Former State Treasurer Barbara Hafer Charged With Concealing Receipt Of Over $500,000 In Consulting Fee Payments
Thursday, July 21, 2016
HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania announced today that a federal grand jury in Harrisburg has indicted the former Treasurer of Pennsylvania for concealing from federal investigators the receipt of hundreds of thousands of dollars in consulting fees.
According to United States Attorney Peter Smith, Barbara H. Hafer, age 72, of Indiana, Pennsylvania, was charged yesterday with two counts of making false statements to federal agents. In May 2016, federal agents interviewed Hafer as a part of an ongoing investigation. During the interview, Hafer allegedly concealed her financial relationship with a business person, referred to in the indictment as “Person #1”, claiming that this person did not help with her consulting business. When shown a signed contract between Hafer & Associates, LLC, and a company owned by the business person, Hafer denied receiving any payment on the contract.
According to the Indictment, Person #1 had a financial relationship with multiple businesses and had relationships, including fee sharing arrangements, with entities that provided asset management services to the Pennsylvania Treasury while Hafer served as Treasurer.
The Hafer interview took place as part of an ongoing long-term FBI-IRS investigation of alleged pay-to-play activities involving the Pennsylvania State government. The investigation revealed that in February 2005, within weeks of leaving the Office of Treasurer, a firm associated with Person #1 began making payments to Hafer’s consulting firm. For a year, Hafer & Associates received $41,667 a month, totaling the $500,000 committed in the contract. Further, the investigation found that payments began before the contract was signed by the parties.
Although Hafer allegedly claimed that this business person did not help her consulting business, the investigation revealed that the money allegedly accounted for approximately 73% of the funds Hafer & Associates earned in 2005. According to the Indictment, Person #1 allegedly helped Hafer’s business by causing the $500,000 agreement to be entered into between Hafer & Associates and a company associated with Person #1 which did not require Hafer & Associates to achieve any particular result; before the Agreement was signed by all parties, Person #1 caused a company associated with Person #1 to pay the first of 12 monthly installments of $41,667 due pursuant to the Agreement; Person #1 caused the payment of approximately $500,000 to be made under the Agreement during the first year Hafer & Associates was in operation; and Person #1 caused an additional $175,000 to be paid to Hafer’s business during calendar years 2006 and 2007.
Hafer served two terms as Pennsylvania’s elected State Treasurer from 1997 to 2005 and two terms as State Auditor General from 1989 to 1997.
This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service. The case is assigned to Assistant United States Attorneys Michael A. Consiglio and William S. Houser.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
The maximum penalty under federal law is 5 years of imprisonment on each count. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.