In Pa., Where's the Payback?

Pennsylvania Attorney General Linda Kelly (on a pressroom monitor) is pursuing cases her predecessor left.
Pennsylvania Attorney General Linda Kelly (on a pressroom monitor) is pursuing cases her predecessor left. (TOM GRALISH / Staff)
Posted: October 01, 2012

HARRISBURG - In 1996, Pennsylvania state legislators grew disgusted that politicians could get taxpayer-paid legal help with no obligation to pay the money back if they were found guilty of corruption.

The result: a law that required convicted public officials to reimburse the treasury if they had lawyered up at public expense.

In the last five years alone, prosecutors have convicted nearly 30 Harrisburg elected officials and staff. The cumulative legal bill for taxpayers - an estimated $15 million.

But the payback requirement has gone unused in case after case.

The sole exception occurred earlier this year when a county prosecutor in Western Pennsylvania invoked the law to force a convicted state senator to pay the state $110,000 for legal defense work.

The responsibility for retrieving the money lies mainly with the state attorney general. Gov. Corbett, twice the state's top prosecutor, brought by far the most corruption cases in recent years. His successor, Attorney General Linda Kelly, has since 2011 pursued the cases Corbett left behind.

A review by The Inquirer, based on court and legislative documents and interviews with prosecutors, defense lawyers, and officials in Harrisburg, shows how taxpayers have not been reimbursed despite the law's mandate. And even if the law had been aggressively applied, the review shows, loopholes mean millions of dollars would still have been left unrecoverable.

Among The Inquirer's findings:

The legislature has imposed no limit on hourly rates or caps on total spending per official. For example, taxpayers paid $134,000 to hire defense attorneys for just one state representative. In contrast, Philadelphia caps the legal defense for indigent murder defendants facing the death penalty at $17,500.

Top officials in the state House acknowledge that records do not provide a full accounting of their legal spending - and that the chamber has never put its legal-coverage policy into writing.

The state Senate does not fully disclose who has benefited from its spending. Though the Senate does reveal sums paid to individual law firms, it is fighting in court to withhold the names of politicians who have received the legal help.

The 1996 law, officially known as Liability for Reimbursement of Costs for Outside Counsel, is at best a flawed instrument, some prosecutors and critics say.

For example, it does not apply to money spent defending legislators facing investigations by the state Ethics Commission - even when the officials are found to have violated ethics rules.

In response to questions from The Inquirer on the application of the law, spokesmen for Corbett and Kelly said on Friday the statute did not apply to any of their cases.

Corbett's spokesman, Kevin Harley, said prosecutors had checked with defense lawyers who had represented legislators and aides. Harley said the prosecutors had been assured that taxpayer money had been spent only on such matters as protecting legislative privacy issues and responding to subpoenas - not in criminal defense.

Nils Frederiksen, a spokesman for Kelly, echoed those arguments. He said the money spent on defense attorneys had not been used "improperly." He would not elaborate.

Frederiksen did not rule out invoking the law in the future. He said, for instance, that his office was "monitoring" the federal corruption prosecution of former State Sen. Robert J. Mellow, the Lackawanna County Democrat awaiting sentencing. In federal cases, the law says the attorney general should seek reimbursement of legal fees by filing suit in state court.

Stephen Miskin, a spokesman for the GOP members in the House, agreed with the attorney general analysis. Though paid lawyers were provided to elected officials and aides, the work was not "criminal defense," he said.

But Brett Marcy, a spokesman for the House Democrats, said his party's caucus found the explanations from Corbett and Kelly puzzling and unpersuasive.

He said the taxpayer-paid defense lawyers had indeed provided direct representation to their clients - the elected officials and aides.

"It sounds like the A.G.'s office is trying to parse out specific language to explain why they haven't asked for compensation," he said.

