Firms Tied to Kids-For-Cash Scandal Settle Civil Lawsuit

From The Citizens' Voice, Wilkes-Barre, Pa. (MCT)

The companies that owned and operated the two detention centers at the heart of the Luzerne County kids-for-cash judicial scandal have agreed to settle a civil lawsuit for $2.5 million.

PA Child Care, Western PA Child Care and Mid-Atlantic Youth Services Corp. - companies once co-owned by local attorney Robert Powell - agreed to settle claims brought by thousands of juveniles who appeared in front of disgraced former Luzerne County Judge Mark A. Ciavarella Jr.

"Despite the parties' strong belief in their respective positions, the parties recognize there are substantial uncertainties and significant litigation costs with respect to the action and their potential outcomes if they were taken to trial," the plaintiffs and defendants wrote in a joint motion.

Ciavarella and former Luzerne County Judge Michael Conahan are serving lengthy prison terms in connection with the scandal, which led to juveniles being locked away in the facilities, often for minor offenses.

They are accused of taking $770,000 in kickbacks from Powell and failing to properly report $2.1 million in "finder's fees" paid by Robert Mericle, the man whose construction company built the detention centers in Pittston Township and Butler County.

Mericle, who pleaded guilty in September 2009 to failing to report a felony in the case, reached a $17.75 million settlement in the lawsuit last year. He continues to await sentencing in federal court.

Powell, who surrendered his law license as part of a plea agreement with federal prosecutors, served 18 months in federal prison for his role in the scandal.

He and the judges remain defendants in the lawsuit.

In 2002, Powell teamed with Allegheny County investment banker Greg Zappala to build their first juvenile detention center, Pennsylvania Child Care, in Pittston Township in 2002. They later built a second center in Butler County called Western PA Child Care. Mid-Atlantic Youth Services Corp. provides services to operate the facilities.

Zappala, son of a former state Supreme Court chief justice and brother of the Allegheny County district attorney, abruptly ended the partnership in June 2008 after The Citizens' Voice reported the FBI was investigating financial ties between Ciavarella, Conahan and Powell. Zappala, who assumed sole control over the companies, was never charged and was not named in civil suit because attorneys said they have no evidence he was aware of the scandal. The joint motion filed in federal court regarding the settlement say PA Child Care, Western PA Child Care and Mid-Atlantic Youth Services - collectively known as "the Provider Defendants" - are not admitting to any wrongdoing.

"While denying any liability, the Provider Defendants also consider it desirable that the actions be settled and ended so as to halt the substantial expense of litigation," the motion says.

Attorneys James C. Schwartzman and Daniel Huyett, attorneys from Philadelphia who represent the detention centers, did not return email messages on Thursday.

The motion notes the two sides would release a "mutually agreed upon statement."

The Juvenile Law Center in Philadelphia, which helped expose the judicial scandal, released a statement Thursday announcing the settlement and also reiterating that the centers deny wrongdoing.

"The juveniles and parents who participate in this settlement acknowledge that the Provider Parties have never been accused of failing to provide services that they were contracted to provide to any juvenile included in the juvenile settlement class," the statement says. "They also acknowledge, by settling their claims, that any claims regarding the juveniles' care and treatment while detained in or placed at PA Child Care's facility in Pittston, Luzerne County, or Western PA Child Care's facility in Emlenton, Butler County are withdrawn."

When the kids-for-cash scandal erupted in 2009, evidence mounted that Ciavarella railroaded juveniles through the tersest of court hearings, violated state court rules by failing to inform them of basic rights, and funneled the young defendants to the for-profit detention centers. A jury convicted Ciavarella in February 2011 on 12 of 27 counts, including racketeering and conspiracy. He is serving a 28-year prison sentence. Conahan pleaded guilty in July 2010 to a racketeering charge. He is serving a 17½-year prison sentence.

All juveniles adjudicated or put in placement by Ciavarella between Jan 1, 2003 and May 28, 2008 are eligible to receive damages, the settlement says. Those who were placed in PA Child Care and Western PA Child Care are eligible for more damages, but the specific amount that will be paid to each plaintiff has yet to be determined.

The two sides will now ask U.S. District Judge A. Richard Caputo to approve the settlement.

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©2013 The Citizens' Voice (Wilkes-Barre, Pa.)

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