Kids for cash scandal

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For the documentary, see Kids for Cash.
An image showing the large domed Luzerne County Courthouse in Wilkes-Barre as seen from across the Susquehanna River
Luzerne County Courthouse in Wilkes-Barre, Pennsylvania

The "kids for cash" scandal unfolded in 2008 over judicial kickbacks at the Luzerne County Court of Common Pleas in Wilkes-Barre, Pennsylvania. Two judges, President Judge Mark Ciavarella and Senior Judge Michael Conahan, were convicted of accepting money from Robert Mericle, builder of two private, for-profit youth centers for the detention of juveniles, in return for contracting with the facilities and imposing harsh adjudications on juveniles brought before their courts to increase the number of residents in the centers.[1][2]

For example, Ciavarella adjudicated a substantial number of children to extended stays in youth centers for a variety of offenses as trivial as mocking a principal on Myspace, trespassing in a vacant building, and shoplifting DVDs from Wal-Mart.[3] Ciavarella and Conahan pleaded guilty on February 13, 2009, pursuant to a plea agreement, to federal charges of honest services fraud and conspiracy to defraud the United States (failing to report income to the Internal Revenue Service, known as tax evasion) in connection with receiving $2.6 million in payments from managers at PA Child Care in Pittston Township and its sister company Western PA Child Care in Butler County.[4][5] The plea agreement was later voided by a federal judge, who was dissatisfied with the post-plea conduct of the defendants, and the two judges charged subsequently withdrew their guilty pleas, raising the possibility of criminal trials.[6]

A federal grand jury in Harrisburg, Pennsylvania returned a 48-count indictment[7] against Ciavarella and Conahan including racketeering, fraud, money laundering, extortion, bribery, and federal tax violations on September 9, 2009.[8][9] Conahan entered a revised guilty plea to one count of racketeering conspiracy in July 2010.[10] In a verdict reached at the conclusion of a jury trial, Ciavarella was convicted February 18, 2011 on 12 of the 39 counts he faced.[11][12]

Following the original plea agreement, the Pennsylvania Supreme Court ordered an investigation of the cases handled by the judges and following its outcome quickly overturned several hundred adjudications of delinquency in Luzerne County.[13] The Juvenile Law Center filed a class action lawsuit against the judges and numerous other parties, and the state legislature created a commission to investigate the wide-ranging juvenile justice problems in the county.[14][15] The Center has maintained a list of related court documents.[16]

Investigations[edit]

The Pennsylvania state Judicial Conduct Board received four complaints about Conahan between 2004 and 2008, but later admitted it failed to investigate any of them, nor had it sought documentation regarding the cases involved.[17] The FBI was tipped off about Conahan and nepotism in the county courts in 2006.[18] An additional investigation into improper sentencing in Luzerne County began early in 2007 as a result of requests for assistance from several youths received by the Philadelphia-based Juvenile Law Center. Attorneys from the center determined that several hundred cases were tried without the defendants receiving proper counsel. In April 2008, the Center petitioned the Pennsylvania Supreme Court seeking relief for alleged violation of the youths' civil rights. The application of relief was later denied, then reconsidered in January 2009 when charges of corruption against the judges surfaced.[19]

The Federal Bureau of Investigation and the Internal Revenue Service also investigated the two judges, although the exact dates and scope of the investigations by the two federal agencies were not made public.[20] Part of the investigation was revealed to have occurred during disciplinary hearings over the conduct of another former Luzerne County judge, Anne H. Lokuta.[21] Lokuta was brought before the Judicial Conduct Board of Pennsylvania in November 2006 to answer charges of using court workers to do her personal bidding, openly displaying bias against some attorneys arguing before her, and publicly berating staff to cause mental distress.[22] The board ruled against Lokuta in November 2008, and she was removed from the bench. During the course of the disciplinary hearings, Lokuta accused Conahan of bullying behavior and charged that he was behind a conspiracy to have her removed.[23] Lokuta aided the federal investigation into the "kids for cash" scheme prior to the determination of the disciplinary board, and a stay order was issued in March 2009 by the state Supreme Court in light of the ongoing corruption investigations, halting Lokuta's removal and the election that was to be held in May to replace her.[24] During the Lokuta hearing, Conahan testified that there were no social relationships amongst the county judges. However, Judge Michael Toole, who was later convicted of case fixing, as well as another judge, had each stayed at a Florida condo jointly owned by Conahan and Ciavarella.[18] The state Supreme Court decided to uphold Lokuta's removal from the bench in January 2011, finding she had received a fair trial, regardless of Conahan's testimony. It also ordered the expungements of the records of 2,401 of those juveniles who were affected.[25][26]

