Prison Pays

Despite a history of abuse and bad conditions, private prison corporation GEO keeps getting contracts from the state.

Anthony Ferrell left the Ben A. Reid halfway house in northeast Houston on October 25, 2010, to go to work. He never came back.

Just over two weeks later, a Meyerland gas station security camera recorded him walking inside shortly after midnight. When he exited, a mother of three was missing her purse and a 24-year-old college student lay on the floor, bleeding to death. The man had intervened in the purse snatching, and for that, he got a bullet in the stomach.

Six days later, a Crime Stoppers tipster spoiled Ferrell's good time: Police arrested him at a nightclub and charged him with capital murder in the death of Sam Irick. Two days after that, Ferrell had the privilege of observing something Irick never again would: a birthday.

Ferrell's criminal history dates back to 1989, when he was convicted of burglary and given seven years probation. When he later refused to provide a sample for a urine analysis, his probation was revoked and the full sentence was imposed. But he was out of state custody by 1992, whereupon he committed armed robbery. He served ten years of a 20-year sentence, and in 2007 was busted for unauthorized use of a vehicle and possession of less than a gram of a controlled substance. The six-month sentences were assigned concurrently, but Ferrell unfortunately got an extra 90 days tacked on when he attacked the officer transferring him into custody; Ferrell kicked the officer in the groin.

When the Texas Board of Pardons and Paroles released Ferrell to Reid, it figured that he wouldn't be too much of a problem. He wasn't placed under "superintensive supervision," meaning he wouldn't be yoked with a GPS. And Reid was not a secured facility.

When the staff at Reid figured out Ferrell had absconded, they notified local and state authorities, per the contract hammered out between the Texas Department of Criminal Justice and the halfway house's Houston-based owner, Cornell Companies. After those phone calls, Ferrell was no longer Cornell's problem. It was up to law enforcement to find him.

This was the same for the sex offender who had absconded from Reid three weeks before Ferrell. And it was the same for the other sex offender who fled in February 2009. Fortunately, neither of those guys did any damage. Not like Gary Cox, the sex offender who strolled off the Reid campus in 2000, and, over the course of a year, kidnapped three pre-teen girls, holding them captive for days. In May 2001, a cop pulled him over outside San Antonio. With Cox in the car were his third victim and a gun. Cox stepped out of the car and shot himself in the head.

None of these things canceled Cornell's contract with the state, which means the company's shareholders never had to hear about losing any money on a guy who kept a nine-year-old girl in a boarded-up cabin in the Hill Country for five days before dropping her off one block from her home when he grew tired of her.

In fact, Cornell never had much to worry about. When the previous supervisor at Reid was indicted for drug distribution in 2004 and seven employees resigned after failing drug tests, TDCJ didn't blink. Nor was it an issue that same year when two residents raped another and then threatened the lives of seven residents who became aware of the incident. The punchline for that joke is that the two rapists already had warrants out for their arrests due to parole violation, a minor detail that the Reid staff somehow overlooked.

But a lack of sanctions wasn't unusual among private prison operators. It took something really big for a contract to be cut, because states often don't have the space for inmates, which is why they're contracted out in the first place. It would take something like forcing kids to sleep in feces-encrusted cells and eat food infested with bugs, which is what happened at a Texas Youth Commission facility in the West Texas town of Bronte in 2007. That one was owned by the Florida-based GEO, which would go on to lose four more contracts in Texas. But GEO would win some as well. And in a $730 million deal in August, GEO took over Cornell, greatly enhancing its place in the market.

The marriage of two of the most problematic private prison operators in the country will probably be good for GEO's shareholders, executives and board of directors. But what it means for community safety and inmate welfare is a bit murky: Barely held accountable for escapes, riots and inmate-on-inmate violence, private prison companies operating in Texas and elsewhere have for decades done exactly what corporations are supposed to do: Put shareholders' interests above all else.

Just like state- and federally run prisons, private prisons have their own set of problems and deficiencies, including:

• Privately operated halfway houses and penitentiaries are not responsible or held accountable for the prisoners who escape from their facilities;

• Performance measures in contracts are often vague; even if such terms are clearly delineated and companies under-perform, they're rarely fined or sanctioned;

• Guards who work in private prisons are paid less than those in government facilities and often undergo a lot less training;

• Through vigorous lobbying and campaign contributions, companies have been able to kill federal and state legislation that would subject them to greater public scrutiny.

