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Pair face trial in fraud case

| Wednesday, Aug. 4, 2004

They reportedly used their state and federally funded jobs at a nonprofit economic-development agency to pay for fancy parties, expensive meals and exotic trips.

Now, five years after a state audit highlighted alleged financial abuse by the heads of the since-renamed Ben Franklin Technology Center of Western Pennsylvania, two people face a trial on federal charges of defrauding taxpayers.

Jury selection begins today in the joint trial of Lawrence McGeehan and Kathleen Haluska, the former chief executive and chief operating officer, respectively, of the Hazelwood-based technology business-development agency -- which has been renamed Innovation Works.

McGeehan and Haluska, both of Fayette County, are accused of deliberately exceeding budgets, subverting internal cost controls and intimidating employees so that the two could use the agency to support a lavish lifestyle, instead of the intended goal of creating good jobs. Each faces up to 180 years in prison.

Stephen H. Begler, the attorney for McGeehan, declined to comment other than to say he expects to prove his client is not guilty.

Thomas Livingston, the attorney for Haluska, did not return a call seeking comment.

In 1999, Auditor General Robert P. Casey Jr. reported that the pair had "spent an exorbitant amount of tax dollars trying to mimic the 'Lifestyles of the Rich and Famous.'"

According to Casey, Haluska and McGeehan, both of Brownsville, made unnecessary trips to Ireland, Germany, Japan and China and around the United States. Casey said in a report that the pair held three staff retreats in 1997 at Nemacolin Woodlands Resort and Spa in Fayette County that cost nearly $30,000.

A $14,000 office Christmas party in 1997 featured a harpist, pianist and magician.

Although Casey put the state's losses from waste and mismanagement at about $2.6 million, the federal charges involve about $500,000 in questionable spending.

The federal trial will be conducted before U.S. District Judge David S. Cercone

The biggest expense reportedly involves a $345,122 payment to a resort in Tucson, Ariz., for a February 1998 conference that Haluska and McGeehan claimed was part of their work for the Navy. The 30-person junket included golf, a jazz concert and a performance by a John Wayne impersonator.

Casey's state audit in 1999 spurred the name change at the business incubator to Innovation Works and led to major accounting improvements, said Richard Overmoyer, deputy secretary of the state Department Community and Economic Development, the state agency that oversees the center.

Cercone recently dropped nine of 29 fraud counts against McGeehan and Haluska, who were both 51 when they were charged in April 2003. Cercone ruled that prosecutors duplicated some charges.

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