Grand jury paints a portrait of bid-rigging and favoritism
March 14, 2013 4:00 AM
Bradley C Bower/Associated Press
Robert J. MellowMitchell RubinJoe BrimmeierGeorge HatalowichMelvin SheltonRaymond ZajicekDennis MillerJeffrey Suzenski
Bradley C Bower/Associated Press
Pennsylvania Attorney General Kathleen Kane, left, and Pennsylvania State Police Commissioner Frank Noonan conduct a news conference Wednesday in Harrisburg.
By James O'Toole, Karen Langley and Bill Toland Pittsburgh Post-Gazette
HARRISBURG -- Citing a "pay-to-play" culture that inflates costs and steers contributions to Pennsylvania politicians, a grand jury recommended charges against a former state Senate leader and seven other figures associated with the Pennsylvania Turnpike Commission.
Attorney General Kathleen Kane announced the criminal charges Wednesday, the first fruit of a years long investigation by two grand juries that spanned the tenures of two of her predecessors. The jury's findings cast one more stain on a state government that has been the focus of serial prosecutions of some of its most influential figures over the past decade.
At a Capitol news conference, Ms. Kane said the inquiry into an agency that has long been the focus of speculation on political favoritism would continue.
"You've all heard rumors about the Turnpike for years, about the way business was conducted," said state Police Commissioner Frank Noonan, who appeared with Ms. Kane. "It was fairly well known, or thought, but that's a big difference between that and having evidence, and this is what we have today."
The jurors recommended charges against former state Sen. Bob Mellow, who is already serving a sentence on unrelated federal corruption charges, former turnpike commissioner Mitchell Rubin, former turnpike chief executive officer Joseph Brimmeier, former turnpike chief operating officer George Hatalowich and former turnpike employees Melvin Shelton and Raymond Zajicek. Dennis Miller and Jeffrey Suzenski, executives with firms that did business with the turnpike, also were charged.
The 85-page presentment paints a portrait of bid-rigging and favoritism linked to campaign contributions, personal gifts, and vendor-paid junkets to locales including Las Vegas; Cozumel, Mexico; Vienna; and Budapest, Hungary.
Ms. Kane emphasized that the grand jury had found enough evidence to charge only the men named -- not the politicians, other than Mellow, who benefited from the forced contributions.
"They did not make any direct contact with turnpike officials or vendors," she said of other political figures. "It was only Sen. Mellow that we had evidence to that effect, and that's why he's the only actual official or ex-official charged. Otherwise it was the turnpike creating their own fiefdom, and it was the turnpike official forcing vendors to give to the political campaign that those turnpike officials told them to give to."
Four of the defendants -- Mr. Rubin, Mr. Hatalowich, Mr. Suzenski and Mr. Miller -- were arraigned Wednesday afternoon in magisterial district court in Harrisburg on $100,000 unsecured bond.
Mr. Brimmeier and Mr. Shelton are expected to be arraigned today, while Mellow will have to be transported from federal custody. Mr. Zajicek is in Florida, and officials are in the process of making arrangements for him to appear, said Senior Deputy Attorney General Laurel Brandstetter.
Until the day before the grand jury handed up its presentment, Mr. Brimmeier was a member of the board of the Port Authority of Allegheny County. He was county Executive Rich Fitzgerald's choice to be the interim head of the agency until controversy over the plan led Mr. Fitzgerald to retreat on the selection.
Mr. Fitzgerald released a statement saying that "Joe Brimmeier called me last night to notify me that he was submitting his resignation from the Board of the Port Authority of Allegheny County, effective immediately, in light of the charges announced this morning.
"He indicated to me that he is innocent of these charges, but would be focusing his time and attention on proving that. Our justice system is set up on the premise that all men are innocent until proven guilty. I believe that and wish Joe the best in facing this challenge."
One of the ingredients of the controversy over Mr. Brimmeier and the Port Authority was the report that an architectural firm owned by his sister, Jan Brimmeier, had sought a contract with the agency months after Mr. Brimmeier's appointment. Both brother and sister said then that they were not aware of the Port Authority solicitation; Ms. Brimmeier said it had been submitted by an employee of the firm without her knowledge.
