The attorney for the Pittsburgh Police Bureau's finance manager said Thursday his client was instructed by former chief Nate Harper to open a credit union account now under federal scrutiny and followed his orders in diverting tens of thousands of dollars to it from funds meant for the City of Pittsburgh.
William H. Difenderfer represents police personnel and finance manager Sandra J. Ganster, who, he said, reported her concerns about the account to city Public Safety Director Michael Huss on Feb. 9. He said his client has since spoken twice to federal authorities.
"The chief would tell her, basically, keep roughly a $3,000 balance in this account," Mr. Difenderfer said. "Like she said, I guess the best way to describe it was, 'It had an odor, but the chief directed me to do it, and I did what he told me to do.' She didn't feel comfortable with it ... but obviously complied."
He estimated that between $28,000 and $37,000 was diverted to the credit union account since about 2008 or 2009 when the account was opened.
Mr. Harper could not be reached for comment. His wife, Cynthia Harper, contacted Thursday evening at their Stanton Heights home, said Mr. Harper was not in and she would not speak for him. His attorney Robert G. Del Greco Jr., said he was not authorized to speak on his client's behalf.
Mr. Huss declined to answer any questions pertaining to an ongoing FBI investigation that top police officials have said targets Ms. Ganster's office.
Asked whether Ms. Ganster came to him Feb. 9 with concerns about the diversion of funds into the credit union account, Mr. Huss said, "I can't confirm it or deny it."
Two days after Ms. Ganster reportedly spoke to Mr. Huss, federal agents "were knocking on her door," Mr.Difenderfer said.
That week the FBI took boxes of documents from two offices at police headquarters on the North Side -- personnel and finance and special events -- and the nonprofit Greater Pittsburgh Police Federal Credit Union in the West End.
The credit union, which provides financial services to active and retired police officers and their families -- but is not affiliated with the city and is not one of 15 authorized city depositories -- housed two accounts connected to the police chief's office.
One account is listed as belonging to "Special Events c/o Sandy Ganster." A separate account -- the one that was the focus of Ms. Ganster's meetings with authorities -- is marked "I.P.F." with the same address as police headquarters.
Mr. Difenderfer said his client told him that Mr. Harper authorized the opening of the I.P.F. account without providing a reason. The chief drafted a letter for Ms. Ganster to send to the credit union and "listed eight people to be on the debit cards" associated with the account, Mr. Difenderfer said.
"That's in a letter to the credit union from the chief," according to Mr. Difenderfer.
Ms. Ganster and at least one other person would steer checks from private employers paying for off-duty police services to the I.P.F. account, he said. Millions of dollars each year flow into the police bureau's special events office to pay for police services. They are supposed to be deposited into authorized city accounts.
Ms. Ganster would "go over to the girl's desk ... and the girl would have 25 checks that came in today," said Mr. Difenderfer.
Ms. Ganster, he said, would then identify enough checks whose total matched the amount Mr. Harper said was needed in the account.
"This was something that wasn't done daily. This was something that was very sporadic," Mr. Difenderfer said.
In 2009 a University of Pittsburgh check for $5,675.52 that was made out to the police bureau was deposited in the I.P.F. account. The check was meant to pay officers for off-duty security work and the city for an administrative fee.
It is not clear who made the deposit.
"On this whole account she was instructed by the chief. She didn't come up with it, 'Hey, let's take the money.' Every question by the feds was answered, 'The chief told me,' " Mr. Difenderfer said.
Money from the account went to pay for police-related items, Mr. Difenderfer said, such as riot shields for officers during the G-20 summit in Pittsburgh in September 2009 as well as standing ashtrays and outdoor furniture for the police bureau.
"I analogize it to a petty cash drawer," Mr. Difenderfer said. "Going out to dinner, you could argue that's extravagant. But I believe it would pass the smell test for a private business. The problem is, it's a tax-paid body."
Mr. Difenderfer said that Ms. Ganster, 57, of Overbrook, "always had a bad feeling about these accounts, but she worked under the chief." Her concern was that the account was unauthorized, he said.
