Judges admit tax evasion, fraud

By Terrie Morgan-Besecker tmorgan@timesleader.comLaw & Order Reporter

SCRANTON – “Guilty, your honor.”

Luzerne County judges Mark Ciavarella, left, and Michael Conahan walk out of the federal courthouse in Scranton Thursday. Both pleaded guilty to tax evasion and honest services fraud.

S. John Wilkin/The Times Leader

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They are words Luzerne County judges Mark Ciavarella and Michael Conahan had heard uttered thousands of times in the years they spent on the bench.

This time the admission came not from some defendant who stood before them, but from their own lips.

Amid a courtroom packed with spectators, the two longtime jurists appeared before Senior U.S. Judge Edwin M. Kosik on Thursday afternoon and admitted violating the public’s trust.

There were no impassioned speeches, no pleas for mercy during the 45-minute hearing. Those are expected to come 60 to 90 days from now, when, following the completion of a pre-sentence investigation, the judges appear for sentencing.

Ciavarella, 58, and Conahan, 56, each pleaded guilty to tax evasion and devising a scheme to defraud the public of their honest services. Their plea deal calls for them to each serve 87 months in prison.

Thursday’s hearing was only the first step in the process. The plea won’t officially be accepted until Kosik signs off on it. If he refuses, either side can withdraw the plea and Ciavarella and Conahan would go to trial.

Those issues won’t be fully resolved until the sentencing hearing. Thursday’s hearing focused on a recitation of the evidence gathered over a lengthy investigation by the FBI and IRS that supported the filing of the charges.

Ciavarella and Conahan sat quietly throughout the hearing, listening intently as Assistant U.S. Attorney Gordon Zubrod recited the evidence that has transformed them from pillars of the legal community into felons.

That evidence, Zubrod said, showed Ciavarella and Conahan had accepted more than $2.6 million in kickbacks in exchange for favorable judicial rulings they issued relating to the operation and construction of two juvenile detention centers – PA Child Care in Pittston Township and Western PA Child Care in Butler County.

Zubrod painstakingly detailed a laundry list of financial transactions the judges made and how they concealed the source of the money by portraying it as business expenses or rental payment for the Mariner at Jupiter Yacht Club, a Florida condominium they owned.

He spoke of how Conahan, as president judge, shut down the county’s juvenile detention center and secretly signed an agreement in 2002 that guaranteed $1.3 million in annual rental payments to the PA Child Care facility owned by Butler Township attorney Robert Powell.

He also spoke of how Ciavarella, the county’s longtime juvenile court judge, began sending children to that facility and its sister facility.

Absent from Zubrod’s statement were allegations that Ciavarella had sent children to the centers, even when juvenile probation officials had recommend a child be sent home, in order to increase his profits.

Al Flora, Ciavarella’s attorney, previously issued a statement in which Ciavarella adamantly denied sending children away to benefit himself financially. He had vowed Ciavarella would not admit to that, and would withdraw his plea if he were required to do so.

Speaking after the hearing, Zubrod said the government, in order to secure the plea, agreed not to present that evidence at Thursday’s hearing. That doesn’t mean that allegation has been dropped, Zubrod said.

Zubrod said authorities contend Ciavarella was motivated to send more children to detention to garner more money. That evidence will be presented at the sentencing hearing, he said.

“It’s going to get a full airing, but to get the plea in, it wasn’t necessary,” Zubrod said. “There are lots of areas that there are going to be fights on (between the prosecution and defense). The idea was let’s identify the elements of the offense and get the guilty plea in.”

Zubrod said prosecutors intend to interview all victims, including juveniles who were detained, and provide a full report to Kosik. He expects that some of the juveniles will be called to testify at the sentencing as well.

Prosecutors must also provide evidence to support their contention that the plea serves the ends of justice.

Assistant U.S. Attorney William Houser, who co-prosecuted the case, took on that task Thursday, detailing why the government feels the plea is the best resolution to the case.

The 87-month sentence is “substantial,” Houser told Kosik, and adequately reflects the seriousness of the charges and character of the defendants.

Houser also noted that the one of the charges – honest services fraud – is extremely complex charge that could have resulted in “years of litigation” if the case went to trial.

Zubrod, speaking after the hearing, explained that various courts have differed regarding the interpretation of what conduct constitutes the charge.

The issue has not yet fully been resolved by appellate courts, he said, which meant prosecutors likely faced years worth of appeals, both pre-trial and post-trial, before the case would be resolved.

“We were prepared to do that, but the U.S. Attorney made the decision that Luzerne County (residents) needed closure. They would not be able to go on if we spent three years in litigation on this,” Zubrod said. “This county has to move on. It’s got to stop the hemorrhaging.”

In addition to the prison sentence, the plea requires Ciavarella, who remains on paid suspension, to resign from office within 10 days of Kosik’s acceptance of the plea.

Conahan, who retired in 2008, had served as a senior judge, but was removed from that rotation after the filing of the charges.

The judges, who remain free on $1 million unsecured bond, will also be required to pay restitution. Zubrod said it will be up to Kosik to determine how to calculate the amount of restitution.

Zubrod said some judges have deemed the salary a public official earned during the time he or she committed criminal acts should be paid as restitution, he said. Whatever the standard, Zubrod vowed prosecutors “will get back every dime.”

Ciavarella and Conahan declined to comment after the hearing. They said they would make a statement following sentencing.

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