KEISLING: Kids for Cash in Luzerne County. (Could it happen here?)

The Luzerne County Courthouse Bribery Scandal Reconsidered (aka Kids for Cash)

by Bill Keisling

Editor’s note: The following is excerpted from a draft of Bill Keisling’s forthcoming book on corruption in Pennsylvania, ‘special legislation’ and the participation and complicity of the media.

Anyone wishing for insights into the wholesale corruption of Pennsylvania government and its courts, and the destructive effect this unchecked corruption has had on families and children, would do well to study the infamous Luzerne County Kids for Cash scandal.

On its face, the scandal is bad enough.

Two Luzerne County Common Pleas Court judges, Michael Conahan and Mark Ciavarella, were convicted in the early 2010s of accepting bribes for nearly a decade from the co-owner of private juvenile detention facilities. Approximately 6,500 kids were denied due process by the bribed judges. The kids were sent to private detention facilities, often for petty offenses.

All this is bad enough, and seems like the plot of a rather unbelievable dystopian Dickens novel.

But all this was just the tip of the tipstaff.

Judges Conahan and Ciavarella for years accepted cash bribes from just about anyone, to fix and manipulate just about any sort of court case before them.

One of the judges, Conahan, for years had regular breakfast meetings with organized crime figures. One of the mobsters regularly brought envelopes stuffed with cash to the courthouse for Judge Conahan. At one point, the mobster got Judge Conahan to help secure a $3.5 million libel judgment against a local newspaper.

A third judge says she also was offered an envelope stuffed with cash. Other judges in the courthouse have been prosecuted for corruption. The county prothonotary was said in court papers to have watched her law partner stuff cash into a FedEx box destined for Judge Conahan.

The Luzerne County Courthouse was a cesspool of corruption.

What’s most alarming is that for years the state court system ignored complaints about what was going on with these elected state judges in the dark and foreboding Luzerne County courthouse.

The most startling thing was that no one could do anything about any of it. Prosecutors, juvenile officials and others sat in courtrooms for years watching as the rights and futures of young people were destroyed as they were carted off without hearings and sold down the river.

“Kids for Cash” then is something of a misnomer. The scandal could just as easily be called “Anything for Cash.”

Throughout it all, the state’s court system overseeing all this for some reason sat back and let it happen, and repeatedly refused requests to take action.

The private detention facilities at the center of the Kids for Cash scandal were co-owned by two men: Luzerne County personal injury attorney Robert Powell, and Allegheny County investment banker Gregory Zappala.

Gregory Zappala was the son of state Supreme Court Chief Justice Stephen Zappala. Gregory’s brother, Stephen Jr., was, and remains, the district attorney of Allegheny County, and ran unsuccessfully for state attorney general in 2016.

The Kids for Cash scam had its roots all the way back to June 2000, according to the federal indictment against Conahan and Ciavarella.

Even before the Kids for Cash scandal began, Powell had been a longtime friend of Judge Conahan’s.

The federal indictment explains, “Beginning in June 2000, Ciavarella, in his administrative capacity as a juvenile court judge, and defendant Powell, an attorney in Luzerne County, began discussions about constructing a new juvenile detention facility in Luzerne County.”

Powell expressed interest in building a juvenile detention facility in Luzerne County, and Judge Ciavarella said he could help.

Judge Ciavarella put Powell in touch with a developer who was also an old friend, Robert K. Mericle, owner of Mericle Construction. Powell and Mericle soon located land in Pittstown Township, Luzerne County, to build the facility.

Powell’s business partner and co-owner of the facility, Gregory Zappala, filed a lawsuit against Powell after the scandal broke. In his 2014 lawsuit Zappala explains a slightly different genesis for the scandal, and the founding of the company he co-owned with Powell, variously called Pennsylvania Child Care, and PA Child Care. Zappala gives an earlier time frame.

“In 1999, Judge Conahan convened a meeting of a group of political cronies, including Judge Ciavarella and Robert Powell, to devise a plan to replace the dilapidated Luzerne County juvenile detention center on River Street, in Wilkes-Barre, Pennsylvania (the ‘River Street Summit’),” Zappala’s suit reads (emphasis added).

