Ex-Pennsylvania Treasurer Sentenced to Probation for Lying

by | November 1, 2017

By Angela Couloumbis

Former State Treasurer Barbara Hafer was sentenced Tuesday to 36 months of probation for lying to the FBI during a long-running federal pay-to-play investigation of Pennsylvania government.

Hafer, 74, of Indiana, apologized to the court, her voice cracking: "I did it. It was wrong. And I am sorry for it," she said, stopping several times to choke back tears. "I'm ashamed, and I am heartsick over the situation."

U.S. District Judge John E. Jones III called Hafer "a political success story" and added that he took her career in public service and acts of philanthropy into consideration in imposing a sentence with no prison time.

But, he said, "I can easily see what happened here." She did not misspeak or forget pertinent information when she was confronted by federal agents about her dealings with a longtime campaign donor. "I think you just didn't want to say," Jones said.

Hafer, a longtime Republican turned Democrat, was charged last summer along with one of her largest campaign donors, Richard Ireland, a Chester County businessman. She was accused of misleading the FBI and IRS about nearly $700,000 in payments Ireland made to her consulting firm between 2005 and 2007, after she had left office.

She had faced two counts of making false statements, but pleaded guilty to one count in June, just weeks before she was to go on trial.

In sentencing-related court documents, Hafer's lawyer, Thomas J. Farrell, said that though Hafer has been out of public office for more than a decade, "she is a public figure, and her shame has been public, even though her crime did not involve the use of her office and at best was unseemly."

Farrell also said Hafer's false statements to federal authorities were the "result of a poor decision made in response to a high-stress situation."

Jones was unconvinced. "I can accept that this situation is a stressful one," he said, but added: "I believe that you feared that disclosing your relationship with Mr. Ireland after you left office in some way might demonstrate something that at worst was illegal and at best was unseemly."

Jones noted Ireland's generous campaign contributions to Hafer over the years, and the "enormous benefit" Ireland's firm received in contracts when Hafer ran the Treasury Department.

"There is something wrong with the system that allows Mr. Ireland and his partner to make a half-million dollars in campaign contributions -- and I'm not holding you responsible for that, you played by the rules as you found them," Jones said, "And in exchange for that, as far as I can see, they received an enormous benefit."

In sentencing Hafer, Jones also ruled that she must perform 500 hours of community service and pay a $50,100 fine.

Friends and family testified on Hafer's behalf, urging lenience. Her daughter, Bethany, talked about her mother's career of service, starting as a public-health nurse and continuing during her time in county and state office, and in her volunteer work since leaving politics.

Before she became treasurer, Hafer served as Pennsylvania's auditor general and was an Allegheny County commissioner. She was active on issues of women's rights, developing services for victims of sexual assault and domestic abuse.

"She is by far the best person I know and love," Bethany Hafer said.

As they left the courtroom Tuesday, neither Hafer nor her lawyer commented to reporters.

Hafer's sentencing ended the last case in which charges were filed in a federal investigation into corruption in Harrisburg. The probe has led to a guilty plea from John Estey, the onetime chief of staff to former Gov. Ed Rendell, and toppled one of Hafer's successors, Rob McCord.

McCord, a Democrat, pleaded guilty in 2015 to attempting to shake down campaign contributors and resigned in the middle of his second term.

Hafer's case stems from statements she made to federal authorities more than a decade after ending her term as treasurer, a job that manages billions of dollars in state investments.

Hafer had initially claimed lapses in memory in denying that she accepted $675,000 in consulting payments from Ireland after leaving office. According to the indictment against her, Ireland, who served as a middleman helping money managers land government work, made more than $10 million in fees while Hafer ran the Treasury Department between 1997 and 2005.

Ireland went on trial earlier this year, but Jones dismissed all charges against him mid-trial. Ireland had been accused of attempting to bribe McCord with campaign contributions in return for government contracts.

McCord, who unsuccessfully sought the Democratic nomination for governor in 2014, cooperated with federal authorities in Ireland's case. He secretly recorded his conversations with Ireland while working undercover to help the FBI and to try to gain a more lenient sentence, and was the government's star witness during Ireland's trial. He has not been sentenced.

In fact, it was one of those secret McCord recordings that led federal authorities to question Hafer's relationship with Ireland, Jones noted Tuesday.

On the recording, Ireland is heard telling McCord that he had taken care of Hafer, who after leaving office opened a consulting firm called Hafer & Associates. During her interview with agents in May 2016, Hafer denied receiving money from Ireland or any businesses with which he was associated.

Agents later discovered that in 2005 alone, Ireland paid Hafer's firm $500,000 -- nearly two-thirds of her firm's business that year.

(c)2017 Philly.com