United States v. Ciavarella

• Decision Date: 24 May 2013
• Docket Number: No. 11–3277.,11–3277.
• Citation: 716 F.3d 705
• Parties: UNITED STATES of America v. Mark CIAVARELLA, Jr., Appellant.
• Court: U.S. Court of Appeals — Third Circuit

716 F.3d 705

UNITED STATES of America

v.Mark CIAVARELLA, Jr., Appellant.

No. 11–3277.

United States Court of Appeals,Third Circuit.

Argued Nov. 14, 2012.

Opinion Filed: May 24, 2013.

Limitation Recognized

18 U.S.C.A. § 1346

Albert J. Flora, Jr., Esq., [ARGUED], Wilkes–Barre, PA William Ruzzo, Esq., Kingston, PA, Counsels for Appellant Mark Ciavarella, Jr.

Peter J. Smith, Esq., United States Attorney, Gordon A.D. Zubrod, Esq., Assistant United States Attorney, [ARGUED], Michael A. Consiglio, Esq., Assistant United States Attorney, Office of United States Attorney, Ronald Reagan Federal Building, Harrisburg, PA, William S. Houser, Esq., Assistant United States Attorney, Amy C. Phillips, Esq., Assistant United States Attorney, Office of United States

Attorney, Scranton, PA, for Appellee United States of America.

Before: RENDELL, FUENTES, and CHAGARES, Circuit Judges.

OPINION OF THE COURT

FUENTES, Circuit Judge:

Mark Ciavarella, a former state judge, was convicted by a jury in the Middle District of Pennsylvania of racketeering, honest services mail fraud, money laundering conspiracy, filing false tax returns, and several other related crimes. The charges resulted from the so-called “Kids for Cash” scandal that erupted in Luzerne County, Pennsylvania in late 2008. Ciavarella and his fellow judge, Michael Conahan, were accused of receiving over $2.8 million in three years from a commercial builder, Robert Mericle, and an attorney and businessman, Robert Powell, in exchange for helping to construct and operate juvenile detention centers and placing juvenile offenders there. Ciavarella complains that the District Court Judge overseeing his case was biased and should have recused himself early on, when Ciavarella asked him to do so. Ciavarella also assigns numerous trial and sentencing errors, which we discuss in detail below.¹

Over the course of several years, Ciavarella committed hundreds of juveniles to detention centers co-owned by Powell, including many who were not represented by counsel, without informing the juveniles or their families of his conflict of interest. By the summer of 2008, Ciavarella and Conahan, aware that they were under criminal investigation, met with Mericle and Powell to collaborate on their stories, discuss how to mitigate the effects of damaging witnesses, and encourage the destruction of records. Unbeknownst to them, Powell was wearing a recording device during these meetings, exposing Ciavarella and Conahan's efforts to obstruct justice.

By early 2009, law enforcement officials gathered sufficient evidence to charge the two judges. Ciavarella and Conahan subsequently entered into an agreement with the Government under which they pled guilty to an Information charging them with wire fraud and conspiracy in exchange for an agreed 87–month sentence. Noting that the stipulated sentences were significantly lower than the advisory U.S. Sentencing Guidelines for the charged offenses, the District Court rejected the plea agreement, and Ciavarella and Conahan withdrew their guilty pleas. Shortly thereafter, a grand jury returned a 48–count Indictment. Ciavarella proceeded to trial, was found guilty of twelve counts against him and was ultimately sentenced to 336 months' imprisonment, as well as restitution, forfeiture, and a special assessment. This appeal ensued. With the exception of Count 7 for honest services mail fraud, we will affirm the judgments of conviction and sentence on all counts. We will remand to the District Court to modify the judgment with respect to the special assessment as to Count 7.

I. Factual and Procedural BackgroundA. Replacement of the Existing County–Run Juvenile Detention Center

Ciavarella served on the Luzerne County Court of Common Pleas from 1996 through January 2009. He primarily served on the Juvenile Court, and in January 2007, was named President Judge of the Court, succeeding Judge Michael Conahanwho had served as President Judge since January 2002.

The circumstances relating to the various counts in the Indictment began in 2000. That year, Ciavarella and Conahan, along with other county officials, began expressing concerns about the serious disrepair and deplorable conditions at the Luzerne County Juvenile Detention Facility. Some county officials wanted to build a new county-run detention center, but Ciavarella advocated for the construction of a private facility, which could then be leased to the county. Ciavarella along with Conahan helped bring together potential investors for this project, including Robert Powell, a lawyer and friend of Conahan, and Robert Mericle, a local commercial builder and friend of Ciavarella. Powell and his business associate, Greg Zappala, ultimately created Pennsylvania Child Care, LLC (“PACC”) to develop the new private juvenile detention center, and Powell hired Mericle Construction Company to build it. In July 2001, Mericle informed Ciavarella that he would pay him a referral fee of 10% of the contract price, and Ciavarella asked him to make the payment through Powell. Ciavarella and Conahan agreed to split the payment because Conahan “put the deal together.” App. 1205.