Not uncommon

It is not uncommon for governments to cover elected officials' and staffers' legal bills. In Harrisburg, the legislature pays for attorneys in matters involving their official jobs, but not purely private issues, such as a drunken-driving arrest. The legislature covers legal bills only during the investigatory phase of a case. Any payments stop once an official is criminally charged, and they must pay for their defense at trial themselves.

What is uncommon is the especially heavy legal spending in the capital.

Of the $15 million paid in the last five years, the state House spent more than $10 million hiring defense lawyers to address the sweeping investigations begun by Corbett and known as Bonusgate and Computergate. The Senate spent an additional $4 million on lawyers in response to federal indictments of four state senators.

These totals are estimates. Citing attorney-client privilege, the chief clerk of the Senate provided The Inquirer only with totals paid to law firms and did not reveal the names of clients or the amount spent for each.

House public information officers said invoices were "not structured in a way that would provide the reader with the ability to discern what charges specifically related to what client of the firm."

In other words, their records also do not break down how much taxpayer money was spent on individual officials.

They do, however, permit some calculations. For example, Mellow recently faced a federal criminal investigation and a state Ethics Commission probe. He was convicted of corruption in the federal case and cited for ethical wrongdoing by the ethics panel.

At least two law firms represented him in those cases, according to interviews and legal records. Senate records show the firms were paid $1.4 million while those investigations were under way.

House records also show the public spent $357,000 on lawyers for State House Speaker John M. Perzel (R., Phila.) and several aides while they were under investigation. Perzel is now serving a prison sentence.

In one specific disclosure, the House records reveal taxpayers paid $134,000 to hire a lawyer to represent former State Rep. Brett Feese, a top Republican convicted last year.

Law born in scandal

The reimbursement law was born of scandal. In 1995, Ernie Preate, the Republican attorney general, suddenly resigned and pleaded guilty to federal charges of taking secret cash campaign donations from operators of illegal video-poker machines.

Then it was revealed the state had paid more than $400,000 for defense lawyers while the FBI was closing in on Preate.

State Rep. Bill Lloyd, a Democrat from rural Somerset County, was upset. He wrote the reimbursement law. The law covers all elected officials and others subject to provisions of the state ethics acts.

"My argument was that if the politician was convicted, taxpayers shouldn't be on the hook for legal expenses," Lloyd, who left the legislature in 1998, said recently. "I just didn't think it was right."

No one disagreed. The Senate approved the bill, 49-0, and the House reapproved it, 201-0.

Preate argued that the money was spent to protect the Attorney General's Office, not himself personally. That argument was punctured by the man appointed to fill out Preate's term: Corbett.

In Preate's case, Corbett aggressively examined the legal fees. He hired a former federal prosecutor and deputized him to look into work done by Morgan, Lewis & Bockius, the Philadelphia firm hired when the FBI was pursuing Preate.

The inquiry found the lawyers hired ostensibly to look after the interests of the Attorney General's Office really served politicians targeted in a probe. The inquiry established that Morgan, Lewis had charged taxpayers to help defend a lower-ranking suspect who was being squeezed as the FBI built its case against Preate.

As Corbett said at the time, "Incredibly, the taxpayers of Pennsylvania paid for a portion of the suspect's legal defense."

Using public money, the firm also hired a private investigator to dig up background on the two federal prosecutors directing the Preate probe.

Though Morgan, Lewis denied any wrongdoing, it agreed to repay the state $304,000.

Law finally invoked

The 1996 law was finally invoked this year by Stephen A. Zappala Jr. the Democratic district attorney in Allegheny County.

Zappala won an order from a county judge that required former Republican State Sen. Jane C. Orie to pay the state the $110,000 used to cover legal bills incurred in the months before her indictment in 2010. The judgment was part of Orie's sentence after she was convicted of using her state employees for campaigning and forging documents in a cover-up.

Zappala, in a recent interview, said he could not explain why other prosecutors had not used the law.

