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The Corruption Chronicles

Hey, at least our city and state excel at something, right?

Public corruption thrives as bureaucracies expand, political rules become arcane, and political competition diminishes through safe, gerrymandered districts and one party towns. No wonder Pennsylvania is among the most corrupt states in the nation.

While we are used to corruption probes and trials, the revelation that John Estey, former chief of staff to Governor Rendell, pleaded guilty this month to wire fraud in an FBI sting caught everyone by surprise.

Estey travelled in circles of political power: Not only did he serve at the highest levels of the Rendell administration in Philly and Harrisburg, but he was a fixture at the politically connected law firm Ballard Spahr, at regional port authorities, and at the Hershey Trust.

He also wore a wire and cooperated with the Feds for the past five years.

How often did he wear a wire? In what situations? In search of what or whom? Only Estey and the Feds know. But a lot of people are checking phone logs and appointment books.

John Estey was a surprise catch to those who know him: A low-key guy without the political bluster of others who have been caught with their hand in the cookie jar. He would have been absent from most people’s corruption suspect list.  

But this goes way beyond Estey. Prosecutors are obviously focused on a wider probe of political deal making in Harrisburg. To launch the probe they had to build the case within their own agency that the sting deserved to be capitalized.

The Estey case gets to the question of what is the line that exists between legitimate lobbying and campaign contributions, and illegal activity? After all, every interest group—corporations, small businesses, labor unions, civic causes, large nonprofits—lobbies. If a trade group didn’t lobby it would be political malpractice. And every politician has to raise money. Members of Congress are elected for two-year terms, which means that even in relatively safe districts, they spend an enormous amount of time on the phone soliciting money.

This would be a good time for political leaders—existing or aspiring—to take a much stronger stand against public corruption. Speak up even if it means speaking back to your own political party.

Lobbying often runs on a parallel track with legal financial commitments to campaigns or even favored candidate causes—The Clinton Foundation jumps to mind. The obvious issue is the explicit link between the act of making contributions to the act of requesting legislation or consideration for a public contract. Once that line is crossed, there is a case. If the line is not crossed, there are just isolated circumstances, even if the pattern seems obvious and the result is less than optimal when it comes to good public policy.  

In the absence of explicit cause and effect, we are free to give as much money as campaign finance laws allow. Large financial firms give generously to Congress to gain access and influence around regulatory issues. The teachers unions backed Governor Wolf in Pennsylvania with money and votes because he was going to support their issues and provide them with access.

None of this is illegal. Moreover, lobbying and contributions do not always have the desired effect. Popular sentiment, conflicting interests, and practical political considerations may run counter to a well-funded campaign to get a law passed or an appropriation made. As legendary community organizer Saul Alinsky used to say: Organized people can beat organized money.

The fake company that snared Estey—Textbook Bio Solutions—came prepared with $135,000 of lobbying money in exchange for legislation, and featured a few federal agents imitating investors. The Feds were able to rely not only on the incentives of cash but also on the willful ignorance of their targets. Nobody—not Estey, nor the lobbying firm, nor the politicians that sponsored the legislation—investigated the company’s track record, investors, or business model.

That is the beauty of the sting. It was based on the assumption that nobody would actually care about the substance of a Florida company whose website could have been designed during a high school student’s detention.

How is this possible? In part, the sting got lucky when everyone followed what seemed like authoritative credentialing. A person who seems to be in the know legitimized the firm or client and then passed them off to the others—who did not check. Harrisburg is not a due diligence operation.  

Companies hire guys like Estey because he knows how to get things done in a complex bureaucracy where even the best-intentioned organizations need someone to guide them through rules, personalities, and policy nuance.  

The beauty of the Estey sting is that it was based on the assumption that nobody would actually care about the substance of a company whose website could have been designed during a high school student’s detention. Harrisburg is not a due diligence operation.

But nobody has been indicted as yet for an explicit pay to play transaction in this case. The charge was wire fraud by a non-politician moving money between a firm, lobbyists and politicians. This may have been a non-story without the wire fraud charge. Just another day at the dysfunctional office that is Harrisburg.

To pass special legislation for a company that waltzes in from Florida, unknown and without any clear industry rationale, is the really big story: It shows how broken the system really is in the state capitol. Stop everything: Legislators want to mandate textbook recycling, so they can get contributions and district jobs. Just imagine if we could get this kind of concerted action on watersheds, education, or pension reform.

Where the Estey case gets most interesting is its path of collateral damage. It is assumed, for example, that Estey contributed in some way (although there may have been multiple roads) to the extortion case against former State Treasurer Rob McCord, who in turn also wore a wire. McCord’s cooperation with the Feds likely brought in political consultant, Mike Fleck, the former campaign manager for the mayors of Allentown and Reading, who recently pleaded guilty to bribery and extortion charges.

