Seven years after Bethlehem police killed a suspected drug dealer in a barrage of gunfire, the city agreed Monday to pay nearly $8 million to the dealer's family, fiancee and landlord and to seek reforms in the police force.
The agreement ends the six-month John Hirko Jr. federal civil rights trial, a case that could have bankrupted Bethlehem or required a huge tax increase.
Mayor John Callahan said that by settling the case instead of risking an even higher verdict the city will avoid a tax increase or at least keep it below 2 percent. The settlement ends a ''painful chapter'' in the city's history, erasing a ''black cloud of financial doom'' hanging over Bethlehem, he said.
''It is a conclusion that allows us not to forget what occurred that night, but one that allows us to move forward in a manner that we can handle financially and that ensures, to the best of our abilities, that this won't happen again,'' he said.
A key to the settlement came when the city promised to seek outside help to improve the police force, including training the city's officers how to respect individuals' civil rights.
U.S. District Judge James Knoll Gardner, who generally suggested the terms of the settlement, will monitor the Police Department to make sure the reforms are implemented.
Another key to the settlement came Saturday during negotiations, when Callahan asked to speak privately to Hirko's mother, Gwendolyn Dashner; his fiancee, Kristin Fodi, and his landlord, Tuan Hoang. Callahan, who took office two months ago, then apologized for the conduct of police, prompting tears in the room.
''That amazes me because in seven years, not a single city official has apologized,'' Fodi said.
During a 1997 drug raid at Hirko's South Side home, police shot him 11 times, mostly in his back. Officer Joseph Riedy, who fired at least 10 of the shots, also tossed in a flash-bang distraction device that set the rented house on fire, burning Hirko's body beyond recognition.
On March 4, the jury found that police used excessive force during the raid. The second phase of the trial was scheduled to start Monday. The jury would have determined how much to award in damages.
Riedy declined to comment about the settlement. But Steven Marshall, president of the city's police union, said Riedy was not pleased. ''He doesn't feel he's done anything wrong.''
Speaking for himself and other officers, Marshall said that the settlement is fair. But police still believe they did nothing wrong, he said.
''I think anytime you can change for the better, it's a good thing,'' he said. ''If it makes our Police Department better, I'm all for it.''
Some members of City Council criticized the settlement. Councilman Joseph Leeson Jr., who was the city's chief lawyer when the trial started, called it excessive.
''This sends the wrong message to the community,'' he said. ''It's a surrender to the drug culture to pay this kind of money to the estate of a dead drug dealer.''
Leeson also criticized Callahan's failure to ask council to approve the settlement. Callahan said the law does not require him to do so.
But Leeson said council's consent should have been sought, because council will have to approve funding for the settlement.
''In essence,'' Leeson said, ''he's made a contract without having a source of money to pay for it.''
Callahan wants to borrow money for 12 years to fund the settlement. That would add $300,000 annually to the city's debt payments, he said. Record-setting low-interest rates would help the city avoid even higher borrowing costs.
The city's insurance company will pay $500,000 of the settlement. That's all the coverage the city had at the time under former Mayor Kenneth Smith.
''I don't know why the Smith administration decided to carry such little insurance,'' Callahan said, ''but there is no magic wand to wave and change the past.''
Riedy will not be required to pay any of the settlement. Nor does the deal include any terms affecting his employment.
The settlement came after two weeks of on-and-off negotiations. Moments after the March 4 verdict, Gardner suggested the talks.
Since then, with Gardner as a mediator, the parties met face to face three times and had many more phone conversations. The latest session, on Saturday at a downtown Allentown hotel, lasted more than 12 hours.
Gardner asked each side what would be its worst-case and best-case scenarios if the trial went to a final verdict. Then, he said later, he suggested a ''round number'' close to what was eventually agreed on.
''It isn't an exact science,'' he said about mediating. ''It was just my sense that this was the right number and the right other conditions for this case to settle at.''
Neither side was completely pleased with the settlement, Gardner said.
''In order to settle a case like this, each side has to be willing to endure some pain,'' he said.
Lawyer John Karoly Jr., representing Hirko's family, fiancee and landlord, called the monetary settlement ''modest'' and said his side was reluctant to accept it until the reform provisions were added.
He predicted the jurors would have ordered higher damages to make the city acknowledge the severity of its wrongdoing. ''We believe they were prepared to render a mega-verdict to send a message that has not been heeded to this point,'' Karoly said.
''The deal was sweetened with the kind of reforms we wanted,'' he said. ''As we've said before, it was never just about the money.''
He called the settlement not a ''victory'' for him or his clients, but a ''triumph for the United States Constitution and the people it protects.''
The $7.89 million settlement includes Karoly's legal fees and expenses, which he said exceed $2 million. Karoly declined to say how much each of his clients will receive.
The other terms require the city to:
Become accredited by the Commission on Accreditation for Law Enforcement Agencies Inc., a program requiring standards for law-enforcement agencies.
Hire an independent police consultant to evaluate the police force and suggest changes consistent with the jury's verdict. The consultant will be selected with the help of Karoly, city solicitor John Spirk and a commission representative.
Seek a $5 million grant to give each city police officer instruction in constitutional rights, especially those under the Fourth Amendment, which protects people from unreasonable searches. The city hopes the federal government will provide the grant.
The parties made the deal official just after 10 a.m. Monday, the time when opening statements were to be given for the trial's second phase.
Gardner had the litigants and lawyers come forward to take the oath to tell the truth. Callahan appeared before Gardner in court for the first time. So did Hirko's father, John Hirko Sr. He's been suffering from a long-term illness.
Riedy's wife sat in the back of the courtroom, as did three police officers who had been defendants. Other officers have returned to their duties.
As the lawyers and litigants stood in a line across the front of the courtroom, Karoly read the settlement terms. Gardner asked them whether they agreed with the terms, and each said yes. The judge then approved the settlement and congratulated both sides for negotiating an end to the case.
''The fact that you have been able to reach a meeting of the minds is something that you should be commended for,'' he said.
The settlement will eliminate years of potential appeals, he said, as well as anxiety and expense. ''The city of Bethlehem can get about the business of planning its fiscal life and the well-being of its citizens.''
Then he brought the 12 jurors into the courtroom and told them the settlement had been reached, but he didn't tell them the terms. Several smiled.
As he dismissed them, he offered what he called a ''nostalgic'' moment.
''You've come to be family,'' he said. ''In fact, I've seen more of you than my family for the last couple of months. Have a good day, have a good week, have a good life. You're excused.''
Afterward, in an unusual move, each side spoke at a news conference in a courtroom at the federal courthouse in Allentown. Gardner had given permission for the news media to bring in tape recorders and cameras, which is usually forbidden in federal courthouses.
Dashner, Fodi and Hoang did not say how they will spend the money, except that something will be done to honor Hirko Jr.
Karoly said he will ask the U.S. attorney to review the evidence he presented during the trial to see if federal criminal civil rights charges should be filed.
In 1997, Pennsylvania Attorney General Mike Fisher cleared police of any criminal wrongdoing. But Karoly claims the investigation by the state police was flawed and covered up wrongdoing.
Meanwhile, after being in court almost every day since late September, Fodi said she's overwhelmed that the case is finished. ''I actually think that tomorrow I'm going to wake up and find out it's not over.''