Charges and pleas[edit]

A statement from the office of the United States Attorney for the Middle District of Pennsylvania outlined the charges against the two judges on January 26, 2009. The charges outlined in the information[27] described actions between 2000 and 2007 by both judges to assist in the construction and population of private juvenile facilities operated by the two Pennsylvania Child Care companies, acting in an official capacity in favor of the private facilities over the facility operated by Luzerne County.[20]

The U.S. Attorney charged that in 2002 Conahan, who at the time was President Judge of the court, used his authority to remove funding for the county-operated facility. The judges were alleged to have received "millions of dollars" in payments for the completion of a binding agreement between the court and the private facilities, co-owned by attorney Robert Powell, to use their services and the subsequent closing of the county facility.[28] The methods used to conceal the payments involved several parties and transactions which resulted in allegations of tax evasion against the two. Ciavarella and Conahan were also charged with "Ordering juveniles to be sent to these facilities in which the judges had a financial interest even when Juvenile Probation Officers did not recommend placement," according to the statement.[28]

Original, negotiated plea agreements called for both judges to serve up to seven years in prison, pay fines and restitution, and accept responsibility for the crimes.[1] However, on July 30, 2009, Judge Edwin M. Kosik of Federal District Court in nearby Scranton rejected the plea agreement, citing "post-guilty plea conduct and expressions from the defendants" that he ruled did not satisfy the terms of the agreement. Kosik wrote that Conahan and Ciavarella continued to deny their crimes even in the face of overwhelming evidence, and therefore did not merit sentences that were well below federal sentencing guidelines.[29][30] Attorneys for the two judges brought a motion requesting reconsideration of the judge's rejection of the plea agreement.[31] The motion was denied on August 24, 2009, and Ciavarella and Conahan subsequently withdrew their guilty pleas, an action which eventually resulted in a jury trial for Ciavarella and additional charges against the former judges.[6]

Following the plea withdrals, on September 9, 2009, a federal grand jury in Harrisburg, Pennsylvania returned a 48-count indictment[7] against Ciavarella and Conahan including racketeering, fraud, money laundering, extortion, bribery, and federal tax violations. Both judges were arraigned on the charges on September 15, 2009.[8][9] Ciavarella and Conahan entered pleas of not guilty on all counts and remained free on $1 million in bail, despite federal prosecutors' contentions that their bail should be raised. Prosecutors argued the judges' bail should have been higher, since they faced the possibility of substantially more prison time and there had been evidence of attempts made to shield assets.[32]

Robert Powell, an attorney and co-owner of the two juvenile facilities at the heart of the scandal, pleaded guilty on July 1, 2009, to failing to report a felony and being an accessory to tax evasion conspiracy, in connection with $770,000 in kickbacks he paid to Ciavarella and Conahan in exchange for facilitating the development of his juvenile detention centers.[5][33][34] The Pennsylvania Supreme Court temporarily suspended Powell’s law license on September 1, citing his criminal conviction.[35]

Robert Mericle, the prominent real estate developer who built the two juvenile facilities, pleaded guilty on September 3, 2009, to failing to disclose a felony. Mericle had failed to tell a grand jury he had paid $2.1 million to Ciavarella and Conahan as a finder's fee. As part of his plea, Mericle agreed to pay $2.15 million to fund local children's health and welfare programs. Mericle faced up to three years in prison and a $250,000 maximum fine.[33][36][37]

