Luzerne County Judges

September 12, 2009

Feds may seize assets of judges

Forfeiture count in an indictment seeks to recover $2.8 million.

By Terrie Morgan-Besecker tmorgan@timesleader.com
Law & Order Reporter
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WILKES-BARRE – Experts in forfeiture law say they expect federal prosecutors will file an action seeking to freeze assets of Michael Conahan and Mark Ciavarella to ensure there’s money left to seize should the former judges be convicted of corruption charges.

A forfeiture count included in an indictment filed Wednesday seeks to recover $2.8 million. Final resolution of the criminal case could take years, however, creating the possibility that any assets the ex-judges own could be entirely depleted.

Federal law allows the U.S. Attorney’s office to seek to freeze a defendant’s assets prior to trial, but prosecutors must show the funds were directly derived from the alleged criminal activity, said Steven Kessler, a New York City attorney who specializes in forfeiture law.

“Just about every type of case is now eligible for a provisional remedy to attach bank accounts,” Kessler said. “Even pre-indictment, the government is permitted under certain circumstances to get an attachment.”

Freezing assets also helps ensure a defendant does not spend down or transfer property that might be subject to forfeiture, said attorney David Debold of Washington, D.C.

Debold said defendants sometimes make those transfers prior to arrest in an attempt to avoid forfeiture. The government can still seek to seize those assets, however, if it can be shown the transfer was made for that purpose.

“They’ll look at the timing of the sale,” Debold said. “What was the motivation?”

Attorney Steven Fleisher of Miami, Fla., said the biggest challenge in seeking to freeze assets is proving which funds were directly derived from illegal activity versus those that were legitimately earned.

That’s not so much an issue for Ciavarella as it is Conahan, who was involved in several businesses during the time the crimes were allegedly committed. They include Trans-Med Ambulance Service in Swoyersville and two beverage distributorships, Beverage Marketing in Sheppton and Kencon Partnership in Dumont, N.J., according to the statement of financial interest Conahan filed with the state in 2007.

Persons involved in those businesses would have a right to intervene should prosecutors file a forfeiture action against them. They would be entitled to compensation should the government seize the businesses as long as they could prove they had no involvement in the alleged criminal activity.

According to the indictment, Conahan reported $889,148 in taxable income in 2005. Prosecutors claim his actual income that year was “materially more than that amount.”

A federal judge would have to hold an evidentiary hearing before the assets could be frozen, Fleisher said. He suspects prosecutors already have information gathered to present to the judge in the Conahan/Ciavarella case.

“You can bet your bottom dollar the IRS has done a thorough investigation of all the defendants’ assets,” Fleisher said. “They’ve subpoenaed bank records, tax records, anything they can get their hands on to prove this is what you own. Now we want to determine how you paid for it.”

U.S. Attorney Dennis Pfannenschmidt declined to comment Friday on whether he will seek to freeze the assets. Kessler and other attorneys interviewed said they would be surprised if the action is not taken.

A federal grand jury issued a 48-count indictment against Conahan and Ciavarella charging them with racketeering, bribery, extortion, money laundering, wire fraud and tax evasion. Prosecutors allege the men accepted millions of dollars in improper payments in connection with rulings they issued that impacted the operation and construction of two juvenile centers.

The forfeiture count included in the indictment gives prosecutors immense power, Kessler and the other attorneys said. That power increases significantly should the ex-judges be convicted of the crimes.

Should that occur, all property and other material goods owned by the men could be subject to forfeiture, even those items that were purchased with money that was legitimately earned, the attorneys said.

Those items would fall under the “substitute forfeiture” count included in the indictment, Debold said.

Debold said the government, utilizing forensic auditors, will attempt to trace how the illegally earned money was spent. If it cannot account for all of it, they can proceed under the substitute forfeiture section.

“We know you have a million, but we can’t find how or what you spent it on. We can find a million of any of your property and seize it,” Debold said to illustrate the procedure. “They can go around seizing assets up to the amount they claim you got illegitimately.”

That could include all properties and businesses in which Conahan and Ciavarella had an interest, even those that are partly owned by innocent parties who played no role in the alleged crimes, the experts said.

Contacted Friday, Fred Buckman, one of the owners of Trans-Med Ambulance Service, said Conahan “has nothing to do with the company.” He hung up on a reporter and did not return a phone message seeking further comment.

Terrie Morgan-Besecker, a Times Leader staff writer, may be reached at 570-829-7179.

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