Independent audits and performance reviews in Texas and other states have continually shown lax oversight of contracts, resulting in some cases with states overpaying the vendors. With private guards being paid much less than their public counterparts, more money is available for lobbying, campaign contributions and lavish executive salaries.
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On March 9, 2010, Cornell's senior vice president of corporate development e-mailed Alfred Moran, the head of the City of Houston's Department of Administration and Regulatory Affairs.

But Ben Erwin wasn't contacting Moran in his city capacity; Moran was also on Cornell's board of directors, a position from which he drew a six-figure pay in addition to his city salary. Cornell's contract with the Federal Bureau of Prisons for the Leidel Comprehensive Sanctions Center — a halfway house in downtown Houston — was up for renewal. Erwin needed an updated letter of approval from the city's Planning and Development Department stating that the facility still complied with city code. (Moran declined to comment for this story. His involvement does not constitute a conflict of interest, according to the city's director of communications, Janice Evans, and City Attorney David Feldman. "Mr. Moran followed all procedures of a City employee who holds outside employment," Evans stated in an e-mail to the Press.)

The Leidel Center had operated mostly quietly and smoothly since its inception in 1996. The only hiccup occurred in 2005, when resident Chris Wilkinson left the facility with a church pass (a neo-Nazi with a swastika inked on the side of his skull, Wilkinson was clearly the religious type) and made a beeline for Tarrant County, where he shot and killed three people over what must have been an action-packed weekend. But since Cornell lived up to its contract by placing a few phone calls to authorities, there was no need for the prison bureau to consider taking action against the company.

Attached to Erwin's e-mail was a letter from him to Marlene Gafrick, director of Planning and Development, and a draft letter "for her to send to me regarding Leidel."

"Thank you for pushing this for us," Erwin wrote to Moran. "We owe the BOP a response by week's end, so please let me know if we run into any unforeseen hurdles."

Resolving this unfinished business was also necessary for reasons beyond renewing the contract: Cornell was negotiating a merger with competitor GEO Group, and it was best to have everything in place.

The contract was renewed, and when GEO's buyout of Cornell was finalized in August, it left GEO with "78,000 beds in 116 correctional, detention and residential treatment facilities," according to a GEO newsletter.

GEO has a varied history in Texas, both under its current incarnation and under its previous moniker, Wackenhut Corrections.

Certainly, not every GEO facility in Texas has been tarred by scandal. Since 2008, for example, the company has quietly run Conroe's Joe Corley Detention Facility, which houses federal prisoners. (The facility's only hitches so far have been a prisoner's suicide in April and the injuries accused Ponzi schemer Allen Stanford suffered in a fight with another inmate.)

In 2009, GEO landed a contract to run a psychiatric hospital in Conroe — something that reportedly surprised mental health advocates and even legislators. As The Dallas Morning News reported in 2009, "Lawmakers inserted an earmark into the state budget to fund the future Montgomery County facility starting in 2011. But they said they didn't know until this week that the county had selected the GEO Group to operate it..." The paper also noted that "the new facility came as a post-session shock to mental health advocates, who acknowledge the need for it. But they say they weren't informed about it and never would have signed off if they knew Florida-based GEO was operating it."

Sometimes Texas officials have no problem with GEO, even when other states do. In 2007, Idaho prison officials inspected a GEO-run prison in the north Texas town of Spur after an Idaho offender committed suicide. Calling the facility the worst they'd ever seen, Idaho officials transferred prisoners from Spur to another GEO facility. But after another suicide, in GEO's Littlefield prison, Idaho officials conducted an audit and found guards had routinely falsified reports. The state subsequently severed its contract with GEO. Texas prison officials, however, never removed or transferred the state's prisoners from those GEO facilities.

But Texas is the setting for the costliest civil judgment in the industry's history and one that involved GEO: In 2009, the Thirteenth Court of Appeals upheld a $42 million wrongful death judgment against the company for the 2001 killing of inmate Gregorio de la Rosa Jr. in its Willacy County lockup.

Here's how the court summarized the incident: "This case involves the horrific and gruesome death of Gregorio de la Rosa, Jr. Gregorio, an honorably discharged former National Guardsman, was serving a six-month sentence at a prison operated by Wackenhut Corrections Corporation for possession of less than 1/4 grams of cocaine. A few days before his expected release, Gregorio was beaten to death by two other inmates using a lock tied to a sock, while Wackenhut's officers stood by and watched and Wackenhut's wardens smirked and laughed."

