Pennsylvania town files for bankruptcy

A decade ago, this small Pennsylvania town was found to have engaged in racketeering to thwart a condo development. Then years later it was found to have wronged the developer yet again.

Now, with a $20 million judgment hanging over it -- an amount 20 times its annual budget -- this community finds itself desperately looking for a way out of its financial predicament.

As a last resort, it has taken the rare step of filing for bankruptcy protection, and a federal judge in Wilkes-Barre is scheduled to hear the case today.

Westfall sits where Pennsylvania, New York and New Jersey meet at the Delaware River. Cows no longer stop traffic on the main road out of town, and a large home-improvement store now sits on what used to be a cornfield, but the wooded, mountainous land bought by developer David Katz more than 20 years ago remains largely undisturbed.

The ongoing legal battle has left Westfall's 2,500 residents facing the prospect of soaring tax bills even if the town gains bankruptcy protection, something experts say is unlikely.

Katz, who now lives in Florida, has opposed Westfall's bankruptcy filing and said he could not comment further while the case was unresolved.