“Conahan invited Robert Powell to the River Street Summit even though Robert Powell had no discernible, useful skills or experience for the task (but he was Conahan’s trusted friend and protégée).

“At that time, Mr. Zappala was an investment banker particularly active in municipal bond work, who had met Robert Powell in that capacity.

“In 1999, Robert Powell informed Mr. Zappala of an opportunity to build a juvenile detention and treatment facility in Northeastern Pennsylvania with the goal to either rent or sell the facility to a public agency.” (Emphasis added.)

“After due diligence, Mr. Zappala determined that there was a need for such a regional facility in Northeastern Pennsylvania.

“Robert Powell scouted for land in Northeastern Pennsylvania and a builder for such a facility and in May 2001 caused PACC (PA Child Care) to be formed.

“Following the River Street Summit, Ciavarella, then the Luzerne County Juvenile Court Judge, put Robert Mericle, the owner and president of Mericle Construction, in touch with Robert Powell about building a juvenile detention facility in Luzerne County.”

Judges Conahan and Ciavarella it seems were already crooks when they hatched the Kids for Cash scheme, and were thick as thieves with contractor Robert Mericle.

Conahan was first elected to the county bench in 1994, after working as a district justice. Ciavarella was elected county judge in 1995. But early on there were allegations of corruption against the two, years before the juvenile detention scandal.

In 1994, shortly after Conahan was sworn in as county judge, he was accused of tipping off a drug dealer that his supplier was under investigation.

“This was not (Conahan’s) first brush with questions about his judicial conduct,” Wikipedia relates. “Ronald Belletiere from Florida was sentenced in the 1990s to 4 1/2 years in federal prison in connection with a Hazleton cocaine-trafficking ring. A witness in that case testified that in 1986, then-Magisterial District Judge Conahan called to tip him off that his drug connection was being investigated. Conahan allegedly referred the man to Belletiere as a safer source to obtain drugs. During a sidebar with a judge in that case, the prosecutor described Conahan as an ‘unindicted co-conspirator.’ That disclosure became public in 1994 eight months after Conahan was sworn in for his first term as a county judge. At a press conference he held to deny the allegation, he blamed the charges on ‘common criminals’ looking for favorable treatment with prosecutors.”

(One wonders why the state judiciary didn’t know or care about Judge Conahan’s earlier alleged misbehavior, and took no action, when an anonymous Wikipedia editor knows of it.)

By the same bad token, according to Zappala’s lawsuit, “Mericle had been funneling to Ciavarella at least $5,000 per year in cash or kind since Ciavarella was elected as a judge.”

So even before the bigger scandal began, Conahan and Ciavarella were crooks on the bench, unimpeded by their overseers in the state courts.

But those state court overseers certainly close connections to Gregory Zappala.

In December 2001, Zappala’s dad, Stephen Sr., would by seniority be sworn in as the state’s 55th chief justice of the state Supreme Court, a position the elder Zappala would hold until his mandatory retirement at age 70 at the end of 2002. During that time Chief Justice Zappala would ultimately be in charge of the state’s judiciary, and its administration, and discipline.

Together, whether they knew it or not (Gregory Zappala says he was a duped malapropos, and was in the dark), they would all be creating what would be called “one of the largest and most serious violations of children’s rights in the history of the American legal system.”

Before construction even began on the Luzerne County detention facility, Powell demanded $1 million from contractor Mericle.

“Robert Mericle, in turn, informed Ciavarella about Robert Powell’s demand for $1.0 million,” Zappala writes in his suit. “Robert Mericle told Ciavarella that it was Ciavarella who deserved the money and offered Ciavarella the $1.0 million as a ‘finder’s fee’ from the PACC Facility construction contract.

“Ciavarella accepted the offer from Robert Mericle and then went to Conahan and offered to split the $1.0 million finder’s fee with him, since Conahan had put together the people necessary to build the replacement for the River Street Facility.

“Conahan, pretending that he did not know about Robert Powell’s demand for the $1.0 million from Robert Mericle, accepted the offer and said ‘That is a heck of a friend you have.’“

Even so, Zappala’s lawsuit reads, “None of Robert Mericle, Mericle Construction, Ciavarella, Conahan, or Robert Powell, who demanded, knew of and approved of the $1.0 million finder’s fee, ever disclosed $1.0 million finder’s fee to Mr. Zappala.”

