Inside the Stephen Reed scandal

HARRISBURG

Eighteen business days before she was charged with crimes, Attorney General Kathleen Kane filed 499 criminal charges against ex-Harrisburg Mayor Stephen Reed.

Reed was accused by Kane of using public moneys to buy thousands of historic artifacts for his dream — carried out largely in secrecy — of making Harrisburg a can't-miss tourist stop while allegedly keeping some for himself. He was accused of diverting earnings of bond funds to buy artifacts to open a “Wild West Museum” to go with the city's Civil War museum and planned sports and black history museums.

Reed's attorney says he is innocent. Kane maintains her innocence. Kane is accused of an alleged scheme to lie and cover up a grand jury leak.

A new book tracing the city's fiscal demise and providing a peek inside Reed's fall from grace is “Capital Murder” by Chris Papst. He's a former Harrisburg TV reporter who now works in Washington, D.C. Papst's book provides some fascinating anecdotes about Reed. It's a story about Harrisburg's financial collapse and the underbelly of municipal bond dealing.

I began working in Harrisburg in 1983. I watched the transition from a seedy capital city to one with new hotels, a “restaurant row” and a Washington Nationals farm team that plays in a stadium on City Island. Reed, mayor for 28 years, was the driving force.

But Reed ran the city like a “dictator,” Papst wrote in an email interview.

Still, Papst said, “In 1982, Reed took over a city in ruin. He was able to turn it around. ... He did wonderful things and this God-like aura surrounded him.

“He used that reputation to do whatever he wanted and people just believed he was acting in the best interest of the city,” Papst said.

And the media frequently didn't challenge him, Papst added.

Attorney Mark D. Schwartz, of Bryn Mawr, was quoted by Papst as saying Reed “seemed like a bond addict, as he went crazy in his conviction to make Harrisburg a first class destination city.”

Schwartz, who worked for the city council during the crisis, said he questions whether Reed should have been charged and whether statute of limitations issues will derail the case.

“Kane is dead wrong for indicting Reed with respect to the bond issues, particularly as primary liability exists with the bond lawyers, investment bankers and advisers who put together and approved the deal,” he said. As for the alleged theft, Schwartz said that's a different issue.

It's unusual for criminal charges to be filed against a former elected official more than five years after he has left office, PennLive's Charlie Thompson reported.

Thompson cited legal sources saying that Jan. 4, 2015, apparently was the cut-off date for charges.

“We are confident that what we've charged is within the statute of limitations,” Kane said at her July 14 press conference.

“It's entirely political,” Schwartz said of the timing of Reed's charges.

But Papst stated that Kane deserves credit for holding Reed and others accountable.

Brad Bumsted is the Trib's state Capitol reporter (717-787-1405 or bbumsted@tribweb.com).