FBI, IRS investigating Luzerne County judges, attorney

Originally posted to the Times Tribune Scranton PA

BY DAVE JANOSKI
STAFF WRITER
Published: Friday, June 06, 2008
Updated: Friday, June 6, 2008 1:00 AM EDT
WILKES-BARRE — The FBI and IRS are investigating possible financial ties between two Luzerne County judges and a local attorney whose firm has made millions leasing a juvenile detention center to the county, according to two courthouse sources who say they’ve been interviewed by the federal agents.

The sources, who spoke on condition of anonymity because of the sensitivity of the investigation, said the agents asked about the relationship between President Judge Mark A. Ciavarella Jr., Senior Judge Michael T. Conahan and Robert J. Powell, part-owner of the Luzerne County Juvenile Center in Pittston Township.

The two sources said they have been interviewed within the past several months.

Judge Conahan and Judge Ciavarella played key roles in closing a county-owned juvenile facility in 2002, arguing it was decrepit and unsafe. Neither judge returned phone messages Thursday. Mr. Powell did not respond to requests for comment made by e-mail, phone and through a spokesman.

Mr. Powell’s company, Pennsylvania Child Care LLC, has a 20-year, $58 million lease agreement with the county that has been criticized as too expensive by state officials. Faced with a threatened cut in state subsidies for juvenile detention that would cost $2 million per year, the county commissioners are trying to negotiate an end to the lease.

Last week, The Citizens’ Voice revealed financial ties between the two judges and W-Cat Inc., a townhouse development firm owned by Mr. Powell’s law partner, Jill A. Moran, who is the county prothonotary. The judges reported their interest on annual financial disclosure forms filed with the state Supreme Court.

Mr. Powell owned half of W-Cat in June 2004, according to documents filed with Wright Township and Luzerne County planning commissions. He transferred his interest in the firm to Ms. Moran for no compensation later that year, his spokesman said.

Ms. Moran did not respond to requests for comment Thursday.

Judge Ciavarella said last week that he was guarantor for some of W-Cat’s $4.5 million debt and could benefit financially if the firm is successful in developing the Sanctuary, an 86-townhouse project in Wright Township. The firm has three mortgages from First National Community Bank, where Judge Conahan is a director.

Mr. Powell’s investment in Pennsylvania Child Care is through a company called Vision Holdings LLC. Mortgage documents filed in connection with the Pittston Township facility in 2002 identified Vision Holdings as a company registered in the Cayman Islands. It was later registered in Pennsylvania in 2003.

The other investor in Pennsylvania Child Care is Consulting Innovations and Services Inc., a corporation owned by Gregory Zappala, a western Pennsylvania investment banker and son of a former Pennsylvania chief justice. Mr. Powell and Mr. Zappala are also investors in Western PA Child Care, which owns a juvenile detention center in Butler County and Gladstone Partners LP, a company proposing a cargo airport to be built south of Hazleton.

Reached by phone Thursday, Mr. Zappala said he knew nothing of an investigation and said the judges have no interest in Pennsylvania Child Care. He declined further comment.

Contact the writer: djanoski@citizensvoice.com