The court also scolded Wackenhut/GEO for withholding or destroying evidence, including a surveillance camera recording of the beating. In a deposition before trial, the prison warden stated that he had seen the videotape. But under questioning on the stand, the warden changed his story: He testified that he never saw video, but had merely viewed his "own little movie" in his mind, based on information from others.

In the company's refusal to turn over evidence, the court opined, "We find that Wackenhut's conduct was clearly reprehensible and, frankly, constituted a disgusting display of disrespect for the welfare of others and for this state's civil justice system."

The company had appealed nearly a dozen other counts against it, prevailing in one: an order for the company to pay $7,000 for de la Rosa Jr.'s funeral expenses. But on that count, which came to less than two-ten-thousandths of one percent of the total judgment, the company emerged victorious. The court could find nothing in the law to uphold that count.

GEO generated more ink for its Coke County youth detention center, which Texas Youth Commission Ombudsman Will Harrell inspected in 2007 and found lacking. Harrell observed an "over-reliance" on pepper spray; an insect infestation; gross understaffing; and bedding that hadn't been washed in a month.

"There is a greater sense of fear and intimidation in this facility than perhaps any other I have been to," he wrote.

Another inspection, by Harris County's TYC liaison, noted that one of the dorms lacked a bathroom, so the kids had to relieve themselves on the floor "or a plastic bag (if they have one)."

Curiously, the facility had received rave reviews from TYC's own inspectors, prompting TYC to twice dub it Contract Facility of the Year. Uncuriously, it turned out that two of the inspectors were former GEO employees.

Once the ombudsman's report became public, TYC could no longer ignore things, and it dispatched new inspectors. After walking through the facility, according to the Dallas Morning News, they had to scrape human excrement off their shoes. Commission head Dimitria Pope removed all 197 kids from the facility, setting them up on another campus where they were given, among other luxuries, toothbrushes.

State Senator John Whitmire, the chair of the Senate Criminal Justice Committee, admonished both GEO and TYC, and launched an investigation and a series of hearings on GEO's contracts in Texas.

"They had their lobbyists try to pressure legislators not to listen to TYC," Whitmire told The Dallas Morning News. Of course, Whitmire had for years accepted campaign contributions from GEO, and would continue to accept the company's money, even after the Coke County center was closed: In January, two GEO PACs contributed a total of $4,000 to his campaign.

It appears that, in the Coke County incident, GEO had pushed the envelope too far: The company may have saved money by not providing decent staff salaries, or even making sure a facility was fully staffed, and by cutting corners on facility maintenance and state-mandated educational programs for its youthful offenders. But a prison company — or, specifically, the staff at each facility — has to recognize the line demarcating what they can get away with and what will spill outside the prison walls.
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On the surface, private facilities can appear cost-effective.

The Texas Legislative Budget Board figured that, in fiscal 2008, the per-diem cost for state-operated "1,000-bed prototype units" was $41.58, while private facilities came in at a cool $36.10.

Based on those costs, the Austin-based conservative think tank Texas Public Policy Foundation has championed the private prison industry's "14 percent" cost savings.

Marc Levin, who heads the TPPD's Center for Effective Justice, says that "national research" proves that private prisons save money. However, outside of state and federal audits that show privatization provides negligible savings, the most widely cited pro-privatization paper is a 2004 study by Vanderbilt University researchers that was partially funded by industry leader Corrections Corporation of America.

Even the Texas Legislative Budget Board noted that "one aspect of the cost differences is that privately operated facilities did not incur certain fixed costs, such as offender transportation and offender classification." Also, per the board, "medical costs for private facilities are paid by TDCJ."

And industry critics say that a per-diem comparison ignores the fact that private prison facilities are not maximum-security; that most contracts allow companies to bill the state for medical care or "return" offenders who develop serious (i.e., expensive) health issues; that they often receive tax incentives or other subsidies for building a facility in a particular location; and, perhaps most important, that they don't have to pay lower-level staff a decent wage. (Private prison guards in Texas and other states also don't have to meet the same training requirements as their public counterparts, so the savings keep coming. As Scott Henson of gritsforbreakfast.org pointed out in 2007, GEO guards typically receive 160 hours of "pre-service training," while TDCJ guards get 300.Since Texas is home to many private prisons, it makes sense that it's home to excellent blogs on criminal justice, including ­gritsforbreakfast.org and texasprisonbidness.org.)