Sandra Brulo, the former Deputy Director of Forensic Services for the Luzerne County Juvenile Probation Office, agreed to plead guilty in March 2009 to federal obstruction of justice. Those charges stemmed from actions Brulo took after she became aware she had been named in the federal civil action. Brulo backdated her recommendation of placement she made concerning a juvenile defendant in September 2007, and changed her original recommendation of placement to probation.[38]

Criminal verdicts and sentences[edit]

Mark Ciavarella booking photo

On February 18, 2011, following a trial, a federal jury convicted Ciavarella on 12 of the 39 remaining counts he faced including racketeering, a crime in which prosecutors said the former judge used children "as pawns to enrich himself." In convicting Ciavarella of racketeering, the jury agreed with prosecutors that he and another Conahan had taken an illegal payment of nearly $1 million from a youth center's builder, then hid the money.[11]

The panel of six men and six women also found Ciavarella guilty of "honest services mail fraud" and of being a tax cheat, for failing to list that money and more on his annual public financial-disclosure forms and on four years of tax returns. In addition, they found him guilty of conspiring to launder money. The jurors acquitted Ciavarella of extortion and bribery in connection with $1.9 million that prosecutors said the judges extracted from the builder and owner of two youth centers, including allegations that Ciavarella shared the proceeds of FedEx boxes that were stuffed with tens of thousands of dollars in cash.

Following Ciavarella's conviction, he and his lawyer appeared on the steps of the courthouse to give an impromptu press conference. The press conference was interrupted by Sandy Fonzo, whose son Edward Kenzakoski committed suicide after Ciavarella adjudicated him to placement, despite Kenzakoski's first-time offender status.[39]

On August 11, 2011, Ciavarella was sentenced to 28 years in federal prison as a result of his conviction.[40] He is currently being held at the Federal Correctional Institution, Ashland, a low-security federal prison in eastern Kentucky.[41] He is scheduled for release in 2035, when he will be 85 years old.[42] Ciavarella appealed his conviction to the Third Circuit and it was rejected on July 25, 2013.[43]

Michael Conahan booking photo

On September 23, 2011, Conahan was sentenced to 17 and a half years in federal prison after pleading guilty to one count of racketeering conspiracy.[44] He is currently being held at a minimum security facility at the Federal Correctional Complex, Coleman in Florida. He is scheduled for release in 2026, when he will be 74 years old.[45]

On November 4, 2011, Powell was sentenced to 18 months in federal prison after pleading guilty to failing to report a felony and being an accessory to tax conspiracy. He was incarcerated at the Federal Prison Camp, Pensacola, a low-security facility in Florida, and was released from a halfway house on April 16, 2013.[46][47][48] On August 10, 2015, a judge approved a $4.75M settlement agreement for Powell, for having paid kickbacks related to the adjudication of at least 2,400 juveniles.[49]

Robert Mericle's sentencing in connection with his guilty plea for failing to report a felony was delayed pending his anticipated testimony in the bribery trial of former Pennsylvania State Senator Raphael Musto. After Musto died on April 24, 2014,[50] Mericle was sentenced the next day to one year in prison by Senior District Judge Edwin M. Kosik. Mericle was ordered to pay a $250,000 fine and to report to the Federal Bureau of Prisons on May 14, 2014.[51] He was released on May 29, 2015.[52]

Victim lawsuits[edit]

Acting under a rarely used power established in 1722 and reserved for extraordinary circumstances, known as "King's Bench jurisdiction",[53] the Pennsylvania Supreme Court appointed a special master on February 11, 2009 to review all juvenile cases handled by Ciavarella.[54] Senior Judge Arthur Grim of the Berks County Court of Common Pleas was appointed special master and returned his findings in an interim report dated March 11, 2009.[55] On March 26, 2009, the Supreme Court approved Grim's recommendations and ruled that Ciavarella had violated the constitutional rights of thousands of juveniles, and initially hundreds of juvenile adjudications were ordered overturned.[13][56]

