Judge Re-Indicted in "Cash for Kids" Scandal

Judge Re-Indicted in "Cash for Kids" Scandal
The Legal Intelligencer by Leo Strupczewski - September 30, 2010

PHILADELPHIA, PA - A federal grand jury has handed down a superseding indictment against former Luzerne County Common Pleas Judge Mark A. Ciavarella Jr. in response to a U.S. Supreme Court ruling on the constitutionality of the federal honest services fraud statute, according to the U.S. Attorney's Office for the Middle District of Pennsylvania. U.S. Attorney for the Middle District of Pennsylvania Peter J. Smith said the indictment contains 39 counts of criminal charges against Ciavarella. That means the number of charges against the former Luzerne County judge has been reduced from 48 to 39.

The new indictment still charges Ciavarella with racketeering, fraud and money laundering, along with tax violations, while alleging he received "millions of dollars in illegal payments," along with fellow former Luzerne County Common Pleas Judge Michael T. Conahan, according to Smith. It did, however, drop charges from the 48-count indictment filed in September 2009, including four counts of tax fraud and three counts of honest services fraud. In the 48-count indictment, federal prosecutors alleged twice that Ciavarella had lied about his taxable income on IRS Tax Form 1040 in 2003, 2004, 2005 and 2006. Each allegation was for a different income amount. In the superseding indictment, however, there is only one such allegation for each year. Also, the superseding indictment drops from the 48-count indictment three counts of honest services fraud for filing "materially false annual statement[s] of interests submitted to the Administrative Office of Pennsylvania Courts." A noted difference between the indictments is the wording of the first paragraph, titled "The Parties," of the indictments. In the 48-count indictment, the document states that Ciavarella and Conahan had a "fiduciary duty to the citizens of the Commonwealth of Pennsylvania and to the Judiciary of the Commonwealth of Pennsylvania and were required to file an annual statement of financial interests with the Administrative Office of the Pennsylvania Courts." In the superseding indictment, the document states that the two judges owed a fiduciary duty to the citizens of the state and to the judiciary "to refrain from engaging in any activity prohibited by law and to refrain from being paid or accepting payment of any fee, emolument or perquisite other than the salary and expenses provided by law." Ciavarella's attorney, Al Flora of Wilkes-Barre, said he hadn't seen the superseding indictment, but knew it was tied to the U.S. Supreme Court's honest services fraud ruling earlier this year. "We knew it was going to be coming down some time ago," he said. "It was just a matter of when." Each charge is related to Ciavarella's ties to two juvenile detention facilities: PA Child Care and Western PA Child Care. The indictment also seeks forfeiture of more than $2.8 million — an amount the government alleges was the proceeds from the judges' criminal activity. The changes in the indictment are a result of the U.S. Supreme Court's decision in Skilling v. United States and two related cases to limit "honest services" fraud charges to cover only bribes and kickbacks. The law was previously used by federal prosecutors to file charges for a wide range of illicit activities

The superseding indictment was the latest twist in a story that has seen several since mid-2009, including Conahan pleading guilty in relation to the case. In July 2009, U.S. District Judge Edwin M. Kosik threw out the initial plea agreements reached between Conahan, Ciavarella and federal prosecutors, in part because of the judges' conduct following the plea agreements and their refusal to accept responsibility for the crimes they had committed. Ciavarella's public comments were self-serving, Kosik said, and Conahan was being obstructionist. Conahan and Ciavarella made a joint filing Aug. 20, 2009, petitioning Kosik to reinstate their agreed upon sentence of 87 months each in prison because neither could be found at fault for his post-plea hearing actions. Kosik rejected that Aug. 24. That same day, the former judges withdrew their guilty pleas and formally entered pleas of not guilty to the charges. In his Aug. 24 order, Kosik said in light of the presentence report and sentencing recommendation from the probation office, it was within his discretion to throw out the plea agreements. The probation officer's "assessment and justification for the recommendation" was partly the basis for Kosik's earlier conclusions that Conahan was obstructing justice, failing to discuss the motivation behind his conduct and failing to accept responsibility for his crimes, he said. "The probation recommendation characterized these failures by Conahan as based on his 'scandalous conduct,'" Kosik wrote in his Aug. 24 order. "The defense claims that a defendant is not required to admit relevant conduct beyond the offense of conviction. The court generally agrees, but the defendant was expected to admit relevant conduct related to the scandalous nature of the offense of conviction." In a telling footnote, Kosik said he had met with Conahan's and Ciavarella's lawyers twice and rejected reconsidering the plea agreements both times. He said federal prosecutors as well as the defense attorneys had urged him to reconsider the plea deals. Both sides offered to meet with him separately "to explain each side's reasons for entering into the plea agreement," Kosik said. "The offer was rejected by the court because such a meeting might impermissibly involve the court in plea bargaining," he said. Later in the body of his opinion, Kosik said: "It ill behooves both parties to want the court to consider additional reasons to be conveyed in private." A new 48-count indictment was filed by the federal government in September 2009 and the judges entered joint "not guilty" pleas. They followed that up by filing a series of pretrial motions together, charging federal officials with "outrageous government misconduct," questioning the impartiality of the judge assigned to their case and requesting a change in venue in March 2010. Conahan, however, took a surprise turn by leaving Ciavarella behind and reaching a plea agreement with prosecutors. In doing so, he admitted to accepting, along with Ciavarella, more that $2.8 million from the builder and former co-owner of a private juvenile detention facility. Conahan's plea agreement limits his exposure to one racketeering conspiracy charge, a crime that carries a maximum penalty of 20 years in prison and a fine of up to $250,000. Absent from the 21-page agreement is any minimum sentencing requirement or sentencing recommendation from prosecutors. Instead, the agreement outlines that any penalty is to be "determined by the court."