The word that Mr. Brimmeier was being considered for the transit agency's top job also prompted a back channel warning from the Corbett administration that he would not be welcome in an agency that receives substantial state funding.
This grand jury investigation began when Gov. Tom Corbett was still the state attorney general, continued under his appointed successor, Linda Kelly, and culminated in Ms. Kane's announcement Wednesday.
The grand jury said would-be contractors for the Turnpike were routinely expected to donate to the campaigns of public officials. Among the campaigns that benefitted were those of officials described in the presentment as "gubernatorial candidate #1," "gubernatorial candidate #2," and "senator #6."
The context and dates of the exchanges make clear that candidate #1 was former Gov. Ed Rendell; candidate #2 was former county Executive Dan Onorato, the unsuccessful Democratic nominee for governor in 2010; and senator #6 was former state Sen. Vincent Fumo, D-Philadelphia.
Asked about the report's use of pseudonyms such as senator #6 and gubernatorial candidate #2, Ms Kane said, "We did that for a reason. ... We did it because there is no evidence that they had any knowledge that this was going on."
Mr. Fumo, who for a generation wielded enormous clout in Harrisburg as the ranking Democrat on the state Appropriations Committee, is now serving a federal sentence after being convicted of a broad array of charges abuse of power that partially overlap the focus of this grand jury.
Asked for his reaction, Mr. Rendell left a phone message saying he wasn't in a position to comment on the charges.
"I am saddened because Joe did some very positive things to make the turnpike operate better for its citizens. Beyond that, I can't comment because I don't have a clue what it's about."
Mr. Rendell removed Mitchell Rubin as chairman of the Turnpike Commission after damaging testimony about his ties with Mr. Fumo emerged in the senator's 2009 federal trial. Mr. Rubin was convicted in 2010 of charges of misleading investigators in the Fumo probe.
Mr. Onorato, who is now an executive with Highmark, did not immediately respond to a request for comment on this investigation.
The grand jurors describe the Turnpike Commission, which was created in 1937, as having operated as a bipartisan patronage and contribution machine. Its board comprises five members with three traditionally appointed from the party of the sitting governor and two from the opposition. The report quotes witness describing an unofficial "60-40 rule," with 60 percent of jobs and contracts to the majority party and the balance to the minority. The state Senate has had special influence over the body because of its powers of confirmation over its members.
Pennsylvania Turnpike Commission chief executive officer Mark P. Compton issued a statement defending the agency's current performance.
"We understand how important it is to maintain the public's trust. And certainly, we're troubled by today's news from Attorney General Kane's office," he said. "If charges against former turnpike employees are indeed proven, we certainly cannot -- and will not -- defend that. But I can say that these actions definitely don't represent the hard-working men and women who keep our road open and safe for customers. In the time that I've been here, the turnpike that I have experienced firsthand is quite different than the one that I've heard about in media reports."
While the report describes shared party influence over the commission, the only public officials charged were Democrats.
The report quotes one witness as explaining that "money is the mother's milk of politics, and these [turnpike projects] are prime opportunities to raise funds."
The target donors are "a whole group of professionals, lawyers, underwriters, et cetera, and then you have the whole engineering world."
Anthony Lepore, a former aide to Mr. Mellow still employed by the Senate Democratic caucus who testified under a grant of immunity, told the grand jury that the turnpike is "a huge organization with vendors with deep pockets and their commissioners are approved by the Senate. It's as simple as that."
Asked at the news conference how much of turnpike work could be obtained only after making contributions, Mr. Noonan responded: "A lot of it."
The "reason they made these contributions and provided these gifts, because they knew that was the way they would get the contracts," he said.
Ms. Kane said the investigation is ongoing. Two Pittsburgh-area businesses were mentioned prominently in the presentment: Orbital Engineering and PNC Financial Services Group.
Both were cited by the grand jury as firms that had successfully navigated the turnpike and state Senate leadership, and were rewarded with lucrative contracts.
Orbital's contracts and performance, in particular, were questioned by the grand jury. According to one Turnpike Commission engineer, Orbital "was difficult to work with, slow to perform requested work, [had] a high turnover rate of qualified engineers, [attempted] to cut corners, and [submitted] unreasonable invoices."
