Former Pittsburgh police chief Nate Harper intends to plead guilty after a grand jury returned an indictment against him today charging him with conspiracy and tax evasion, his attorney said this afternoon.
Robert Del Greco Jr. said the evidence against Mr. Harper was "unambiguous." He said Mr. Harper would plead guilty to all five counts contained in the indictment without modification.
"It's a felony," Mr. Del Greco said this afternoon. "It's cost him his career, possibly his pension. I don't know that I could put it any better."
He said his client's actions were indefensible, that the "lure of the account" proved an "irresistible temptation."
Another of Mr. Harper's attorneys, Robert 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.
This morning, U.S. Magistrate Judge Robert C. Mitchell announced a federal grand jury handed the indictment after months of meetings and testimony.
The grand jury foreman said 17 members were present and at least 12 voted to indict. Assistant U.S. Attorney Robert Cessar motioned for an arrest warrant.
At an afternoon initial appearance and arraignment before U.S. Judge Mitchell, Mr. Harper pleaded not guilty as is standard at this stage of federal proceeding. He appeared in a brown suit. Mr. Del Greco Mr. Leight, who said they will continue to represent him, appeared with Mr. Harper before Judge Mitchell.
Mr. Cessar estimated a trial would take five days.
Mr. Harper was released on $100,000 unsecured bond and ordered to surrender any passport.
Speaking at a press conference earlier were U.S. Attorney David J. Hickton, FBI Special Agent in Charge Doug Perdue and IRS Special Agent in Charge Akeia Conner, who works out of the agency's Philadelphia office.
Mr. Hickton would not say whether Mayor Luke Ravenstahl was a target.
"I cannot," he said. "We don't describe and make public who are the subjects or targets of an investigation."
He said a separate investigation involving the firm Alpha Outfitters that won a contract to install radios and computers in city police vehicles was not over.
"The possibility of those charges are going to be the subject of further discussion," he said.
He said the charges carry a maximum penalty of nine years in prison and fines of up to $650,000.
"These are serious charges," he said. "The allegations represent the worst kind of public corruption. These monies belong to the taxpayers and they have been taken by theft."
Ms. Conner said that from 2008 through 2011 Mr. Harper earned "approximately $475,000," but "willfully chose not to file his income tax returns for four years.
"No public official gets a free pass to ignore the tax law," she said.
Inside the indictment
According to the indictment, from July 2008 through January 2013 Mr. Harper conspired with unidentified people to open an account at the Pittsburgh Police Federal Credit Union called the I.P.F. account.
Mr. Harper told police employees to get two debit cards related to the account.
He then "instructed employees of the police department to misapply checks and cash totalling at least $70,628.92" to the account, according to the indictment.
Mr. Harper also misapplied "for his own use" at least $31,986.99, according to the indictment.
The indictment lists 14 checks associated with the account. It also lists numerous cash withdrawals "for his own personal use" in amounts ranging from $53 to $303 at places including the Jerome Bettis Grille and Macy's.
According to the indictment, Mr. Harper failed to pay federal income taxes for calendar years 2008, 2009, 2010 and 2011.
Several people in law enforcement and city government expressed disappointment in Mr. Harper.
"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 G-20. 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 it's illegal, he said.
"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 would not detail when and how the investigation began.
"Obviously, for purposes of protecting witnesses and not compromising the investigation, it's advisable that we just simply say the investigation is continuing," he said.
He would not say whether federal authorities were made aware of the diversion of funds in 2009 when some police bureau employees began to look into the diversion to the credit union of a check sent by the University of Pittsburgh to the bureau for off-duty police services.
Mr. Ravenstahl released a brief statement by email this afternoon.
"Today is a sad day for the Bureau of Police, and for the City of Pittsburgh as a whole," he said. "We will continue to work tirelessly to rebuild the Bureau and to ensure that Pittsburgh remains one of the nation's safest cities."
The FBI released its own statement after the indictment was announced.
The indictment "is not an indictment of the Pittsburgh Bureau of Police," according to the statement, noting that the FBI and the city's force have "a successful, longstanding and collaborative partnership."
In a statement emailed to reporters about 2 p.m., acting Pittsburgh police Chief Regina McDonald asked that people not hold Mr. Harper's indictment against the entire police bureau.
"We (PBP) are saddened to learn of the Federal indictments against former Police Chief Nathan E. Harper," she said in the statement. "The Pittsburgh Bureau of Police wants to reassure the residents of the City of Pittsburgh that our officers and civilian personnel are dedicated hardworking professionals who will continue to protect and serve the City of Pittsburgh to the best of our ability."
