FBI, U.S. Attorney’s office join state auditor general in looking at ICA
The FBI has joined the state auditor general and other agencies looking at the Pittsburgh Intergovernmental Cooperation Authority for potential fraud and abuse.
A spokesperson for David Hickton, U.S. Attorney for the Western District of Pennsylvania, confirmed that his office “is reviewing the matter in close coordination with the FBI.”
State Auditor General Eugene DePasquale said Monday his office will begin a “deep dig” audit in several weeks that will involve combing through the surviving paper records and attempting to reconstruct electronic fiscal files at the ICA. The agency was formed by state lawmakers in 2004 to help Pittsburgh manage about $1 billion in debt and to keep the city from toppling into bankruptcy.
“Look, you’ve got a lot of taxpayer dollars at stake here, and the ICA was designed to be a watchdog on the city of Pittsburgh. If they weren’t following best business practices themselves, that’s a problem,” DePasquale, D-York, told the Tribune-Review in a telephone interview.
“Incompetence is not a crime. There could be something illegal. There could be something that wasn’t illegal but wasn’t a good business practice. That’s something we’re going to try to find out,” he added.
Allegheny County District Attorney Stephen Zappala Jr. opened an investigation March 28, the same day the Trib published the second part of an investigative series that detailed the mass destruction or loss of receipts and other financial records at the ICA.
The Trib investigation found the ICA’s only employee over the past 11 years — executive director Henry Sciortino, 67 — sought personal bankruptcy protection between 2010 and 2011 after being accused in court documents of running a string of sham companies out of his West Chester home to hide assets from creditors.
Sciortino did not return messages Monday seeking comment and has declined numerous past opportunities to do so.
The Trib’s reporting triggered calls from top state lawmakers and Pittsburgh Mayor Bill Peduto for a “forensic” audit of the ICA’s books.
“We’re encouraged that they’re taking our direction and moving forward with their investigation,” said state Sen. Wayne Fontana, D-Brookline.
Fontana and state Sen. Jay Costa Jr., D-Forest Hills, have introduced legislation that will patch what they say are holes in the 2004 law that created ICA, adding more protections for taxpayers and setting a day for the ICA to be eliminated.
“But as far as I’m concerned, the ICA is not needed anymore,” said Fontana. “The aggravation that it’s causing us now is not needed.”
ICA works alongside a similar state agency organized under Act 47 authority to pass Pittsburgh’s annual budget. City Hall remains mired in litigation with the watchdog agency over what soon will become $20 million in Rivers Casino gaming revenues earmarked for Pittsburgh but withheld by ICA in a budget battle.
The auditor general released a special snapshot audit report of ICA’s finances in November, focusing on the agency’s financial health while trying to resolve simmering disputes between its board and Peduto’s administration over pension, medical care and other outstanding issues.
DePasquale said the November report helped put a deal on the table that would have permanently diverted gambling revenues to portions of Pittsburgh’s unfunded pension plan, with the stipulation that the ICA eventually was eliminated. Neither side would budge, he said.
This time, DePasquale’s auditors will target the ICA much as investigators sniff out public corruption, bribery, embezzlement and fraud. His investigators noticed missing records when they performed last year’s audit and urged the ICA to shore up shoddy record-keeping.
“We certainly alluded to these issues (in the November report),” said DePasquale. “But we weren’t looking at the bank records and the check statements. We weren’t calling up the banks. We weren’t doing that because that wasn’t the goal of the report, but we certainly alluded to it. We were asking for contracts that they couldn’t supply.”
DePasquale pointed to the fact that his auditors could neither number nor name all the ICA contracts forged over the past 11 years. The agency handed his investigators a list. He said he had “never seen something like that.”
“It’s like something out of Tammany Hall,” said DePasquale, referring to the notoriously crooked political machine that dominated New York City a century ago.
A special ICA board meeting is set for Friday at the City-County Building to determine Sciortino’s fate. Since DePasquale’s audit was published, the ICA board added three new appointees to the five voting members of the panel, who will decide whether to renew Sciortino’s month-to-month contract.
Carl Prine is a Tribune-Review investigative reporter. Reach him at [email protected] or 412-320-7826.