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True stories from the case files of
A town gone bad


David Unkovic

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David Unkovic calls the cops


'What could be more important for an Attorney General of the state to do than to investigate how the financial condition of the state capital got ruined? Right?'

Why did it take a year and a half for Pennsylvania
law enforcement to call back?

watch the complete video coverage >

 

In a town gone bad, things have a nasty habit of disappearing.

Jeff Haste

Dauphin County PA Commisioner Jeff Haste explains why he signed a document stating Harrisburg incinerator debt was 'self-liquidating' when it was not, and why the commissioners insisted on a 'guarantee fee' for Dauphin County (watch Haste's sworn testimony here).

Must see TV

David Unkovic testifies before the Pennsylvania state senate

Jeff Haste testifies before the Pennsylvania state senate

Downloads:

Download Unkovic's written statement here

Transcripts of hearings PA State Senate October 4, 2012

Transcripts of hearings PA State Senate November 13, 2012

Harrisburg incinerator DEP environmental documents complete (45MG)

Harrisburg incinerator hazardous waste DEP/EPA docs (13 MG)

Letter from Harrisburg city attorney concerning PA DER hazardous waste designation October 19, 1990

EPA: Shut down Harrisburg incinerator letter to PA DEP November 20, 2000

Letter from Harrisburg Authority to Dauphin County Commissioners September 25, 2012

Take, for example, the $1.5 billion that somehow went missing from Harrisburg PA after 30 years of fast and loose insider bond deals.

"A billion here, a billion there, and pretty soon you're talking about real money," Sen. Everett Dirksen once observed.

If a billion and a half dollars disappeared from your house, you would think someone might, well, call the cops.

Not in Pennsylvania.

At least not until outsider Dave Unkovic came along.

Pennsylvanians for whatever reason have a lot of problems calling the cops.

Some of our biggest criminal cases, past and present, involve the startling question: Why didn't they call the cops?

Of course we know the unspoken answer to that: In a town gone bad, you can't trust the cops.

This was driven home last week when Pennsylvania Attorney General Kathleen Kane acknowledged that her office was finally investigating the finances of the Harrisburg incinerator -- nearly 18 months after being asked to do so by Harrisburg Receiver David Unkovic.

It was indeed alarming to some last year when Receiver Unkovic called the cops.

Days before he resigned as Harrisburg's state-appointed receiver in late March 2012, Unkovic wrote the Office of Pennsylvania Attorney General, and the U.S. attorney, requesting a criminal investigation of the Harrisburg incinerator's financing.

There wasn't exactly a rush to investigate.

Instead, Dave Unkovic, who would turn out to be one of the most decent and honest officials in memory, would find it necessary to resign.

'Hard to explain'

If you're confused by the current state of Harrisburg's tangled $1.5 + billion bond debt, Unkovic, a bond attorney, wants you to know you're not alone: he was confused too. "Things were done in ways that are just hard to explain," he says.

"Now, I show up, become a Receiver, and in talking to all the people in the city, they really have not been treated well over the years by their officials and by the public finance industry," Unkovic remembers.

"I remember before I became a Receiver, around the time I was nominated, I went over to the Authority, the Harrisburg Authority, and asked them to put all the bond documents on the table for me. And I'm an old bond lawyer, so I can go through 10 feet of bond documents in an afternoon, you know, looking for specific stuff, and I did look at that ordinance that was enacted in 2007 for the city guaranty of the C and D notes, and I was reading the project description and it went on and on and on. I said, why is this project description so long? And then I get to the end and they define it all as one project.

"Defining a project as going from 1993 to 2007, it's just illogical. There were multiple contractors, multiple boards, multiple administrations, (and) professionals. I mean, time had gone on; things had changed. ... And saying all that was one project ... I mean, I was just sort of dumbfounded."

(Watch Unkovic below on this exclusive video explaining why there should be a criminal investigation of Harrisburg's finances. Watch testimony of all 17 witesses on video here.)

 

The C-word

Though the strained circumstances surrounding Harrisburg's nearly 30 years of accumulated bond debt are complicated, Unkovic used a single word last year to describe what was, and apparently still is, going on: corruption.

Unkovic used the word "corruption" on the witness stand in federal court in March 2012.

Several weeks later, in his letters to the state and federal law enforcement agencies, and at a press conference, Unkovic used the C-word again, this time explaining what he meant.

