Inside the FBI investigation into Philly Councilman Kenyatta Johnson, his wife, and Kenny Gamble’s nonprofit

City Councilman Kenyatta Johnson has found himself dogged for the last three years by FBI scrutiny of his tenure representing South and Southwest Philadelphia. But while much of that investigation has taken place behind closed doors, details are beginning to emerge.

In interviews with The Inquirer over the last month, sources familiar with the probe described a sweeping examination into everything from the councilman’s involvement in the bargain-rate sales of city-owned land to the work of his wife, Dawn Chavous, as an education consultant, campaign adviser, and charter-school advocate.

More than a dozen people who have either been approached by agents or testified before a grand jury since 2016 said they were questioned about Chavous’ level of involvement at her husband’s office and the couple’s connections to Universal Companies, the South Philadelphia nonprofit founded by music producer Kenny Gamble.

In particular, those sources said, federal interest appears to have coalesced around one project that involves all three — a 2014 plan Universal pitched to redevelop the site of the old Royal Theater, once a crown jewel of South Street that through years of neglect had become a blighted eyesore in the heart of Johnson’s district.

The councilman pushed a rezoning bill for the site that year that helped advance Universal’s proposal to demolish the building and put up a retail and residential complex in its space. Johnson’s wife was working as a consultant for Universal at the time.

The couple have denied any wrongdoing. The investigation, led by many of the same agents and prosecutors who secured corruption convictions against former U.S. Rep. Chaka Fattah, continues.

Johnson and Chavous have both hired defense attorneys — in the councilman’s case, one paid for by the city. And in April, two years after the FBI raided Universal’s offices, the investigation secured its first guilty plea from an unlikely source: the former school board president of Milwaukee, who admitted to accepting bribes from Universal executives.

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Most of the sources who spoke to The Inquirer did so on the condition of anonymity, citing the confidentiality of the grand jury process. And Johnson, a Democrat and former state representative who left Harrisburg to run for Council in 2011, has remained largely silent, saying only that he is focused on his district and his reelection campaign for a third term in office this year.

“As we have previously stated, there is no basis for any investigation,” his lawyer Patrick J. Egan, said in a statement. “Any allegation of improper behavior on his part is incorrect or unsubstantiated.”

Here is what is known so far about some of the areas that have drawn investigators’ attention:

Before the passage of Johnson’s zoning ordinance for the Royal Theater site, Universal had struggled to redevelop the site for 14 years.

The structure was on the verge of collapse when the nonprofit purchased the 1,200-seat theater at 15th and South Streets for $250,000 in 2000. And Gamble’s organization, which specializes in affordable housing and charter school operation, vowed to restore it to its glory days as a prime entertainment destination for the black community in Philadelphia.

The Royal, advertised upon its opening in 1920 as “America’s Finest Colored Photoplay House,” had once drawn patrons from across the region with first-run films by African American directors and live performances from the likes of Billie Holiday, Bessie Smith, and Fats Waller.

» READ MORE: Will the Royal be royal again?

But despite receiving nearly half a million dollars from city, state, and federal coffers between 2000 and 2011 for its rehab efforts, Universal had made little progress.

By 2014, Universal’s then-CFO, Shaheid Dawan, told the city’s Historical Commission that the nonprofit “could not feasibly redevelop [the] site without [further] public subsidies.”

Then suddenly, later that year, Universal changed course. Under advice from developer Carl Dranoff, it began seeking approvals to demolish all but the building’s facade and replace the structure with a mixed-use complex featuring 45 apartments above 7,600 square feet of ground-floor retail space.

Johnson eagerly supported the plan and in October 2014 introduced a bill that would change the density allowable under the site’s zoning restrictions. The measure passed six weeks later, allowing Universal to move forward with the most promising proposal it had put forth to date.

Several people involved with the project who have since been questioned by investigators expressed surprise upon learning that agents were now scrutinizing Johnson’s assistance.

As a councilman, they said, he had supported redevelopment of the Royal, a major property in his district, for years. And Universal’s proposal garnered little opposition from community groups, many of which were happy to see anything open there after decades of decrepitude.

Despite the support for Universal’s plan, it never got off the ground. More than a year after Johnson’s bill passed, Universal sold the property to developer Robert Roskamp for $3.7 million — nearly 15 times what it paid for the site in 2000.

Universal said at the time that it hoped to shift focus to other aspects of its business, including its charter schools in Philadelphia and Wisconsin.

Those aspects have drawn FBI scrutiny, too.

In April, Michael Bonds, the former president of the Milwaukee school board, traveled 850 miles to Philadelphia to plead guilty to federal charges alleging he accepted nearly $6,000 in bribes from two Universal executives between 2014 and 2016.

He told a federal judge that the company’s former CEO Rahim Islam and Dawan, the ex-CFO, were seeking his support in a deal that would defer $1 million in rent payments the nonprofit owed his school district for two charter campuses it operated there.

