The state receiver’s job was to implement a financial recovery plan for the bankrupt city. It was the state’s Financial Recovery Plan, filed in July 2011, that valued the city’s water system at a mere $50 million, give or take.
“This city had been mismanaged for twenty years!” the receiver fumed on the witness stand in federal court on March 21, 2012, pounding his fist.
The receiver clearly was becoming exhausted, and unhinged. He said fraud, inside deals and corruption were all around him in the city.
After the hearing, as he stomped from the courthouse, the rattled receiver went on to intone, “It’s all a house of cards, and now the house is coming down!”
But it’s been that way for years.
All around the receiver, literally or figuratively, stand supposed aggrieved parties who claim that they have been injured by the irresponsible financial acts of the city: Citizens. County commissioners. The city council. Bond sellers. Bond holders. Bond insurers.
What the unhinged receiver knows is this: These supposed aggrieved parties, especially the bond dealers, are not the victims of the crime.
They are among the perpetrators.
The receiver knows something else.
The city’s water system — the reservoir, its dam, and its forest — may soon be lost to the same breed of complicit private speculators who were all too happy to look away from hard reality and honest numbers to help the city of Harrisburg pile up the debt that bankrupted it.
All around the receiver are bizarre artifacts from a broken city’s past:
An ill-fated city incinerator that never worked well.
There’s also a warehouse full of cowboy and Wild West artifacts, bought on bond deal money.
The cowboy artifacts are piled high, gathered and stacked as if by Charles Foster Kane, in a warehouse next to the incinerator. A warehouse full of cowboy artifacts is odd for a city in central Pennsylvania, I hear people say. And yes, it is odd.
There are as well mountains of legal papers and inscrutable broken bond promissory notes that themselves will become artifacts to all this.
Perhaps the most interesting artifact in the receiver’s possession is a report.
It is a largely unread and unspoken-about 130-page document called a Forensic Investigation Report, commissioned in 2010 by the Harrisburg Authority, and released in January 2012.
The Harrisburg Authority, which commissioned the forensic audit report, is the public entity supposedly responsible for the ill-fated incinerator, and its unpayable mountain of debt.
The Authority’s Forensic Investigation Report is the city of Harrisburg’s equivalent to the Pentagon Papers. The latter, of course, was commissioned by our military when it lost track of how it became involved in the Vietnam War.
In this case, the Harrisburg Authority wanted to know how in God’s name it had run up a $300 million dollar debt on its incinerator. The report however doesn’t even get into the mysteries of the warehouse stuffed with cowboy and Wild West artifacts.
It turns out when you read between the lines of the report, the debt that broke the city’s back wasn’t really all that much about the incinerator.
The incinerator was just the caboose at the end of the train wreck.
The debt was instead all about how the city was run, for a quarter of a century, not on tax revenue, but on cash flow from dishonest bond deals.
It turns out the city was running for decades, not on hard currency, but on plastic.
It was a city run on credit cards… On ‘Liar’s Loans’.
And now the cards have been cancelled. And the creditors are circling to clean out the cabinets. (To be continued)
Outstanding series by your writer. No one else has had the courage to tell this story. The former mayor’s mismanagement of the city is legendary and yet his legacy lives on as the “powers that be” push out a very competent and honest receiver.