Longtime Councilwoman Karen Dolan is resigning from government and may be leaving the city altogether.

Following the release of the Northampton County district attorney's grand jury report on her conduct regarding Illick's Mill nonprofit Gertrude B. Fox Environmental Group, Dolan said in an email to the Press Friday she has been unable to find employment in the Lehigh Valley and is now searching for work outside the area.

Dolan confirmed in the email that she told the mayor and city clerk to expect her formal resignation in the near future.

The investigating grand jury into Fox group's debts to the city and potential ethics violations released its report last week with an overall condemnation and call for Dolan's resignation.

From late April through September the grand jury examined 46 emails, letters, financial records and other documents, and heard testimony from 20 witnesses, including former Mayor John Callahan and other former city employees and those involved with the Illick's Mill organization.

Central to the investigation was that Dolan, the nonprofit's CEO as well as council member and Parks and Recreation committee chair, allegedly used those connections to have Fox debts to the city forgiven – to the tune of $127,959. There were also allegations Dolan ignored ordinances to benefit Fox by allowing Illick's Mill to host receptions serving alcohol stronger that 7 percent.

When the public became aware of some of these allegations through the media, Dolan resigned from her position at Fox and agreed to change her committee assignment. But District Attorney John Morganelli, as he had with similar allegations against the National Museum of Industrial History on Third Street, had already applied for the investigation into Dolan's activities.

Dolan said, in an interview with the Press in August and at other times, that she had been promised by city officials that the Mill was exempt from rent and utilities payments because of its nonprofit, educational mission. She blamed employees for nonpayment of taxes for three years, resulting in a temporary revocation of Fox's IRS nonprofit status. She also said she had only shared suggestions on the alcohol issue made by others, and that she's personally investigated state ethics laws and was in no way in violation.

Dolan said her advocacy of the Mill was merely business as usual and that all council members advocate for their own interests in some manner.

Testimony refutes these assertions, notably in regard to the alcohol and city debt issues, which Mill employees and board members said they were either explicitly told by Dolan were above board or not informed at all.

For instance, Fox board member Levi Arevalo testified Dolan was incensed when she learned of a proposal to begin charging the Mill rent, and she sent emails to Mayor Bob Donchez threatening to close the building – all without consulting the board. Arevalo also said he was unaware of the large debt to the city or the ordinance against 7 percent or greater alcoholic beverages.

Additionally, accountants James P. Weiss and Linda Kunsman said nonprofit 990 forms were inaccurate for several years, not reflecting the $127,959 forgiven by the city, and that Dolan's claim it was their responsibility to file the forms for tax purposes is also wrong.

Robert P. Caruso, executive director of the Pa. State Ethics Commission, said an elected official cannot attempt any action that will benefit themselves, a family member or business with which they may be associated. This includes any attempt to facilitate a financial benefit.

According to the Ethics Act, said Caruso, compensation from a nonprofit organization is not necessary for the relationship to be considered a conflict of interest. Thus, paid or not – and Dolan's position was paid beginning in October 2013 – her advocacy alone is an ethics violation.

The investigation concluded that Dolan used her positions to the benefit of her own organization and violated the public trust as an elected city official. The report recommends the repayment of the outstanding debt in the most convenient increments given Fox's financial anemic standing. It also suggests city council and city department heads provide complete disclosures of their affiliation with any nonprofits, and that new policies and procedures are developed to forestall such ethics violations in the future.

On the advice of legal counsel, Dolan utilized her Fifth Amendment right to remain silent during her own testimony.