Came across this 12 years later looking for the same issue. The answer is SQLPlus can't properly handle the encoding of your input and/or output of your PowerShell terminal. Run the following before issuing your sqlplus command. This will set your text encoding to ASCII which SQLPlus can handle.

[Console]::InputEncoding = [System.Text.Encoding]::ASCII
[Console]::OutputEncoding = [System.Text.Encoding]::ASCII