A class action lawsuit was filed by the Juvenile Law Center on behalf of the juveniles who were adjudicated delinquent by Ciavarella despite not being represented by counsel or advised of their rights. Besides naming Ciavarella and Conahan, the suit seeks damages under the civil portion of the Racketeer Influenced and Corrupt Organizations Act (RICO) against the judges' spouses and business associates, shell companies, youth center officials, and Luzerne County.[15][57] Three other federal lawsuits filed on behalf of the victims have been consolidated with the Juvenile Law Center lawsuit into a master class action.[58] An amended master complaint was filed on August 28, 2009.[59]

In June 2010, an injunction was filed on behalf of PA Child Care, Western PA Child Care, and Mid Atlantic Youth Services, the companies that provided treatment programs at the youth centers,[60] to prevent the ordered destruction of thousands of juvenile records on the grounds the records are needed for the defense's case.[60]

On July 8, 2013, a three-judge panel of the Third Circuit Court of Appeals ruled in the case of Markel International Insurance Company v. Robert J. Powell, (his business partner) Gregory Zappala, et al., that the insurance company had no obligation to defend or indemnify the individuals or corporations involved, leaving the defendants liable for adverse judgments.[61]

Interbranch Commission on Juvenile Justice[edit]

In the aftermath of the federal charges and defendant pleas, the Pennsylvania General Assembly moved to create a commission to investigate the entire set of circumstances surrounding the miscarriage of justice in Luzerne County. Sponsored by Representative Todd Eachus of Butler Township in Luzerne County, House Bill 1648[62] established the Interbranch Commission on Juvenile Justice in July 2009. The commission comprises 11 members, appointed from each branch of government in Pennsylvania, with four members chosen by the judiciary, four by the legislature and three by the governor.[14]

In signing the legislation on August 7, 2009, Governor Ed Rendell castigated Ciavarella and Conahan, saying they "violated the rights of as many as 6000 young people by denying them basic rights to counsel and handing down outrageously excessive sentences. The lives of these young people and their families were changed forever."[14] Scheduled to meet a minimum of once per month, the commission was organized to investigate the actions of and damages caused by the two judges and review the state of the Luzerne County courts left in the wake of their tenures.[63][64] The commission was given power of subpoena and was required to complete its work and report its recommendations and findings to the three branches of state government by May 31, 2010.[65]

In popular culture[edit]

The scandal was featured in Capitalism: A Love Story, the 2009 documentary by Michael Moore.[66] A full-length documentary covering the scandal entitled Kids for Cash was released in February 2014,[67] and has been favorably reviewed.[68][69] In April 2014, CNBC's crime documentary series American Greed reported on the case.[70]

The scandal has also led to several portrayals in fictional works. The Law & Order: Special Victims Unit episode "Crush", the CSI: NY episode "Crossroads",[71] and an episode of The Good Wife featured corrupt judges sending children to private detention centers. An episode of Cold Case called "Jurisprudence" is loosely based on this event.[72][73][74] In 2015, crime fiction novelist Ace Atkins, using the nom de plume of the late Robert B. Parker, wrote "Kickback," which borrows heavily from this case, transposing it into a Boston suburb instead. An episode of Billions called "Quality of Life" has a subplot inspired by the scandal in which a New York City judge sentences youths harshly for financial gain.[75] The novel Corrupted by Lisa Scottoline includes the scandal, portraying characters in the book as victims of the scandal.[76]

See also[edit]

References[edit]