Nevertheless, the suit reads, “Mr. Zappala pursued financing for the PACC Facility.”

In January 2002 Conahan became president judge and took control of the courthouse budget. He soon signed a secret deal with Powell, agreeing to pay PA Child Care $1.3 million in annual rent for the new facility. This was in addition to the millions the state and county would pay to house juveniles.

To clear way for the new facility, Conahan first had to close the county’s own juvenile detention center.

In October 2002 Conahan announced that the county’s detention facility was unsafe, and that the court would stop sending kids there. Despite Conahan’s pronouncement, the next month the state ruled that the county’s center was safe, and renewed its license.

But Conahan controlled the purse strings, and forced the county to close its own facility by the end of 2002. A few months later, in February 2003, the Luzerne County Commissioners approved the use of the PA Child Care facility.

In October 2004, County Commissioners Greg Skrepenak and Todd Vonderheid approved a $58 million, 20-year lease for the PA Child Care center.

In 2009 Skrepenak was himself indicted by federal prosecutors for accepting multiple bribes during his six years in office for offenses unrelated to the private juvenile detention facility, including a $5,000 bribe for approving a government-subsidized loan to a local school developer.

The PA Child Care center was opened in February 2003, leasing the facility to Luzerne County for $2.9 million a year for 20 years.

In return for the bribes, juvenile Judge Ciavarella proceeded to load the private detention facility with kids. Ciavarella sentenced juveniles to jail at twice the state average.

Parents were told not even to bother retaining lawyers for their children at hearings before Ciavarella, because they wouldn’t be heard. Kids were carted off from their parents for minor offenses, like making fun of the school principle. One young man committed suicide. Parents stood by helplessly as thousands of kids were hauled off to Powell and Zappala’s private detention facility.

As early as 2003 so much bribe money from Powell was coming their way that Judges Conahan and Ciavarella had trouble hiding it all. In 2004 they together bought a $785,000 condo in Florida to help conceal the payments. Powell meanwhile began parking his $1.5 million yacht, the Reel Justice, in front of the judges’ Florida condo.

Things were going so well that Powell and Zappala decided to build another private detention facility in Butler County, this one called the Western Pennsylvania Child Care facility, or WPACC.

The second facility brought another $1 million “finder’s fee” for Judges Conahan and Ciavarella, again laundered through Powell from contractor Mericle, who also built the second facility.

The judges extorted another $733,500 from Powell, he would later complain to federal investigators.

All told, Judges Conahan and Ciavarella took in about $2.8 million in bribes through the private detention facilities. Gregory Zappala would say he didn’t know about any of it.

Meanwhile, there were plenty of warning signs and red flags that something was amiss in Luzerne County. And those red flags were flying for years.

In 2004, a Pennsylvania Department of Public Welfare (DPW) audit director, Tom Crofcheck, decided to audit PA Child Care when he learned that Luzerne County commissioners were preparing to lease the facility for $58 million. The commissioners apparently didn’t know they were paying too much, Crofcheck told his boss. They’d already planned an audit, but decided to expedite it.

The state auditors noticed peculiarities. The county was billing the state the same rate every month for detention services, instead of sending fluctuating bills, like other counties.

But PA Child Care refused to cooperate with the audit, and sued Crofcheck, preventing him from completing the audit.

In December 2004 the unfinished audit, which described the facility as a “bad deal,” was subpoenaed by county Controller Steve Flood, who leaked it. PA Child Care then sued Controller Flood, claiming he’d violated “trade secrets.” Judge Conahan sealed the suit, preventing other documents from getting out.

So the courts, and court proceedings, were used, and misused, to cover all this up, and to punish potential whistleblowers.

There were plenty of other warnings.

As far back as 2000 the Philadelphia-based Juvenile Law Center appealed a case of a child who was sentenced without a lawyer. But the problem of unrepresented kids before Judge Ciavarella only grew worse. State data indicated that Judge Ciavarella sentenced juveniles without legal representation at more than five times the state average from 1997 to 2003. From 2003 to 2007, Ciavarella’s rate of sentencing lawyerless kids was about 10 times the state norm.

