Holder's Army Forging Ahead with Judicial Honest Services Fraud

County jurist 20th person feds charged
The Times Leader by Terrie Morgan-Beseckertmorgan@timesleader.com
Law & Order Reporter

WILKES-BARRE, PA – Months of speculation regarding the fate of Luzerne County Judge Michael Toole ended Wednesday when federal prosecutors announced the jurist has agreed to plead guilty to honest services fraud for improperly influencing a court case, and to tax evasion for an unrelated matter. Luzerne County President judge Chester Muroski announces that Luzerne County Judge Michael Toole signed a plea agreement Sept. 25 to charges that he committed honest services fraud. Toole has agreed to resign from office, according to the plea agreement. The uninsured motorist case that led to charges against Luzerne County Judge Michael Toole isn’t the first such case to draw scrutiny. Attorneys have questioned Toole’s judgment in the naming of a neutral arbitrator and his refusal to dismiss a case against an insurance company on technical legal grounds, court records show.

In 2005 attorney Robert Smith of Scranton sought to have attorney Brian Corcoran removed as the neutral arbitrator in the case of Matthew Cienciva vs. Farmers Insurance. Smith had argued Corcoran, who had been appointed by Toole, had a conflict of interest because of Corcoran’s relationship with attorney John Nardone, who represented Cienciva. Smith had learned Corcoran had chosen Nardone to serve as the plaintiff’s arbitrator in at least four cases Corcoran brought against various insurance companies. That created an appearance of impropriety, Smith argued. A transcript of the hearing shows Toole gave Smith a dressing down, telling him it was up to the attorney appointed as the arbitrator to report if he felt he had a conflict of interest. He denied Smith’s request, saying he believed the attorney was engaging in a “fishing expedition” that would open up a “Pandora’s box” of unjustified challenges to court appointed arbitrators. Toole did not mention that he, himself, had a conflict in hearing the Cienciva case because he had a financial relationship with Nardone.

Statements of financial interest Toole filed in 2004 and 2005 list Nardone as a source of income. The transcript of the Cienciva hearing shows Toole never mentioned that relationship. Smith never appealed Toole’s ruling. The case settled out of court before going to the arbitration panel for a decision. Questions regarding Toole’s relationship with Nardone surfaced again this April, when attorney Michael Blazick filed a motion seeking to recuse Toole from the case of Charles Davis vs. Hartford Insurance. Blazick was seeking to overturn a $2.9 million uninsured motorist arbitration award that had been entered in favor of Davis, who was represented by Nardone. Toole was set to rule on a motion Blazick filed that sought to dismiss the case against Hartford on legal grounds. He sought Toole’s recusal after he read media reports regarding the Cienciva case and learned, for the first time, that Toole had a financial relationship with Nardone. Toole granted that request in August. Senior Judge Carson Brown was appointed to hear the case. A hearing on the motion to dismiss is scheduled for Monday. A complaint filed by the U.S. Attorney’s Office says Toole secretly communicated with a plaintiff’s attorney to appoint a person that attorney had sought as a neutral arbitrator in an uninsured motorist case. The neutral arbitrator is part of a three-person panel and is a key vote in deciding how much money to award or not award a plaintiff. Unbeknownst to the insurance company, Toole had a “long standing financial relationship” with the attorney, identified as “participant #1,” the complaint says. Toole had also stayed multiple times at a New Jersey beach house prosecutors say was “controlled” by the attorney, free of charge. He failed to disclose any of that information to the insurance company or to recuse himself. In a separate matter, Toole is also charged with failing to report on his income tax return a $30,000 referral fee he received from another attorney, who is identified a “participant #2.” Rumors that Toole would be arrested have been circulating for months. They intensified last month, when Toole, who has served on the bench since 2004, suddenly announced he was taking several weeks of vacation and had rescheduled all his cases to be heard in December and January.

