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Build Jails, Not Schools: Ohio Prison Building Corruption

The apparatus of repression provides frequent examples of the corruption endemic to late capitalism. It is hugely expensive, miniminaly accountable, and has no clear product by which to gauge its performance. Military fraud and waste are cliche. Endless police scandals regularly crop up around the country. The prisonindustrial complex is no exception. Why, for example, should a forprofit prison get an $8.1 million subsidy at the expense of impoverished city schools? Why should a jail cell cost $180,000? The jailing of Northeast Ohio's V Group, a cabal of companies owned by Paul Voinovich, brother of former Republican governor and now U. S. senator George Voinovich, suggests some answers.

The Dayton Daily News describes the V Group as "a Cleveland based architectural and construction management business". In August, 1995, the Group brought the City of Youngstown and Corrections Corporation of America (CCA) together to build CA's 1500bed Northeast Ohio Correctional Facility. According to CCA vice president David Meyers, the V Group also negotiated a property tax abatement for the prison and oversaw construction. Philip Hamilton, a former V Group lobbyist with close ties to both Paul and George Voinovich, was hired as a CCA lobbyist to facilitate the deal. An agreement was signed in March, 1996. The V Group was paid $3.5 million for its services and also profited from buying and selling CCA stock.

Youngstown schools were in serious financial trouble at the time, ultimately being placed in fiscal emergency status in September, 1996. The schools being financed by property taxes, abatements such as CCA's were a particular burden. Existing state law gave schools a say in property tax abatements of greater than 10 years and more than 75%. Apparently anticipating the Youngstown school district's crisis would lead it to use that provision to block CCA's 3 year, 100% abatement, V Group executive Frank Fela renegotiated the abatement to 10 years and 75%. The change gave CCA an additional $2.3 million tax break and froze the schools out.

At the same time, state education officials, including state superintendent of public instruction John Goff and executive director of the Ohio school boards association Warren Russel, were working to expand local school boards' influence over the abatements as part of broader education reforms. They persuaded state legislators to include a provision in the 1996 budget bill that would allow fiscal emergency schools such as Youngstown's to bring abatements before a special commission required to weigh their impact on troubled schools. The measure elicited no opposition and was "well received" in committee hearings.

On June 20, 1996, governor Voinovich vetoed only the abatement provision in expansive school reform legislation contained in a 259 page state budget bill. No one who is admitting it called for the veto and there is no record of any work by the governor's staff recommending it. Verily, it was the governor himself who instructed John Goff and associates to devise legislation to rescue Youngstown and other ailing schools, albeit before the CCA deal.

Politician Voinovich would only say about the veto that existing law gave schools enough power over abatements. He still refuses to say more. The veracity of this rationale depends on the definition of "enough". But for it not to be a lie, Voinovich's definition makes him an advocate of fatter profits for powerful business interests too rich for market discipline at the expense of thinner education for children too poor for private school. Or maybe it was merely nepotism he favored. He did know his brother was involved in the prison's construction, according to senator Voinovich's spokesman Mike Dawson.

V Group involvement in the design and construction of the Jefferson County Jai1 in Steubenville, Ohio, further illuminates prison business'as usual. Jefferson County hired the VGroup to design a 140bed jail in 1992. Construction began in 1995 and continued contemporaneously with the CCA project. It was completed 19 months late and the jail eventually opened 15 months late in Janyary, 1998. The jail ultimately cost $25 million, $10 million over estimates.

IRS, FBI, and EPA investigations, dozens of counts in indictments, and at least four plea bargains with associated ratting, among other evidence, suggest the jail shenanigans began with the very land on which the jail was built. According to these sources, the site selected was near a landfill into which demolition debris from the site could be dumped, for which Paul Voinovich would receive "tipping fees". Both the land and the landfill were owned by Robert Vukelic.

In 1995, Vukelic paid some
$170,000 in bribes to officials of the North Ohio Valley Air Authority (NOVAA), which worked with the Ohio EPA in regulating landfills, for help increasing the landfill, a authorized capacity. Phone records showing over 500 calls from NOVAA to the V Group between December, 1992, and December, 1995, plus more calls to the then V Group and future CCA lobbyist in Columbus (state capital) Philip Hamilton tie the V Group tighter to the grafters. So does the indictment of NOVAA employee Vince Zumpano for attempting to bribe a Jefferson County commissioner to secure a contract for the V Group in 1993. Zumpano fingered Paul Voinovich as involved in the bribery scheme.

Vukelic sold the land to the county at an inflated price, and his trucking companies transported tons of trash from the expanded landfill. The V Group, former vice president of which Clark Miller is one of Vukelic's unindicted coconspirators in a 37 count indictment spawned by the jail job, was responsible for overseeing the clearing. It is accused of adding hundreds of thousands of dollars to the project's cost by approving inadequate debris removal.

In addition to the criminal indictment, the construction problems prompted a civil suit. Filed in federal court for the Southern District of Ohio, the suit allegations charge the V Group with cost overruns, delays, shoddy workmanship, and fraud. V Group denies everything, of course. It claims all the phone calls were consultations" about environmental matters relating to the project, that none of its executives had any relationship at, all to the snitch, that all the problems were the fault of the county commissioners.

The jury saw things differently. Though some fraud allegations are still pending, the jury awarded a $13.3 million judgement against two V Group companies in December, 1999. That led the pair to file in U.S. Backruptcy Court for Chapter 11 protection from creditors, preventing final resolution of the actual award and effectively ducking the plaintiffs.

The damage done to Youngstown schools by the $8.1 million diversion will stand. Absent additional evidence, it is "legal". After all the wrangling in the looser, less sophisticated scheme is done, the mis, mal, and non feasance that evaporated $10 million from Jefferson County, coffers will also stand. The "beef" will be left with a few little fish. But there is residual value in such corruption slopping out of its dark corporate corners: it shows us where to look for it before it can stand.

Sources: The Dayton Daily News, The Columbus Dispatch, The Plain Dealer g

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