Mr. Difenderfer also said there were pages of restaurant expenses associated with at least some of the debit cards connected to the account. Those cards were issued to Mr. Harper, Mayor Luke Ravenstahl's three bodyguards (one of whom is retired), Ms. Ganster, her second-in-command, Tamara L. Davis, Deputy Chief Paul Donaldson and Assistant Chief Maurita Bryant.
Mr. Difenderfer said Ms. Ganster never used her card.
Mr. Difenderfer said the other account was already in existence -- the "c/o Sandy Ganster" account -- since 2004. He did not know who opened that account or why but said it was not used as frequently as the I.P.F. account.
He said that Ms. Ganster became angry when she learned that the bill for a multi-thousand-dollar party to celebrate the August promotion of Eric Holmes to commander from sergeant was paid for from the funds.
"Eric Holmes, his promotion party was paid out of this account, which really bothered her. And she knew her name was on it, and she knew it wasn't right," Mr. Difenderfer said.
Lt. Larry Scirotto, a close friend of Cmdr. Holmes, said he attended the party at Olive or Twist, a Downtown martini bar and restaurant.
He said the party was organized by Officer Tonya Montgomery-Ford, one of four police headquarters employees put on paid administrative leave in the course of the federal investigation.
Lt. Scirotto did not know who paid for the party or how much it cost -- he said there were hors' d'oeuvres and no beverages -- but said he and others made "significant" donations and that Cmdr. Holmes would not have known how expenses were paid.
Warner Macklin III, a spokesman for Officer Montgomery-Ford, said, "She has told me directly she doesn't know how that promotion party was paid for."
Following the party, Ms. Ganster asked whether it was funded through the I.P.F. account and was told no, Mr. Difenderfer said. She later saw paperwork that convinced her otherwise.
"It's one thing to buy shields. It's another to pay for a promotional party for the chief's buddy," Mr. Difenderfer said.
Jeff Wallace, operations manager at Olive or Twist, said he did not remember the party. He said the FBI contacted the business last month "and said they had some questions for us regarding some party and they didn't give us any specifics on it."
He said the FBI later told them they didn't need the information anymore.
Mr. Difenderfer said information about how the party was paid for, plus other rumblings about Mr. Harper's business dealings, prompted Ms. Ganster to go to Mr. Huss.
"She clearly brought this to light. Whether or not this would've been discovered without her, I doubt it," Mr. Difenderfer said.
Ms. Ganster went on voluntary leave as the investigation blossomed, but was placed this week by acting Chief Regina McDonald on involuntary paid leave despite her desire to return to work.
Mr. Huss would not say why she was kept on leave.
"It's very disturbing to us [that she is on leave] for doing the right thing," Mr. Difenderfer said. "What she needs is a trophy."
Chief McDonald could not be reached for comment.
Ms. Ganster met with the FBI, IRS and a federal prosecutor twice for a total of six hours, Mr. Difenderfer said. She did so under a "queen-for-a-day" agreement, according to him, which provides limited immunity.
During the meetings Ms. Ganster was presented with statements from the I.P.F. account, he said. She told authorities that she had not seen them before because someone else received them at the bureau.
"Did she have a duty to inquire [about the nature of the account]?" Mr. Difenderfer said "My answer is 'No.' "
He said investigators "definitely asked ... if she had any knowledge of the mayor's involvement, and she said, 'No.' "
Mr. Ravenstahl met Feb. 20 with the FBI for two hours. Later that day he forced Mr. Harper's resignation.
Attorney Charles Porter Jr. represented the mayor at the meeting and said Mr. Ravenstahl is only a witness, to his knowledge.
Mr. Difenderfer said Ms. Ganster believes her role in the investigation is over and wants to return to work.
"There was no intent to do wrong. None," Mr. Difenderfer said. "She was listening to the orders of the chief of police of this city and her boss, and she wants her job. She's there for 30 years, and she liked the guy."
Jonathan D. Silver: firstname.lastname@example.org or 412-263-1962. email@example.com, 412-263-1542 or Twitter @richelord. Liz Navratil: firstname.lastname@example.org, 412-263-1438 or on Twitter @LizNavratil. First Published March 8, 2013 5:30 AM