On May 13, 1999, the Washington Department of Corrections ended its last remaining prison telemarketing program. As reported in the August, 1998, issue of PLN, prison telemarketing has had a controversial history in Washington prisons. In 1998 the Washington DOC ended its state run telemarketing operation at the Clallam Bay Corrections Center (CBCC) when it was discovered that Parker Stanphil, a serial rapist, was sending suggestive post cards to women who called 1-800 numbers for the state Environmental Department and the Parks and Recreation Department. Under these contracts with other state agencies, the DOC's Correctional Industries was responsible for the telemarketing operations.
When Stanphil's activities gained intense publicity, Ida Ballasiotes, the chair of the corrections committee in the state House of Representatives, called public hearings to demand an explanation. DOC secretary Joseph Lehman blamed the problem on CBCC superintendent Robert Wright and promptly fired him. The Correctional Industries manager in charge of the CBCC telemarketing operation, David Wattnem, was "reassigned" to other duties.
The closure of the CI telemarketing operation at CBCC did not affect the other prison based telemarketing operation, run by the Washington Marketing Group (WMG). WMG was a telemarketing company owned by Jim Paton, which was based at the Washington State Reformatory in Monroe. Paton also owns an Everett based telemarketing company called Legacy Enterprises. WMG was classified as a Class I industry because it was privately owned while employing prisoners paid the minimum wage to work. WMG itself was no stranger to controversy.
In 1995 PLN broke the story, picked up by local and national media, that U.S. congressman Jack Metcalf had used WMG and its prisoner telemarketers to campaign on his behalf using a "tough on crime" platform that included support for the death penalty. [See May, 1995, PLN for details.] In response to that story, the Washington legislature introduced legislation that would have banned the use of prison slave labor in elections. The legislation died, as did subsequent legislation that would have banned prison telemarketing in its entirety. In 1997 WMG was briefly mentioned in a 60 Minutes program as doing fundraising for the American Red Cross. After the show aired the Red Cross quietly switched its fundraising contract from WMG to Paton's outside company, Legacy Enterprises. WMG's other major contract at the time, Associated Magazine Distributors, cancelled its WMG contract in light of the publicity.
In its August, 1998, issue PLN reported that WMG's activities then included mortgage refinancing calls for Washington based mortgage companies such as Jonas Funding, Seafirst Bank, Ranier Mortgaging and Prime Sources. WMG's prisoner telemarketers would call homeowners with bad credit ratings in Washington, Utah, Oregon and Illinois (based on lists supplied by the mortgage companies) and if the homeowner expressed interest in refinancing, the prisoners would then get the address, appraisal value of the home, and all relevant financial information which was then forwarded to the mortgage company's loan officers for .follow up.
Ida Ballasiotes is apparently an avid reader of PLN. On August 5, 1998, shortly after that issue of PLN was received, she ordered a meeting Paton, Lehman and Cathy Carlson (the DOC's private venture manager). At the meeting Ballasiotes expressed concern about WMG's mortgage refinancing business. Seeing the writing on the wall, Paton agreed to end mortgage marketing from prison.
In a letter to Ballasiotes dated January 19, 1999, Paton states WMG had ceased mortgage marketing. He notes Ballasiotes had told. him at the August 5, 1998, meeting that she was concerned about prisoners "dealing with information of people on the outside." Paton also noted "you also stated you could support the industry if we were doing something else."
Apparently in response to this, WMG then began doing business to business telemarketing, mainly selling cell phone plans for Touchtone Air Cellular, and moving services for Mayflower Moving. WMG also halted all of its telemarketing operations during the 1999 legislative session in an attempt to forestall any legislative activity. (Washington's legislature meets for three months in odd numbered years and two months in even numbered years).
On May 13, 2000, the DOC terminated WMG's contract and ordered Paton to vacate the prison premises by May 31, 1999. The DOC's termination letter of May 19, 1999, stated that any continued WMG operations "would further jeopardize the safety ofWSR."
In media accounts published in July, 1999, the DOC claimed that a "routine inspection" discovered WMG prisoner employee John Anderson venturing onto the internet to shop. It was Anderson's internet escapades that were cited as the reason for WMG's immediate closure. In exclusive documents obtained by PLN, it was no "routine inspection" that led to WMG's closure.
