Long our Commonwealth of Corruption's nexus, Harrisburg has settled a first-of-its-kind Securities and Exchange Commission fraud case based on former Mayor Stephen R. Reed's administration misleading investors.
Required financial filings for 2007 omitted $4 million paid to guarantee bond debt related to a municipal-incinerator boondoggle that drained city coffers. A 2008 filing claimed “a high degree of uncertainty” about the city's incinerator authority making debt-service payments — when Harrisburg knew those payments couldn't be made for 2009 and later.
After that, Harrisburg stopped filing required documents with the SEC. That left investors looking to the 2009 city budget, which portrayed Harrisburg's credit rating as higher than it was, and Mr. Reed's 2009 “State of the City” address. He knew — but didn't mention — that the city likely was on the hook for $260 million total, instead discussing an “additional challenge” that could be “resolved.”
Mayoral successor Linda Thompson's administration was cited for additional filing failures. It cooperated with the SEC probe and has implemented reforms; she's pleased that the settlement precludes further litigation or fines.
But it doesn't preclude criminal prosecution, which is needed to deter further public corruption — and to reinforce what's widely seen as the settlement's broader purpose:
Putting municipal officials nationwide on notice about making statements that amount to securities fraud.
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.