Who says crime doesn’t pay? The Pennsylvania Supreme Court

Lackawanna County businessman Robert J. Kearns went community to community across Pennsylvania selling a plan that he and a partner said would save local governments big bucks on their electricity bills.

It was nothing more than a scam, prosecutors in four counties said, in which Kearns and a co-defendant enriched themselves at the expense of taxpayers, giving themselves big bonuses while the streetlight work they’d promised went nowhere.

Kearns is now a convict and is serving a six- to 12-month prison sentence in Northampton County, where he was found guilty of bilking $832,000 from Bethlehem Township. He surrendered in May after years of appeals, but his legal battles have only shifted to a different front — one that gives new meaning to the adage that crime doesn’t pay.

Ordered to make restitution to Bethlehem Township, Kearns says he shouldn’t have to pay back the money he stole.

And a recent ruling by the state Supreme Court may back his position, though it flies in the face of age-old wisdom: that if you steal, not only will you get in trouble, but you’ll have to make your victim whole.

In Pennsylvania, that bedrock principle has been called into question by the courts — especially for those who stole from the government.

At issue is the wording of the state’s restitution law, through which Kearns and countless others have been ordered by judges to make up for the losses their victims suffered. But under the Supreme Court decision, just who can legally be considered a victim is narrower than many judges, prosecutors and defense attorneys assumed.

The groundbreaking case involved Mike Veon, a former Democratic Party power broker and Beaver County state representative who served five years in prison after being convicted of public corruption in Harrisburg’s Bonusgate scandal. In November, the court struck down a $136,000 restitution order he was under, finding that the state agency defrauded in one of his cases — the Department of Community and Economic Development — doesn’t qualify as a victim under the law as it is written.

That has led the courts to throw out other hefty restitution figures tied to lawmakers brought down in Bonusgate, where legislative leaders and staffers illegally used taxpayer resources for political purposes. Among those whose debts to the public have been rescinded: former House Speakers Bill DeWeese ($117,000), D-Greene, and John Perzel ($1 million), R-Philadelphia.

Now, Kearns’ case is testing how far those rulings may go. Citing them, Kearns is seeking to have his restitution stricken, arguing that a municipality, like a state agency, simply isn’t eligible to receive restitution under the statute’s language.

The restitution law relies upon Pennsylvania’s Crime Victims Act, which defines a victim as “an individual” who suffered “physical or mental injury, death or the loss of earnings.”

“Every relevant noun unequivocally describes a human being, not a government agency, and nowhere else is there a relevant definition that persuades us to broaden the common understanding of these words,” Justice David Wecht wrote in Veon’s case.

So if a state agency doesn’t qualify, what about the township in Kearns’ case? Or a nonprofit whose bookkeeper embezzled from it? Or a store whose customer shoplifted?

The courts “really placed a strict definition on what a victim is,” said Kearns’ attorney, Brian Monahan. “If this type of court rationale continues, the possibilities that you raise are very real.”

Northampton County District Attorney John Morganelli is fighting to keep Kearns’ restitution order in place. But having studied the Veon opinion, Morganelli said he isn’t sure his arguments will carry the day.

Morganelli contends the facts of Kearns’ case make it different from those of Veon and other Bonusgate defendants who abused their offices. Kearns wasn’t convicted of political corruption, but of directly stealing, Morganelli says. Also, Kearns’ victim was a municipality, not the state government, which Morganelli says is a distinction.

But Morganelli acknowledged his arguments face hurdles, saying the “law is not in our favor on this.”

“It’s a huge problem,” he said, calling it a “legislative faux pas” and “absurd result” that needs to be fixed.

To good-government activists, the ruling also is, in effect, a license to steal from the public.

“It is disappointing because it was one of the few tools we have to combat corruption,” said Eric Epstein, the coordinator of the watchdog group Rock the Capital. “If you want to get a politician’s attention, you’ve got to hit them in the pocketbook. If you break the law, you rip off taxpayers, you ought to pay the price.”

In striking down Veon’s restitution, the Supreme Court did so with misgivings. Wecht highlighted the history of holding defendants responsible for the money they usurped, calling it “a tool we have long recognized as essential, first and foremost, to the rehabilitative process.”

“It cannot be denied that, in this case, public funds were diverted to inappropriate purposes and thus were unavailable to be used in the ways intended, effectively victimizing the commonwealth and its citizens,” Wecht wrote. “As a consequence of this ruling, these are monies that the commonwealth may never recover.”

But it is up to the Legislature, and not the courts, to correct the law’s language, Wecht said.

It remains unclear whether Harrisburg is interested in acting.

Aaron Zappia, a spokesman for Senate Judiciary Committee Chairman Stewart Greenleaf, R-Montgomery, said so far, no one has raised the issue to him.

A request for comment from Greenleaf’s counterpart in the House, Rep. Ron Marsico, R-Dauphin, went unreturned.

One influential group will be pushing for a change.

Richard Long, executive director of the Pennsylvania District Attorneys Association, said his organization believes the restitution law needs to be rewritten. If not, Long said, the association worries about how far the rulings may span.

His example: “Your volunteer fire company whose treasurer rips them off — that type of thing.”

“We want to make sure that we are able to get restitution for victims that are non-individuals,” Long said. “We want to get a fix that will allow ‘organizational victims,’ shall we say, to get restitution.”

The Bethlehem Township case

Kearns, the Northampton County defendant, was convicted in 2013 of theft. He and his co-defendant, Patrick J. McLaine, were the principals of Municipal Energy Managers of Lackawanna County, which was hired in 2007 to help Bethlehem Township buy its streetlights from PPL, a plan township commissioners hoped would bring savings on electricity bills.

Instead, Kearns and McLaine pocketed the money and did little work, failing to even contact PPL until nine months after the acquisition was supposed to be complete, prosecutors said at trial.

Kearns, 53, and McLaine, 70, pleaded guilty to similar scams in the counties of Bucks, Cumberland and Lehigh, where they admitted stealing $160,000 from Coplay. In those cases, they were spared prison, receiving house arrest or probation.

The restitution against the pair totals $2.47 million. Court records show they have paid just $2,205 in Cumberland, and nothing in their three other cases.

Morganelli doubts Northampton County will ever see Kearns or McLaine pay back the money — a reality of many theft cases. But he says he wants the restitution order to remain in place regardless.

A hearing on Kearns’ petition is scheduled Aug. 29 before Senior Judge Leonard Zito.

As an alternative, Morganelli is asking Zito to impose restitution under a separate provision in state law: as a condition of parole, should Kearns be released from prison before his 12-month sentence is complete. Morganelli calls that a “short-term” fix, and it is a tactic the Pennsylvania attorney general’s office also is using for the Bonusgate defendants, arguing it is a vehicle through which restitution can be reimposed.

Joel Sansone, a Pittsburgh lawyer who represents Veon and Perzel, thinks the parole argument falls flat. Restitution requires a victim, and the Supreme Court has found the definition of victim is limited, he said.

No matter what, it is up to lawmakers to change the definition if they wish to, Sansone said. He noted the courts raised questions about the restitution law’s language as far back as the 1990s.

Since that time, Harrisburg has had chances to cast a wider net, Sansone said, but chose not to.

riley.yates@mcall.com

Twitter @riley_yates

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