  1. ^ a b Urbina, Ian (March 27, 2009). "Despite Red Flags, Judges Ran Kickback Scheme for Years". New York Times. Retrieved 2009-05-02. 
  2. ^ Frank, Thomas (April 1, 2009). "Thomas Frank Says 'Kids for Cash' Incentivizes the Prison Industry". Wall Street Journal. Retrieved 2009-08-25. 
  3. ^ "Pennsylvania rocked by 'jailing kids for cash' scandal". 
  4. ^ Urbina, Ian (February 26, 2009). "70 Youths Sue Former Judges in Detention Kickback Case". New York Times. Retrieved 2009-08-25. 
  5. ^ a b Sisak, Michael (July 1, 2009). "Powell pleads guilty". The Times-Trubine. Retrieved 2009-08-26. 
  6. ^ a b Morgan-Besecker, Terrie (August 25, 2009). "Judges withdraw guilty pleas". Wikes-Barre Times Leader. Archived from the original on September 1, 2009. Retrieved 2009-08-25. 
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  8. ^ a b Morgan-Besecker, Terrie (September 10, 2009). "Ex-judges hit with 48 counts". Times Leader. Retrieved 2009-09-11. 
  9. ^ a b "U.S. Attorney's Office News Release" (PDF). September 9, 2009. Retrieved 2009-09-10. 
  10. ^ Morgan-Besecker, Terrie (April 25, 2011). "Hearing set for Ciavarella pension". Wilkes-Barre Times Leader. Retrieved 21 May 2011. 
  11. ^ a b "Ex-judge Mark A. Ciavarella Jr. guilty in 'cash for kids' case". The Philadelphia Daily News. Retrieved 2011-02-21. 
  12. ^ "Ciavarella won't fight for $250K pension". Wilkes-Barre Citizens Voice. April 26, 2011. Retrieved 21 May 2011. 
  13. ^ a b "Court Tosses Convictions Of Corrupt Judge". CBSnews.com. March 26, 2009. Retrieved 2009-05-02. 
  14. ^ a b c "Governor Rendell Signs Bill Creating Commission to Probe Juvenile Justice System". Pennsylvania Office of the Governor. August 7, 2009. Retrieved 2009-08-26. [dead link]
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  16. ^ "JLC's growing list of related Court Documents". Juvenile Law Center. 2010-05-16. Archived from the original on 2010-05-16. Retrieved 2012-11-16. 
  17. ^ State Failed to Investigate Complaints in Juvenile Court Kickback Scandal, Juvenile Justice Information Exchange, Noah Echols, March 22, 2010. Retrieved 7 December 2016.
  18. ^ a b Lokuta says conduct board kept conahan allegations under wraps, Citizens Voice, Michael R. Sisak, DECEMBER 12, 2009. Retrieved 7 December 2016.
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  21. ^ Leo Strupczewski and Peter Hall (February 9, 2009). "Rumors Intensify About Investigation Into Allegations of Luzerne County Case-Fixing". Pennsylvania Law Weekly. Retrieved 2009-08-27. 
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  25. ^ Former judge Lokuta still off the bench, Citizens Voice, Dave Janoski, January 15, 2011. Retrieved 7 December 2016.
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  28. ^ a b "Press Release". U.S. Department of Justice for the Middle District of Pennsylvania. January 26, 2009. Archived from the original on September 1, 2009. Retrieved 2009-08-26. 
  29. ^ Urbina, Ian (July 31, 2009). "Plea Agreement by 2 Judges Is Rejected In Pennsylvania". New York Times. Retrieved 2009-08-27. 
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  32. ^ Morgan-Besecker, Terrie (September 16, 2009). "Ex-jurists plea, still free Magistrate judge declines to raise bail. Federal prosecutors see Conahan, Ciavarella as flight risks.". Timesleader.com. Retrieved 2009-10-05. 
  33. ^ a b Dale, Maryclaire (August 14, 2009). "Luzerne builder latest to admit guilt in scandal". Associated Press/The Morning Call. Archived from the original on September 3, 2009. Retrieved 2009-08-26. 
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  35. ^ Lewis, Edward (September 2, 2009). "Pa. court suspends Powell's law license Action taken as Butler Twp. lawyer awaits sentencing in federal corruption probe.". Timesleader.com. Archived from the original on February 24, 2012. Retrieved 2009-09-06. 
