Nonprofit execs acquitted of bribing Kenyatta Johnson face new trial on charges they paid off another official

A day after a federal jury acquitted Philadelphia City Councilmember Kenyatta Johnson on bribery charges, prosecutors returned to court Thursday hoping to persuade the same panel to convict two of his codefendants for a separate set of crimes.

The case involves allegations that Rahim Islam and Shahied Dawan — two former executives at Universal Companies, the South Philadelphia housing and charter school nonprofit founded by music legend Kenny Gamble — embezzled nearly $500,000 from the organization and used its money in a separate bribery scheme involving the president of the Milwaukee school board.

But as the defense delivered its opening pitch to jurors, it was eager to remind the panel of the loss the government had just endured.

“Welcome to the epilogue of the government’s failed attempt to bring down Councilman Johnson,” Islam lawyer Joshua David Hill told the panel in an opening statement. “Ladies and gentlemen, you are witnessing firsthand how the government squeezes someone.”

» READ MORE: Who is Kenny Gamble? From Philly soul to Universal Companies, here’s what to know.

That remark drew a forceful objection from Assistant U.S. Attorney Eric L. Gibson, who moments before had accused the two executives of treating the nonprofit they ran as their “personal ATM machine.”

As he told it, Islam, Universal’s former CEO, and Dawan, its ex-CFO, looted the organization by awarding themselves five-figure bonuses without the approval of the board as Islam also embezzled hundreds of thousands of dollars through reimbursements for everything from $16,000 in gym membership fees to pricey vacations to Orlando, Jamaica, and the Bahamas with “a variety of girlfriends.”

“He even used Universal funds to pay for a girlfriend’s trip to Seattle to see The Oprah Winfrey Show on location,” Gibson said.

That contentious dynamic between defense lawyers and those for the government has by now become familiar for the jury of seven women and five men hearing the case.

The panel has already sat through four weeks of testimony detailing Universal’s dire financial situation between 2013 and 2014 in relation to earlier allegations that Islam and Dawan bribed Johnson, and his wife, Dawn Chavous, seeking his help to hold on to the organization’s troubled real estate assets in his district.

But while the jury acquitted all four defendants on that matter Wednesday, the remaining case against Islam and Dawan set to play out in court over the next few days appears stronger — at least on paper.

Much of the evidence in the Johnson bribery case was circumstantial.

There was no explicit testimony detailing a corrupt understanding among the councilman and the Universal execs. Instead, prosecutors relied on a series of emails, text messages, invoices, and a detailed timeline of meetings, payments, and City Council votes to argue there was no room for doubt Islam and Dawan had intended to bribe Johnson through a series of contracts with his wife worth nearly $67,000.

In the remaining case, though, jurors will hear directly from the elected official accused of accepting the bribes — Michael Bonds, the former president of the Milwaukee school board.

Bonds, who pleaded guilty to charges of conspiracy and violations of the Travel Act in 2019, is expected to testify for the government that Islam and Dawan paid him $18,000 in bribes between 2014 and 2016 disguised through invoices to a company he owned, African American Books & Gifts. In exchange, he became what Gibson described as Universal’s “champion, vote and inside man” on the Milwaukee school board.

Hill offered a different description of the former school board president in court Thursday: “a desperate man” seeking a break on his prison sentence and someone “who should not be believed.”

But whichever is closer to the mark, Universal — which had primarily focused its efforts on charter school operations and real estate development in South Philadelphia — had by 2012 launched a costly effort to expand into Wisconsin.

The Milwaukee school board had approved Universal to operate two charter schools, though both were failing to meet enrollment targets and had become, as former employees described it, costly money pits. Still, Islam pushed for Universal to open a third campus and sought Bonds’ support.

Bonds has admitted Universal continued to pay his book company for years, during which time he also backed Universal’s request to defer payments on a district-owned property it was leasing for one of its schools.

But none of those expansions or concessions helped put the nonprofit’s out-of-state venture in the black.

“The entire foray into Milwaukee was a disaster for everyone associated with it,” prosecutors wrote in court filings in advance of the trial. “Universal lost money, and in the middle of the 2016 and 2017 school year, [it] terminated its contract to provide charter services” in Milwaukee and never paid those deferred lease payments back.

And all the while, the prosecutors contend, Islam and Dawan were pocketing money Universal sorely needed to stay afloat.

But Hill on Thursday chalked up the reimbursements Islam received for personal expenses to an accounting mistake and contended that the executives’ six-figure salaries and bonuses were fully earned. He accused the government of presumptuously trying to assign value to the work of defendants in the case, once again.

Chavous’ defense strategy during the earlier phase of the trial was to attack prosecutors’ claims she did little to earn the $67,000 Universal paid her as a consultant, which the government had labeled a bribe.

First, Hill said Thursday, the government argued “Mrs. Chavous didn’t work hard enough for what she was paid.”

“Now we have the government coming in and complaining that Mr. Islam and Mr. Dawan were paid too much,” he said. “No one on Universal’s board ever expressed concern about management compensation to Mr. Islam and Mr. Dawan.”

Islam and Dawan face charges including racketeering conspiracy as well as wire and honest services fraud — the most serious of which carries a prison term of up to 20 years.

Islam also faces multiple counts of tax fraud for allegedly failing to report the additional income he received from the personal expense reimbursements he obtained from Universal.

The trial is expected to last through next week.