Accused Old City arsonists ordered to pay $135,000+ in wage theft case

The building was gutted by fire on Feb. 18. Adjacent buildings were damaged.

This building in Old City, Philadelphia was gutted by fire on Feb. 18, 2018. Adjacent buildings were damaged. (Emma Lee/WHYY)

Two brothers accused of sparking a devastating 2018 arson in Philadelphia’s Old City neighborhood have been ordered by a judge to pay out more than $135,000 to victims of a wage theft scheme they also orchestrated.

Brothers Imad and Bahaa Dawara were arrested last year on charges they intentionally set fire to their Chestnut Street hookah lounge to collect on a $750,000 insurance payout. The ensuing blaze displaced hundreds and destroyed millions of dollars worth of property.

But a class-action suit filed by four former employees in 2018 alleged the duo were up to nefarious activity years before the blaze –– requiring their employees to work for tips alone, then falsifying tax records to create the impression they had paid out legal wages.

After nearly two years, U.S. District Judge Mitchell Goldberg sided with the onetime lounge workers, awarding each between $20,000 and $48,000. The sums amount to lost wages plus damages –– as some of the workers said the Internal Revenue Service later pursued them for taxes on income the Dawaras had never paid out.

“This is a great victory for low-wage working people whose wages were unlawfully stolen from them,” said plaintiffs’ attorney Ryan Hancock. “My clients have incurred enormous unfair and incorrect tax liabilities that they have been struggling to pay for years.”

The case had been pending for several months, awaiting a judge’s ruling. Some of the plaintiffs, like former bartender Amal Ibrahim, said they had been dogged by IRS penalties even after the wage theft suit was filed.

“The IRS is still sending me notices and penalties. I can’t buy a home. I can’t get a loan for nursing school,” she told WHYY last year. “It’s a big weight. I’m just trying to fix it.”

Hancock said he hoped the ruling would help his clients free themselves from tax woes now, as a judge had acknowledged that the brothers “conspired to defraud the federal government.”

Josh Ganz, a lawyer for the Dawaras, declined to comment. The brothers are currently in jail awaiting trial on arson and tax evasion charges.

Follow PlanPhilly

Want a digest of WHYY’s programs, events & stories? Sign up for our weekly newsletter.

Help us get to 100% of our membership goal to support the reporters covering our region, the producers bringing you great local programs and the educators who teach all our children.