But both Levin and critics can agree that cost-savings is just one area of concern.

"I think we need strong accountability," he says. "We have to make sure that anybody who contracts with the government does what they say they're going to do. And TDCJ does...They're quite rigorous, from what I understand." (Levin may have been unaware of the Texas State Auditor's March 2010 report that stated that TDCJ "did not consistently include in its contracts performance standards to help ensure that the Department can hold its providers accountable for unacceptable performance or contract non-compliance.")

Parroting the TPPF's "14 percent" figure is the allegedly libertarian think tank the Reason Foundation. The foundation, which is perhaps the biggest nonindustry proponent of private prisons, has for years accepted corporate contributions from the GEO Group. The foundation also heralds the Corrections Corporation of America-funded Vanderbilt study; CCA is also a foundation donor.

Foundation spokesman Chris Mitchell brushed aside any suggestion of a conflict of interest, telling the Press in an e-mail that "Reason Foundation was researching and advocating the benefits of privatization decades before these prison companies even existed...Our expertise in improving government efficiency and lowering costs has prompted the previous four presidential administrations, Democrats and Republicans, to seek our counsel on privatization issues."

Meanwhile, lobbyists for GEO and other companies have fought to kill legislation such as Texas House Bill 3093 that would extend open record laws to private facilities. This, despite an assurance on GEO's Web site that the company understands that the public is "naturally curious about an institution that is financed by all but seen by few." (The company also claims that "a healthy respect for a vigilant media is a powerful guarantee of private operator accountability," which must be why GEO spokesman Pablo Paez never returned calls for this story and was always ready with a helpful "no comment" to media in the past.)

But private prison operators have a built-in quality control factor in their investors, according to the Reason Foundation's Leonard Gilroy.

"The reality is that bad things happen in good prisons, both public and private," Gilroy wrote in a Reason white paper. "These are not utopias — these are prisons. If all sorts of horrible things were going on, though, these companies know that investors would steer clear. Which is another incentive for privately run prisons to stay as safe as possible."

However, it appears that private prison corporations are just like any other: Investors will "steer clear" if there's no money. Whether or not "horrible things were going on" is a nonissue.

Of course, that depends on your definition of "horrible."
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In 2001, Cornell issued a press release announcing a projected $42 million deal with the Arkansas Division of Youth Services to manage a secure youth facility in the town of Alexander.

It was a welcome bit of good news, as Cornell was in the process of shuttering a Pennsylvania youth center after it was discovered that at least 11 kids had been sexually assaulted by guards.

The press release for the Arkansas deal touted a "minimum ramp-up time," stating that the company would "immediately begin to both change people's lives and provide a return to our shareholders." Nowhere did the release say the company was inheriting a facility with a challenging special-needs population or that the company would need time to adequately staff the facility with qualified professionals, or that the facility had been out of compliance with state regulations for several years.

The State of Arkansas was expecting Cornell to turn the facility around. Instead, after a year passed without any improvement, the Civil Rights Division of the U.S. Department of Justice and the Department of Education conducted investigations. Inspectors found underqualified staff, poor monitoring of kids on suicide watch, and a lack of textbooks, among other shortcomings.

Still, the Department of Justice and State of Arkansas allowed Cornell to continue its control of Alexander, ostensibly under the belief that no company would be brazen enough to ignore federal and state orders to bring itself into compliance.

But three years later, unfortunately for Cornell, a 17-year-old girl named LaKeisha Brown dropped dead while in the company's care. Subsequent state investigations found that medical staff ignored Brown's pleas for treatment, believing she was faking. A medical examiner found that Brown died from blood clots in her lung, which she had been suffering from "for at least two days and possibly as long as two weeks" before she died.

Out of the state's investigation into Brown's death came other troublesome findings: falsification of records and inappropriate use of forced injections of Thorazine and Benadryl as chemical restraints. (In a separate investigation of how two kids escaped eight months after Brown's death, it was revealed that one security guard was asleep at her desk and another was preoccupied with a pizza.)

