Audit challenges juvenile center
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A million dollars in consulting fees, a swordfishing trip, college basketball tickets and a $3,500 suit are among $1.26 million in expenses being questioned in a state audit of a Butler County juvenile detention center owned by Pittsburgh businessman Greg Zappala.
The state Department of Public Welfare says those expenses and others were not allowable costs at the facility, which receives much of its funding from state and county governments. The results were in the draft of an audit report of the Western Pennsylvania Child Care facility issued by the Welfare Department and obtained by the Pittsburgh Post-Gazette.
Auditors say the facility also sent erroneous bills, violated contracts by billing for days on which juveniles were discharged, failed to keep proper records and charged Luzerne County $73,920 for beds in the facility in Allegheny Township, Butler County -- 260 miles away -- that were never used.
The facility and a similar one in northwest Pennsylvania also owned by Mr. Zappala are at the center of a criminal case against two former Luzerne County judges who are scheduled to plead guilty today in a fraud case. Former judges Mark A. Ciavarella Jr. and Michael T. Conahan are accused of accepting $2.6 million in payments to facilitate the development of the Butler County facility and Pennsylvania Child Care in Pittston Township, Luzerne. Federal prosecutors allege they steered children to the center against probation officers' recommendations and without legal representation.
No charges have been filed against Mr. Zappala or his former business partner, attorney Robert J. Powell. Mr. Zappala is the brother of Allegheny County District Attorney Stephen A. Zappala Jr. and son of former state Supreme Court Justice Stephen A. Zappala Sr.
If Western Pennsylvania Child Care had not misspent funds as the audit alleges, the facility could have reduced its charges to counties. The facility bills $314 a day for secure treatment and $255 per day for shelter services, but could have reduced those charges to $249.84 and $194.81, respectively, if it hadn't spent the questioned costs, auditors concluded.
Butler County Commissioner James Kennedy has long questioned those charges.
He abstained from a 2005 vote to contract with Western Pennsylvania Child Care because he thought the charges were too high.
"The costs were exorbitant," Mr. Kennedy said in an interview Tuesday. "I couldn't condone going through with this deal."
Similar facilities at the time were charging $180 per day for secure treatment and $140 per day for shelter care, according to minutes of the 2005 meeting.
Butler County Controller Jack McMillin is concerned that the county may have been overcharged for years.
He said he was very concerned after reviewing the draft audit, which yesterday was sent to facility operators, county officials and others.
The county has paid the facility more than $901,000 since it opened at the end of 2005. Western Pennsylvania Child Care operates a secure unit for juvenile criminals and a shelter for those waiting to be adjudicated or who need emergency housing because their parents are not able to care for them.
Calls to Western Pennsylvania Child Care were referred to company executive Michael Cummings, who did not return a phone call yesterday.
Among the questionable costs identified in the audit are $1 million in undocumented consulting fees paid to firms with financial ties to Mr. Zappala and Mr. Powell; $5,800 for limousine service to three college basketball games and for a shopping trip to King of Prussia Mall outside Philadelphia; $4,500 for a charted fishing trip Mr. Zappala took in Florida; and $3,500 for a custom-made men's suit. The audit also questioned $51,482 in interest the center paid on a line of credit that provided interest-free loans to its principals.
Meanwhile, according to the audit, the facility claimed it couldn't pay its bills because of cash-flow problems and was getting utility shut-off notices.
Western Pennsylvania Child Care has 60 days to respond to the findings in the draft audit. Their response will be incorporated into a final Welfare Department audit report.
Also yesterday, the state Supreme Court appointed Berks County Senior Judge Arthur E. Grim as a special master to review juvenile cases adjudicated in Luzerne County.
The court specifically directed him to review cases in which Judge Ciavarella committed juveniles to the detention facilities owned by Mr. Zappala and cases in which there are allegations that Judge Ciavarella denied defendants the right to counsel.
Judge Grim can decide to expunge records, grant new hearings or void rulings, according the Supreme Court order issued yesterday.
"The goal of this court is to determine whether the alleged travesty of juvenile justice in Luzerne County occurred and, if it did, to identify the affected juveniles and rectify the situation as fairly and swiftly as possible," the order says.
First Published February 12, 2009 12:00 am