Harrisburg, Pa., Mayor Eric Papenfuse confirmed that he testified recently before a grand jury in Pittsburgh convened by Pennsylvania Attorney General Kathleen Kane's office.
Papenfuse, who took office in January, did not elaborate. Kane's office last summer said it would investigate bond deals connected to an incinerator retrofit project that put Harrisburg on the brink of bankruptcy. Dauphin County District Attorney Edward Marsico requested that the state intervene. "There is the existence of a grand jury. I was subpoenaed before the grand jury as a witness," Papenfuse said Friday on a local video posted on the Roxbury News website. "I did testify before the grand jury and the city is cooperating with the attorney general's office with regard to providing information for their investigation."
Last May, the Securities and Exchange Commission accused Harrisburg of fraud, but imposed no fines and prosecuted no one.
The city last month emerged from state receivership, armed with a recovery plan that erased about $600 million of debt.
Transactions included the sale of the city incinerator to the Lancaster County Solid Waste Management Authority, which in December sold $130 million of bonds to finance its purchase of the facility, which it renamed the Susquehanna Resource Management Complex.
Papenfuse said he did not want to talk about the substance of what he said and what materials the city provided. "I believe it might compromise the investigation. But I do believe the public has the right to know that this is existing."
He said he didn't recall what date he testified, although the testimony consumed much of the day. Papenfuse added, however: "I've never felt more confident that we will have accountability for Harrisburg. There will be justice and I believe it will come and it will come swiftly."
Kane's office expanded the investigation to include the Harrisburg School District, according to a report in the Patriot-News of Harrisburg. A message seeking comment was left with Kane's office.
Mark Schwartz, who represented the Harrisburg City Council in its October 2011 Chapter 9 filing that a federal bankruptcy judge nullified, said Kane's office is doing far too little.
"This attorney general is all about politics and putting on a show. Time and again she has shown that it's not about justice," said Mark Schwartz, a Bryn Mawr, Pa., solo practitioner.
Papenfuse, appearing before the state Senate local government committee on Oct. 4, 2012, recalled his resignation in 2007 from the Harrisburg Authority, the public works agency that owned the incinerator at the time.
He said "that the numbers didn't add up, that there was no way that the debt should continue to be characterized as self-liquidating."
The certifying of bond transactions as self-liquidating enabled issuers to circumvent state debt limits.
"There was a deliberate, deliberate attempt perpetuated by a number of different folks in 2007 to circumvent the Debt Act and to essentially break the law to borrow money which we shouldn't have been allowed to borrow," Papenfuse told the committee.
Papenfuse said he had asked then-Attorney General Tom Corbett - now the governor - to investigate the bond deals, only for members of the Federal Bureau of Investigation's public corruption unit in Harrisburg to order him, under the threat of prosecution for obstruction of justice, not to talk because they had an "active, ongoing investigation."
He said that two years later, "I felt that the investigation was going nowhere. I don't think that they're particularly well-equipped to deal with matters of very complicated financial procedures."
