Ex-mayor of Harrisburg charged in probe of city debt crisis

By David DeKok

HARRISBURG, Pa. (Reuters) – The former mayor of Harrisburg, Pennsylvania, who ended his 28-year tenure in 2010 with the state capital near financial ruin, was charged on 499 criminal counts on Tuesday for theft, bribery, evidence tampering and other charges.

Stephen Reed and unnamed associates issued municipal bonds for legitimate purposes but allegedly used some of the proceeds to buy a bizarre list of artifacts in which Reed was interested while creating fees payable to “a coterie of professionals,” a grand jury said in its indictment.

Reed, 65, who served as mayor from 1982 to 2010, allegedly used some of the bond proceeds to travel the country and buy about 10,000 artifacts, including a sarcophagus, a suit of armor and a “vampire hunting kit,” that he said were destined for museums.

The expansive allegations stretch over a quarter century to numerous public agencies that Reed touched, including the parking authority, school district, civic baseball club and a local university.

Attorney General Kathleen Kane said she was “very confident” that the complex, ongoing investigation of the city’s crippling debt crisis would bring charges against others.

“This is one of the most disturbing cases of public corruption this office has investigated,” Kane said in a statement. “His conduct is at the root of the fiscal issues that continue to plague the city of Harrisburg today.”

Harrisburg in 2011 filed for bankruptcy, at the time one of the biggest U.S. municipal bankruptcy filings ever. The case was thrown out and the city was put into receivership, which it exited last year. It is still under state financial oversight.

Under Reed’s watch, Harrisburg backed municipal bond deals to finance repairs of its trash incinerator that left the city drowning in more than $362 million of debt.

While in office, Reed also bought artifacts for pet projects including a National Civil War Museum, which was built, and a “Wild West Museum” of the American westward expansion, which was not.

He purchased, for example, the dental chair of Doc Holliday, the dentist-gunfighter and friend of notorious 19th-century gunslinger Wyatt Earp.

Agents from the Pennsylvania attorney general’s office raided Reed’s home in June and carted away antiques and boxes.

On his way into court, Reed told reporters he was “absolutely” innocent. “I look forward to waging a vigorous fight against these charges. There is much more to this story.”

Reed also tried to sell at least 20 city-owned firearms in Gettysburg in May, then attempted to cover his tracks, according to the criminal complaint. The weapons have been recovered, Kane’s office said.

And he allegedly tried to bribe at least one former city council president by offering a yet-to-be-created position with Harrisburg’s minor league baseball team in exchange for control of city council votes.

Reed is due back in court on July 24 to enter a plea. Magisterial District Judge William Wenner ordered Reed to surrender his passport and he was released on a $150,000 recognizance bond.

(Additional reporting by Ankush Sharma in Bengaluru and Hilary Russ in New York; Editing by Chizu Nomiyama and James Dalgleish)