Kids For Cash

On this episode of Misfortune: A Financial Crimes Podcast, Adam and Danger discuss the Kids For Cash scandal. Between 2003 and 2008, two Pennsylvania judges allegedly accepted more than $2.6 million from the developer and co-owner of two for-profit juvenile detention centers in return for sentencing thousands of children to those centers. Many of the teens were accused of minor offenses, such as trespassing in an abandoned building or creating a mock MySpace page to make fun of a principal.

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According to the indictment, around June 2000, Robert Powell, an attorney from Hazleton, Pennsylvania began conversations with Luzerne County judges Michael Conahan and Mark Ciavarella Jr. about getting a contract to build a private detention center. Ciavarella introduced Powell to his friend, Robert Mericle, a commercial developer who would build the facility.

In January 2002, Judge Conahan was elected as President Judge of the Court of Common Pleas, which are the general jurisdiction trial courts of Pennsylvania. At the end of that month, Conahan signed a “Placement Guarantee Agreement” between PA Child Care, Powell’s first detention center, and Luzerne County’s Court of Common Pleas that guaranteed an “absolute and unconditional” obligation to pay an annual sum of at least $1.3 million for housing juvenile defendants. Additionally, as President Judge, which is a five-year term, Conahan was able to stop eliminate funding for Luzerne County Juvenile Detention Facility, the county’s public facility, forcing its closure.

PA Child Care opened in February 2003 in Pittston Township, Pennsylvania. Due to its “success,” the owners opened a second facility, Western PA Child Care, in 2005 in Butler County, Pennsylvania. According to an Associated Press article, Luzerne County paid Powell’s company more than $30 million between 2003 and 2007 to house juveniles at these two facilities but the county could have built its own juvenile center for about $9 million.

Judge Ciavarella had always had a reputation for being a strict judge, so much so that his nickname was Mr. Zero Tolerance. So it’s probably took some time before people began to suspect something else was going on. He was sentencing juveniles to detention at twice the state average. Later investigation would show half of the children who appeared in his courtroom were never advised of their right to a lawyer. This was not a new problem with Judge Ciavarella – from 1997 to 2003, juveniles appeared before him without counsel more than five times the state average, but between 2003 to 2007, once the private facility was open, that rate was about 10 times the state average. When he was asked when he didn’t tell juvenile defendants they had a right to a lawyer, he said, “I just don’t believe I have to spoon-feed people to do things in their life.”

In 2006, 13 year old DayQuawn Johnson was sent to a detention center for several days for failing to appear at a hearing as a witness to a fight, even though his family had never been notified about the hearing.

16 year old “A.A.” was arrested for gesturing with her middle finger at a police officer who had been called during a custody dispute involving her parents and her sister. She was an honor roll student with no prior arrest record. A.A. spent six months in juvenile detention.

It got to the point where the judges were struggling to hide how much money they were getting. They would disguise some of the payments as broker’s fees for introducing the builder to the owners, deposit money into bank accounts created under other people’s names, and create false entries in the financial records of businesses controlled by the two judges. Through one of the companies, the judges purchased a $785,000 condo in Florida together so they could disguise some of the transactions as rent.

There were several red flags early on:

In 2003, State Department of Public Welfare auditors noticed that Luzerne County was billing the state for the same amount every month for detention services while for other counties, the bill would fluctuate depending on the number of juvenile offenders that month.

Another judge in the county sent a letter to county commissioners raising concerns about detention costs. A few days later, Judge Conahan transferred him to another court.

Ted Dallas, executive deputy secretary for the Department of Public Welfare, said that his office tried to work with the county to lower its use of detention as the state partially reimburses those costs. However, there was little they were able to do as the judges were siding with the centers.

Between 2004 and 2008, the Pennsylvania state Judicial Conduct Board received four complaints about Conahan but later admitted it failed to investigate any of them.

Although the FBI has not disclosed exactly when it began investigating the judges, in 2007, the Philadelphia-based Juvenile Law Center determined that several hundred teenage defendants had appeared before Ciavarella without counsel. During the investigation, Robert Powell agreed to wear a wire and record incriminating conversations with the two judges.

In January 2009, both judges were indicted on multiple charges associated with accepting kickbacks in exchange for sending juveniles to the detention centers.

Judge Ciavarella insisted that the money he received was a legal “finder’s fee” that the owner, Robert Powell, had paid him for introducing Powell to the builder Robert Mericle. However, Powell testified that Ciavarella kept a record of the number of children he sent to the facility as well as how much the owners were making. At one point, Ciavarella allegedly said to Powell, “I know how much money you’re making, and it’s time to step up.”

The judges initial plea agreement was rejected by a federal judge, who felt the proposed prison sentence of 7 years was too lenient. Ciavarella opted to go to trial and on February 12, 2011, he was convicted of 12 of the 39 charges, including racketeering, money laundering and filing false tax returns. His lawyer argued for a lighter sentence, writing in his sentencing memorandum “If Mark Ciavarella never did one day of incarceration, he would still be punished.” Six months after his conviction, Ciavarella was sentenced to 28 years in prison and ordered to pay $1.17 million in restitution. (Side note: On January 9, 2018, a federal judge threw out Ciavarella’s convictions for racketeering, conspiracy to commit racketeering and money laundering, due to Ciavarella’s attorney’s failure to raise statute of limitations defense on those charges – he may receive a new trial on those charges which could take years off his sentence.)

Rather than go to trial, Judge Conahan reached another plea agreement and pled guilty to one count of racketeering conspiracy. At his sentencing hearing in September 2011, he apologized to the affected kids, saying “”My actions undermined your faith in the system and contributed to the difficulty in your lives. I am sorry you were victimized.” Although the prosecutor acknowledged his cooperation, he was sentenced to 17 ½ years in prison and ordered to pay over $900,000 in fines and restitution.

On July 1, 2009 Robert Powell pleaded guilty to failing to report a felony and being an accessory to tax evasion conspiracy. He was sentenced to 18 months in prison, which he completed in April 2013. He also agreed to pay $4.75 million to settle the affected juveniles’ class action lawsuit against him.

On September 2, 2009 developer Robert Mericle pled guilty to failing to report a felony. As part of his plea agreement, Mericle agreed to donate $2.1 million to local programs that benefit children. He also agreed to pay $17.75 million to settle lawsuits against him and his company for his role in the scandal. His sentencing was delayed as he had been expected to testify in another unrelated trial. On April 25, 2014, Mericle was sentenced to one year in prison and ordered to pay a $250,000 fine. He was released on May 29, 2015 and today continues to run his commercial development company.

In October 2009, the Pennsylvania Supreme Court overturned all convictions issued by Ciavarella between January 2003 and May 2008 due to his “complete disregard for the constitutional rights of the juveniles.” About 4000 cases were estimated to be affected.

Photo Credit: David Kidwell/AP


  1. Wikipedia: Kids for Cash Scandal
  9. Wikipedia: Michael Conahan
  10. Wikipedia: PA Child Care