Addressing the issue in a quarterly earnings conference call four months later, Cornell CEO James Hyman said, "In April, we experienced the tragic death of one of our clients in our care. We feel awful about this. We feel even worse because the pace of our investigation allowed us to appear callous or indifferent to the public."

Later in the call, responding to a question from an investment banker about the projected economic impact of this death, Hyman said, "What I would say is that we do not anticipate any material financial issue coming out of that."

The State of Arkansas resumed control of the Alexander facility in 2006.

While Cornell avoided fines in this instance, Bob Lumpkin, who heads the division of TDCJ that deals with private prison contracts, says, "All of our contracts have financial penalties for certain compliance standards not being met." When asked if any significant financial penalties come to mind, Lumpkin says no.

Fines are pretty unusual. As Alex Friedmann of Prison Legal News points out, governmental entities are more likely to simply pull the inmates and not renew a contract than to seek sanctions. (Friedmann was convicted of armed robbery and assault with attempt to commit murder in Tennessee in 1990. He also was convicted of attempted aggravated robbery in 1992. He served six of his ten years in a CCA prison.)

A good example of this might be Hawaii's Department of Corrections' removal of all the women it sent to Corrections Corporation of America's prison in Otter Creek, Kentucky, after Hawaii officials learned of widespread sexual abuse.

"They didn't cancel the contract — and this is fairly common — they just didn't renew the contract," he says. "So they transferred them all back to Hawaii, and they wouldn't say publicly, 'Well, this is because your staff has this annoying habit of raping our prisoners.'"

Kentucky's DOC followed suit, swapping out all its female inmates in Otter Creek with men.

When U.S. Immigration and Customs Enforcement inspected a Cornell detention center it contracted with in New Mexico and found too many violations, there was no penalty. ICE simply removed its inmates. Peacocking for its shareholders, Cornell made a display of "considering" a lawsuit, but nothing came of it.

In Colorado, GEO wasn't fined, but it may have pushed things too far: After winning a bid for a secured facility in Pueblo, the company refused to break ground until the state amended the contract to state that it would pay GEO for 90 percent occupancy, even if there weren't that many inmates.

As that fight dragged on, GEO won a bid for an even bigger prison in Ault, Colorado — thanks in large part to the state's number two man in its Department of Corrections, who stumped for GEO as a "consultant" even while he collected a state salary.

"Do I have much respect for GEO Group of Florida? No. No, I don't," says Colorado State Representative Buffie McFadyen.

Four years after winning the Pueblo contract, GEO abandoned its plans to build a prison there. It also scrapped its plans for the Ault facility.

But of course GEO now runs the Reid Community Corrections Center, to which the Texas Board of Pardons and Paroles sends people like Anthony Ray Ferrell every month. Whether those people stay is entirely up to them.

Ultimately, McFayden says, privatization is "ethically immoral, but also it bankrupts the taxpayers. So either you can think with your heart or your wallet — either way, it's not any good."
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HOW IT STARTED
Texas first contracted with private prisons to honor the Constitution, not to save money.

Texas's reliance on private prisons was borne out of a landmark prisoners' rights case that completely restructured the state's corrections department.

A 2003 report by Abt Associates Inc., for the National Institute of Justice offers a history of the industry's presence in Texas.

In 1978, Judge William Wayne Justice of the Eastern District of Texas presided over a class action lawsuit filed on behalf of all Texas prisoners against the Texas Department of Corrections (as it was then known). Two years later, Justice ruled that TDC violated prisoners' constitutional rights in six areas. The department and the prisoners entered a consent decree regarding the necessary improvements.

The changes were slow to come, a problem exacerbated by the rapidly increasing number of inmates. "By the mid-1980s, Judge Justice had become so impatient with the pace at which the state was changing its prison system that he demanded that the state pay a daily fine in excess of $800,000 if it did not improve its efforts to comply with the mandates of the decision," according to the Abt report.

Freaked out by the potential financial hemorrhage, lawmakers in 1987 passed the first bit of legislation that would allow the TDC — rechristened the Texas Department of Criminal Justice in 1989 — the ability to contract with private vendors for the housing of prisoners, parolees and juvenile offenders.

"The impetus for the program was the need to acquire additional prison capacity quickly and to satisfy the federal court's demands for constitutionally compliant imprisonment," according to the Abt report. "The goal of providing more cost-effective services than the TDCJ was providing was also added, but this was not the dominant objective."

craig.malisow@houstonpress.com

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