Just call me Judge Dirty!

Officials: Conahan ordered deposits to his bank

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BY DAVE JANOSKI
PROJECTS EDITOR

Published: Wednesday, July 23, 2008 11:03 AM EDT

Former Luzerne County President Judge Michael T. Conahan directed millions of government dollars to a bank of which he is a director by ordering the county’s magisterial district judges to deposit their fines there, county and state officials say.

First National Community Bank — where billionaire casino owner Louis A. DeNaples was chairman of the board until his recent indictment on perjury charges — handles about $7 million in deposits from those magisterial district courts each year, state and county audits show.

Conahan, whose financial holdings are a focus of an ongoing FBI investigation into the county courts, did not return phone messages seeking comment Tuesday.

Conahan’s decision to direct district court deposits to the bank came shortly before or after he was named to the bank board in 2003, county Court Administrator William Sharkey said Tuesday. Before that decision, the county’s 17 magisterial district judges, who handle traffic tickets, small civil cases and preliminary hearings in criminal cases, used banks of their own choosing.

Sharkey said the change was made because First National Community Bank, headquartered in Dunmore, offered a countywide courier service with daily pickup.

“Some of the magistrates had some concerns for security reasons. They weren’t too thrilled about taking deposits to the bank every day,” Sharkey said.

Sharkey said he didn’t know if the bank approached the county or if Conahan sought proposals from other banks.

“I’m not quite sure how that happened,” Sharkey said. “I’m not sure if they contacted the county and they offered the courier services or vice versa.”

James Koval, communications manager for the Administrative Office of Pennsylvania Courts, confirmed that First National Community Bank is the depository for all district courts in Luzerne County. He said decisions about where to deposit fines from district courts are left up to the president judge in each county. The fines are divided between the state and county, with more than two-thirds typically going to the state.

Koval said his office exercises no oversight over the selection of the banks and has no rules governing the selection.

“I’m not aware of any rule that addresses this head-on,” Koval said.

Joseph A. Massa Jr., chief counsel for the state Judicial Conduct Board, which enforces the state Code of Judicial Conduct, did not return phone messages Tuesday.

Conahan was paid $57,583 as a director at First National Community Bancorp Inc. in 2007, according to the bank’s U.S. Security and Exchange Commission filings. He owns 55,927 shares in the bank worth $755,014 at Tuesday’s closing price of $13.50 per share.

DeNaples, a Dunmore businessman with holdings in landfills, used auto parts and real estate, owns about 10 percent of the bank’s 15.8 million outstanding shares. His brother and son, who are also directors of the bank, own about 9 percent. The DeNaples’ shares are worth $40 million.

The bank reported having $945 million in deposits in 2007.

DeNaples took a leave of absence from the bank board on Feb. 6 after he was charged with lying to state gaming regulators about ties to organized crime figures when seeking a license for his Mount Airy Casino Resort in Monroe County, which opened last year.

Federal banking regulators subsequently suspended him from the board and prohibited him from participating in the affairs of the bank while the charges are pending. The Pennsylvania Gaming Control Board barred DeNaples from Mount Airy and appointed a trustee to oversee the casino until the criminal case is concluded.

DeNaples, 67, and bank President and CEO J. David Lombardi, who is acting chairman of the board, did not return phone messages Tuesday.

Conahan, who retired last year at age 56 and is now a senior judge presiding over the county’s Drug Treatment Court, has declined comment on the ongoing federal probe.

Courthouse sources speaking on condition of anonymity say the FBI and IRS have questioned them about Conahan’s links to the former owner of a juvenile detention center. The center made millions from county contracts after Conahan decided to stop sending juveniles to an aging county-owned facility in 2003.

Conahan has described the former co-owner of the facility, Butler Township attorney Robert J. Powell, as a personal friend. The FBI seized county records detailing the county’s dealings with Powell’s center last month.

The Standard-Speaker first reported in May that Conahan and current President Judge Mark A. Ciavarella Jr., who presided over juvenile court for a dozen years, have a financial interest in a townhouse development firm headed by Powell’s law partner, county Prothonotary Jill A. Moran. Powell owned half of the townhouse firm until the second half of 2004.

The townhouse firm, W-Cat Inc., is building an 86-unit development in Wright Township called The Sanctuary with $4.5 million in funding through First National Community Bank. Another director of the bank, Michael G. Cestone, is president of the construction company building the townhouses, S.G. Mastriani Co. Inc.

Cestone did not return a phone message Tuesday.

djanoski@citizensvoice.com

source Standard Speaker