His arrest is the latest to rock the county. He is the third county judge and 20th person overall to be snagged in the ongoing corruption probe. A plea agreement filed simultaneously with the complaint says Toole will plead guilty to one count each of honest services fraud and tax evasion. He has agreed to resign from office within 10 days of the acceptance of the plea, which is scheduled for Dec. 29 at 11 a.m. before U.S. District Judge Richard Conaboy. The charges carry a maximum sentence of up to 23 years in prison and a $350,000 fine. Prosecutors have agreed to seek a lesser sentence, however, if Toole follows through on a promise to cooperate in the investigation of wrongdoing of others. Toole could not be reached for comment Wednesday. His attorney, Frank Nocito, declined to comment. The federal complaint does not identify which underinsured motorist case Toole influenced, but details contained in the federal charges indicate it involves a $1.2 million arbitration award entered on behalf of Richard Gazenski of Wilkes-Barre. The case was filed by attorney Harry Cardoni of Cardoni and Associates in Kingston against Erie Insurance Exchange. Uninsured motorist claims involve drivers who sue their own insurance company to recover money for injuries caused by another driver who had little or no insurance. Disputes over the amount of money due are settled by a three-member arbitration panel. The plaintiff and defense attorney each choose one person. Together they chose a third, neutral arbitrator. If they cannot agree, a judge can appoint the neutral.

According to the federal complaint, in March 2006 Toole presided over a proceeding to select a neutral arbitrator. In November 2007, the parties filed a motion before Toole seeking to force the arbitrators to render an opinion in the case. Court records show the Gazenski case is the only uninsured motorist case that Toole heard in which he entered court rulings during the time period in question. According to the records, on March 6, 2006 Toole granted a motion filed by Cardoni that sought the appointment of attorney Bruce Phillips as the neutral arbitrator in the Gazenski case. On Nov. 30, 2007, Toole issued an order compelling the arbitration panel to meet on Dec. 18, 2007 and to deliberate until they reached a decision. A search of property records in New Jersey show that Cardoni is the owner of a home located at 117 E. Connecticut Avenue in Beach Haven, Ocean County, N.J. Cardoni has not been charged with any wrongdoing. He did not return a detailed phone message left at his office Wednesday afternoon. Attempts to reach him at home were unsuccessful. Contacted Wednesday, Gazenski said he was “blown away” to learn his case appeared to be the subject of the federal case against Toole. Gazenski is an insurance agent with J.W. Hoban and Associates in Wilkes-Barre, which sells Erie Insurance. He was injured in a crash caused by an uninsured driver at Sullivan and South Franklin streets on July 24, 2005, and filed a claim against his own insurance company. “You could blow me away with a feather,” Gazenski said when told of information The Times Leader had uncovered. “You hit me cold. I just don’t know what to do.” Phillips confirmed he served as the neutral arbitrator in the Gazenski case. He said he had no knowledge that anyone had specifically sought to have him appointed to the case. “I can tell you on behalf of myself I played no role in getting appointed,” Phillips said. Phillips said he has served as an arbitrator only a handful of times and had no idea why someone would want to see him appointed to that case. He said he and the other two arbitrators reviewed the case carefully and issued an appropriate award. “It was a lengthy case. I can tell you the decision of the arbitration panel was based on the evidence presented,” Phillips said. Court documents show the panel’s decision was not unanimous. Phillips and Gerard Martillotti, the plaintiff’s arbitrator, voted for the award while James A. Doherty Jr., the defense arbitrator, voted against it. Neither Doherty nor Richard Polachek, the attorney who represented Erie, returned a phone message Wednesday. Martillotti could not be reached for comment.

The federal investigation into uninsured motorist arbitrations awards became public in April, when FBI agents removed 79 files relating to the appointment of neutral arbitrators from the Luzerne County Courthouse. Attorneys previously told The Times Leader that insurance companies have been complaining for years that arbitration process in Luzerne County was biased in favor of plaintiffs. That’s precisely what happened in the case involving Toole, the U.S. Attorney’s office alleges. According to the complaint, Toole, through an intermediary, secretly asked the plaintiff’s attorney whom he wished to serve as the neutral. That attorney relayed the information through the intermediary, and Toole appointed that person. “Judge Toole appointed the neutral arbitrator . . . under the guise that the appointment was made free of deceit, bias, favoritism, self enrichment or conflict of interest,” the complaint says. “In fact, however, the appointment was corrupt, deceptive and biased and was made in a manner that undermined the fairness and integrity of the arbitration process.”

