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Harrisburg Charged With Fraud

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HARRISBURG -- Pennsylvania's capitol city has a new distinction and it is not a good one. Harrisburg is now the first municipality charged with securities fraud.

Officials with the Securities Exchange Commission charged with city Monday with giving misleading or false statements about financial problems from 2009 to 2011.

"Sadness was the first reaction. I know we've been having trouble. I know there have been a lot of questions and one of the things that struck me is how long this has been going on," said Gerald Rhoades who lives near Harrisburg.

"It's embarrassing for the mayor then,the mayor now our community, you know? The people who run our community. It's embarrassing for all of us," said Janae George of Harrisburg.

According to the SEC, Harrisburg is a near-bankrupt city under state receivership. That means the state oversees the city.

"The Receiver's office is very glad to see there is no financial penalties being incurred against the city in this matter and we're just glad to put it behind us," said spokesman Corey Angell of the Receiver's Office in Harrisburg.

According to the SEC, Harrisburg officials have agreed to settle the charges.

In a statement released Monday, Harrisburg's mayor Linda Thompson said, in part:

" prevent such things from happening in the future, and as the SEC is aware, the city has completely revamped its polices and procedures for financial disclosures. "

In her statement, the mayor did not give any specific details about the policy changes. She also said she is prohibited by law from talking about the charges or settlement anymore.

"Everything is kept behind closed doors and they made statements like that and we are expected to believe they are making some kind of headway and we never see anything. These are the statements we hear all the time," said Reese Crane of Harrisburg.