  36. ^ "United States v. Robert K. Mericle". The United States Attorney's Office, Middle District of Pennsylvania. Retrieved 2009-08-27. 
  37. ^ Morgan-Besecker, Terrie (September 3, 2009). "Mericle pleads guilty". The Times Leader. Archived from the original on September 7, 2009. Retrieved 2009-09-03. 
  38. ^ "United States v. Sandra Bruno". The United States Attorney's Office, Middle District of Pennsylvania. Retrieved 2009-08-25. 
  39. ^ "Mom blames son's suicide on Luzerne County judge in 'kids for cash' case". PennLive.com. Associated Press. February 22, 2011. Retrieved 17 September 2014. 
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  41. ^ Halpin, James. "Ciavarella requests hearing in effort to get new trial". citizensvoice.com. Retrieved 15 December 2015. 
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  49. ^ http://www.msn.com/en-ca/news/other/us-judge-oks-dollar475m-settlement-in-kids-for-cash-case/ar-BBlG1wJ
  50. ^ "Obituary". timesleader.com. 2014-05-28. Retrieved 2014-05-28. 
  51. ^ "Robert Mericle Sentenced to One Year in Prison". U.S. Attorney’s Office. 2014-04-25. Retrieved 2014-05-28. 
  52. ^ "Inmate Locator". 
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  58. ^ Sisak, Michael (June 11, 2009). "Attorneys agree to a consolidated lawsuit against Ciavarella, Conahan". The Citizen's Voice. Retrieved 2009-09-06. [dead link]
  59. ^ "Amended Master Complaint" (PDF). August 27, 2009. Archived from the original (PDF) on September 21, 2010. Retrieved 2009-09-09. 
  60. ^ a b "Juvie papers' destruction blocked". Timesleader.com. June 10, 2010. Retrieved July 2, 2010. 
  61. ^ Opinion of the Court Nos. 12-2016, 2013. Retrieved 1 August 2013
  62. ^ "House Bill No. 1648". The Pennsylvania General Assembly. June 25, 2009. Retrieved 2009-08-26. 
  63. ^ Swift, Robert (August 21, 2009). "Juvenile justice commission's first meeting set for next week". Wilkes-Barre Citizen Voice. Archived from the original on September 2, 2009. Retrieved 2009-08-26. 
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  65. ^ Swift, Robert (August 7, 2009). "Rendell to sign legislation creating corruption commission". Wikes-Barre Citizen Voice. Archived from the original on September 2, 2009. Retrieved 2009-08-26. 
  66. ^ Rich Drees (18 February 2011). Judge Featured In Moore’s CAPITALISM: A LOVE STORY Found Guilty Of Racketeering. Film Buff Online. Retrieved 6 February 2014. See also: The 'Kids for Cash' Scandal from 'Capitalism: A Love Story'.
  67. ^ "Tom Hiddleston to Star in Legendary's 'Skull Island' Film, Jordan Vogt-Roberts Directing". IMDb. 17 November 2013. Retrieved 17 September 2014. 
  68. ^ Rickey, Carrie (2014-02-04). "Movie Review: Kids for Cash | Ticket". Phillymag.com. Retrieved 2014-05-01. 
  69. ^ "Kids For Cash: Inside One of the Nation's Most Shocking Juvenile Justice Scandals". Democracy Now!. Retrieved 2014-05-01. 
  70. ^ "CNBC's American Greed will feature kids-for-cash scandal". The Citizens' Voice. 2014-01-10. Retrieved 2014-06-03. 
  71. ^ Review: CSI: New York — ‘Crossroads’, CSIFiles.com
  72. ^ stevelaudig says:. "Ripped from the Headlines: Greed, Corruption, and Hate Crimes in Northeastern Pennsylvania | The Public Record". Pubrecord.org. Retrieved 2012-11-16. 
  73. ^ "Wilkes-Barre, news, sports, obituaries, and classifieds for Luzerne County and Scranton | The Times Leader, Wilkes-Barre, Scranton PA – www.timesleader.com". Archives.timesleader.com. Retrieved 2012-11-16. 
  74. ^ Michael R. Sisak (Staff Writer) (2009-12-17). "County judges provide TV fodder – News". Standard Speaker. Retrieved 2012-11-16. 
  75. ^ Joshua Alston (2016-03-28). "Bobby buries one of his own in a solid but empty Billions". avclub.com. Retrieved 2016-03-28. 
  76. ^ Scottoline, Lisa. (2015) Corrupted: A Rosato and DiNuzio Novel. St. Martin's Press

External links[edit]

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