HARRISBURG - A company owned by a prominent Pittsburgh businessman is at the center of a federal investigation into a kickback scheme involving two Luzerne County judges.
President Judge Mark Ciavarelli Jr. and Judge Michael T. Conahan agreed this week to plead guilty to criminal charges they accepted $2.6 million to steer delinquent children to juvenile detention centers, according to an agreement filed in U.S. District Court in Scranton.
The detention centers are owned by Pennsylvania Child Care, which operates a facility in Pittston, and Western Pennsylvania Child Care, which runs a center in Butler County.
The companies were owned by Luzerne County attorney Robert Powell and businessman Gregory Zappala, 47, of Downtown. Zappala took sole ownership in June when he purchased his partner's share, according to a statement by Powell.
Zappala is not accused of any wrongdoing in the two-year-old investigation by the FBI and IRS.
In a statement, William Brucker, attorney for the companies, said: "I can confirm that no charges have been brought against the companies or its principal owner Gregory Zappala and that none are anticipated. These companies provide superior services to youth in need and will continue to do so. Neither the companies nor its principal had any knowledge whatsoever of the actions described in the indictment."
Zappala could not be reached. Brucker declined further comment.
The U.S. Attorney's Office in Harrisburg and the FBI in Scranton and Philadelphia declined comment.
The criminal complaint alleges the judges met with "participant 1," a Luzerne County attorney, and "participant 2," a Luzerne County contractor, in 2000 to discuss building the juvenile facility in Luzerne County. The judges allegedly received their first payment in 2002 for helping the facility to be built, according to the complaint.
The judges directed juveniles to the Pittston center and the Butler County facility, the complaint alleges. Newspapers in Wilkes-Barre and Scranton identified the two participants named in the complaint as Powell and Robert Mericle of Mericle Construction.
Powell and Mericle's attorney did not return calls seeking comment.
Western PA Child Care operates a youth detention facility with 99 beds in Allegheny Township, Butler County.
According to Butler County Controller John McMillan, payments totaling about $800,000 were made to Western Pennsylvania Child Care since the facility opened in 2005.
He said the county did not renew the firm's contract after an extension of the contract ran out at the end of 2008.
McMillan has criticized the facility. He said a state Welfare Department review cited the high cost of Western Pennsylvania Child Care, which ranged as high as $315 a day per child.
"They are very expensive," said Tom Holman, deputy court administrator for Butler County. He said the county relies on lower-cost providers.
Holman said cost was the reason for the reduction in referrals. He said judges determine placements.
