First Posted: 9/10/2009
By Terrie Morgan-Besecker [email protected] & Order Reporter
HARRISBURG – A federal grand jury filed a 48-count indictment Wednesday against and Michael Conahan, charging the former Luzerne County judges with racketeering, extortion, bribery, money laundering, fraud and tax violations.
The press release announcing former judges Conahan and Ciavarella have been indicted.
Filing racketeering charge ups stakes
Just what does a grand jury do?
Update: Conahan and Ciavarella to be arraigned Sept. 15
The indictment, issued by a grand jury in Dauphin County, alleges Conahan and Ciavarella received millions of dollars in illegal payments in connection with improper actions they took to facilitate the construction and operation of the PA and Western PA Child Care juvenile detention centers, according to a press release issued by U.S. Attorney Dennis Pfannenschmidt.
In addition to the charges, prosecutors are seeking forfeiture of at least $2.8 million they allege is the proceeds of criminal activity, the release said.
Pfannenschmidt issued the press release at around 5 p.m. Wednesday. The document provided only a vague description of the charges. It did not provide any further details of the former judges’ conduct.
A copy of the indictment could not be obtained Wednesday as it was not publicly filed with the federal court’s electronic system. Pfannenschmidt did not respond to a request to provide a paper copy of the indictment. He also declined to comment further on the case.
Speculation that Conahan and Ciavarella would be indicted has been rampant since a plea deal the men reached with federal prosecutors fell apart last month.
The former judges pleaded guilty in February to charges of honest services fraud and tax evasion under plea agreement that called for them to serve 87 months in prison. They withdrew the plea on Aug. 24 after U.S. District Judge Edwin Kosik rejected terms of the agreement, saying the men had not adequately demonstrated they accepted responsibility for their conduct.
Ciavarella’s attorney, Al Flora, and Conahan’s attorney, Philip Gelso, declined comment on the indictment.
Flora said he expects Ciavarella and Conahan will next appear before a federal magistrate judge for arraignment on the charges. He did not know when that arraignment would take place.
The charges contained in the indictment are far more serious and carry significantly stiffer sentences than what Conahan and Ciavarella faced under the plea deal, according to Douglas McNabb, a Washington, D.C., defense attorney who specializes in federal law.
“It is a very serious set of charges that could bring substantial jail time if they are convicted on all counts,” McNabb said.
For instance, McNabb said the money laundering and fraud charges alone each carry a maximum sentence of 20 years in prison.
Although the indictment was not available, information contained in a complaint filed against Conahan and Ciavarella in January and documents filed in connection with charges against two other defendants involved in the scheme provide some insight into the conduct that likely was the basis of the indictment.
The extortion charge likely refers to attorney Robert Powell, who co-owned the PA and Western PA Child Care Centers. Powell alleges Ciavarella demanded he pay kickbacks totaling $772,500 to compensate the judges for decisions they made that benefited the two juvenile centers.
Those decisions included Conahan’s closure in 2002 of the county-run juvenile facility. Prosecutors allege Ciavarella, the county’s long-time juvenile judge, ensured a high occupancy rate at the centers by incarcerating youths even when probation department officials recommended against detention.
Powell pleaded guilty in July to failing to report a felony and being an accessory after the fact to tax evasion for his role in the scheme. In addition to the money he paid, prosecutors allege Powell helped funnel approximately $2 million that was paid to the judges by Robert Mericle, the contractor who built the two centers.
That funneling of money is likely the basis of the money laundering charge contained in the indictment. Money laundering involves a scheme to disguise the source of illegally obtained income to make it appear as though the money was legitimately earned.
According to the initial complaint filed against Conahan and Ciavarella, Powell disguised the money he paid the judges by listing it as rental payments for a Florida condominium owned by the judges’ wives. Prosecutors also alleged the part of the money Mericle paid was funneled through Vision Holdings, a company Powell owned.
It was not clear Wednesday whether the money Mericle paid could be considered as part of the money laundering charge. Prosecutors do not contend the payment of the money was illegal, which is a necessary element of money laundering.
Mericle pleaded guilty last week to failing to report a felony. Prosecutors say Mericle knew that Ciavarella had not reported the money Mericle paid him on his income tax returns, but failed to disclose that information to federal authorities.
At Mericle’s plea hearing, Assistant U.S. Attorney Gordon Zubrod said the $2 million Mericle paid was a “finder’s fee” to reward Ciavarella for introducing Mericle to Powell.
Zubrod said the payment of the fee itself is a standard practice in real estate and is not illegal. The illegality came when Mericle failed to reveal that information to a grand jury and federal prosecutors when questioned about it.
Terrie Morgan-Besecker, a Times Leader staff writer, may be reached at 570-829-7179.