Councilman Bill Peduto, who is running for mayor, said:
"It is tragic that after serving so many years on the Pittsburgh police force that Nate Harper's career ends in this manner," he said in an emailed statement from his campaign. "As a city, we need to make sure our government is open and accountable."
Pittsburgh City Councilwoman Theresa Kail-Smith, chairwoman of the public safety committee, said she was deeply disappointed at today's news.
"I think no one would like to see an outcome like this," she said.
She has proposed legislation to reform the handling of money in the Special Events Office.
"Hopefully our legislation will prevent some of those concerns and prevent some of those things from occurring in the future," she said.
Grand jury winds down
The grand jury met again this morning.
Suspended police finance manager Sandra J. Ganster arrived about 8:30 a.m.
"It's obviously a very sad day in Pittsburgh," attorney William H. Difenderfer, who is representing Ms. Ganster, said after the indictment was announced. "A person in that type of position, it's just unbelievable ... it's extremely stupid and it's a shame."
Ms. Ganster testified before the grand jury last month under limited immunity and briefly appeared again this morning, also with limited immunity, to "rehash" her testimony, Mr. Difenderfer said.
"She had limited knowledge of the accounts," he said. "She never saw the invoices."
Mr. Difenderfer said he is waiting for a phone call from the City of Pittsburgh inviting 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. Harper resigned under pressure last month after Mayor Luke Ravenstahl talked to federal investigators and said he was told enough to force the departure of his police chief.
Mr. Harper has denied any wrongdoing.
Also appearing was Karen Palmer, an employee in the bureau's personnel and finance office, who worked with Ms. Ganster. She left shortly after 10:30 and did not comment.
Ms. Palmer is mentioned in a January memo written by Officer Christine A. Gasiorowski and sent to her sergeant detailing concerns about more than $31,000 in checks which are supposed to be deposited in authorized city accounts. Instead they had been diverted to an unauthorized account at the Greater Pittsburgh Police Federal Credit Union.
Officer Gasiorowski wrote that Ms. Palmer told her Ms. Ganster and Tamara L. Davis, her second-in-command, were taking the checks.
"Karen explained that both Tammy and Sandy have taken checks that were supposed to be deposited and instead are depositing them in a separate account at the Pittsburgh Police Federal Credit Union," according to the memo.
Ms. Palmer has copies of the checks allegedly taken by the women for the past two years, the memo says.
Just before noon, Mr. Cessar left the grand jury room and declined comment. The grand jurors also left, wearing their coats.
The Alpha Outfitters probe
The first hints of possible trouble for Mr. Harper emerged two years ago, when a federal prosecutor handling a guilty plea in a fraud case mentioned Art Bedway, describing him as a 'confederate' of the defendant.
Mr. Bedway was a friend of Mr. Harper's who stood near him at his 2006 swearing-in as chief. A Robinson resident and bodybuilder, Mr. Bedway is a security industry entrepreneur who is listed in filings with the state Corporations Bureau as an executive with Victory Security L.P. and Victory Security Agency II LLC. A Carnegie-based firm called Victory Security Agency Inc. employed Cynthia Harper, the former Chief's wife, some time prior to 2011.
Managers of two city housing developments have told the Post-Gazette that around 2009, Victory Security Agency Inc.'s implied entree to the chief was one of the firm's selling points.
Mr. Harper told the Post-Gazette in 2011 that his wife left Victory because its competitors "were saying she was a ghost employee," which he said was false.
In November, Mr. Bedway was indicted on counts of bribery, conspiracy and mail fraud in a case that stemmed from a city of Pittsburgh contract to install radios and computers in the bureau's vehicles.
Federal prosecutors said that Mr. Bedway was the real owner of Esplen-based Alpha Outfitters LLC, though it was ostensibly run by longtime Victory Security employee Lois Kolarik. (Alpha Outfitters was later officially run by Colleen Moore Bedway, daughter of a former Pittsburgh police officer and now Mr. Bedway's wife.) Alpha Outfitters in 2006 won the contract to install and maintain radios and computers, and was eventually paid around $330,000.
Mr. Bedway, according to the indictment, conspired to win the contract with Christine Kebr, then a senior systems analyst for the city, and with an unnamed third person. They met at least once at Victory Security Agency Inc.'s office, prosecutors claimed. Ms. Kebr in December pleaded guilty to conspiracy, confirming that she helped Alpha Outfitters to get the job, and accepted $6,000 from Mr. Bedway.