B. Kickbacks to Ensure Completion of the Juvenile Detention Center

As part of the plan to help Powell and Mericle ensure completion of the project, Ciavarella and Conahan engaged in various endeavors to stymie the county's efforts to build and operate its own facility. Most critically, when Powell had trouble securing financing for construction in late 2001, Ciavarella and Conahan agreed to create a lease between PACC and Luzerne County to secure a bank loan. The judges agreed that Conahan would sign a lease in January 2002, after he became President Judge and would have the authority to bind the county. The lease, which the judges prevented any county officials from seeing, committed the county to pay $1.314 million per year to PACC in exchange for PACC housing the county's juvenile offenders.

In February 2002, after Powell secured financing, Mericle and PACC finalized a construction contract, which included an agreement that Mericle would pay a $997,600 referral fee after he completed construction of the facility. It was Mericle's understanding that he would make the payment to Powell, but that Ciavarella would be the ultimate recipient. In January 2003, when construction was nearing completion, Conahan provided Powell with wire transfer instructions. Pursuant to the instructions, Mericle transferred the referral fee to Conahan and Ciavarella through a series of transactions between multiple individuals and companies to ensure the funds were not traceable. While Mericle Construction reported the payment for tax purposes, Ciavarella never reported the income.

After PACC began operations, Powell and Mericle worked to develop a second juvenile detention center, Western PA Child Care (WPACC), and expand PACC from 48 beds to 60 beds. Ciavarella received referral fees for each of these projects. In July 2005, Mericle paid Ciavarella a $1 million referral fee for WPACC and in February 2006, Mericle paid Ciavarella a $150,000 referral fee for the PACC expansion. Mericle received the instructions from Ciavarella and made the payment by transferring funds to the Pinnacle Group of Jupiter, LLC, a corporation that Ciavarella, Conahan, and their wives formed in January 2004. Altogether, Mericle paid $2,147,600 in referral fees to Ciavarella and Conahan.C. Ensuring Success for the New Detention Centers

In January 2002, Conahan appointed Ciavarella to the Juvenile Court, a position that Ciavarella leveraged to place juvenile offenders with PACC to perpetuate the scheme. Months earlier, the outgoing President Judge had removed Ciavarella from the Juvenile Court and appointed himself, but when Conahan became President Judge, Conahan instead reappointed Ciavarella to that position as Juvenile Court Judge. By February 2003, PACC had begun operating, and Ciavarella started keeping regular tabs on how many beds were utilized at any given time. In November 2003, Ciavarella and Conahan called Powell into a meeting to discuss how many juveniles Ciavarella had sent to PACC and what the county had paid PACC for housing the juveniles. In 2003, alone, Ciavarella detained more than 100 juveniles at PACC. Based on this information and on a cursory estimate of PACC's profits, Ciavarella concluded that PACC was “doing very, very well” and that he “want[ed] a part of it.” App. 532–33. After Powell responded with concerns about cash flow, Ciavarella said “he didn't care ... [and] want[ed] to be paid” his share. App. 535–36. The judges told Powell that they had formed the Pinnacle Group and would use it to purchase a condo, and Powell could use it to make “rent” payments. In February 2004, Pinnacle purchased an uninhabitable condo in Jupiter, Florida. From January to September 2004, Powell sent $590,000 in numerous personal and business checks to Pinnacle, identified as payments for rent and marina fees, financed through Powell's draws on PACC and his law firm, which he kept hidden from his business partner Zappala.

In July 2005 and February 2006, Ciavarella and Conahan received referral fees from Mericle for the construction of WPACC and expansion of PACC. Both payments were funneled through several conduits. Shortly thereafter, Ciavarella and Conahan again pressured Powell to make more payments. In June 2006, the judges called Powell into another meeting to discuss how much money Ciavarella had made for Powell by detaining juveniles at PACC and WPACC. For the year 2005, Ciavarella had detained more than 100 juveniles at PACC and had begun placing juveniles at WPACC. The judges told Powell, “Look, you're in this business, we helped you get into it, you're making a lot of money, you're going to give us some.” App. 568. Powell testified that he “wasn't paying them for any services rendered, [but] was paying them because they demanded it in their position of authority.” App....