Monday, June 29, 1987

A billion here, a billion there; Uncovering a huge bond scandal

By following the threads of a suspicious municipal bond issue in the dirt-poor city of Chester, Pa., I discovered something amazing: A fraud that stretched all across America and into the Pacific territories, as a group of Wall Street wheeler-dealers used an income-tax loophole and phony promises to poverty-stricken communities to make themselves rich.With the Inquirer allowing me to investigate the story at length, and teaming me with business-reporter partner Barbara Demick and genius investigations editor Jonathan Neumann, we wrote a series of stories that led to big results: the Wall Street firm's demise and its principal officer's indictment and jail term. The federal investigator on the case told us he used this story as "his roadmap" to show other investigators what to dig for.Amazingly, we had this story to ourselves for months, our only competition being the industry newspaper, The Bond Buyer. In the day of Boesky and Milken, the Wall Street Journal didn't touch this huge scandal until indictments were at hand.

The Inquirer nominated these stories for the Pulitzer. We didn't win (another Inquirer investigation did), but Editor Gene Roberts told me this series was his favorite of the paper's entries that year -- and that remark is an honor I continue to treasure.

(click on image to enlarge)