Disbarred PA Attorney Robert Powell Sentenced to 4 Years for $18M Tax Evasion

Disbarred Pennsylvania attorney Robert Powell, already known for his central role in the “Kids for Cash” scandal, received a four-year prison sentence on Thursday for evading taxes on more than $18 million in unreported income. The sentencing concludes a case revealing a complex scheme to conceal income derived from legal settlements and luxury purchases.

From ‘Kids for Cash’ to Tax Evasion

Powell, 65, formerly of Luzerne County, Pennsylvania, and now residing in Palm Beach, Florida, was sentenced following charges stemming from an improper tax filing in 2016. Prosecutors detailed how Powell also submitted false statements to the Internal Revenue Service during a subsequent audit in 2019. This latest legal setback follows a decade of scrutiny stemming from the “Kids for Cash” scandal, which involved accepting bribes to influence juvenile court sentencing.

Powell’s legal career effectively ended in 2009 when his law license was suspended, and it was ultimately revoked in 2015 after multiple felony convictions related to the bribery scheme. He and two judges, Michael Conahan and Mark Ciavarella, were found to have accepted nearly $1 million in bribes to steer children into a privately-owned juvenile detention center, Western Pennsylvania Youth Services (WPYS), enriching Powell who owned the facility.

Concealing Millions in Settlement Funds

While the “Kids for Cash” scandal led to the loss of his law practice, Powell continued to benefit financially. Even after losing direct control, he was entitled to 90% of future fees generated by the Powell Law Group after expenses. This proved lucrative when the firm settled a large lawsuit in 2015 for $5.15 billion, resulting in approximately $120 million in attorney’s fees.

However, instead of distributing these fees to the firm’s partners, the funds were used as collateral for over $125 million in loans. These loans were then channeled through nominee bank accounts – accounts not directly in Powell’s name but under his control – and used to fund his personal expenses. This elaborate scheme allowed Powell to access the funds without directly reporting them as income.

Luxury Spending and Unreported Income

The illicit funds were used to finance a lavish lifestyle. Powell purchased a $2.65 million home in Palm Beach Gardens, Florida, which is now valued at $6 million, along with multiple vehicles and a $1.25 million sportsfishing yacht. He also covered private school tuition for his children. Despite these substantial expenditures, Powell failed to report the income derived from the settlement fees, along with an additional $3.6 million in fees earned through late 2019.

Restitution and Court Supervision

As part of the sentencing, Powell has agreed to pay $3.5 million in restitution to the IRS, and is liable for any additional taxes the IRS determines he owes. Following his release from prison, Powell will be subject to three years of court supervision.

The case highlights the lengths to which individuals will go to conceal income and evade taxes, even after facing prior legal consequences. The complexity of the scheme, involving nominee accounts and loan structures, underscores the challenges faced by tax authorities in tracking illicit financial flows. The sentencing of Robert Powell marks the latest chapter in a saga that has already had a significant impact on the justice system and the lives of those affected by the “Kids for Cash” scandal.