Prosecutors further allege that Toole and the attorney took steps in the summer of 2008 to conceal the fact Toole had stayed free at the attorney’s beach home. Toole also failed to report on his financial relationship with the attorney on Toole’s statement of financial interest for 2006, 2007 and 2008. In the case involving the referral fee, prosecutors say that in 2005, Toole referred a case to an attorney. After that case settled, the attorney paid Toole a referral fee of $30,000 in October 2006. There is nothing illegal about paying a referral fee. The practice is common amongst attorneys, who may refer a case to another attorney should a conflict arise, or if they feel that attorney is better suited to handle a particular case. Toole’s actions constituted a crime because he failed to report the income on his income tax, according to the complaint. The complaint does not identify the person who paid Toole the money. Sources previously told the Times Leader that Toole was under investigation for accepting money from attorney Robert Powell, who has also been charged in connection with the corruption probe. Powell could not be reached for comment Wednesday.

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Who’s been charged?

MARK CIAVARELLA, of Kingston, the former president judge of the Luzerne County Court of Common Pleas, was charged on Jan. 26 with accepting $2.6 million from private individuals in exchange for rulings that benefited two juvenile detention centers the county utilized. He pleaded guilty, but the plea agreement was rejected by a judge. A grand jury issued a 48-count indictment against him on Sept. 9. He is awaiting trial.

MICHAEL CONAHAN, of Wright Township, a former senior judge on the Luzerne County Court of Common Pleas, was charged on Jan. 26 with accepting $2.6 million from private individuals in exchange for rulings that benefited two juvenile detention centers the county utilized. He pleaded guilty, but the plea agreement was rejected by a judge. A grand jury issued a 48-count indictment against him on Sept. 9. He is awaiting trial.

WILLIAM SHARKEY, of West Hazleton, the former Luzerne County court administrator, was charged on Feb. 3 with stealing more than $70,000 in illegal gambling funds that had been turned over to the county by the Pennsylvania State Police Bureau of Liquor Control Enforcement. He pleaded guilty on Feb. 17 and awaits sentencing.

SANDRA BRULO, of Hanover Township, the former Luzerne County probation deputy director of forensic programs, was charged on Feb. 20 with altering a juvenile’s record in an attempt to lessen her potential culpability in a lawsuit filed against her. She pleaded guilty on March 26 and awaits sentencing.

ROSS SCARANTINO, of Duryea, the former Pittston Area School District superintendent and a former member of Luzerne County Community College’s Board of Trustees, was charged on April 16 with accepting money in exchange for the awarding of a Pittston Area contract. He pleaded guilty on May 29 and was sentenced on Oct. 8 to 13 months in prison. He began serving his sentence on Nov. 10.

BRIAN DUNN, of Wilkes-Barre, a Wilkes-Barre Area School Board member, was charged on April 21 with accepting tens of thousands of dollars in kickbacks in exchange for his influence in the awarding of contracts and the hiring of teachers within the district. He agreed to plead guilty and is scheduled to enter that plea on Dec. 16.

JIM HEIGHT, of Wilkes-Barre, a former Wilkes-Barre Area School Board president, was charged on May 18 with accepting $2,000 in cash in connection with support he provided to a contractor trying to obtain a contract with the Wilkes-Barre Area School District. He pleaded guilty on May 29 and is scheduled to be sentenced on Jan. 26.

ROBERT POWELL, of Hazleton, an area lawyer and former co-owner of PA Child Care and Western PA Child Care juvenile detention centers, was charged on June 9 with failing to report illegal activity by two former judges. Prosecutors say he paid former judges Mark Ciavarella and Michael Conahan $772,500 in kickbacks, often disguising the payments as rental fees for docking his boat at the judges’ condominium in Florida. He pleaded guilty on July 1 and awaits sentencing.