The state’s Judicial Conduct Board meanwhile received at least four complaints about Judge Conahan between 2004 and 2008. The Conduct Board refused to investigate any of the complaints, and never even sought documentation.

In April 2008 the Juvenile Law Center petitioned the state Supreme Court for relief for the alleged violation of the kids’ civil rights. The Supreme Court denied the petition.

Instead, the payoffs rolled on unimpeded for most of a decade, or a full decade, depending on whose timeline you prefer.

Thousands of kids and their families would see their lives destroyed or upended, and all of them would get a close look at just how bad and corrupt Pennsylvania courts had become.

It’s not clear how or when the scandal began to unwind, only that the FBI and federal prosecutors began to investigate in the late 2000s.

The FBI, on its website, states, “The inquiry began in 2007 and over the next four years expanded to include county government offices, state legislators, school districts and contractors in Northeastern Pennsylvania.”

In the mid-2000s Judge Conahan filed disciplinary charges against a third Luzerne County judge, Anne Lokuta. Conahan accusing Lokuta of bullying and displaying bias against attorneys appearing before her, humiliating courthouse staff and causing them mental distress, and using courthouse staff to do her housework. As early as 2002, President Judge Conahan had shipped Lokuta off to an “uncompleted facility … without access to the court files, the court records, the mail or anything,” she’d complain.

Judge Lokuta apparently wasn’t playing ball.

There was no doubt a rats’ nest of corruption, bias, courtroom bullying and imperious, political boss-like behavior permeating the Luzerne County courthouse on a daily basis, as well as the state court system supposedly providing oversight.

Another Luzerne County judge, Michael Toole, would later be convicted of case fixing. Judge Toole, and another judge, each stayed at various times at Conahan and Ciavarella’s condo in Florida. So the corruption in the courthouse went well beyond Judges Conahan and Ciavarella.

But the state court’s disciplinary system was used to go after the enemies of Conahan and Ciavarella, and not to investigate the real criminals.

In late 2008, the Court of Judicial Discipline, acting on Conahan’s complaint, removed Judge Lokuta from the bench.

Former Judge Lokuta would later say that Judge Conahan ousted her because she had gone to the FBI with allegations of corruption.

Lokuta said that she had been approached by a courthouse intermediary who was carrying an envelope from mobster Bill D’Elia. D’Elia, reputed to be a member of the Bufalino crime family, for years had been eating breakfast with Judge Conahan at a local restaurant. Court testimony would also establish that D’Elia regularly entered the courthouse parking garage to deliver envelopes to Judge Conahan.

Lokuta alleged that D’Elia was attempting to deliver an envelope to her to induce her to get off a case in which she had ruled unfavorably against an associate of D’Elia’s, so that Conahan could have the case.

Patricia Benzi, a courthouse security guard, would testify that she was once asked to deliver an envelope from mobster D’Elia to Judge Lokuta. She dropped the envelope off with Lokuta’s secretary. Later that day the secretary returned the envelope to Benzi, telling her, “You tell him my judge isn’t like the rest of the judges!”

So at some point Judge Lokuta went to the FBI about these and other matters. The FBI may also have been tipped off that Conahan was practicing nepotism in his hirings in the county court.

As well, at some point, for reasons still mostly unknown, Zappala’s partner in the juvenile detention facilities, Robert Powell, began cooperating with the FBI.

Local press accounts in 2008 reported that the FBI was investigating the relationships between Judges Conahan and Ciavarella, and Powell’s various business interests.

Gregory Zappala’s lawsuit reads that Powell, Powell’s law partner, and Judge Conahan “entered into the land development business and constructed townhouses located in Mountaintop, Luzerne County, Pennsylvania,” forming a corporation called W-CAT, Inc. Powell, and Judges Conahan and Ciavarella, and their wives, all became personal guarantors of bank loans to W-CAT.

“On or about May 30, 2008, a Luzerne County newspaper exposed the W-CAT business relationships” among Powell, Conahan and Ciavarella and the others, Zappala’s lawsuit reads.

