Nightclub owners admit 2018 Old City arson that displaced hundreds and shuttered popular eateries

The co-owners of a long-shuttered Old City restaurant and nightclub agreed Thursday to serve nine years in prison and pay more than $22 million in restitution after admitting in court they started a 2018 fire that displaced dozens of residents and led to the closure of several popular neighboring eateries.

Brothers Imad Dawara, 40, of Swarthmore, and Bahaa Dawara, 32, of Woodlyn, told a federal judge they set the blaze at 239 Chestnut St. hoping to collect on a $750,000 insurance policy they had taken out just two weeks before the fire on their business, the 24-hour Revolution Diner.

The men also acknowledged in a hearing before U.S. District Judge Juan R. Sánchez that they hid income from the IRS for years from a separate Delaware Avenue club they operated called B-Side Complex.

If the deal they struck with prosecutors is approved, the brothers could shave as much as 16 years from the maximum prison sentence both would have faced for convictions for conspiracy to commit arson and tax fraud, the two charges to which they pleaded guilty Thursday.

But Sánchez warned them during the three-hour proceeding in federal court in Philadelphia that he might still reject the agreement, a move that would allow the Dawaras to withdraw their pleas and take their case to trial.

“I just want to make it abundantly clear that this is a conditional acceptance,” he said, as the brothers dressed in green prison jumpsuits each admitted their guilt in court.

For their part, the Dawaras, who have remained in custody since their 2019 arrests, said little, responding only to the judge’s questions about their upbringing in Syria and the terms of their guilty pleas. As they were shuffled out of court afterward, they blew kisses through face masks to a small group of family members seated in the courtroom gallery.

Their guilty pleas come three years after they set the devastating blaze on one of Philadelphia’s most popular tourist corridors during a busy Presidents Day weekend — a conflagration whose damage is still being felt.

It took fire crews more than nine hours to extinguish the fire, across Chestnut Street from the Museum of the American Revolution. And while no one died, two firefighters were injured, dozens who lived in apartments above the diner were forced to move, and a handful of pets were killed.

A nearby Best Western hotel remained closed for years due to water and smoke damage, while some neighboring restaurants on the block, like the popular bar and restaurant Little Lion, remain closed to this day as they wrestle in court over insurance payments needed to reopen.

The owners of the Capogiro gelato chain blamed losses they sustained from a pizzeria they ran on the block, Capofitto, for their decision to shut down their entire business in 2018.

The building itself, a 166-year-old structure with first-floor cast-iron facade, was razed almost completely.

Many residents said they suspected the Dawaras from the start and described them as longtime problem tenants. Before Revolution Diner, the pair ran another dining spot and hookah lounge in the space — Barra Restaurant & B-Side — which was shut down over persistent noise complaints and their failure to obtain proper licenses.

But in the hours after the fire, Imad Dawara claimed to be just another one of its victims.

“I had my blood there,” he told The Inquirer at the time. “I’m so upset about what happened.”

His brother posted news stories about the blaze on his Facebook page with three sad-face emojis.

In truth, Imad Dawara admitted Thursday, he was at the Delaware Avenue club in the early morning hours of Feb. 18, 2018, while his brother doused the Chestnut Street building’s basement with gas and set it aflame.

Agents with the Bureau of Alcohol, Tobacco, Firearms and Explosives began to suspect the pair after learning of the insurance they had taken out shortly before the fire and on the same day their landlord had served them with an eviction notice for $64,000 in unpaid rent.

The broker who sold them the policy recalled Imad Dawara repeatedly asking during their conversation exactly how he would be paid if there were a fire. And their landlord would later tell agents that in a previous dispute over the money the brothers owed, Imad Dawara once threatened to destroy the whole building.

As agents looked into the brothers, they uncovered other wrongdoing — like the tax fraud at their Delaware Avenue club, which they pulled off by registering its ownership in the name of employees who held no actual equity in the business.

When employees there sued them for unpaid wages, the Dawaras blamed the fire they set on Chestnut Street, claiming it had destroyed all of their business files.

Imad Dawara was also collecting Medicaid benefits during the same period, after lying about his income and marital status and while living in a $580,000 home.

At several points during Thursday’s proceedings, Sánchez, the judge, seemed taken aback by the vast $22 million sum the brothers’ plea agreements required them to pay as part of their sentence.

“That’s a truly staggering amount,” he said. But the Dawaras both assured him that they believed they were capable of paying off the debt.

The first $500,000 was due Thursday under the terms of their deal. But to date, said U.S. Attorney Jeanine Linehan, the Dawaras have submitted only just over $366,000.

They hope to make up the rest, she added, by selling Imad Dawara’s half-million-dollar suburban home.

Staff writer Michael Klein contributed to this article.