"My read of the statute was that it's a mandatory responsibility that a prosecutor has," he said. "If you don't try to recover taxpayer monies that should be recovered, you've been victimized again."

In court, Orie's defense lawyer, William C. Costopoulos, unsuccessfully challenged Zappala's use of the law. The payback push was "unprecedented legally and factually," he argued.

"This is the first known attempt to use the reimbursement provisions," he said. "In none of the cases of the convicted public officials in the Bonusgate or Computergate investigations was such reimbursement sought, let alone granted," he said.

Judge Jeffrey A. Manning was unmoved.

"Whether or not this request by the Commonwealth has any precedent is immaterial," he wrote. "The statute clearly and unequivocally requires the court to order a public official convicted of a criminal offense to reimburse the Commonwealth for any funds incurred to defend the official."

He ordered Orie to start paying as soon as she completes her prison term.

All legal costs

When Lloyd introduced the reimbursement statute, it mandated that the corrupt official had to pay all legal costs - including money paid to represent the institution or other employees caught up in a probe.

Lloyd said that was fair.

"The money wouldn't have been spent but for the original conduct of the state official," he said.

The House agreed and passed the law as drafted. But the provision making convicted officials liable for all costs was stripped out in 1996 by the Senate's Rules Committee. Records detailing the vote could not be located, but the panel was chaired at the time by F. Joseph Loeper (R., Delaware), then Senate majority leader.

Four years later, Loeper pleaded guilty to corruption charges. Among the other members on the Rules Committee were State Sen. Sen. Vincent J. Fumo (D., Phila.) and Mellow, both later convicted of corruption charges, and former Sen. Raphael Musto, who is awaiting trial on federal charges of taking kickbacks.

On the House floor in 1996, Lloyd predicted the change meant taxpayers would still be "saddled with hundreds of thousands of dollars in legal costs."

In Orie's criminal case, that was proved true.

During the trial, lawyers for the Senate Republican fully detailed the spending prompted by the investigation. In all, they said, $1.2 million in taxpayer money was used to cover legal bills.

But of that, they said, only $110,000 was spent to assist Orie directly.

The other $1.1 million, the GOP's lawyers said in a filing, was spent representing the Senate.

As examples, the lawyers said they fought to block the seizure of "legislatively privileged material," reviewed thousands of documents sought by the investigators, and advised 20 aides who were witnesses in the probe.

They also stressed they got back "Caucus property (not Sen. Orie personal property) unlawfully seized by the Commonwealth from the Senate's Pittsburgh North Hills office."

Judge Manning ultimately agreed with the Senate position but was bemused. "Just explain to me for a minute your position here," he asked from the bench in June. "Wouldn't you rather have the money back than not have the money back? . . . It is taxpayer dollars. It is all taxpayer dollars."

Zappala said he rejected the notion that the Senate lawyers pursued an agenda apart from Orie's. "I think that's nonsense," he said.

But Drew Crompton, a top Republican aide in the Senate and a lawyer, disputed that. He noted that many aides ended up as prosecution witnesses against Orie.

No full accounting

Though the full scope of spending in connection with Orie was laid out at her trial through subpoenas, the Senate will not provide an accounting for all officials whose bills have been paid.

The Senate, supported by House lawmakers in a friend-of-the-court filing, argued that disclosure might unfairly smear officials merely caught up in criminal investigations, perhaps as witnesses.

For two years, the Senate has been fighting a lawsuit by the Associated Press requesting a full detailing of spending. In a friend-of-the-court brief last month, the Pennsylvania Newspaper Association said the information should be released to provide "public accountability for public funds."

Commonwealth Court ordered the full information made public last year. The Senate has appealed.

The Philadelphia law firm Conrad O'Brien is handling the case. The Senate will not say how much it has paid the firm.


Contact Craig R. McCoy at 215-854-4821 or cmccoy@phillynews.com.

Inquirer staff writer Angela Couloumbis contributed to this article.


 


 

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