Creating Public Pride: Third Judge Charged With Fraud

Feds Charge Third Luzerne County, Pa., Judge With Fraud
The Legal Intelligencer by Hank Grezlak and Leo Strupczewski - December 3, 2009

Federal authorities have charged Luzerne County Judge Michael T. Toole with honest services fraud and with filing a false tax return.

The U.S. Attorney's Office for the Middle District of Pennsylvania announced the charges and an accompanying plea agreement Wednesday afternoon. Toole faces a maximum of 23 years in prison and a fine of $350,000. Under his plea deal, Toole has agreed to cooperate with federal authorities and provide information "concerning the unlawful activity of others." He will also resign from the bench as part of his plea agreement. According to the criminal information released by federal prosecutors, Toole allegedly concealed a financial relationship with an attorney who appeared before him and "improperly" ruled in that attorney's favor in civil litigation cases. The attorney was not named and referred to by the government as "Participant 1." That charge against Toole marks the first time during the Luzerne County corruption probe that authorities have charged anyone related to the alleged case-fixing in UM/UIM arbitration cases. The Legal Intelligencer first reported in February that federal investigators were looking at how those arbitration cases were handled in Luzerne County.

In addition, Toole also allegedly failed to disclose on his income tax return a $30,000 referral fee he received in cash from another attorney. That attorney was also not named by the government and referred to as "Participant 2." However, multiple sources have identified "Participant 2" as attorney Robert Powell, whose alleged kickbacks to two other judges in relation to the private juvenile detention center he co-owned were first revealed in January. When asked if Powell was "Participant 2," his attorney, Mark B. Sheppard of Montgomery McCracken Walker & Rhoads, said he could not comment on an ongoing investigation. Toole is the third judge from Luzerne County's courthouse to be charged by the federal government this year. Former Judges Michael T. Conahan and Mark A. Ciavarella Jr. were charged earlier this year with honest services fraud and later federal racketeering.

The announcement ends months of speculation regarding Toole's fate. The Legal Intelligencer first reported back in March that Toole was under scrutiny from federal authorities. Sources told The Legal Intelligencer back in April there were ongoing negotiations between Toole's lawyers and the government. Several times over the past few months rumors have surfaced that Toole's plea deal was "imminent" only to be proved incorrect. However, multiple sources had confirmed weeks ago that Toole had signed his plea agreement. According to the plea agreement, Toole and his lawyers signed it Sept. 25. One knowledgeable source told The Legal Intelligencer there was frustration on the part of some investigative agencies that Toole was allowed to stay on the bench after he had signed his plea agreement. When asked about the delay, Heidi Havens, a spokeswoman for the U.S. Attorney's Office, directed a reporter to a sentence in the office's release announcing the agreement, which read: "Because the Information contains a charge relating to a tax matter, the Office of the United States Attorney for the Middle District of Pennsylvania was required to obtain separate approvals for the charge from Department of Treasury and Department of Justice officials in Washington." Havens said her office would have no other comment.

Luzerne County Common Pleas Court President Judge Chester B. Muroski said Toole, who abruptly notified the court last month that he was taking vacation, never notified him of pending charges or a plea agreement. Had he known about Toole's plea agreement, Muroski said, he would have refrained from giving Toole "any judicial assignments" and would have reported Toole to the Judicial Conduct Board and the Administrative Office of Pennsylvania Courts. "I don't know how anyone can function as a judge once they enter into a plea agreement with the government," Muroski said. Toole's attorneys, John Rogers Carroll and Frank W. Nocito, had no comment on the agreement. When asked why there was no announcement immediately following that, sources were split on the reason for the delay. Several speculated there may have been bureaucratic delays in getting approval from the Department of Justice in Washington, D.C. According to the criminal information, Toole allegedly accepted things of value -- such as the use of a beach house at the New Jersey shore -- and then improperly ruled in favor of "Participant 1." One of the ways Toole was alleged to have ruled improperly in that attorney's favor was in the manner in which Toole oversaw the appointment of a neutral arbitrator in a UM/UIM case the attorney was handling in March 2006. According to the information, Toole, "through the use of an intermediary, secretly asked Participant 1" to tell him who the attorney wanted him to appoint as a neutral arbitrator in the case. Toole appointed the person "Participant 1" requested, the information said.

The appointment was "corrupt, deceptive and biased and was made in a manner that undermined the fairness and integrity of the arbitration process" since Toole had received things of value from "Participant 1," the information said. Toole later issued an order in November 2007 requiring the arbitrators to rule on the case, the information said. The statements of financial interest Toole filed with the Administrative Office of Pennsylvania Courts in 2006, 2007 and 2008 were false because they did not identify "Participant 1" as a source of income or gifts, the information said. Luzerne County court officials previously provided federal investigators with a list of 80 petitions to appoint neutral arbitrators in UM/UIM cases. Toole had the second-highest amount of appointments of any judge, with 16. According to the information, Toole referred a case to "Participant 2" in 2005 and later accepted a cash payment of $30,000 in October 2006. Toole failed to report that money on his tax return, the information said. Those sources who have identified Powell as "Participant 2" have said the cash payment was made in a bar after attending a wake. Toole is scheduled to appear in court Dec. 29 at 11 a.m. at the Scranton federal courthouse.