In the early 1980s, Pennsylvania discovered its state workers had overpaid federal taxes due to errors in state withholding. Many accounting firms competed for a multimillion-dollar contract to determine compensation to each employee. In 1986, Dwyer was convicted of receiving a bribe from a California firm trying to gain the contract. Throughout his trial and after his conviction, he maintained that he was innocent of the charge and that he had been framed.
On the morning of January 22, 1987, he committed suicide with a gun during a televised press conference at his office in Harrisburg, the state capital.