Turmoil, litigation stall Pittsburgh watchdog authority's mission
Lost in the widening scandal at the Pittsburgh Intergovernmental Cooperation Authority are the ongoing lawsuit pitting the fiscal watchdog against City Hall and the halt in agency spending on studies to improve city government efficiency.
In July, Pittsburgh Mayor Bill Peduto's administration sued ICA in Allegheny County Common Pleas Court, demanding reams of financial records and the release of what soon will be $20 million in Rivers Casino gambling revenues earmarked for the city but withheld by the agency in an ongoing budget dispute.
Created by state lawmakers in 2004 when Pittsburgh reeled from nearly $1 billion in debt and teetered on the brink of bankruptcy, ICA works alongside a similar state agency organized under Act 47 to help solve the city's long-term financial woes.
Since the July filing, however, much has changed at ICA — even if the litigation drags on.
A Tribune-Review investigation uncovered the mass destruction or loss of financial records at the ICA and reported that the agency's director, Henry V. Sciortino, personally went into federal bankruptcy protection in the midst of allegations that he bilked an ex-business partner and tried to hide assets.
Sciortino, of West Chester, also apparently failed to file mandatory annual financial interest statements with the state Ethics Commission since 2005.
On March 28, three newly appointed voting members joined the ICA board. The board reorganized, removing from the chairmanship Nicholas Varischetti, a Republican and Downtown lawyer, and installing BJ Leber, a Democrat who once served as late Mayor Bob O'Connor's chief of staff.
The board has set an April 15 public meeting to decide Sciortino's fate.
The ICA faces the unwanted prospect of dipping into the gambling funds owed to the city to fund Sciortino's severance package and to pay Kleinbard LLC, its Philadelphia special counsel. The law firm was hired by the former ICA board to fight Peduto's lawsuit but has been dragooned to clean up the agency office during the Sciortino scandal.
Peduto, a Point Breeze Democrat, said Kleinbard should be fired.
“The board should hire independent legal representation. The new members were not part of the past decisions and should be protected as they clean up the mess,” he said. “It is time to have an oversight board that helps Pittsburgh, not hurts it. We will continue to pursue our lawsuit against the ICA, until every dollar of the $20 million has been accounted for and all necessary good government reforms have been implemented.”
Kleinbard partner Matthew Haverstick, who also has been serving as ICA's interim solicitor, referred the Trib to board chairwoman Leber for comment. She did not return messages.
Between July and early January, Haverstick and co-counsel Joshua Voss billed ICA $55,715 for legal duties tied to the city's litigation.
According to Pennsylvania Auditor General Eugene DePasquale, the average annual state appropriation to ICA in recent years was about $235,000, about 80 percent of which went to Sciortino's salary.
That leaves little room for costly litigation, but critics point to a larger problem at the ICA: the authority's spending on studies to help Pittsburgh streamline city services has dwindled in recent years. Expenditures on lawyers and public relations firms increased substantially, according to available records.
Between 2004 and 2010, ICA spent nearly $1 million on consultants studying Pittsburgh's problems, but that dried up.
From 2010 to early 2016, ICA wrote 46 checks totaling $342,735 to five law firms, according to a Trib analysis of ICA's sole surviving check registry.
Only seven invoices backing up the spending exist today, the Trib discovered after filing a Right to Know request. ICA blacked out every detail.
The few non-legal bills provided by ICA to the Trib also were often highly censored, especially invoices submitted by Veritas Communications, a Downtown public relations firm run by Mt. Lebanon Democrat Robert Butter.
Between Feb. 16, 2011, and June 30, 2015, the ICA wrote 17 checks totaling $134,975.33 to Veritas. Only three receipts justifying that spending could be located, along with two Butter invoices submitted in 2008 that totaled $18,300.
ICA redacted every detail of the work Butter did before handing over the documents to the Trib.
The Veritas invoices and the checks paid out by Sciortino's ICA don't match up. On Dec. 26, 2014, for example, Butter submitted six invoices totaling $16,016.22 to ICA for payment, apparently for the previous six months of services.
Two weeks later, ICA paid Veritas $17,219.65, according to the check registry. ICA declined to explain the apparent overpayment of taxpayer funds, but in legal filings conceded it might have occurred.
In his affidavit trying to block the Trib from seeing more of the few remaining records at ICA, Sciortino swore that Veritas was “intimately involved in internal discussions with the ICA” and that details for each surviving receipt contained “internal plans and stratagems” the agency employs during budget battles with the city and thus had to be redacted.
In an emailed statement to the Trib, Butter declined to specify what he did for the ICA, adding that he makes “it a habit not to discuss any former or current client engagements.”
Between the beginning of 2010 and early 2016, the ICA spent $269,179 on public relations and Internet marketing firms like Butter's, including companies paid to design and maintain the agency's website.
Today, the ICA's webpage is defunct.
With the ICA running out of money because of Sciortino's possible severance package and the city's lawsuit, spending on the agency's paid public relations spokesmen might be ending, too.
Between mid-2015 and late January, ICA paid $30,456 to David Caliguiri, son of late Democratic Pittsburgh mayor Richard Caliguiri, and Craig J. Kwiecinski, the former spokesman for Democratic Mayor Tom Murphy when he sought state aid during the city's bankruptcy crisis in 2004. A former lobbyist, Caliguiri managed the political campaigns of Murphy and state Sen. Jay Costa, Jr., who called for Sciortino's firing.
The Caliguiri Group responded to a Trib inquiry about its services with a statement that it has provided public relations services to the ICA board under a month-to-month contract since April 2015: “In this capacity, our firm serves as a liaison to the media, develops various press materials including public statements, press releases, media advisories, and general correspondence and provides other communications services to the Board as needed. We have also assisted the Board in the execution of their public meetings.”
Carl Prine is a Tribune-Review investigative reporter. Reach him at email@example.com or 412-320-7826.