Bonds’ admissions came nearly two years after FBI agents raided Universal’s offices and Islam’s house in North Philadelphia in 2017. And while neither Islam nor Dawan has been charged with a crime, Universal’s board ousted both men from their positions as the investigation progressed.

Universal’s lawyers, from the Center City law firm Duane Morris, said they continue to cooperate with the probe and have provided documents and grand jury testimony from employees as requested.

Bonds’ attorney, Franklyn Gimbel, told the Milwaukee Journal-Sentinel this spring that his client is also cooperating. Lawyers for Islam and Dawan declined to address their client’s responses to the investigation.

Sources with knowledge of the FBI’s interests said agents are also probing Universal’s operations in Philadelphia, where, in addition to redevelopment projects like the Royal Theater, it operates seven charter schools.

Many who have been questioned said investigators have keyed in on the company’s relationship with one education consultant in particular: Johnson’s wife, Dawn Chavous.

Some who testified before the grand jury said they were asked whether they were aware that Chavous was working as a consultant for Universal in 2014, when her husband submitted the zoning ordinance to advance the nonprofit’s Royal Theater proposal.

Universal’s lawyers declined to discuss Chavous’ role or specify the dates the company employed her. Chavous’ attorney, Barry Gross, did not return calls for comment.

Several of her other former clients have reported receiving grand jury subpoenas or visits from FBI agents over the last three years.

Since 2011, Chavous, 39, has made her living as a consultant to politicians as well as businesses and nonprofits, primarily in the education field. While running her own firm, she also serves as board chairman for Sky Community Partners, a Philadelphia-based nonprofit that provides scholarship money to independent schools under the state’s Opportunity Scholarship Tax Credit program.

Before that, Chavous worked as chief of staff to State Sen. Anthony Hardy Williams — a job she left in 2010 to run Williams’ campaigns for Senate and his failed bids for governor in 2011 and mayor of Philadelphia in 2015.

Williams, who was asked by prosecutors about Chavous’ work for him during testimony before the grand jury last year, said he had nothing critical to tell them.

“Dawn and Kenyatta are like my baby brother and sister,” he said. “But even with that lack of objectivity, there’s nothing [prosecutors] asked me that made me feel uncomfortable.”

Another past client, Jake Gaffigan, executive director of the Philadelphia-based parks-and-playgrounds nonprofit Big Sandbox, also praised Chavous’ work as a fund-raiser and lobbyist for him between 2016 and 2018. Still, he told The Inquirer last year that he ended his organization’s relationship with her after receiving a grand jury subpoena.

Students First — a pro-voucher, pro-charter-school nonprofit that Chavous ran between 2010 and 2013 — has also been drawn into the probe, sources close to the investigation said.

The organization’s financial backers — the billionaire partners at the Bala Cynwyd financial trading company, Susquehanna International Group — are among the most deep-pocketed school-choice advocates in the state and pumped millions into Williams’ campaigns.

During the period in which Chavous was at the helm of their nonprofit, she took home a $125,000 annual salary for 20 hours of work a week, according to Students First’s tax filings. Meanwhile, its affiliated PAC donated more than $22,000 to her husband’s campaign and $130,000 to Williams’.

A lawyer for Students First declined to comment when asked about the organization’s role in the ongoing investigation, saying only that his clients have been assured they are not targets of the probe.

Meanwhile, references to Chavous’ work have also surfaced in other investigations.

The Inquirer reported in January that wiretap recordings in the federal bribery case against City Councilman Bobby Henon and labor leader John J. Dougherty included conversations in which Henon said Johnson might need a “little, like hug” before he agreed to support Mayor Jim Kenney’s signature soda-tax proposal in 2016.

Dougherty, according to court filings, responded: “Let [Johnson] know that once you get this stuff, there’s gonna be a ton of major league jobs that his wife [is] more than qualified for.”

» READ MORE: Which city councilman needed a soda tax 'hug?' Kenyatta Johnson, sources say

Dougherty and Henon have denied any wrongdoing in their involvement with the soda tax. And the indictment in their case does not mention Johnson or Chavous by name or make any mention of whether the councilman actually sought a benefit like the one Henon and Dougherty allegedly discussed.

Johnson has denied seeking anything for his vote, while Chavous protested any suggestion of corrupt business dealings on her part in a letter to the editor published just days after The Inquirer’s January report.

“My husband … is a tireless and dedicated public servant, and I have never personally benefited from his position as an elected official,” she wrote. “I’ve built a successful … business through hard work. I am not part of any backroom deals.”

Staff writers William Bender, Andrew Seidman, Claudia Vargas, and Mark Fazlollah contributed to this article.

Correction: A previous version of this story incorrectly identified Big Sandbox executive director Jake Gaffigan.