Nate Harper began the year as a proud, robust and respected police chief running a major metropolitan department and earning more than $100,000 a year.
But on Friday, Mr. Harper -- ousted from his post -- stood quietly before a federal judge as an accused criminal, looking defeated and shrunken in his loose-fitting sport coat and slacks.
A federal grand jury indicted Mr. Harper on one count of conspiracy to use public funds for personal use and four counts of failing to file federal income tax returns.
Prosecutors said Mr. Harper and other unnamed individuals diverted more than $70,000 meant for the City of Pittsburgh to off-the-books accounts and tapped it with debit cards.
The grand jury alleged Mr. Harper spent more than $30,000 over a four-year span on meals, booze, a satellite radio system for his car, movies from a Monroeville porno shop, a 32-inch LCD television, perfume and other personal expenses.
"The allegations represent the worst kind of public corruption. These monies belong to the taxpayers, and they have been taken by theft," U.S. Attorney David J. Hickton said, flanked at a media briefing by prosecutors and agents from the FBI and IRS.
In a news conference a short time after Mr. Harper appeared before U.S. Magistrate Judge Robert C. Mitchell, his attorneys had a clear and surprising message: Mr. Harper intends to plead guilty as charged.
"I think we're prepared to plead to that indictment without modification," Robert G. Del Greco Jr. said. "The evidence is unambiguous and overwhelming. I think it's a fair indictment in that we are certain that the allegations in the indictment would be proved in a court of law."
Mr. Hickton pegged the maximum penalty for Mr. Harper at nine years in prison and a fine of $650,000.
But Mr. Del Greco's co-counsel, Robert Leight, said based on Mr. Harper's history and reputation it is more likely he would serve 10 to 16 months -- possibly under house arrest.
In a 13-page indictment the grand jury said Mr. Harper "instructed" police bureau employees to misappropriate cash and checks totaling $70,628.92 between July 2008 and November 2012.
The indictment listed 14 diverted checks, 23 withdrawals by Mr. Harper and 56 Visa card purchases -- only a sampling of the total diversions and transactions, Mr. Hickton said.
Mr. Harper's attorneys said federal agents met with him five times -- at his Stanton Heights home, his chief's office and his attorney's office -- between October 2012 and last week.
The investigation had public and private moments. Last month, federal agents carried boxes of documents from the police bureau, drawing the attention of the media. More quietly, a few weeks ago investigators executed a search warrant for paperwork at Mr. Harper's house.
Over the months the investigation's focus shifted from a questionable city contract for the police bureau to Mr. Harper's tax returns to his personal use of funds meant for the city.
Friday morning, the grand jury put the finishing touches on its indictment after two pivotal police bureau civilians appeared before it at the Downtown federal courthouse.
"This is a sad day for most of us," Mr. Hickton said, noting that Mr. Harper cooperated with many federal law enforcement efforts. "He worked with us on [the] G-20 [Summit]. He helped us when we were trying to find out who was making bomb threats at the University of Pittsburgh. This is puzzling and baffling behavior."
And, Mr. Hickton said, it is illegal.
"It is not proper to divert the money in the first place, and it was not proper to spend the money on himself. We are committed to follow the evidence wherever it leads us."
Mr. Hickton declined to discuss specifics of the investigation, which he said was ongoing.
Mr. Harper's attorneys said their client initially used the accounts for what he believed were legitimate police bureau expenses. But over time his use shifted.
"I think the lure of the unmonitored accessibility of that account proved to be an irresistible temptation for Nate," Mr. Del Greco said. "It's a felony, it's a federal offense. It cost him his career, possibly his pension."
"As he told both of us," Mr. Leight said, "it's just bad judgment on his part."
As for Mr. Harper's failure to file income tax returns from 2008 through 2011 -- during which time he earned more than $400,000 from the city -- his attorneys had a simple answer.
"The chief's explanation has to do with some personal issues and procrastination," Mr. Del Greco said.
A possible indictment had been in the wind for weeks, if not months, ever since Mr. Harper's former friend, Art Bedway Jr., was charged in November with conspiracy, bribery and mail fraud.
Prosecutors said Mr. Bedway formed a company called Alpha Outfitters LLC that won an allegedly rigged bid to install equipment in Pittsburgh police cars by bribing former city systems analyst Christine Kebr. Ms. Kebr pleaded guilty in December to one count of conspiracy.
Documents and statements by federal prosecutors have indicated that Mr. Bedway and Ms. Kebr met with a third individual about the bids.
Mr. Harper told the Pittsburgh Post-Gazette -- and his attorneys reiterated Friday -- that he did not take any money from Mr. Bedway.
Mr. Del Greco and Mr. Leight had been preparing for the possibility that Mr. Harper would be indicted in the Bedway matter.
They said they had no indication until this year that investigators were looking into the flow of funds through the Pittsburgh Bureau of Police and, specifically, through Mr. Harper's office.
The attorneys described themselves as "heartened" that Friday's indictment steered clear of implicating Mr. Harper in anything to do with Alpha Outfitters.
In carefully worded remarks announcing the charges against Mr. Harper, Mr. Hickton said his office continues to investigate both the Alpha Outfitters contract and the alleged misappropriation of funds at the police bureau's North Side headquarters.
