U.S. Attorney's Office
Eastern District of Pennsylvania
(215) 861-8200
December 21, 2015

Former Allentown Finance Director Charged with Rigging City Contract Award

PHILADELPHIA—Garret Strathearn, 68, of Sea Girt, NJ, was charged today by information with conspiracy to commit mail and wire fraud, announced United States Attorney Zane David Memeger. Until earlier this year, Strathearn was the Finance Director for the City of Allentown, PA.

The information alleges the following:

Public Official #3 was a public official who represented the City of Allentown through an elective office which vested him with authority and influence over the awarding of certain municipal contracts. Aspiring to win election to a statewide elective office, Public Official #3 sought to raise campaign contributions from parties who had profited from their dealings with the City of Allentown and who sought favorable treatment from the City of Allentown. Public Official #3 also directed certain municipal officials to give preferential treatment to certain of his past and potential political donors. Strathearn and Assistant City Solicitor Dale Wiles were among the municipal officials over whom Public Official #3 had authority.

The City of Allentown outsourced its collection of delinquent real estate taxes and municipal claims (“the revenue collection”) to a law firm with experience in collecting taxes. For several years, the contract for the City’s revenue collection contract had been serviced by Law Firm #1, whose contract had been renewed annually without Law Firm #1 being required to compete with other firms in order to keep the contract. On or about November 11, 2013, the City published a request for proposals (RFP) inviting potential contractors to bid on servicing Allentown’s revenue collection contract for 2014. According to the RFP, the City would evaluate competing proposals based on their merits and select a winner based on which one would “be most advantageous to the City.” Relying on the representations in the RFP, several competitors submitted proposals for the revenue collection contract, including Law Firm #1, Law Firm #2, and a partnership between Law Firm #3 and a revenue collection company (“the Partnership”). The “revenue committee,” which was responsible for evaluating the proposals and submitting a recommendation to the City’s Purchasing Agent, consisted of Wiles and two municipal officials who reported to Strathearn.

Consistent with the representations in the RFP, the members of the revenue committee graded each of the proposals received using pre-established criteria and memorialized these scores on preprinted government forms (“the score sheets”). The original 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.

Dissatisfied with the amount of campaign contributions that he had received from Law Firm #1 and its affiliates, Public Official #3 believed that certain principals and affiliates of the Partnership were more promising sources of campaign contributions. Public Official #3 instructed certain subordinates, known to the United States Attorney, that he wanted the Partnership to be awarded the 2014 revenue collection contract, that he did not want to be perceived as having influenced the contracting process, and that he would consider future renewals of the Partnership’s contract based on whether the Partnership and its affiliates had given sufficient campaign contributions for the benefit of Public Official #3. Specifically, on or about January 8, 2014, Public Official #3 explained to Strathearn that awarding the 2014 revenue collection contract to the Partnership was important to Public Official #3 and his political ambitions. Strathearn agreed that he would help Public Official #3 by giving preference to the Partnership in the contracting process.

To prevent the committee from recommending Law Firm #2’s proposal to the Purchasing Agent, Strathearn 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. Strathearn communicated to Wiles that the contracting process was being corruptly manipulated in order to steer the 2014 revenue collection contract to the Partnership, all with the approval of, and for the benefit of, Public Official #3. Strathearn also made clear that Wiles was expected to help create the false impression that the Partnership had won the contract on the merits. Public Official #3 had authority over both Strathearn and Wiles.

Streathearn, Wiles, and Public Official #3 each took steps to advance the conspiracy and ensure that the Partnership was awarded the contract, despite the substantive findings of the revenue committee. For example, Strathearn removed from the committee the municipal official whose score for the Partnership was the lowest of the committee members and replaced her by joining the committee. Strathearn and Wiles both falsified certain paperwork in order to create public records which gave the false impression that the Partnership had earned the revenue collection contract on the merits. After the City awarded the revenue collection contract to the Partnership, Strathearn, Wiles, and Public Official #3 each obstructed justice in order to help conceal the conspiracy. For example, in 2015, all three made statements to FBI agents which were materially false with respect to the revenue collection contract award process for 2014.

For his role in the conspiracy with Strathearn (who was then identified as “Public Official #4”), Wiles previously pleaded guilty before United States District Judge Juan R. Sanchez and is scheduled for a sentencing hearing on March 2, 2016.

This case is being investigated by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigations, and the Pennsylvania State Police. It is being prosecuted by Assistant United States Attorneys Joe Khan and Nancy Beam Winter.

An Information is an accusation. A defendant is presumed innocent unless and until proven guilty.

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