"I meant corrupt in the sense of a body being corrupted. Deteriorated," the receiver explained.

At his March 28, 2012 press conference, Receiver Unkovic described the failed Harrisburg financing as a "joint venture" involving, as he saw it, several parties, including former Harrisburg Mayor Steve Reed, Dauphin County (particularly, he said, GOP Commissioner Jeff Haste), and bond insurer AGM.

Unkovic said these parties cooperated in a "risky joint venture." For example, by hiring untested and unbonded contractor Barlow Projects, Inc., to fix the incinerator, Unkovic said, the city, the county and the bond insurer, "Basically ... were rolling dice and it came up snake eyes."

'I meant corrupt in the sense of a body being corrupted. Deteriorated.'

Some of these parties in the "joint venture," he proffered, not only rolled the dice, they'd apparently also cooked the books by filing false claims about the project's prospects to liquidate the debt. And in the midst of all this high-finance confusion other municipalities had been overcharged for utility services.

In the days leading up to his resignation, Unkovic said two of these parties -- Dauphin County and AGM -- employed Harrisburg lobbyist Stan Rapp of Greenlee Associates to undercut his attempts for a fair outcome for taxpayers.

Unkovic pointed out that Rapp, as lobbyist for both Dauphin County and the bond insurer, had numerous meetings with the governor and the governor's representatives in the months leading up to his appointment as receiver.

These same well-heeled, and well-connected parties were pushing to undercut Receiver Unkovic, he said, to have themselves unfairly bailed out, at the expense of taxpayers.

"I'm very concerned about the environment with which I'm trying to get this recovery done," Unkovic said, days before he resigned, essentially in protest.

Jump ahead to today.

Unkovic's replacement, William Lynch, is about to announce the Lancaster County Solid Waste Management Agency's (LCSWMA) purchase of the Harrisburg incinerator with a fresh bond issue -- this time backed by Lancaster ratepayers.

 

Different day, same refuse incinerator

What, we should ask, has changed?

On July 22, 2011, LCSWMA head Jim Warner told his board that the original $45 million price tag of the incinerator had swollen to $124 million at the behest of none other than the Dauphin County commissioners, acting on behalf of bond insurer AGM.

"(T)hat is how the $124 million offer was determined," board minutes report Warner told the LCSWMA board. "The Harrisburg Authority is not pleased that the County negotiated a sale price for their asset. The County did this to attempt to enhance the value and to try to develop a plan with the debt guarantor (AGM) in Act 47."

In other words, the same parties Receiver Unkovic asked to be criminally investigated ended up brokering the current incinerator deal involving LCSWMA, and the inflated sale price.

There are several obvious questions, and points that can be made.

Why did it take nearly a year and a half for the attorney general's office to take up Unkovic's call to investigate?

By law, the state AG's office could only get involved if it received a referral from the Dauphin County District Attorney's office, which by statute had first bite of the apple.

Dauphin County PA DA Ed Marsico

Dauphin County PA District Attorney Ed Marsico sat on the case for over a year. Why was that?

Republican Dauphin County DA Ed Marsico sat on the case for over a year.  Why was that?

This week DA Marsico said he'd finally made the referral to the AG's office a few weeks back because he had "political or professional" relationships with various parties involved in the incinerator deal.  Read: His fellow GOP Dauphin County Commissioners.

So it looks like the parties involved in this year's LCSWMA incinerator deal are now under criminal investigation for past incinerator deals.

There's plenty of reason to suspect, as former Receiver Unkovic charged last year, that the entire ACT 47 Receiver process has been undermined by parties now under criminal investigation, in an attempt to cover-up past wrongdoing, and bail themselves out, on the public dime.

Had Harrisburg proceeded to federal bankruptcy court, the roles of the county commissioners and the bond insurer could have been investigated in the judicial discovery process, critics of ACT 47 have long said.

In a statement issued on August 16, Harrisburg controller and mayoral candidate Dan Miller said, "I have long called for such an investigation and thought it should be conducted and concluded before the asset is transferred from control of the Harrisburg Authority. That is clearly not going to happen."

But it should.

If nothing else, all this goes to show what former Harrisburg Receiver Unkovic learned for himself last year.

Why not call the cops in Pennsylvania?

In political cases like this, politics and the old boy network make it just about impossible to do.

 

 

-- Bill Keisling
posted August 22, 2013

 

 

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