A federal grand jury Friday indicted ousted Pittsburgh police Chief Nate Harper on charges of failure to file tax returns and diverting public money for his own use.
"This is puzzling and baffling behavior, and a sad day," said U.S. Attorney David Hickton, who noted he worked with Harper on high-profile events and investigations for several years. "The allegations represent the worst kind of public corruption."
Prosecutors charged Harper, 60, of Stanton Heights with four counts of failure to pay taxes and one count of conspiracy. He pleaded not guilty during an initial appearance about 2 p.m. before U.S. Magistrate Judge Robert Mitchell, who released Harper on $100,000 unsecured bond. He ordered the former chief to surrender his passport.
Harper, wearing a tan suit, said nothing except answering the judge's questions with "yes, sir." He was accompanied only by his attorneys, Robert Del Greco and Bob Leight, who planned a 3 p.m. news conference, Downtown.
On the conspiracy charge, Harper diverted at least $70,628.92 from the $3.85-per-hour administrative fee business pay when they hire off-duty officers, and he used at least $31,986.99 for his own benefit, prosecutors say. They also say he failed to pay taxes for four years on salaries ranging from $110,000 to $123,000.
"Today's indictment of Nathan Harper for public corruption violations is not an indictment of the Pittsburgh Bureau of Police. The Federal Bureau of Investigation and the Pittsburgh Bureau of Police have a successful, long-standing and collaborative partnership to advance the public service mission of our respective agencies," said Gary Douglas Perdue, Special Agent in charge of the Pittsburgh office of the FBI. "That being said, stemming public corruption is the FBI's top criminal investigative priority. It will not be tolerated in our community, no matter the level, the amount or the individuals involved."
The indictment comes two months after the Tribune-Review reported the grand jury's work and one month after Mayor Luke Ravenstahl forced Harper to resign his post. Harper led the department since 2006.
Ravenstahl is in Bradenton, Fla., where the Pirates have spring training. In a written statement, he called it a sad day for the city and police bureau.
"We will continue to work tirelessly to rebuild the bureau and to ensure that Pittsburgh remains one of the nation's safest cities," he said.
Public Safety Director Michael Huss could not be reached.
The indictment
The indictment accuses Harper of working with others to send public money to secret accounts at the Greater Pittsburgh Police Federal Credit Union and tapping the accounts for personal use, including purchases and meals.
The indictment lists 14 checks meant for city accounts that went to credit union accounts labeled "Special Events" and "IPF." The largest check topped $10,000.
Authorities said he used two of eight debit cards from the credit union to withdraw cash and buy perfume, food and alcohol, an oven upgrade, a ladder, movies, a gift card and a 32-inch LCD TV.
The last transaction listed in the indictment was Dec. 20.
Between September 2008 and December 2012, Harper used $31,986.99 of the money from two credit union accounts using two Visa cards, the indictment states. It lists more than 50 transactions between April 2010 and December at places including Harris Grill, Nakama, The Wine Loft, Grandview Salon, Macy's, Hofbrauhaus and XM Radio. He spent $391.38 at Sam's Club on the TV and other items on Aug. 16, 2010; $700.85 to Houston-Starr for the oven upgrade on June 7, 2010 and $326.33 at the Capital Grille on Dec. 14, 2011.
Hickton declined to say whether his office will seek indictments against anyone else involved in the debit card conspiracy. He would not say whether Ravenstahl, whose bodyguards had debit cards from the credit union, is under investigation.
Ravenstahl has said authorities told him he is not a target.
Harper had tax problems in the past. Between 1996 and 2006, city, county and school officials filed a dozen liens on his home for nearly $6,000 in unpaid taxes and sewage, court records show. He paid the taxes before becoming chief.
Expanding investigation
The Tribune-Review reported in January that a grand jury was investigating Harper's involvement with Arthur J. Bedway, 63, of Robinson, an owner of Carnegie-based Victory Security indicted on charges of setting up a shell company, Alpha Outfitters, to win a contract to install computers in police vehicles. Bedway and Harper were friends.
Hickton said the FBI is still investigating the awarding of that contract and declined to say whether Harper would be charged with any crimes related to that.
The investigation expanded into spending by police officials and employees close to Ravenstahl. The mayor and others spoke to FBI agents and federal prosecutors.
They include Sandy Ganster, manager of the police bureau's Office of Personnel and Finance, a target of an FBI search last month. Ganster entered the grand jury room at about 8:30 a.m. Friday. She left without commenting about 10:15.
Karen Palmer, an accountant in Ganster's office, left the room about 20 minutes later. She declined to comment.
Ganster, under a grant of immunity, told authorities she diverted $25,000 to $35,000 in public money over three to four years into accounts Harper ordered her to open at the credit union, her attorney, Bill Difenderfer has said.
The money came from payments that businesses, including bars, restaurants, strip clubs, construction firms and sports teams, made to hire off-duty police officers, often to provide security.
City officials had reason to suspect problems in Ganster's office and the Special Events Office, which coordinates off-duty work.
In a memo to Sgt. Carol Ehlinger dated Jan. 10, Officer Christie Gasiorowski said Palmer raised concerns about several checks she received from the Special Events Office. She said Palmer told her she was afraid to tell anyone else her concerns because she believed her supervisors, Tamara Davis and Ganster, along with Harper, were involved in diverting money.
Palmer told Gasiorowski that numerous checks were diverted to the credit union and she was making copies. The checks totaled more than $31,000.
According to the memo, Ehlinger said she believed one of the checks had gone to pay for a promotion party for Cmdr. Eric Holmes. Gasiorowski asked for protection for her, Ehlinger and Palmer under the "Federal Whistle Blowing Act."
Ganster, 57, of Overbrook told authorities she brought concerns about spending to Huss on Feb. 9. Three days later, FBI agents seized boxes of records from the Personnel and Finance and Special Events offices at police headquarters. That week, agents also copied records at the West End credit union.
Harper ordered debit cards in the names of eight people, including himself, Ravenstahl's bodyguards, and police brass including Deputy Chief Paul Donaldson and Assistant Chief Maurita Bryant.
The FBI interviewed Davis, one of Harper's former subordinates who started a private security firm with him called Diverse Public Safety Consultants LLC.
Allegheny County District Attorney Stephen A. Zappala Jr. last month sent a cease-and-desist letter to company owners Harper, Holmes, Sgt. Barry Budd, Officer Tonya Montgomery-Ford and Davis because they didn't have a private detective license.
Bedway and prosecutors are discussing a plea deal on a charge of defrauding the government, court records show. Victory Security once employed Harper's wife, Cynthia, a former police officer.
Bobby Kerlik and Brian Bowling are staff writers for Trib Total Media.
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