Former Luzerne County Attorney Sentenced to Four Years in Prison for Tax Evasion

SCRANTON, Pennsylvania - Robert J. Powell, age 65, of Palm Beach, Florida, was sentenced today to 48 months in prison, to be followed by three years of supervised release, for tax evasion in connection with substantial legal fees he earned.

According to court documents and statements made in court, Powell sought to evade a substantial tax that was due and owing the IRS for 2016 by using "nominee" bank accounts (i.e., accounts in others' names), causing an accountant to file a request for a filing extension that falsely reported zero estimated tax liability for 2016, and making false statements during an IRS audit in 2019. At sentencing, the Government put forth evidence that Powell did not file taxes for a period of approximately fifteen years, during which he earned over $18 million in income.

"Today's sentencing holds Mr. Powell accountable for his criminal actions" said Yury Kruty, Special Agent in Charge of IRS Criminal Investigation for the Philadelphia Field Office. "Mr. Powell's fraudulent scheme to evade income taxes is unfair to every taxpayer who obeys the law and pays their fair share. IRS CI is committing to working with our partners at the United States Attorney's Office to see that criminals like this are stopped."

In 2009, Powell pleaded guilty to multiple federal felony offenses for paying bribes to two judges of the Luzerne County Court of Common Pleas and assisting those judges in concealing the bribe payments from tax authorities. In 2011, Powell was sentenced to 18 months in federal prison for these offenses. The conduct for which he was sentenced today began around the time that he pleaded guilty to the earlier offenses and continued throughout the time of his imprisonment and beyond.

Powell's license to practice law was suspended in 2009, and he was subsequently disbarred in 2015, in connection with his earlier convictions. As a result, in 2009 he relinquished his ownership of The Powell Law Group. He nevertheless retained the right to collect 90% of the remainder of any future fees collected by the firm after the payment of firm expenses. Specifically, The Powell Law Group represented thousands of plaintiffs in a mass tort litigation that settled for approximately $5.15 billion in 2015, and The Powell Law Group was expected to receive approximately $120 million in attorneys' fees from that settlement.

Prior to the disbursement of the attorneys' fees, The Powell Law Group and its co-counsel used those future legal fees as collateral to obtain a series of loans totaling over $125 million. Instead of depositing the loan proceeds into The Powell Law Group's bank accounts and using them to pay firm expenses, Powell instead directed the loans to nominee bank accounts that were under his control. He then used the loan proceeds for his personal debts and expenses, as well as his and his former law partner's personal benefit. Powell's personal expenses included multiple luxury vehicles, a $1.25 million sportfishing yacht, and tuition and living expenses for private high schools and universities for his children. Powell's personal expenses also included buying a $2.65 million home in Palm Beach Gardens, to which he then made more than $1 million in renovations. Once Powell was informed that he was the focus of a federal investigation, he transferred ownership of the home to a business partner, but Powell and his wife have continued to live in that home-now worth more than $6 million-rent-free.

In June 2016, most of the attorneys' fees were finally disbursed and the loans were repaid. Nevertheless, Powell did not file a personal income tax return and pay taxes on the receipt of the fees in that year. After the initial disbursement and through October 2019, an additional $12 million in attorneys' fees was distributed, and The Powell Law Group's share continued to be directed into nominee bank accounts that Powell controlled. Powell personally received an additional $3.6 million of the fees during that time.

In 2019, when the IRS commenced an audit of his tax liabilities, Powell made false statements to the interviewing agents to conceal his income and expenditures. Namely, Powell falsely stated that, for tax years 2014 through 2016, his only sources of funds were loan advances, that he and his spouse did not have signature authority or control over other bank accounts, and that he had no ownership in any corporations.

Powell agreed to pay restitution in the amount of $3,500,000, to the IRS. Powell also agreed that the IRS may later determine that he owes even more in taxes, plus penalties and interest, beyond what he has agreed to pay.

Assistant Attorney General Tyson Duva of the Justice Department's Criminal Division and U.S. Attorney Brian D. Miller for the Middle District of Pennsylvania made the announcement.

IRS Criminal Investigation investigated the case.

Trial Attorney Alexandra K. Fleszar of the Criminal Division's Tax Section and Assistant U.S. Attorney Ravi Romel Sharma of the U.S. Attorney's Office for the Middle District of Pennsylvania prosecuted the case.

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