“When Mr. Zappala read the story,” the suit explains, “he called Robert Powell and told Robert Powell that Robert Powell would either buy Mr. Zappala out of PACC, WPACC and MAYS (the Mid-Atlantic Youth Services Corp), or Mr. Zappala would buy Robert Powell out of PACC, WPACC and MAYS, but either way they were done.”  Zappala would end up buying out Powell, which would later be the grounds for a counter-suit by Powell against Zappala.

By this time, the summer of 2008, there were all kinds of rumors swirling around the Luzerne County courthouse about federal investigations of Powell and the judges.

Powell at some point went to the FBI, or they came to him.

Powell evidently told the FBI and federal prosecutors that he was the victim of extortion by Judge Conahan for the bribe and “finder’s fee” money, and that his partner, Zappala, had no knowledge of any of it. Powell would tell the feds he feared being sued by Zappala.

This much is known: in the summer of 2008 the FBI put a wire on Powell and sent him in to talk to Conahan and Ciavarella. Powell recorded at least a half dozen conversations with the judges. His recordings would serve as the basis of the prosecutions.

“Ok. Let me tell you something,” Judge Conahan at one point told Powell. “If you want to check me, I’m not wearing a wire.”

“Neither am I,” Powell told him. But he was.

Judge Conahan, worrying about the FBI, at one point tells Powell, “I never got the cash from anybody. That’s the story. And you better stick to it.”

“I’ll stick to it,” Powell told him.

“Bobby,” Conahan tells him, “…you just gotta say it didn’t come from me.”

“Listen, you paid me rent for my condo,” Conahan tells him. “You didn’t pay me rent for my condo to shut the juvenile detention center down or fix cases.”

As for his partner, Powell says to Judge Ciavarella that he worried that Zappala “has a team up there auditing the books, to see where payments were made. …I think we’re getting sued.”

Judge Ciavarella countered that there was nothing they could do about Zappala, but that it wasn’t important.

“So he can sue us all he wants,” Ciavarella told Powell. “He didn’t pay the finder’s fee. Mericle paid it.”

In the end, Judges Conahan and Ciavarella would be put away in federal prison for decades.

At trial Powell testified that the judges told him, “You are making a lot of money and you’re going to give us some.”

Powell was treated as a cooperating witness and got his hand slapped. He pleaded guilty to failing to report a felony and being an accessory to tax conspiracy. In 2011 Powell was sentenced to only 18 months in a minimum-security federal prison in Florida. He was released from prison in 2013, and returned to live in his mansion in Florida.

Gregory Zappala would say in his lawsuit against Powell that Powell had “induced Mr. Zappala into business relationships for the purpose of plundering (Zappala) of millions of dollars that Robert Powell used to assure the success of (his businesses) by bribing Luzerne County, Pennsylvania, Court of Common Pleas officials for favorable rulings … and lining his pockets with the booty.

“In doing so, Robert Powell (and his) codefendants and … coconspirators thoroughly corrupted the administration of civil justice in Luzerne County, Pennsylvania, from at least 2001 until at least 2008; ruined the Plaintiffs’ reputations; stole millions of dollars from Plaintiffs; and burdened Mr. Zappala, PACC, WPACC and MAYS with crushing debt and litigation costs in the United States District Court for the Middle District of Pennsylvania.”

Zappala’s suit adds, “PACC, WPACC, MAYS and Mr. Zappala were sued by hundreds of children and their parents in the United States District Court for the Middle District of Pennsylvania because of what the Defendants did, and have expended or incurred in excess of $3.0 million in attorneys’ fees and litigation costs; PACC and WPACC have paid $600,000 to settle the Middle District Litigation, and PACC and WPACC must pay an additional $1.9 million to settle the Middle District Litigation.”

But the above is the only paragraph in Gregory Zappala’s lawsuit in which the word “children” appears.

He doesn’t really mention how the children were destroyed by his private detention facilities.

Gregory Zappala has steadfastly denied that he knew of the bribes being paid to the judges to house the kids in his private detention facility.

But nowhere does he question the wisdom of housing kids in private detention facilities.

Zappala mentions that he’s lost “millions” in his business plans to house the kids in a prison. In this respect, Gregory Zappala is a reverse Milton Hershey, isn’t he?

