New details emerge in 'kids for cash' scheme

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Former Luzerne County Judges Michael T. Conahan (front left) and Mark A. Ciavarella Jr. (front right) leaving the federal courthouse in Scranton after their September arraignment. (Mark Moran / Wilkes-Barre Citizens Voice)

In the summer of 2008, when Luzerne County was aswirl in rumors of a federal investigation, a judge and a lawyer hatched a plan for dealing with the feds.

"OK. Let me tell you something," Judge Michael T. Conahan confided to lawyer Robert J. Powell. "If you want to check me, I'm not wearing a wire."

"Neither am I," Powell lied.

Powell, co-owner of the juvenile jails at the heart of Luzerne County's "kids for cash" scandal, had already agreed to go undercover.

He wore a wire, and brought back evidence that became the cornerstone of the case against Conahan, Luzerne County's former president judge, and former juvenile court judge Mark A. Ciavarella Jr. Federal prosecutors say the two got kickbacks for hundreds of children sent to two detention centers, often for petty offenses.

Powell's undercover role is described in a brief prosecutors filed this month in Scranton. They laid out fresh details of the alleged kickback scheme, and for the first time included excerpts of conversations Powell recorded.

Those excerpts have come to light even as a state panel prepares to make recommendations on how to avoid another scandal like the one in Luzerne County's courts. The panel's report is due Thursday.

The federal prosecutors' brief contains but a few excerpts of six conversations Powell taped with the now-disgraced judges. But even those excerpts are a fresh reminder that the long-running Luzerne County corruption investigation isn't over.

Thus far, about two dozen people have been charged with crimes. The two judges have been removed from office; Conahan is pleading guilty. Many of the defendants whom Ciavarella sentenced over the years have sued. The scandal has spread to other branches of local government. There is talk that more criminal charges await.

Lawyers for Ciavarella, who has pleaded not guilty, contend the taping violated his due-process rights, and are fighting to suppress the tapes in federal court.

Prosecutors contend that Powell and Robert Mericle, a contractor who built the two juvenile detention centers - PA Child Care in Luzerne, and Western PA Child Care in Butler County - funneled more than $2.9 million to the judges between 2003 and 2006.

The tapes were made in 2008, when word was out that the FBI was probing.

"Tell you one thing right now," Conahan said to Powell at a meeting later that summer, according to the excerpts. ". . . I'd never do anything to hurt you, but I never got the cash from anybody. That's the story. And you better stick to it."

"I'll stick to it," Powell replied.

The brief says Conahan is also heard on tape telling Powell what to say if anyone came asking about "cash" and payments.

"Bobby," Conahan is quoted as telling Powell, ". . . you just gotta say it didn't come from me."

The excerpts have surprised some of the lawyers handling the wave of criminal and civil cases arising from the scandal.

"I was shocked at how frankly they spoke about it," said David Senoff, whose Pittsburgh law firm is handling a suit on behalf of about 400 former juvenile defendants and their parents. "It clearly established how the conspiracy operated, and who was paying whom and how the payments were being made."

Powell and contractor Mericle have also filed guilty pleas. Mericle has admitted that he concealed the truth from a federal grand jury.

The government's latest salvo is aimed at Ciavarella, the former juvenile judge, who is also accused of sending hundreds of children to the private detention centers with little regard for their constitutional rights.

His lawyers say the taping violated a "mutual defense agreement" that the two judges and Powell made after discovering that a federal grand jury had been convened when witnesses started to receive subpoenas. They say Powell was in on that agreement but had a change of heart, and in the summer of 2008 told federal investigators he wanted to cooperate with them instead.

Between July 21 and Sept. 4 that year, Powell met with Conahan and Ciavarella six times, wearing a wire at every meeting.

During the first recorded conversation, Powell told Conahan that he was worried that his business partner, Gregory Zappala, was asking a lot of questions about money matters at the detention centers that Zappala co-owned.

