Former Luzerne County Attorney Sentenced to Four Years for Tax Evasion

Robert J. Powell, a 65-year-old former attorney from Luzerne County, has been sentenced to 48 months in federal prison and three years of supervised release for evading taxes on millions of dollars in legal fees. The sentencing, announced by the U.S. Attorney’s Office for the Middle District of Pennsylvania, concludes a case involving a sophisticated scheme to hide income and avoid tax obligations to the Internal Revenue Service (IRS). Powell, who now resides in Palm Beach, Florida, failed to file taxes for approximately fifteen years, during which he accumulated over $18 million in earnings.

Court documents revealed that Powell implemented a strategy to conceal his tax liability for the year 2016. This involved utilizing bank accounts established under the names of others, known as “nominee” accounts. Furthermore, he arranged for an accountant to submit a request for a filing extension that falsely declared zero estimated tax liability for that year. Powell also allegedly made misleading statements to IRS agents when his tax affairs were audited in 2019. The government presented evidence showing that Powell’s non-compliance with tax laws extended over a decade and a half, during which he amassed significant income.

This is not the first time Powell has faced legal repercussions. In 2009, he pleaded guilty to federal felony offenses related to bribery payments made to two Luzerne County judges and efforts to conceal these payments from tax authorities. He received an 18-month prison sentence for those convictions in 2011. The tax evasion activities for which he was recently sentenced appear to have commenced around the time of his earlier guilty plea and continued through his imprisonment and afterward.

Powell’s legal career was significantly impacted by his prior convictions. His law license was suspended in 2009 and he was subsequently disbarred in 2015. Consequently, he relinquished ownership of The Powell Law Group in 2009. Despite this, he maintained the right to collect a substantial portion, 90%, of any future fees earned by the firm after operational expenses were covered. A significant portion of these future fees stemmed from a mass tort litigation where The Powell Law Group represented thousands of plaintiffs, leading to a settlement of approximately $5.15 billion in 2015. The firm was projected to receive around $120 million in attorney fees from this settlement.

Before the attorney fees were distributed, The Powell Law Group and its co-counsel secured loans totaling over $125 million, using the anticipated future legal fees as collateral. Instead of depositing these loan proceeds into the firm’s accounts for business expenses, Powell allegedly directed the funds to nominee bank accounts that he controlled. These funds were then reportedly used to cover Powell’s personal debts and expenses, including the purchase of luxury vehicles, a sportfishing yacht valued at $1.25 million, and tuition and living costs for his children’s private schooling and university education. His personal expenditures also included the acquisition of a $2.65 million home in Palm Beach Gardens, Florida, which he subsequently renovated with over $1 million in improvements. After becoming aware of a federal investigation, Powell transferred ownership of this residence to a business partner. However, he and his wife have reportedly continued to reside in the home, now valued at over $6 million, without paying rent.

In June 2016, after most of the attorney fees were disbursed and the loans repaid, Powell still failed to file a personal income tax return or pay taxes on the fees he received. Between the initial disbursement and October 2019, an additional $12 million in attorney fees were distributed, with The Powell Law Group’s share continuing to be channeled into nominee accounts under Powell’s control. During this period, Powell personally received approximately $3.6 million of these fees.

When the IRS initiated an audit of his tax liabilities in 2019, Powell reportedly provided false information to the investigating agents. He allegedly claimed that his sole sources of funds from 2014 through 2016 were loan advances, denied having any control or signature authority over other bank accounts, and stated he had no ownership in any corporations.

As part of his plea agreement, Powell has consented to pay restitution to the IRS totaling $3,500,000. He has also acknowledged that the IRS may determine he owes additional taxes, penalties, and interest beyond this agreed-upon amount. The investigation was conducted by IRS Criminal Investigation, with the prosecution handled by the Department of Justice’s Criminal Division and the U.S. Attorney’s Office for the Middle District of Pennsylvania.

Article by Mel Anara, based upon information from U.S. Attorney’s Office, Middle District of Pennsylvania

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