KAREN HOLLY, of West Pittston, a former district magisterial judge in West Pittston, was charged on Aug. 5 with stealing more than $5,000 from the Wyoming Valley Sanitary Authority, where she worked as a billing clerk. She pleaded guilty on Aug. 24. She was sentenced on Nov. 23 to 30 days in a halfway house and two years probation.

JOSEPH OLIVERI, of Hughestown, a former Pittston Area School Board member, was charged on Aug. 11 with accepting a bribe for his influence in the awarding of a contract in the school district. He pleaded guilty on Aug. 25 and awaits sentencing.

ROBERT MERICLE, of Jackson Township, a major local developer, was charged on Aug. 13 with failing to disclose his knowledge that Conahan and Ciavarella committed income tax evasion by failing to report money they accepted from Mericle and Robert Powell in connection with the operation and construction of the PA and Western PA juvenile detention centers that Mericle built. He pleaded guilty on Sept. 2 and awaits sentencing.

GERALD BONNER, of Mountain Top, a member of the Luzerne County Housing Authority and a Luzerne County jury commissioner, was indicted on Sept. 1 on a charge of helping a fellow board member obtain a bribe. He has pleaded not guilty. A hearing on a motion to suppress statements he made to federal agents is scheduled for Dec. 16.

WILLIAM MAGUIRE, of Mountain Top, another member of the Luzerne County Housing Authority, was charged on Sept. 11 with corrupt receipt of a reward. Prosecutors said he took money from a business owner in exchange for influencing a Housing Authority contract to that business. He pleaded guilty on Oct. 22 and awaits sentencing.

FRANK PIZZELLA JR., of Plains Township, president of the Wilkes-Barre Area School Board, was indicted on Sept. 15 on a charge he allegedly passed on a $5,000 bribe to help an unnamed person get a teaching position. His arraignment is set for Dec. 18 in federal court in Wilkes-Barre.

BARTON WEIDLICH, a Pittston businessman, was charged with attempted obstruction of justice on Oct. 1. His warehouse was searched for records relating to the Luzerne County corruption probe. Prosecutors allege Weidlich made veiled threats against a witness he suspected was wearing a concealed recording device. His lawyer has filed court papers that state Weidlich is working out a plea agreement with prosecutors.

HOWARD ALLEN BELLAS, of Kingston, a member of the Luzerne County Redevelopment Authority and Wyoming Valley West School Board, was charged Oct. 15 with corrupt receipt of a reward. Prosecutors say he took money in exchange for his influence on the authority in getting a contractor approved for a tax-forgiveness program. He resigned from the authority and the school board on Oct. 16 and has agreed to plead guilty.

RICHARD EMANSKI, of Harveys Lake, was charged Oct. 15 with corrupt payment of a reward for official action. Prosecutors say he installed free carpeting in the residence of a member of the Wilkes-Barre Area School Board as a reward for support of a contract given to Emanski’s business. He has agreed to plead guilty, but no plea date has been set.

ANTHONY SPINOZZA, of Hanover Township, a member of the Hanover Area School Board, was charged Wednesday with accepting a bribe in exchange for his influence in the awarding of a contract within the district. He pleaded guilty on Oct. 26 and awaits sentencing.

BILL BRACE, of Wilkes-Barre, charged on Nov. 12 with receiving a custom-fitted suit in exchange for supporting a contract in 2007 or 2008 when he was Luzerne County’s deputy chief clerk. Brace signed a plea agreement but has not yet appeared in court.

MICHAEL TOOLE, of Wilkes-Barre, a judge, has agreed to plead guilty to honest services fraud and filing a false income tax return. According to a complaint, Toole secretly communicated with an attorney to determine whom that attorney wished to have appointed as a neutral arbitrator in an underinsured motorist case in exchange for the judge’s free use of a New Jersey beach house. He’s also charged with failing to report on his income tax return a $30,000 referral fee he received from another attorney. He is scheduled to plead guilty on Dec. 29.