She is set to be sentenced April 4.
Mr. Harper, who was hard to reach during the winter, in part due to the death of his mother, said during a Jan. 25 interview in the driveway of his Stanton Heights home that he wasn't involved with the contract award, and didn't get money from Mr. Bedway.
In January, a federal grand jury heard from Mr. Bedway, Mrs. Bedway, Ms. Kebr and Pittsburgh police Sgt. Gordon McDaniel, who oversees the bureau's vehicles. Attorneys representing Mr. Bedway, Ms. Kebr and Sgt. McDaniel could not be reached late Thursday.
In February 2012, Mr. Harper joined four other bureau employees in launching an entrepreneurial venture of their own, called Diverse Public Safety Consultants LLC. First reported by the Post-Gazette last month, the firm also included Sgt. Barry Budd, Officer Tonya Montgomery-Ford, bureau finance aide Tamara L. Davis and Eric Holmes, who was a sergeant at the time. Six months later, he was raised to commander.
Mr. Harper claimed the business was dormant, not generating revenue and not soliciting clients. He said it was meant to be used after retirement from the police bureau.
However, Cmdr. Holmes' attorney, Patrick Thomassey, said last week that the fledgling firm generated around $5,600 in revenue last year, and would be dissolved. Allegheny County District Attorney Stephen A. Zappala Jr. issued a cease-and-desist letter because none of the principals had obtained a private detective license -- a prerequisite for the type of services being offered.
Warner Macklin III, spokesman and crisis manager, for Ms. Davis, said earlier this month that she voluntarily spoke with federal authorities. He said Thursday night that she had not had any recent contact with investigators "because we presume that they've been diligently doing their jobs these last few weeks."
Mr. Macklin also represents Officer Montgomery-Ford and her mother, bureau civilian employee Kim Montgomery, and said neither of them has been contacted by federal investigators.
Moonlighting and the credit union
As the Alpha Outfitters probe continued, federal investigators in February quietly served a subpoena on the city's Law Department.
Their target: records from the police bureau's special events and personnel and finance offices.
On Feb. 11, Pittsburghers were treated to the disturbing sight of FBI investigators walking out of police headquarters with boxes. City officials explained that they were cooperating with the FBI, which was conducting a grand jury investigation. The exact subject of the investigation was unclear, as was a definitive answer as to whether the seizure was linked to the Bedway affair.
Mayor Luke Ravenstahl told the Post-Gazette that he was aware of only one grand jury investigation going on.
Top police brass -- including Chief Regina McDonald -- singled out the personnel and finance office as an object of intense interest. Deputy Chief Paul Donaldson referred to internal allegations of misappropriation of funds from that office.
The personnel and finance office, staffed by civilians, handles the bureau's payroll and processing of millions of dollars each year from private businesses who hire officers to moonlight. Those employers send payments covering both the officers' pay and a surcharge for the city to the special events office, which coordinates the hiring and scheduling of the side jobs.
Special events personnel, in turn, send the money across the hall at police headquarters to personnel and finance.
The Post-Gazette has learned that at least one check sent to the bureau in 2009 and meant for the city treasury was deposited into an account at the Greater Pittsburgh Police Federal Credit Union on the West End.
The credit union, a nonprofit financial institution for active and retired police officers and their families, is not affiliated with the police bureau or the city. It is not one of 15 approved depositories for city funds.
The Post-Gazette first reported that a Sept. 16, 2009, University of Pittsburgh check for $5,675.52, meant to pay for off-duty officers who guarded a mobile science truck, was deposited into an account called "I.P.F." at the credit union on Sept. 28, 2009. The account has the same address of police headquarters on the North Side -- 1203 Western Ave.
That same day, Tamara L. Davis, second-in-command in the bureau's personnel and finance office, withdrew $4,000 from the account.
Neither Ms. Davis's attorney nor her spokesman has explained the withdrawal.
The attorney representing personnel and finance manager Sandra J. Ganster said Mr. Harper directed her to open the I.P.F. account and that she followed his orders in diverting between $28,000 and $37,000 into it since it was opened in 2008 or 2009.
A Jan. 2013 internal police memo obtained by the Post-Gazette from Officer Christie Gasiorowski of the special events office to her supervisor, Sgt. Carol Ehlinger, pegged the diverted funds at more than $31,000. Officer Gasiorowski wrote that she learned about the allegations of diverted funds from another civilian in the bureau, Karen Palmer.
