Tom Corbett: Lost Money and Missing Memory, Part 2

Posted by By at 26 September, at 07 : 40 AM Print

Inside the Machine

In 1978 Pennsylvania voters approved a Constitutional amendment providing for the election of an Attorney General effective in 1980. The Constitutional amendment was implemented by the Commonwealth Attorneys Act of 1980, which defined the duties and powers of the Attorney General.

Pennsylvania voters perceive that Republicans as more likely than Democrats to combat crime and maintain law and order. The Office has been a Republican monopoly since we first began electing the Attorney General.

The Attorney General’s Office has never been subject to the regular turnover of partisan employees that the other statewide offices are subjected to.  Practices that are inconsistent or in violation of vendor contracts become standardized as those originally appointed stayed in place. Relationships between contractors and government employees become warm, comfortable and bereft of any meaningful oversight.

Leroy S. Zimmerman was the first elected Attorney General. He served two terms from January 1981 through January 1989. Ernest D. Preate, Jr. was elected as Attorney General in 1989 and reelected in 1992. Mr. Preate convicted of mail fraud resigned from the office in June 1995.

Governor Tom Ridge, appointed Thomas Corbett  to fill out Preate’s term. The Senate confirmed Corbett on October 3, 1995. Mr. Corbett transitioned to the Attorney General’s Office with the understanding he would not seek election.  “I had to make a promise to the — to the Pennsylvania Senate that I would not seek office in 1996. And I had to send — send each senator an individual letter to that affect.[1]

Corbett made a point not to disturb the inner workings of the machine although the previous General had just resigned for breaking the law. Corbett, free from reelection pressures, did not use any outside firms to audit the Financial Enforcement Section, and never made a request of the Auditor General to look into the workings of the Attorney General’s office.[2]

Question: “And did you feel the need when you came in to do anything, to — undertake an internal review processes or procedures?”

Corbett: “I believe we conducted a transition investigation. Not even investigation. Tell me what the office is like. Tell me what’s going on.”[3]

Corbett returned for a second tour of duty on January 18, 2005, this time by winning the election.  He was reelected in 2008 and presided over a sweeping series of grand jury investigation involving public corruption, specifically, the use of state resources and staff for personal or political gain. Those investigations resulted in the arrest of more state officials and state employees than any previous Attorney General in Pennsylvania.”[4]

Tom Kimmett, discovered problems predating Corbett including approximately 250 compromises  – some of which dated back to the 1990s – had never been sent to the referring agencies.[5] During the 1990s Republicans Ernie Preate, Tom Corbett and Mike Fisher served as Attorney General of Pennsylvania. Preate went to jail, Corbett became Governor, and Fisher was appointed to the Third Circuit Court of Appeals.

William H. Ryan, Jr., the First Deputy Attorney General under Attorney Generals Corbett and Gerald Pappert (December 15, 2003 – January 18, 2005), became Acting Attorney General on January 18, 2011, when Tom Corbett took the oath of office as Governor. Bill Ryan was the First Deputy of the Internal Affairs Unit during the Kimmett’s tenure.

Kimmett, a lawyer and CPA, came to the FES in September 2006 to straighten out problems that had been identified by the AG’s comptroller’s office after an FES employee abruptly left earlier that year. Mr. Kimmett was actually interviewed and approved for the position by Corbett himself.[6]  “Ultimate [hiring] decision is with me, but I have yet to overturn anybody’s decision relying upon my management team to determine what their needs were and whether these people met their needs.”[7]

Louis Rovelli, Director of the Civil Law Division in the Attorney General’s Office said, “We need you to look at the practice and procedure in the administration side of Financial Enforcement, the side we hired you to manage.  We want you to give us proposed solutions.”[8]

The office of Financial Enforcement Section was established in 1981 and handles delinquencies owed to some 200 agencies and state universities.  At any given time, it handles about 40,000 cases with receivables ranging from $300 million to $500 million. It collects nearly $70 million a year in back taxes.

Many of the front line players involved in the mismanagement and negligence at the Financial Enforcement Section began their careers when Leroy Zimmerman was elected in 1981. Among those absorbed into the AGO machine during the Zimmerman era – and still working for Mr. Corbett during both his two terms – were Steve Brandwene and Jill Keiser.”

Steve Brandwene was Chief of the Financial Enforcement Section from 1985 through March 2007. According to Tom Corbett, Steve Brandwene was a working corpse. In his deposition, Corbett explained that by 2005, Brandwene was “RIP, retired in place.”[9] Corbett elaborated on RIP employees, “People don’t work necessarily as they would if there were the for five years…It’s a function of government, I think. Not all people, but there are some.”[10]

Jill Keiser was an FES employee since the inception of the Department in 1981. Keiser was the Supervisor of the Administrative Collections unit of FES from the mid-1990s and held that position when Kimmett was hired.

In February 2006, Lee Gill, Tim Kimmett’s predecessor at the FES resigned. Shortly thereafter FES employees destroyed her records. Records were also missing relating to unacceptable and untraceable Private Collection Agency (PCA) accounts.  Kimmett learned from a number of his employees that Keiser and Mark Santana, an FES employee, had destroyed and removed Gill’s documents on the eve of the Comptroller’s audit.[11]

In April 2006, private collection agencies and FES employees continue report special access given to Private Collection Agency employees. Additionally, 17 unopened boxes discovered in field offices Pittsburgh and Philadelphia region that were never processed.

The Department of Revenue was also raising red flags. In November 2006, Kimmett met with four Department of Revenue employees, including James Furlong. Mr. Furlong was an employee of DOR’s Compliance Division and the Assistant to Deputy Secretary Robert Coyne. Furlong was the designated liaison between the Attorney General’s Financial Enforcement Section and the Department of Revenue.[12]

Revenue’s employees informed Kimmett – on a confidential basis – of significant concerns the Department of Revenue had with the Financial Enforcement Section, including information relating to wrongdoing and fraud by FES a employees.[13] They alleged special deals were cut for select taxpayers and their representatives.