And yet, Orbital continued to get work from the turnpike, more than $4.2 million over the last dozen years, according to grand jury calculations.
In 2009, after the turnpike refused to approve a "change order" -- that is, additional cost overruns -- an Orbital official leaned on a lower-level turnpike engineer and threatened to go over his head. "I'm going to have to meet with Brimmeier, and I don't want to have to tell Brimmeier that you and I aren't getting along. He hates hearing that," the Orbital official said in a voice mail.
Orbital officials could not be reached for comment.
PNC, according to the presentment, didn't begin receiving work from the Turnpike Commission until 2005. Mr. Mellow and Mr. Lepore, the grand jury said, "intervened directly on [PNC's] behalf to secure bond work for PNC," the biggest bank in Pennsylvania. PNC is not accused of any wrongdoing in the presentment, but its gifts to Mr. Mellow are the basis of one of the charges against him as he failed to disclose them.
PNC's corporate ethics office kept meticulous records of its social outings with Mr. Mellow -- in addition to several Yankees games, "PNC also provided Mellow with tickets to a Rod Stewart concert, 'Dancing with the Stars' at Wachovia Arena, and a Bryan Adams concert."
Mr. Mellow, the grand jury contends, did not report -- or drastically underreported -- the value of the gifts and outings he received from PNC. A bank spokesman, Frederick Solomon, said Wednesday afternoon that PNC's "practice is not to comment on legal matters, though we note that PNC is not accused of wrongdoing."
Also in the presentment, McTish, Kunkel & Associates, an Allentown, Pa.-based engineering and environmental services firm that has offices in Pittsburgh and Monroeville, acknowledged having "purchased a $4,000 travel voucher from Liberty Travel and [giving it to] George Hatalowich."
The longtime president of the company "could not provide the grand jury with a reasonable explanation for the gift. He recalled that he wanted to do something nice for Hatalowich and testified, 'Thinking back, I don't remember what my state of mind was. ... it wasn't the right thing to do.'"
McTish also provided Pirates tickets and the use of an apartment in Pittsburgh to Mr. Hatalowich. McTish started getting work from the Turnpike Commission in 2003, "to provide construction management and inspection on the Findlay Connector project, [part] of the Southern Beltway.
The original contract was for $19.8 million, and supplemental overruns brought the final agreement to $21.6 million; the award caught some turnpike employees off-guard.
Two years later, MKA was selected to replace the Allegheny River Bridge on the turnpike, a $15.1 million contract, and later it was hired to do roadway construction for $22.3 million.
David Shapiro, an attorney for Mr. Rubin, said: "We are going to trial, but other than that I don't have any comment."
Michael Engle, an attorney for Mr. Suzenski, said he was just beginning to digest the information from the grand jury's investigation.
"Mr. Suzenski maintains his innocence," Mr. Engle said. "He also feels that he had no part in any wrongdoing involving the turnpike or any other individual associated with this case."
Catherine Recker, an attorney for Mr. Hatalowich, said: "What I can say is that we dispute both the factual allegations and the legal conclusions set forth in the presentment, and my client looks forward to his day in court."
Mark Sheppard, an attorney for Mr. Miller, said: "Mr. Miller intends to vigorously defend himself against these charges. He had been fully cooperative with the grand jury and agreed to be interviewed, and frankly we're very surprised at these charges. He's very proud of the work he did with [project manager Ciber] and the performance of the contract. I think once all the evidence is in it'll be pretty clear that there's no merit to these charges."
Highlights of the presentment
An 85-page grand jury presentment detailed a pervasive pattern of political and financial corruption at the Pennsylvania Turnpike, including:
• Secret gifts of cash, travel, and entertainment given to politicians.
• Officials strong-arming businesses and individuals to make political contributions in order to do business with the Turnpike.
• Bid rigging, in which politicians directed which companies would be awarded contracts.
• Political work and campaign fundraising done by turnpike employees.
• The "misdirection, misuse, and theft of millions of dollars of public money," according to Attorney General Kathleen Kane.
Correction: An earlier version of this story incorrectly reported PNC's response. The bank responded Wednesday afternoon. (Published March 14, 2013)mobilehome - Transportation