by Bill Keisling
In a court hearing held on May 22, 2012, the former receiver of Harrisburg suggested that Gov. Tom Corbett and his top staffers are the main obstacles in preventing a criminal investigation of Harrisburg’s growing debt scandal.
The former receiver went on to suggest that the governor is in cahoots with bad actors in the debt crisis.
Gov. Corbett, the former receiver suggested, is not only protecting the bad actors in the debt crisis from investigation. Corbett, the former receiver testified, is favoring the same bad actors for an early taxpayer bailout despite their involvement in apparent misdeeds.
As if all this wasn’t bad enough, former Harrisburg Receiver David Unkovic went on to suggest that Corbett and governor’s office staffers forced him out of his job because he called for a criminal investigation of Harrisburg’s $1 billion-plus mountain of debt.
Unkovic was a seasoned bond industry counsel working for the state Department of Community and Economic Development (DCED) when he was appointed by Gov. Tom Corbett in late 2011 to oversee a recovery plan for Harrisburg.
By all accounts, Unkovic quickly nettled and alarmed top state Republicans by attempting to get to the bottom of the debt crisis, and suggesting fair treatment for Harrisburg’s victimized taxpayers, as well as criminal investigations of the perpetrators.
The turning point for Unkovic’s receivership came with the January 2012 release of a $1.2 million forensic audit of the Harrisburg incinerator. The audit was commissioned by the Harrisburg Authority, the nominal owner of the incinerator.
The audit detailed, among other subjects, how the bond underwriters and insurers who financed a botched incinerator retrofit finance deal were aware that the project made no financial sense, despite what the paperwork said, and were only involved because the bond float had been guaranteed by Dauphin County commissioners.
The forensic audit reports, for example, that, “In a December 18, 2003 e-mail message Mr. (James) Losty of RBC (Dain Rauscher) (the bond underwriter for the deal) communicated with an individual from TRowePrice, stating, “My only word of advice is if you are trying to evaluate this on a revenue generating basis, you are the only one including the bond insurer. Bottom line is that there is an AA County with a full faith and credit general obligation pledge.”
In return for guaranteeing this questionable 2003 bond deal, the report notes, Dauphin County Commissioner Jeff Haste insisted the county receive an unusual $1.9 million fee skimmed off the top from the resulting deal.
These same bond interests and their insurer had earlier joined Dauphin County commissioners in what now appears to be a smokescreen lawsuit in county court designed to place themselves at the front of the line to be paid by the sale and/or lease of Harrisburg’s assets.
In effect, the forensic audit suggests, the same players who had knowingly bankrupted the city were now, with Gov. Corbett’s consent, maneuvering not only for legal protection, but an early payout that would leave other creditors, and Harrisburg taxpayers, stranded, without assets to generate future income or to pay off more than a billion dollars of additional debt.
A bond counsel with some 30 years experience and former general counsel of the DCED, Receiver Unkovic appeared genuinely appalled at what he was learning about Harrisburg’s debt crisis.
“This city had been mismanaged for twenty years!” Unkovic intoned on the witness stand in federal court on March 21, 2012, pounding his fist. He said fraud, inside deals and corruption were all around him in the city.
After the hearing, as he stomped from the courthouse, Unkovic went on to warn, “It’s all a house of cards, and now the house is coming down!”
A week later, on March 28, Unkovic called for state and federal criminal investigations of Harrisburg’s debt. About the same time, Dauphin County Judge Todd Hoover amazingly approved a request by his county commissioners and the bonding interests to appoint a separate receiver for the incinerator, undercutting Unkovic.
The next day Receiver Unkovic hastily resigned.
“I have done my best to use my powers as receiver to bring fiscal stability to the city of Harrisburg,” he told the court in a handwritten note dated March 30. “However, I find myself in an untenable position in the political and ethical crosswinds and am no longer in a position to effectuate a solution.”
What exactly had happened leading to Unkovic’s hasty resignation? taxpayers and observers wondered.
At a bizarre Commonwealth Court hearing on May 22, intended to confirm Unkovic’s replacement, former Receiver Unkovic took the stand and suggested that Gov. Corbett had forced him out because of the Unkovic’s calls for a criminal investigation of the debt mess.
The same creditors who had helped put Harrisburg in its mess now had been put in charge of the incinerator, thanks to Judge Hoover’s ruling, Unkovic complained in court
“I was extremely concerned,” Unkovic testified. “It was not just the naming of another receiver (for the incinerator). The county was an active party. I felt very strongly about a whole host of things in connection with the incinerator financings.
He went on to say that he felt he had been “put in a box” not only by creditors who should be investigated, but by Gov. Tom Corbett and his staff, who were displeased that Unkovic had spoken “out of school” by calling for a federal criminal investigation of the parties involved
Rather than getting to the bottom of the fiasco, and letting the chips fall where they may, as a governor should, Tom Corbett has once again, perhaps predictably, and certainly unwisely, positioned himself as an agent of cover-up and deceit, owned by special interests, like the bonding industry
The day after Unkovic called for criminal investigations, Unkovic recounted that Gov. Corbett’s general counsel, Steve Aichele, told him he would soon be fired
“I offered to resign, and Mr. Aichele proposed that I might no longer be able to remain on as receiver, but might stay on at DCED and continue to work on Harrisburg matters behind the scenes,” Unkovic testified. 的 came away from that meeting believing I would be removed as receiver and therefore decided to resign and leave state government at the same time.
Gov. Corbett has since appointed Aichele as his new chief of staff.
Corbett’s former chief of staff, Bill Ward, was sacked this month amid growing perceptions of incompetence and corruption in the governor’s office, and speculation of other cover-ups and obstructions of justice involving former Attorney General Corbett, such as the long-running Joe Paterno/Penn State/Jerry Sandusky scandal and its fallout.