Instead, a prisoner employee of WMG who identified himself as "openly gay" but who otherwise remained anonymous, sent a five page computer printed letter to various local media outlets (who apparently ignored the matter), and to Vicqui Hueitt, the WSR prison investigator who did follow up.
In his letter, the informant outlined WMG's operations and described WMG's "rules of conduct" for its prisoner telemarketers. This includes never admitting to customers that the caller was a prisoner or calling from a prison.
A DOC rule that WMG employees not bring paper or pen to the work site was apparently never enforced. What led to WMG's demise was the informant's allegation that prisoner John Anderson, WMG's technical supervisor responsible for maintaining all of the company's phone and computer equipment, cruised the internet and shopped for clothes and music CDs, with the full knowledge of Paton and WMG's civilian employees. This was a violation of DOC policy prohibiting prisoner access to the internet.
On April 19, 1999, Joyce Leeberg, a DOC private industries coordinator, wrote to Paton instructing him to forbid his prisoner employees from downloading private customer information provided by WMG clients. Paton was told civilian workers would have to do this.
In the meantime, prison investigators searched the harddrive of Anderson's computer. Material found included Anderson registering the computer game Hardwood Solitaire II with Silver Creek Entertainment, the game manufacturer. Anderson also used his credit card to order clothing from Land's End and buy vinegar for his mother from Cornet Bay Shoppe. All of the printouts show Anderson's e-mail address and credit card information. An investigator's note states Anderson's computer had internal and external modem capability and a configured, but hidden, hard drive. A telephone dial pad was found concealed in Anderson's file cabinet.
In the movie Casablanca, Claude Raines portrays the corrupt police inspector who is "shocked, absolutely shocked" that gambling is going on in a bar. So too with Washington prison officials and Ida Ballasiotes who are "shocked, absolutely shocked" that prisoners in general and Anderson in particular might be using prison telemarketing for something other than enriching their masters.
As early as 1988 the Seattle Times reported that John Anderson was being given special privileges and perks for both his computer expertise and, according to the newspaper, activities as an informant. In litigation filed by Ballasiotes over the death of her daughter by work release prisoner Gene Cain, she sought information relating to Anderson's employment by a telemarketing firm at WSR, WMG's predecessor. Anderson is also somewhat notorious as the convicted killer of seven people, making him one of the most prolific convicted killers in Washington history. (Seattle Times, Can You Spare a Minute with a Killer?, June, 1989).
In a separate article, the Seattle Times reported that DOC investigators had concluded Anderson received special perks and privileges, including being found by investigators at a DOC computer with prisoner infraction histories. (Seattle Times, Staff Inmate Ties Alarm Some, July, 1989).
As subsequent events with WMG show, nothing came of those articles. By the time of WMG's closure in May, 1999, it was common knowledge within the prison that Anderson had Internet access and shopped on the Internet, in part, due to the fact that he bragged of doing so as well as having designed WMG's website.
Asked by the Everett Herald why WMG was closed down by the DOC, owner Jim Paton said "It was just politics dealing with the state." Given the sordid past of prison telemarketing in Washington, it appears Paton is correct.
As with most prison industries programs, WMG was generally popular with the prisoners who worked there. While a number of prisoners complained off the record that WMG had cheated them out of bonuses and a profit sharing scheme no evidence was provided to support these claims. While WMG prisoner employees were paid the minimum wage, along with productivity bonuses, their take home pay was substantially less with the state seizing up to 65% of their gross pay. Paton was popular because he would frequently bring pizza and donuts for his prisoner workers as an added incentive. He also provided financial assistance for some prisoners furthering their educations.
Interestingly, none of WMG's supporters were willing to speak on the record either. It appears that prison telemarketing is a thing of the past in Washington prisons. "It's a real difficult business to have and to justify its existence inside an adult correctional facility," Howard Yarbrough, the head of DOC's Correctional Industries, told media.
Private business ventures in Washington prisons are under increased pressure now due to a lawsuit filed by waterjet companies which challenge the constitutionality of the state leasing convict labor to private companies [PLN, Feb. 2000]. For his part, Jim Paton now offers his services as a consultant who will assist private businesses seeking to set up shop in Washington prisons.
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