Fleck’s cooperation has led to ongoing shake-ups in Allentown and Reading. Just this month, Matthew McTish, who ran an engineering firm that did business in those cities, pleaded guilty to conspiring to bribe officials.

If you read documents associated with Fleck, McTish or other contractors already brought down, it is likely that Ed Pawlowski, the Mayor of Allentown, and Vaughan Spencer, the former Mayor of Reading, might be among the next to face the music. Allentown has already had guilty pleas from its former finance chief, controller, and assistant solicitor. Reading has already lost its head of City Council, as well as his wife who was on the local school board.

But we are likely only at the tip of the iceberg, and it will take several years to find out where this is all headed. It is inconceivable that others in the legislature and other large campaign contributors are not also actively under investigation. Rumors are flying about who has already gotten a target letter.

The Estey, McCord, and Fleck cases all happened as other unrelated instances of public corruption were emerging. There were the smaller cases brought against five Philadelphia legislators for accepting bribes; the case against a former Harrisburg mayor; Pennsylvania’s indicted Attorney General; state supreme court justices forced to resign for distributing offensive emails; a Philadelphia judge tainted by political considerations in her courtroom; and the disbanded traffic court, which was a casino for petty graft.

And a few weeks ago in an almost comical corruption case, State Senator Larry Farnese of the first senatorial district was indicted on a charge stemming from an alleged bribe to a local ward leader. The supposed bribe went to Bard College to pay for expenses for a semester abroad for the Ward leader’s daughter.

In Pennsylvania you can use campaign funds for practically anything, so the Feds will have to show the quid pro quo; the $6,000 donation to Bard College is not enough by itself. Farnese simply may have woken up one day and decided that the college deserved his campaign funds, for no apparent reason.  

Farnese claims he is innocent and will defend himself. He represents a district whose prior State Senator, Vince Fumo, went to jail on corruption charges. And prior to Fumo, the State Senator from that district—Buddy Cianfrani—also went to jail on corruption charges. We are after all a city of grand traditions. I just don’t think the Farnese charge measures up to the standards created by Vince or Buddy.

And finally there is the blockbuster case on trial now against Congressman Chaka Fattah, who lost his primary last month. He is charged with corruption related to campaign finance machinations and the unlawful use of grants going back to his 2007 mayoral bid in Philadelphia.

This has been a bad year for the Congressman. He has watched his son get convicted on unrelated corruption charges and his wife has been tangentially implicated—but not charged —on a small transaction within the Congressman’s indictment. The nonprofits that he has sponsored and supported with federal money are in disgrace, along with his legacy. In fact the nonprofits may have only been necessary as part of a Fattah network of political operatives loyal to Fattah. The scholarships they granted and conferences they held could have been run by established agencies that had independent and more efficient capacity.

In Pennsylvania, you can use campaign funds for practically anything so the Feds will have to show the quid pro quo; the $6,000 donation to Bard College is not enough by itself. Farnese simply may have woken up one day and decided that the college deserved his campaign funds, for no apparent reason.  

Few people remember that during Fattah’s run for Mayor in 2007 he wanted to sell or lease the airport and use the proceeds to address poverty with massive social service programs. Perhaps there were good intentions behind this policy position, but I remember wondering at the time whether this was also about building his regime through a network of operatives giving out services and contracts.

Fattah associates who managed his nonprofit and even his for-profit alliances are also on trial. Moreover, there are two former associates of the Congressman giving testimony against Fattah. So this trial is really about more than just one politician who might get convicted of wrongdoing; it’s also about the dissolution of an entire political clan.

The Fattah defense is to blame his associates who turned on him in exchange for consideration in sentencing, claiming they acted on their own behalf. The logic: I’m not a crook. My friends who worked on my behalf went rogue. They are the crooks. It is hard to see that working out well for the Congressman, but stranger things have happened.  

Meantime, McCord is 18 months overdue for sentencing, which is a sign that the Feds are measuring the impact of his cooperation. Estey was only sentenced now  in order to avoid the statute of limitations.

The inevitable upshot is that public trust in business and government continues to decline just in time for a presidential election that polls tell us is defined by who we don’t want more than who we want.

This would be a good time for political leaders—existing or aspiring—to take a much stronger stand against public corruption. I don’t hear enough voices doing that, even as we elect a new state attorney general and a new state treasurer. Speak up even if it means speaking back to your own political party. Otherwise prepare to be overrun by the new American populism running between the right and the left, reflecting a general disgust at a system that views us all as suckers and supplicants more than citizens.

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