Watchdog alleges Pennsylvania teachers’ union laundered money to Gov. Josh Shapiro campaign

A watchdog group that battles union corruption is alleging that a Pennsylvania teachers’ union laundered money to illegally donate $1.5 million to the Keystone state’s Democrat Gov. Josh Shapiro. 

It provides added context to Shapiro’s decision in the summer of 2023 to veto a $100 million school choice program that he vowed to support when campaigning, said the watchdog group. 

The scheme centered around political donations the union made from its own general funds to the Democratic Governors Association (DGA), a registered political organization that supports Democrats running for governor.

The DGA then transferred the money to the Shapiro campaign, said the union-busting watchdog, the Freedom Foundation.

However, unions are forbidden under the law from using general funds for campaign donations that are made either directly or indirectly, said a researcher at the Freedom Foundation.   

“You don’t need to prove intent [to prove violations of the law]. You need to prove where the money actually went,” Maxford Nelsen, director of research and government affairs at the Freedom Foundation told The Lion. “And basically, the starting point under Pennsylvania law – and there’s two different state laws to this effect – is that a corporation’s or labor union’s general treasury revenue is not to be used to support or oppose candidates for office.” 

The Freedom Foundation said it filed three complaints against the Pennsylvania State Education Association (PSEA), the state’s largest teachers’ union. 

One complaint was filed with state and local authorities alleging violations of the election code and certain criminal statutes. Another went to the Pennsylvania Labor Relations Board alleging violations of rules governing public employee unions. 

The watchdog filed a third complaint with the Internal Revenue Service, the U.S. Attorney for the Middle District of Pennsylvania, and the Federal Bureau of Investigation’s Philadelphia field office, alleging the filing of a falsified tax return. 

The PSEA moved money from its general fund into a political slush fund operated by the union known as the Fund for Student Success (FFS), according to the complaints.  

The FFS sent nearly $1.5 million to the DGA, which then sent a bulk donation of over $5 million to the Shapiro campaign to help erase the forensic footprint of the donation, Nelsen told The Lion.  

Some of the allegations in the Shapiro case bear a resemblance to another recent case where Pennsylvania’s Attorney General Michelle Henry, a Democrat, filed charges against two men for unlawfully funding a public political campaign, Nelson also said. 

In that case, Henry is charging two men with a subsidiary union of the National Union of Hospital and Healthcare Employees for funneling money indirectly to candidates using a false billing scheme.  

“These two men are accused of intentionally defrauding a workers’ union with an elaborate scheme to steal and divert money for political purposes,” the attorney general said in a statement. “The law is very clear about how unions can support candidates and their campaigns. My office will seek to hold those accountable who violate the rules.”  

The PSEA admitted to the contributions in the Freedom Foundation complaint in a carefully crafted statement, but it defended itself by saying that the money did not go directly to the Shapiro campaign. 

“PSEA, through its Fund for Student Success, made a lawful contribution to DGA, into an account that was permitted to accept union contributions. None of those funds were used to make direct contributions to the Shapiro campaign,” said Chris Lilienthal, PSEA spokesperson, in an email to local WFMZ 69 News. 

PSEA, however, did not address the indirect nature of the campaign donation, a type of donation by unions, which Nelsen said, is also a violation of the law.  

Nelsen said the laws are on the books “to prevent either actual or the appearance of quid pro quo kinds of corruption.”  

Indeed, Shapiro, a former Pennsylvania attorney general, has been mired in a battle in Pennsylvania over school choice.   

A key component of Shapiro’s gubernatorial campaign was to support a lifeline scholarship that parents with kids in Pennsylvania’s worst-performing schools could use to go to better performing schools.  

The PSEA is opposed to the program.   

In a last minute conversion last summer, Shapiro suddenly announced he would veto a proposal that would have approved $100 million for the scholarships after the state’s teachers’ unions applied pressure.  

It has all the looks of a quid pro quo.  

“If nothing else, [the donations provide] important added context for the governor’s change of heart and the debate over lifeline scholarships in Harrisburg,” noted the Freedom Foundation.  

Nelsen added that even if theoretically the PSEA didn’t break the law, at the very least they are deliberating lying to their members.  

“I think it’s worth pointing out that the PSEA is lying to its members and assuring them repeatedly that their dues money is not going to be used for politics, when in reality it absolutely is. And the PSEA knows it,” said Nelsen.