Judges Mark A. Ciavarella Jr., and Michael T. Conahan pled guilty in federal court to wire fraud and income tax fraud for taking more than $2.6 million in kickbacks to send up to 6,500 teenagers to youth detention centers run by PA Child Care LLC and Western PA Child Care, both subsidiaries of Mid-Atlantic Youth Services Corp. The Pennsylvania Supreme Court reversed thousands of juvenile convictions and, in January 2010, ruled that the youths cannot be retried.
According to a class-action lawsuit filed in 2009, the two judges, who controlled the Luzerne County court system as top administrative judges, conspired with several private companies as follows:
Beginning in 2002, the judges orchestrated "placement guarantee agreements" with PA Child Care and Western PA Child Care worth tens of millions of dollars in business from Lucerne County to house juvenile offenders in newly built detention centers. Mericle Construction, Inc., builder of the private facilities, also bribed the judges to facilitate construction, according to the lawsuit.
Later in 2002, the two judges de-funded the county's public detention center, claiming it was in poor condition. State and local health and welfare departments determined the public facility was safe and up to standards, but it was closed down.
The case has attracted national and international attention to the issue of judges' corruption, but very little scrutiny of the privatized detention centers, which remain open as of early 2010. No charges have been filed against the company executives involved in the scandal, but the investigation is continuing. The executives and seven companies, as well as the judges, are defendants in a class-action lawsuit filed by the Juvenile Law Center in 2009 on behalf of 140 named plaintiffs.
In 2009, the Pennsylvania legislature established the Interbranch Commission on Juvenile Justice to investigate the "Kids for Cash" scandal and make changes to keep it from happening again. In May 2010, the Commission released its report outlining recommendations to strengthen the state's juvenile justice system.