Parties at center of Attorney General investigation of Harrisburg incinerator deeply involved in LCSWMA deal

by Bill Keisling

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?

This was driven home this week when Pennsylvania Attorney General Kathleen Kane acknowledged that her office was investigating the finances of the Harrisburg incinerator, nearly 18 months after being asked to do so.

It was indeed alarming to some last year when Harrisburg’s state-appointed receiver, David Unkovic, called the cops.

Days before he resigned as Harrisburg’s 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.

Though the strained circumstances surrounding Harrisburg’s nearly 30 years of accumulated 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 his press conference, Unkovic used the C word again, and explained 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 retrofit the incinerator, Unkovic said, the city, the county and the bond insurer, “Basically … were rolling dice and it came up snake eyes.”

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 Gov. Tom Cortbett 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.

What, we should ask, has changed?

On June 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,” 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.

Republican Dauphin County DA Ed Marsico had been sitting 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.

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 Friday, 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. The public in Lancaster and Dauphin Counties should demand an investigation before more good money is thrown after bad.

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