Audio recordings highlight role of Reed adviser

HARRISBURG, Pa. (WHTM) – Governor Tom Wolf is seeking outside legal aid to potentially sue financial and legal advisers to Harrisburg’s incinerator deals.

The Pennsylvania Office of General Counsel and Harrisburg recovery coordinator Steve Goldfield are soliciting legal aid to pursue civil lawsuits in the bond deals that financially sank the city.

According to a 2012 forensic audit of the trash incinerator, financial and legal advisers received fees from several municipal bond dealings that were known to be fraudulent and not self-liquidating like the certifications guaranteed. These are the actions Attorney General Kathleen Kane said her office was continuing to investigate when she announced corruption charges against former Mayor Stephen Reed.

ABC 27 News filed a right to know request to obtain audio recordings from several Harrisburg Authority meetings at the center of the investigation. One of the examples named in the grand jury’s presentment against Reed is the transfer of $515,000 into a special projects fund during an Authority meeting in 2003.

During the September 2003 meeting, Authority board member Frederick Clark raised concern over putting money into the fund. The man who responded was an outside financial adviser to Reed, according to a source close to the matter.

“Those funds that at least we’ve approved, that I’ve seen we’ve approved, I just beg to differ, humbly, that I would argue that they are economic development,” the voice in the recording says. “Yes, you are correct. You are absolutely correct that they are being spent on those things you suggest.”

The source said “those things” were artifact purchases made by Reed. The adviser continued to persuade Authority members that the requisition policy for procedures to add money into the special projects fund was properly vetted.

“Not only do we have checks and balances, just recently we’ve expanded those checks and balances to ensure from a legal standpoint, from counsel and to ourselves, we’re doing the right thing,” the voice says.

Another voice further stated the matter should not be discussed further during public comment.

Later in the meeting, board members unanimously approved a $515,000 “administration fee” – stemming from a $77 million transaction involving the Harrisburg School District – be submitted into the special projects fund.

The grand jury noted in the presentment that the transaction was evidence of misuse of funds. Thomas Mealey, former executive director of the Authority, told the grand jury he was unaware why the Authority would have earned a fee for not performing any work on that transaction. According to the presentment, Reed almost simultaneously submitted artifact purchase reimbursements of nearly $500,000.

Sources close to the investigation told ABC 27 News they are also looking into the firms of advisers surrounding not only artifact purchases and the special projects fund, but the incinerator deals.

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