Prosecutors say Mericle paid $997,600 to Ciavarella in 2003 as a finder's fee for getting him the contract to build the Luzerne detention center. They say Ciavarella told him to give the money to Powell, who in turn wired it in two chunks to the judges.

Thanks to the judges, prosecutors say, the detention centers got a steady flow of business - so Powell and his partner, Zappala, decided to build a second center in Western Pennsylvania. When Mericle won the contract for that facility, prosecutors say, he gave the judges an additional $1 million. The money was wired to a business the judges controlled, Pinnacle Group of Jupiter, Fla., in 2005.

In 2006, Mericle won a third contract, to put an expansion on the original juvenile jail - and the judges got an additional $150,000, prosecutors say.

They say the transactions were meant to hide the fact that the money went to the judges, not to Powell as a "finder's fee."

In one excerpt, Powell said Zappala "has a team up there auditing the books, to see what payments were made . . . I think we're getting sued."

Ciavarella is quoted as having replied that Zappala couldn't be stopped, and that it didn't matter, anyway.

"So he can sue us all he wants," Ciavarella said. "He didn't pay the finder's fee. Mericle paid it."

In another conversation, Ciavarella is quoted as saying, "I was the one who directed [Mericle] where to send that money, and I was the one who gave him the instructions as to where to send it."

Zappala was not charged with any crime, and his lawyer, William Brucker, says that "he had no knowledge of anything that was going on."

In September, Mericle pleaded guilty to concealing knowledge of a felony. Prosecutors say he didn't know about Powell's kickbacks to the judges, or about the constitutional violations that placed the children in the detention centers.

His crime, rather, was lying to the IRS when its agents asked him about the finder's fee, Assistant U.S. Attorney Gordon Zubrod said in court at the time of Mericle's plea agreement. It was different from Powell's payments, which the judges had allegedly demanded.

"Mr. Powell was paying money, and he understood it to be a quid pro quo that he would not get juveniles anymore if he didn't pay up the money," Zubrod said. "And he paid over $700,000 for that purpose."

Prosecutors contend that Powell sent his kickback checks to Pinnacle, the Florida firm - ostensibly to rent a $1 million condo, or to pay fees for a boat slip.

They also say he delivered $143,500 in cash - some of it stuffed into FedEx boxes - and had it delivered to Conahan.

On one tape, prosecutors say, Conahan made reference to the fact that the two judges had closed down the county's old publicly owned juvenile jail.

"Listen, you paid me rent for my condo," Conahan is quoted as saying in another conversation. "You didn't pay me rent for my condo to shut the juvenile detention center down or fix cases."

"It's $15,000 for 60 months. $900,000," Conahan continued. "That's what you were supposed to pay."

In other taped conversations, the participants wondered if an unnamed female employee was cooperating with federal investigators.

"But I'm gonna tell you, she didn't give me any boxes," Conahan is quoted as having told Powell. "And if you gave her stuff to give to me . . . it was documents. Maps. It was anything."

"That's our story," Powell said. "We'll stick to it."

"Yeah," Conahan said. "She's wearing a wire. That's why she didn't show up today."

Al Flora, Ciavarella's criminal defense attorney - and, as of two weeks ago, Luzerne County's chief public defender - said he intended to file a reply to the government's brief, which is due Friday. In previous motions, defense attorneys argued that the tapes are not admissible because they contain the defendants' defense strategy - and that prosecutors have engaged in "outrageous" conduct.

Prosecutors said the taped conversations weren't about strategy - they were about perjury.

"Powell repeatedly pointed out that he had in fact paid them cash on several occasions," the prosecutors' brief says. "The defendants replied that they needed to testify that they had received no cash from Powell and warned Powell that he had better keep to that story."

That evidence is key to the prosecution's case against Ciavarella. A federal judge is expected to decide this summer whether the tapes can be used in court.

 


Contact staff writer Trish Wilson at 610-313-8095 or twilson@phillynews.com

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