He would not say whether other indictments are expected.
Mr. Harper, typically reticent, said few words to Judge Mitchell as he agreed to turn over his passport and pleaded "not guilty" as a formality. He was released on $100,000 unsecured bond and, ever the dapper dresser, left the courthouse with his overcoat and hat.
Mr. Harper originally intended to appear for the news conference at Mr. Del Greco's offices at PPG Place, Downtown, an hour after his arraignment, but did not.
"We had expected and hoped that he would but he's embarrassed and distraught and simply declined to show," Mr. Del Greco said. Mr. Leight said Mr. Harper has not taken the investigation well.
"He's lost 20 pounds in the last month," Mr. Leight said. "He's very upset. He's humbled. He's affected. It has affected his mental health."
Mr. Del Greco said there have been no discussions of a plea bargain.
Public officials commented about the end of Mr. Harper's long and distinguished career.
Public Safety Director Michael Huss said he was "disappointed, a little bit disgusted."
Police brass took pains to note that the alleged acts by the former chief did not tarnish the bureau as a whole.
"What message we have to instill in the other people in the bureau of police is: 'You did nothing wrong. You have no reason to be ashamed of who you are, what you are or what you do, and we encourage you to continue to do your duties and not be impacted by these goings-on,' " Deputy Chief Paul Donaldson said.
Mr. Harper resigned under pressure Feb. 20 -- the same day Pittsburgh Mayor Luke Ravenstahl met with federal authorities who revealed information about the investigation.
The federal probe into the diversion of funds became public Feb. 12, when the FBI removed documents from police headquarters. It was Mr. Harper's 60th birthday.
Throughout that week, the FBI and the IRS appeared at the Greater Pittsburgh Police Federal Credit Union in the West End.
The credit union serves active and retired Pittsburgh police officers and their families. It is not affiliated with the city or the police bureau.
Federal agents were tracing a money trail that led from private businesses to the credit union.
As outlined Friday by Mr. Hickton, who used a large pasteboard chart on an easel as a prop, private businesses hire off-duty police officers to moonlight as security.
Most businesses pay the officers through the police bureau's special events office, which schedules and bills for the services.
Millions of dollars flow through the office each year. The funds go to the bureau's personnel and finance office, and from there are to be placed in one of the city's 15 authorized depositories.
Instead they went into either the "I.P.F." account -- with an address at police headquarters -- or the "Special Events c/o Sandy Ganster" account at the credit union. The credit union is not an authorized depository for city funds.
Sandra J. Ganster, the police bureau's personnel and finance manager, is on paid administrative leave. Since February Ms. Ganster has met twice with federal investigators under a grant of limited immunity.
She also appeared Friday morning before the grand jury, again under immunity.
"She had limited knowledge of the accounts," said her attorney, William H. Difenderfer. "She never saw the invoices."
Mr. Difenderfer said he is waiting for the bureau to bring Ms. Ganster back to work.
"We're waiting for the phone call about when she can come back or a damn good explanation as to why she's not [there]," he said.
Mr. Difenderfer has said his client told investigators that Mr. Harper directed her to open the I.P.F. account and that she followed his orders in diverting the funds.
Also appearing Friday before the grand jury was police bureau civilian Karen Palmer, who figured prominently in a January 2013 internal police memo obtained by the Post-Gazette.
In the memo, a police officer in special events told her supervisor that Ms. Palmer confided in her that checks were being taken off her desk by Ms. Ganster and her second-in-command, civilian employee Tamara Davis.
The Post-Gazette first reported that a $5,675.52 check from the University of Pittsburgh -- meant to pay for officers guarding a mobile science truck -- was deposited into the I.P.F. account at the credit union on Sept. 28, 2009.
On the same day, Ms. Davis withdrew $4,000 from the account for reasons that neither she nor her attorney or spokesman have explained. Ms. Davis has not been charged with any crimes.
In the memo, Officer Christie Gasiorowski writes that when she learned in 2009 that the check had been diverted, she alerted then-Assistant Chief Regina McDonald, who at the time oversaw special events and personnel and finance.
City officials, including acting Chief McDonald, have refused to say what she was told at that time and who, if anyone, she notified.
Former U.S. Attorney Mary Beth Buchanan, who served in that position until November 2009, said she did not recall anyone alerting her to the diverted check but would have "certainly" been interested in investigating if she had known about it.
Mr. Harper's attorneys did not detail how or when their client decided to begin using the credit union funds for personal expenses. They also did not say whether Mr. Harper instructed his subordinates to take the special events checks and deposit them in the credit union.
"I think he was led to believe this conduct was OK," Mr. Leight said, declining to specify who gave him that impression.
"He's humbled. He's 60 years old. He has to put the pieces back together," Mr. Del Greco said. "He'll end up a convicted felon."
Jonathan D. Silver: email@example.com or 412-263-1962. Liz Navratil: firstname.lastname@example.org, 412-263-1438 or on Twitter @liznavratil. Rich Lord: email@example.com, 412-263-1542 or on Twitter @richelord. Moriah Balingit contributed. First Published March 23, 2013 4:00 AM