Powell settlement approved in Kids for Cash case

By Jennifer Learn-Andes - jandes@timesleader.com | December 16th, 2015 10:52 am

Disgraced attorney Robert J. Powell lost his yacht, jet and Mountain Top mansion in the aftermath of the Kids for Cash scandal, but there are signs he is on a financial rebound since he completed his 18-month prison sentence in 2013.

Payments to Avoca-area victims he had legally represented in a massive environmental contamination suit have started coming in, and he now lives in a mansion in Palm Beach Gardens, Florida. A racketeering suit filed against Powell last year by Gregory Zappala, his former business partner in two private juvenile detention centers at the center of the scandal, alleged Powell has been living large, driving a new, $102,500 Maserati Quattroporte and frequently traveling overseas.

Powell’s net worth is now of interest because it will determine what he pays juveniles and parents who sued him, his company, Vision Holdings, LLC, and others in 2009 in connection with the judicial corruption scandal that made international headlines.

In exchange for dismissal from the suit, Powell will pay $4.75 million and possibly up to $2.5 million more based on his net worth calculated by the end of 2016.

United States District Court Judge A. Richard Caputo granted final approval of the settlement following a hearing Wednesday morning, saying he believes it is “reasonable and in the best interest” of plaintiffs.

Powell, a Hazleton area native, did not attend Wednesday’s hearing, but his attorney said he concurs with the settlement.

A total of 1,187 juveniles and 605 parents have filed claims to receive settlement money, attorneys said after Wednesday’s hearing. Juveniles who were adjudicated by former county Court of Common Pleas Judge Mark Ciavarella between Jan. 1, 2003, and May 28, 2008, were eligible for settlement money, the agreement said.

Final chapter

The suit alleged juveniles, their parents and guardians suffered harm at the hands of Ciavarella, former judge Michael Conahan and others who were involved in a $2.8 million kickback scheme connected to the construction of two for-profit, private juvenile detention centers and the placement of youths in the facilities.

Powell served time for failing to report a crime related to the kickback scheme.

The settlement closes the case for everyone except the former judges because settlements of more than $20 million had been reached with defendant Robert K. Mericle and Mericle Construction, which built the centers, and with Zappala’s PA Child Care, LLC, and other entities that owned and operated the centers located in Pittston Township and western Pennsylvania.

West Pittston attorney Michael J. Cefalo, who was among several who appeared in court on behalf of the plaintiffs, said the settlement with Powell is part of the “final chapter” of a case that marred the county’s reputation.

“It was the biggest judicial disaster in the United States, and it’s finally coming to an end,” Cefalo said.

Cefalo said he was the first to file action against Powell and the others. His suit was consolidated with related ones in court.

“We’ve helped the kids. How can you be not happy with helping the kids? That’s the name of the game. That’s what we’re supposed to do,” Cefalo said.

The amounts paid to victims are still being tallied based on a formula that provides higher compensation to juveniles who were lodged in the two centers that were co-owned by Powell and Zappala. Legal fees also must come off the top, and Caputo did not issue a ruling on that amount.

“Everybody thinks the lawyers make a lot of money, and we really don’t. It wasn’t really for that purpose that we brought this case. We brought the case because it wasn’t fair. It just wasn’t fair,” Cefalo told reporters outside the federal courthouse in Wilkes-Barre.

Attorneys said after the hearing they expect to return to federal court around April asking the judge to issue a ruling on the amounts that must be paid by Conahan and Ciavarella.

Caputo issued a default judgment against Conahan and a summary judgment against Ciavarella, but he did not set their share of the damages, attorneys said.

The two former judges are serving federal prison sentences — 28 years for Ciavarella and 17.5 years for Conahan.

Attorneys question the ability of Ciavarella and Conahan to make the yet-to-be-determined payments to victims.

“Whatever kind of judgment Ciavarella and Conahan have, I don’t think they’re going to be able to pay it,” Cefalo said.

Net worth

The settlement agreement details how Powell’s net worth will be calculated to determine if he pays more than $4.75 million. He will pay nothing more if his net worth is $4.75 million or less.

If Powell’s net worth is between $4.75 million and $14.875 million, he must pay 10 percent of the amount by which his net worth exceeds $4.75 million.

His second payment will be $1.01 million and 14 percent of the amount beyond $14.875 million if his worth is between $14.875 million and $19.9 million.

The additional payment will be $1.7 million plus 20 percent of the difference if he is worth more than $19.9 million, but this payment can’t exceed $2.5 million, attorneys said in Wednesday’s court hearing.

It’s unclear how much Powell will receive from the environmental litigation. Zappala alleged in his racketeering suit that Powell was expected to receive $150 million, but Powell has disputed that estimate. Powell, who was disbarred, has since brought in New York City firm Weitz & Luxenberg, P.C., to handle the environmental case.

Zappala and Powell cancelled their lawsuits against each other and affiliated companies in July. Zappala’s suit made wild claims that Powell, using the name “Robert Kulbacki” as an alias, has formed a Cayman Island company and “was reported to have taken duffle bags of cash” to Costa Rica. He also alleged Powell was “making frequent trips to Switzerland,” it says. Caputo had denied Zappala’s request to freeze Powell’s environmental suit receipts.

Powell must provide an evaluation of his net worth by next November. An independent professional will be called in to calculate and issue a binding determination of net worth if the suit filers dispute Powell’s amount within 10 business days.

According to the agreement, the consultant must examine and value Powell’s assets and liabilities, with the exception of Powell’s principal residence and any personal property that’s worth less than $5,000.

Powell must provide all documentation that the professional “reasonably” requests for the calculation, on the condition that the consultant agrees in writing that that documentation won’t be disclosed to suit filers or anyone else without Powell’s permission and will be destroyed or returned to Powell after the consultant issues a report.


By Jennifer Learn-Andes


Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.