Hailing as he does from one of Pennsylvania’s more prominent political and judicial families, Gregory Zappala oddly doesn’t seem at all concerned by the private detention business, and its obvious dangers, as we see all too well here.

And though he may not have known about the bribes, what about the years these facilities overcharged the state and county? Didn’t Zappala know about the audits saying his facility was “a bad deal?” Didn’t Zappala know that his company was suing whistleblowers in state court for allegedly revealing “trade secrets?”

And what about the statistics showing the judges for more than a decade were sentencing kids without lawyers at a rate multiple times greater than elsewhere in Pennsylvania? Didn’t Zappala, or his father, a prominent member of the state Supreme Court for decades, and its chief justice in 2002, know or care about that either?

No one has adequately explained why the state Supreme Court refused to look into what was going on in Luzerne County.

“We filed a brief with the state supreme court and it sat there,” Marsha Levick deputy director and chief counsel of the Juvenile Law Center told me.

The state Supreme Court only agreed to re-examine the complaints after the federal investigation was made public.

“Powell says that Gregory Zappala knew nothing of it, and didn’t notice millions missing,” Levick adds.

“These kids were mostly poor,” she laments. Many were non-white.

Levick says she suspects Judge Lokuta’s secretary wrote letters to the feds and the Judicial Conduct Board, and that’s what got the ball rolling.

But still questions remain. Some of the questions are obvious, others not so.

Did the state Supreme Court not interfere because the son of a chief justice was involved with the private detention facilities? she and others wonder.

There could be other hidden conflicts.

Judge Ciavarella’s wife’s maiden name, Baer, was the same as another Supreme Court justice. There may be other connections between the Luzerne County judges and the appeals courts, Levick suggests, dating to law school.

There never has been an adequate or thorough investigation of all this.

And where was the state attorney general’s office? In the same time frame, the late 2000s, AG Tom Corbett was accused of refusing to investigate the Jerry Sandusky scandal.

And what about the state legislature? As with the Sandusky case, there were never legislative hearings about how all this happened.

The state legislature at one point approved an “Interbranch Commission on Juvenile Justice” to supposedly investigate what went wrong in Luzerne County.

But that investigation didn’t investigate what went wrong in the state courts, which provided no oversight, and which for years sat back and let things happen.

So in that respect, predictably in Pennsylvania, the commission was a whitewash.

Signing the Interbranch Commission legislation in 2009 Gov. Ed Rendell said that Judges Conahan and Ciavarella “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.”

And what about the press in all this?

As news of the great scandal was breaking in 2009, Hank Grezlak of the Legal Intelligencer, the state lawyers’ trade paper, wrote an article titled “How Deep is the Luzerne Co. Snake Pit? No One Is Sure.”

“With apologies to all the fine people and honest and hard-working lawyers and judges in Luzerne County,” wrote Grezlak, “after digging into the judicial scandal for a few weeks I can safely say that I can’t throw a rock up in the air in this state without hitting someone who has a horror story or allegation or points out a troubling connection with regard to the county’s common pleas court.”

The FBI relates on its website, “The case was investigated by the agents of the Internal Revenue Service, Criminal Investigations and Federal Bureau of Investigation’s Scranton office. To date, over 30 local or state government officials and contractors have been convicted or are awaiting trial.”

But what about what’s going on in the other 66 county courthouses in Pennsylvania? What about the obvious corruption throughout Pennsylvania’s state court system, and the lawyers and the reporters who continuously avert their eyes?

It became safe and fashionable to criticize the Luzerne County legal establishment. With safety in numbers, pack reporters feel safe to comment on it.

With apologies to Grezlak and the Legal Intelligencer, I can’t throw up a rock in most any county in the state, or in any state appeals court, without hitting someone who complains about routine daily petty and grand corruption, high-handedness, or malfeasance in those courts.

Pennsylvania’s news establishments apologize for it all, and deny it all.

The problem, at least in part, is about judges who act like political bosses.

The honorable is regularly confused with the dishonorable.

Honor, honesty and integrity, after all, aren’t automatically passed out with a gavel and a robe when a lawyer wins election to the bench.

See also:

US v Conahan and Ciavarella, 2009

Zappala v. Powell et al 2014