Ms. Palmer has declined comment.
Ms. Ganster and at least one other person would sporadically steer checks into the I.P.F. account in amounts that matched those Mr. Harper had requested, according to her attorney, William H. Difenderfer. He said Ms. Ganster kept some of the debit cards in a safe in her office. Mr. Difenderfer recalled one occasion when Ms. Ganster was out of town and Mr. Harper had to use a locksmith to break into the safe to access a debit card.
Mr. Difenderfer said Ms. Ganster grew upset when she became convinced the account had been tapped to pay for a promotion party for Zone 2 Commander Eric Holmes. Feeling that such an expenditure was not appropriate, and knowing that her own name was on one of the debit cards, Ms. Ganster took her concerns to Public Safety Director Michael Huss on Feb. 9, according to her attorney.
Mr. Harper has not commented on Mr. Difenderfer's statements or those made to the Post-Gazette by one of the mayor's former bodyguards, Fred Crawford Jr.
In addition to allegedly paying for Cmdr. Holmes' promotion party, the I.P.F. fund -- one of two at the credit union associated with the police bureau -- was used in October of 2009 to pay for items bought at Giant Eagle, gas at a station in Maryland and restaurant tabs in Denver, among other expenses, according to a transaction report obtained by the Post-Gazette.
Eight people had debit cards associated with the I.P.F. account -- Mr. Harper, Ms. Ganster, Ms. Davis, Deputy Chief Donaldson, Assistant Chief of Operations Maurita Bryant, current mayoral bodyguards Dominick Sciulli and Matthew Gauntner and Mr. Crawford, the former bodyguard.
Deputy Chief Donaldson and Assistant Chief Bryant said they did not know about the cards in their names until federal investigators informed them of their existence after they took documents from the bureau and from the Greater Pittsburgh Police Federal Credit Union. Sgt. Gauntner and Assistant Chief Bryant have produced credit union documents showing that they did not use their cards. Sgt. Sciulli used his card around a dozen times for police business, and twice accidentally for personal expenses for which he reimbursed the I.P.F. account.
Mr. Harper on Wednesday declined comment on his I.P.F. card.
Mr. Crawford told the Post-Gazette that Mayor Luke Ravenstahl knew of the cards and advocated their use so he could skirt the state Right-to-Know Law, which would have allowed reporters to see his expenses.
Mr. Crawford, 48, who has since retired from the force, said the cards were used for various expenses, some of which included alcohol.
The mayor has denied Mr. Crawford's allegations and said when he announced earlier this month that he would not run for re-election that Mr. Crawford will "have to answer for that some day whether it's legally or otherwise."
"A cop's cop"
After nearly a month out of the public eye, Mr. Harper emerged this week for a civil trial in federal court. Along with the city and bureau Assistant Chief George Trosky, he was a defendant in a case in which a Squirrel Hill man blamed them for a since-fired detective's 2010 road rage incident.
Mr. Harper testified that as chief he had suspended the former detective Bradley Walker twice -- for hitting another detective and for a domestic incident -- but also praised his aggressive police work.
On Wednesday, U.S. District Judge Arthur J. Schwab released both Mr. Harper and Chief Trosky as defendants, saying that no reasonable jury could find them responsible for the off-duty road rage incident. The jury is expected to continue to deliberate Monday on whether to hold the city liable.
The former chief's suits seemed to hang loosely on his frame, and he politely declined reporters' efforts at conversation. He was unflappable on the witness stand, and talked quietly with Chief Trosky and courthouse security officers.
In some ways, that behavior was consistent with his demeanor during much of his nearly 36-year career, during which officers described him as a "cop's cop."
He spent time riding a motorcycle in the traffic unit, worked narcotics, made sergeant and then skipped several ranks to commander.
He was an appealing choice for the politicians: a career man, a religious man, a black man -- in other words, an easy sell who seemed to have everything going right.
Except that some said he was a little too nice and trusting, perhaps even naive.
"He was not one of them looking for the bad [in people.] He's looking for the good in people and trying to bolster them up," Barry Fox, a retired narcotics detective who worked under Mr. Harper, said in a previous interview with the Post-Gazette. "Now if those people he was with wanted to go the wrong way, I could see where they could have been able to persuade him. Not something bad. But something that wasn't particularly right."
Moriah Balingit contributed. First Published March 22, 2013 1:00 PM