The issues raised by Department of Revenue employees at that meeting (and in subsequent communications)” included:

FES manager Jill Keiser moved cases from FES attorneys and Department of Revenue field offices to Private Collection Agencies immediately before money was about to be collected on the account, thus allowing PCAs to collect unearned commission.[14] FES allowed PCAs to collect commissions for cases where all of the collection work had been performed by FES.;[15] Keiser demanded sign-off from DOR employees on authorizations of payments to the PCAs without supporting documentation,[16] and she demonstrated favoritism in the referral process to one PCA – Linebarger, Goggan, Blair & Sampson (LGB&S) – with whom Keiser had a close personal relationship.[17]

Preferential treatment was accorded certain repeat offenders’ for their debtor clients from Brandwene and Keiser. They would pull cases from DOR field offices and enter into low-ball compromises at the requests of those repeat offenders.[18]

After Thanksgiving in 2006, Kimmett routed his concerns and findings through the proper channels in the AGO’s chain of command. Kimmett was given assurances that both Mr. Corbett and the Department of Revenue’s Deputy Secretary, Robert Coyne were aware of the problems he was uncovering.

However, this is also the point in which Kimmett began to encounter systemic resistance to his efforts to reform the Financial Enforcement Section.

In mid-December 2006, Douglas Ottenberg, Assistant Comptroller informed Sheri Phillips, Director of OAG Management Services Division, of the problems Kimmett had uncovered at the Financial Enforcement Section including “2000+ dockets that were never assigned to a collector, hundreds of inactive accounts sitting with [PCAs] well beyond their six month time limit, and the millions of dollars with no collector notations nor any type of activity for well over two years….”[19]

Rovelli claimed he was not aware of the backlog, and “it was just as likely as not that it was a failure to assign.”[20]

Kimmett reported that Private Collection Agencies failed to make interest payments on hundreds of thousands of dollars of Commonwealth funds – debts they collected – held in their accounts each month. He recommended that the PCAs be required to live up to the contract and pay unpaid interest going back five years. Rovelli, Phillips, and Deputy Attorney General Mike Roman rejected that proposal and instructed Kimmett only to seek interest on a going-forward basis, notwithstanding the long-standing nature of that contractual obligation.[21]

Mike Roman’s position was that as long as the debt was collected, it was fine to pay the Private Collection Agency a commission – even when under the terms of the contract they were not entitled to such payment.[22]

However, Rovelli admitted, “In fact I remember an e-mail string from Tom where — I think started by Tom — that said, ‘I am still having trouble with this. I think we should demand payments back to 2003.’ And I believe that went to Mike. And then it came to me. And I said, let’s go back to when we notified them that we want payment, you know, that we’re enforcing those provision. And I believe after that, and beyond that in the e-mail string, Mike and Sherri concurred.”[23]

In December 2006, three months after he arrived Kimmett presented a summary report of his findings. Brandwene and Rovelli adopted a defensive stand. Rovelli, Director of the Civil Law Division, ordered Kimmett to submit another the report.

 

Footnotes    (↵ returns to text)
  1. Corbett Deposition, p. 53.
  2. Corbett Deposition, p. 25.
  3. Corbett Deposition, p, 52.
  4. Kimmett Deposition, Exhibit 1 at 335:20-336:18”
  5. Pennsylvania Attorney General, “History of the Office of Attorney General,” http://www.attorneygeneral.gov/theoffice.aspx?id=170)
  6. Rovelli Deposition, p. 138.
  7. Corbett Deposition, pp. 87-88.
  8. Rovelli Deposition, pp. 140-141.
  9. Corbett Deposition, Exhibit 3 at 126:1-127:2.
  10. Corbett Deposition, p. 126.
  11. Kimmett Deposition, Exhibit 1 at 215:17-216:14 & Bellaman Deposition, Exhibit 18 at 216:12-21.
  12. Kimmett Deposition, Exhibit 1 at 169:6-170:17.
  13. Exhibit 25, Kimmett Deposition at Ex. 15 & Kimmett Deposition, Exhibit 1 at 122:4-123:10, 171:4-14.
  14. Kimmett Deposition Exhibit 1 at  171:4-24, 201:5-20 &  Exhibit 26 at Corbett Deposition Exhibit 8.
  15. Bellaman Deposition, Exhibit 18 at 417:13-422:23;
  16. Kimmett Deposition, Exhibit 1 at 172:3-8;
  17. Kimmett Deposition, Exhibit 1 at 261:24-262:7; Exhibit 26; Corbett Deposition at Ex. 18); and, Exhibit 27 , Corbett Deposition  at Ex. 5.
  18. Kimmett Deposition, Exhibit 1 at 205:9- 206:13 & Burman Deposition, Exhibit 28 at 122:1-125:17;.
  19. Exhibit 37, Ottenberg Deposition Ex. 3 at 2
  20. Rovelli Deposition, p. 55.
  21. Roman Deposition, Exhibit 9 at 340:5-342:7;  Rovelli Deposition, Exhibit 7 at 379:16-380:14); and, Exhibit at 44, Rovelli Deposition Ex. 15.
  22. Roman’s position was that, so long as the debt was collected, it was fine to pay the PCA a commission – even when under the terms of the contract they were not entitled to such payment. Ex. 9 (Roman Dep.) 248:7-250:21;  and, Kimmett Deposition, Exhibit  at 169:6-170:17.
  23. Rovelli Deposition, p. 380.

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