” to donors who have given campaign contributions in excess of those limits. Prior to the 2015 Democratic primary, Public Official #1 believed that he had received contributions which were prohibited by the Code of Ethics, and that his best chance of winning re-election would require keeping these contributions and raising additional funds which would also be prohibited by the Code of Ethics. Public Official #1 decided to engineer a repeal of the relevant sections of the Code by bribing the President of City Council, Francisco Acosta, in violation of federal criminal law. Lloyd assisted Public Official #1 with this scheme and helped devise and implement it.
Public Official #1 and Lloyd decided to offer Acosta an $1,800 “loan” to the campaign committee of Acosta’s ally ( “Public Official #2”), which would be “forgiven” upon Acosta successfully orchestrating a repeal of Sections 1012 and 1006(H). Acosta accepted the payment on April 10, 2015 and then, three days later, introduced legislation to eliminate certain restrictions in the Code of Ethics in accordance with Public Official #1’s wishes (“the repeal bill”). As agreed to by Public Official #1, Acosta, and Lloyd, the repeal bill would have repealed Section 1012 in its entirety, thereby eliminating the restrictions on campaign contributions and nullifying Section 1006(H)’s prohibition on awarding “no-bid contracts” to certain donors.
To conceal his participation in the scheme, Public Official #1 sought to finance any campaign contributions to Public Official #2 with funding from third parties. Public Official #1 also sought to offer Acosta additional funding for the campaign committee of Public Official #2 as a reward for Acosta successfully orchestrating the passage of the repeal bill, although only a single payment—an $1,800 check payable to the campaign of Public Official #2 (“the bribe check”)—was ever provided to Acosta. When Acosta took possession of the bribe check, he agreed that, in order to avoid scrutiny of his agreement with Public Official #1 and Lloyd, neither Acosta nor Public Official #2 would deposit the bribe check until a later date. Acosta then attempted to persuade other members of City Council to pass the repeal bill before the primary election by falsely asserting that he was motivated solely by the best financial interests of Reading and by concealing that he had received the bribe check.
After the FBI confronted Acosta, Acosta withdrew from the conspiracy and absented himself from the vote on the repeal bill. The repeal bill was unanimously defeated and Public Official #1 was defeated in the Democratic primary election. After the election, Public Official #1 believed that his best chance of retiring his campaign debt was to obtain additional campaign contributions from parties who sought favorable official action, including the awarding of contracts, from the City of Reading before the expiration of Public Official #1’s term in office. Public Official #1 and Lloyd conspired to retire Public Official #1’s campaign debt by causing city contracts, collectively worth millions of dollars, to be awarded to vendors who would be willing to provide Public Official #1 with sufficiently large campaign contributions, all in violation of federal criminal law. Lloyd took numerous steps to help Public Official #1 accomplish this goal.
After accepting the guilty pleas, United States District Judge Juan R. Sanchez scheduled a sentencing hearing on March 2, 2016 for Wiles, and on March 3, 2016 for Lloyd. Wiles faces a maximum possible sentence of 20 years in prison, a fine, three years of supervised release, and a $100 special assessment. Lloyd faces a maximum possible sentence of five years in prison, a fine, three years of supervised release, and a $100 special assessment. For his role in conspiring with Public Official #1 to repeal the Code of Ethics, Acosta pleaded guilty on August 5, 2015 and is awaiting sentencing.
These cases are being investigated by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigations, and the Pennsylvania State Police. They are being prosecuted by Assistant United States Attorneys Joe Khan and Nancy Beam Winter.