Former police Chief Harper indicted on five counts

| Friday, March 22, 2013, 12:18 p.m.

Ousted Pittsburgh police Chief Nate Harper is embarrassed and distraught and will plead guilty to federal charges of failing to pay taxes and diverting public money into private accounts for his own use, his attorneys said on Friday.

“The lure of the accessibility of an unmonitored account proved to be too much of a temptation,” attorney Robert Del Greco said three hours after prosecutors filed a five-count indictment. “It really lured him in. It was an irresistible temptation.

“He accepts full responsibility for his actions. As he told us, it was just bad judgment on his part.”

Authorities charged Harper, 60, of Stanton Heights with directing at least $70,628.92 into accounts he opened at the Greater Pittsburgh Police Federal Credit Union and spending at least $31,986.99 on meals and drinks, gifts, a TV and other personal uses. The money came from businesses that hire off-duty officers.

Harper also is charged with failing to pay taxes for four years on salaries ranging from $110,000 to $123,000.

“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.”

Harper pleaded not guilty during an appearance before U.S. Magistrate Judge Robert Mitchell, who released him on a $100,000 unsecured bond. He ordered the former chief to surrender his passport.

“Today's indictment of Nathan Harper for public corruption violations is not an indictment of the Pittsburgh Bureau of Police,” said Gary Douglas Perdue, special agent in charge of the FBI's Pittsburgh office. “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.”

Harper, wearing a tan suit, said nothing during his court appearance except to answer the judge's questions with “yes, sir.” He was accompanied by Del Greco and attorney Bob Leight.

Harper decided not to attend a news conference with his attorneys.

“He's embarrassed, sad and humbly contrite,” Del Greco said.

The indictment occurs two months after the Tribune-Review reported the grand jury's work and one month after Mayor Luke Ravenstahl forced Harper to resign. Harper had led the department since 2006.

Leight said Harper likely would lose his $63,121 annual pension. He could be given up to 14 years in prison, though Leight said sentencing guidelines would place Harper in the 10- to 16-month range.

“His cooperation will be made known to the sentencing judge,” Leight said.

From Bradenton, Fla., where the Pirates hold spring training, Ravenstahl said in a written statement: “We will continue to work tirelessly to rebuild the bureau and to ensure that Pittsburgh remains one of the nation's safest cities.”

Adult store ‘movies' purchase

The indictment lists 14 checks meant for city accounts that went to credit union accounts labeled “Special Events” and “IPF.” Hickton said that list and others in the indictment provide examples of what Harper did but don't list all of the transactions the indictment covers.

Two checks came from W.J. Beitler Co. in Esplen. The fourth-generation, family-owned trucking and warehousing company paid a total of $17,447.93 in December 2009 in fees. Quentin Beitler, the company's president, could not be reached for comment.

Authorities said Harper 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 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 Saloon, Macy's, Hofbrauhaus and XM Radio. He spent $74.88 at an Adultmart Monroeville News store on Dec. 29, 2010, for “movies,” according to the indictment.

Fraternal Order of Police Fort Pitt Lodge No. 1 President Michael LaPorte wondered why others were not indicted.

“Based on my personal knowledge, to think he was the one who masterminded the diversion of funds is against what I know of his character,” LaPorte said.

Hickton declined to say whether his office will seek indictments against others. He would not say whether Ravenstahl, whose bodyguards had debit cards from the credit union, is under investigation.

Ravenstahl has said authorities told him that he is not a target.

Harper had past tax problems. Between 1996 and 2006, city, county and school officials filed a dozen liens on his home for nearly $6,000 in unpaid taxes and sewer bills, court records show. He paid the taxes when he became chief.

Del Greco said Harper had financial issues because he helped raise his five grandchildren, including one with special needs, and is paying a daughter's school loans.

“The chief was naïve about how the whole process worked. He was led to believe this conduct was OK,” said Leight, but would not say to whom he referred.

Leight said Harper set up the initial account in 2004 because a business that hired off-duty officers did not have enough money to pay them.

Expanding investigation

In January the 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.

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.

Leight said the FBI questioned Harper five times from October to last week. He said Harper denies taking money from Bedway. The attorneys declined to say if the FBI questioned Harper about Ravenstahl.

Hickton said the FBI is investigating the awarding of that contract.

The investigation expanded into spending by police officials and other employees. The mayor and others spoke with 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 was in the grand jury room for about an hour and 45 minutes on Friday. Outside the courthouse afterward, she denied taking city money.

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 that 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.

Suspicions aired in memo

The money came from a $3.85 hourly fee that bars, restaurants, strip clubs, construction firms and sports teams paid to hire off-duty 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 questioned several checks she received from the Special Events Office. She said Palmer told her that she was afraid to tell anyone else because she believed her supervisors, Tamara Davis and Ganster, along with Harper, were diverting money.

According to the memo, Ehlinger said she believed one check paid for a promotion party for Cmdr. Eric Holmes.

Ganster told authorities that she brought concerns about spending to Public Safety Director Mike 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 copied records at the West End credit union.

Warner Macklin, a spokesman for Davis, said Ehlinger's memo “doesn't pass the smell test.” He said she “was not involved in the diversion of funds.”

Harper ordered debit cards in the names of eight people, including Ravenstahl's bodyguards, Deputy Chief Paul Donaldson and Assistant Chief Maurita Bryant.

The FBI interviewed Davis, who with Harper, Holmes, Sgt. Barry Budd and Officer Tonya Montgomery-Ford formed a private firm, Diverse Public Safety Consultants LLC.

Bobby Kerlik and Brian Bowling are Trib Total Media staff writers. Reach Kerlik at 412-320-7886 or Reach Bowling at 412-325-4301 or Staff writers Carl Prine and Margaret Harding contributed to this report.

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