Few details available in Estey bombshell

05012016-John-Estey
John Estey, a former top political aide to Gov. Ed Rendell, continued to move in high-level circles while cooperating with the FBI.

In the world of Pennsylvania politics, it would have been tough to find someone more deeply connected than John Estey.

The former chief of staff to Gov. Ed Rendell and a onetime top lawyer, Estey spent the last two decades moving in and out of many circles, Democratic and Republican: Philadelphia City Hall. The state Capitol. The Delaware River Port Authority. A $12 billion charity.

Unbeknownst to all but the FBI, he also apparently had another title: federal cooperator.

Friday's disclosure that he had been snared in a corruption sting that started seven years ago was poised to be even more explosive than last year's arrest of Pennsylvania Treasurer Rob McCord for extorting political donors.

Both secretly cooperated with agents, according to sources. McCord recorded conversations for the FBI.

What makes Estey's case more intriguing are the few details - and the lack of many others - unveiled in the plea documents that he signed.

Prosecutors said he was targeted as part of a probe into lobbying in the legislature, and the charges refer to at least three lawmakers Estey offered to influence with donations.

But the documents don't identify the legislators, the FBI-created fake company Estey thought he was lobbying for, or what the firm's executives pretended to be seeking. They say agents gave Estey $20,000 for illegal campaign contributions but that he kept most of it for himself.

Perhaps most significantly, the sting has been under wraps for nearly five years. Since then, Estey continued to move in high-powered circles statewide.

"This is a major deal, to have two cooperators at this level," said Jeff Lindy, a veteran Philadelphia defense lawyer and former prosecutor, who has no connection to the case.

The agreement Estey signed says the 53-year-old Ardmore resident will plead guilty to a single count of wire fraud. It also noted prosecutors could ask his sentencing judge for leniency based on any cooperation.

Through his lawyer, Ronald H. Levine, Estey last week apologized for his "mistakes."

Beyond that, he would not discuss the case.

Though never in the limelight like his onetime boss or prominent Rendell chief of staff David L. Cohen, Estey rose smoothly in Pennsylvania politics.

A Philadelphia native - his late father was chairman of what is now the Montgomery McCracken law firm - he served as Mayor Rendell's deputy chief of staff in the late 1990s.

When Rendell became governor in 2003, Estey landed the highest-ranking job in his administration, helping to negotiate deal after deal with legislators on everything from the budget to legalizing gambling in Pennsylvania.

Rendell declined comment last week, but Kevin Feeley, another former adviser, said he and others who knew Estey were confounded by his downfall.

Feeley described Estey as smart, funny, and charming. "In my dealings with John, he has always been a very principled person," Feeley said. "John was the guy in the room who would say, 'You can't do that,' or 'You have to think about that.' "

Estey left the governor's office after Rendell won a second term, and returned to the Philadelphia law firm of Ballard Spahr, leading a new team representing corporate clients before the same kinds of agencies that he once dealt with as an administration official.

In the private sector, sources say, Estey was among the players who drew FBI scrutiny in a 2010 probe of a botched deal to develop a new Family Court building in Philadelphia. At Ballard, Estey was hired by the Philadelphia court system to lobby the governor - his former boss - to release millions of state dollars for the structure.

The project fell apart after the Inquirer revealed another Philadelphia lawyer hired by the courts had ended up as a partner with the project developer. No charges resulted from the FBI inquiry.

Around the same time, Estey fell into the sting, according to court filings in his case.

Estey was a newly registered lobbyist for Ballard in 2009, they said, when he began representing an out-of-state firm. In reality, the business was an FBI front, and its executives were undercover agents.

In May 2011, the documents show, he agreed to funnel firm money in campaign donations to Pennsylvania legislators. State law sets no limits on donations from individuals, but corporations are barred from giving campaign contributions.

Estey took $20,000 from the firm - money he promised to split evenly between three lawmakers and one of the four leadership caucuses in the legislature. The documents don't name any of the intended recipients, but they do say Estey admitted keeping $13,000 of the money and lying to the firm about it.

The court filings also don't indicate when he started cooperating with the FBI.

Months after the 2011 sting, Estey amended a financial disclosure form he was required to file as an appointed public official.

He added one item, acknowledging he had earned money from a new for-profit business called Eleven Twelve Partners that shared an address with his Ardmore home.

The form, and its incorporation papers, offer no information about the partnership's purpose, its source of income, or why it was not listed in the original filing.

Late in 2011, Estey was named acting general counsel for the Hershey Trust. He took the job at a perilous time for the trust, overseer of the Milton Hershey School and beneficiary of the giant chocolate business.

It was facing an investigation by the state Attorney General's Office into its $12 million purchase of a luxury golf course, among other issues. In hiring Estey, the trust, long known for its strong GOP ties, turned to a Democrat to deal with a Democrat: Attorney General Kathleen Kane.

In the end, Kane cleared the trust of any misconduct, but negotiated reforms, including a cut in pay for trustees.

Estey stayed on at Hershey - rising to serve for a time as interim school president and once earning $736,000 in a year. But the federal investigation was still percolating, and he kept his hand in politics.

In September 2013, Estey created a political action committee, the Enterprise Fund, records show. It is unclear if he did so on his own or at the urging of a partner, such as the FBI.

According to political insiders who spoke with Estey about the PAC, Estey promoted the fund as a vehicle by which Republican donors who wanted to keep a low profile could give campaign donations to Democrats.

It didn't operate like a traditional PAC.

Public records show the Enterprise Fund raised $125,000 over four days in late 2013, and months later gave it all to just one candidate: McCord, the Democrat and state treasurer who wanted to be governor, and ultimately became an FBI target himself. The donation even landed at an odd time - May 21, 2014, the day after McCord lost the primary to Gov. Tom Wolf.

Records show that $100,000 of the money came from one donor, Ross Nese, the owner of a sizable Pittsburgh nursing-home chain.

The remaining $25,000 came from Vahan and Danielle Gureghian. Vahan Gureghian is a Montgomery County lawyer and charter-school magnate known as one of the state's biggest GOP donors.

A spokesman for Gureghian, A. Bruce Crawley, said he would have no comment. Nese could not be reached for comment.

In late 2014, federal prosecutors subpoenaed records about the Estey PAC. Today, it is dormant.

After being confronted, sources said, McCord secretly taped conversations for the FBI. Despite pleading guilty a year ago, he is still waiting to be sentenced.

On Friday, prosecutors made public a series of court documents laying out Estey's misconduct. They included a statement, signed by Estey, his lawyer, and prosecutors, in which he admitted that he had "acted with intent to defraud."

Hours later, the Hershey Trust fired him.

Ric Fouad, a Hershey School alumnus and leading critic of the school, said Hershey should never have appointed Estey to the educational post.

"From day one, John Estey had no qualifications for serving as the interim president of a child-welfare charity other than his political connections," he said.

Estey remained in a leadership position of the billion-dollar trust for years after being caught.

On Friday, the organization took pains to point out that it "had no prior knowledge that Estey was a target of a federal investigation."

cmccoy@phillynews.com215-854-4281@craigrmccoy

Staff writer Bob Fernandez contributed to this article.