Harrisburg's Appointed Receiver Appears Before Judge

David Unkovic, whose appointment by Pennsylvania Gov. Tom Corbett as the receiver for Harrisburg has come under fire because of his ties to major creditors in the city's financial crisis, appeared before a Commonwealth Court judge on Thursday as part of his confirmation process.

Senior Judge James Kelley, who presided over the hearing, has 60 days to confirm Unkovic, an attorney.

Unkovic, previously the chief counsel for the state Department of Community and Economic Development, told Kelley he had no intimate connections to bond deals related to Harrisburg's incinerator debt. The city owes $310 million, largely due to costs related to retrofitting its incinerator, and has skipped roughly $60 million in bond payments.

Unkovic worked for 27 years for law firm Saul Ewing LLP, which is representing incinerator bond insurer Assured Guaranty Municipal Corp. He also worked for Public Financial Management Inc., which represented Dauphin County in a financing of the incinerator debt, and for law firm Cozen O'Connor LP, which was retained by Pennsylvania to object to a bankruptcy filing by Harrisburg's City Council.

Federal Judge Mary France last week nullified the council's Chapter 9 filing.

"He shouldn't have any interest in any of the parties. He should be totally pure as the driven snow," James Chatz, a partner at law firm Arnstein & Lehr LLP in Chicago with more than 50 years' bankruptcy law experience, said of Unkovic. "They're quickly pushing through someone with a bit of a taint, based on his ties with creditors. Why?"

Chatz said he agreed with France's ruling, noting that state law allows the city to file again on July 1. "It is a long period of repose which would allow the parties to negotiate in good faith and come to appropriate resolutions," he said, while acknowledging Harrisburg's political impasse.

Mark Schwartz, the attorney for the City Council, said he would review France's written ruling before deciding whether to appeal.

Unkovic told Kelley he found the bond deals in 2002, 2003 and 2007 "disturbing," though speaking with reporters after the hearing, he said he would rather wait for the Harrisburg Authority, which operates the incinerator, to complete its forensic audit.

"There are things that need to be looked at, but looked at in the context of how we go forward, because how we go forward and what the best plan for the city is depends in part on where we've been, so it's important to look back and understand what happened there," Unkovic said.

Meanwhile, Unkovic's successor, acting DCED chief counsel Jill Busch, has written to firms involved in the incinerator financing deals asking them to preserve their records.

That prompted a sharp response from Schwartz. "Excuse me, where have you been? You were there," he said rhetorically to Unkovic.

Kelley, meanwhile, barred Schwartz from participating in Thursday's hearing. Schwartz cited what he called a procedural misunderstanding. "Another door has been slammed in the face of the people of Harrisburg," he said.

Kenneth Lee of Tucker Arensberg PC, representing Mayor Linda Thompson, questioned Unkovic at the hearing. "He might as well have baked a cake and given it to him. He didn't even say boo," Schwartz said.

Also on Wednesday, three people, including former mayoral candidate Nevin Mindlin, filed a civil rights lawsuit in federal court, saying the state's Act 47 workout plan for distressed communities excludes African-Americans from the decision-making process. The group also includes Rev. Earl Harris, senior pastor of St. Paul Baptist Church and first vice president of the Interdenominational Ministers Conference of Greater Harrisburg, and labor leader Eric Jenkins.

Thompson, who defeated Mindlin in the 2009 general election to become the city's first black mayor and its first female mayor, has supported the Act 47 plan, which the council rejected three times.

"Listen, I would never side with a plan that is racially biased," she said Wednesday.

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