In 2004, Maranatha Corrections Corp., a faith-based private prison operator, was on the verge of losing an $8.1 million CDC contract for the 660-bed Victor Valley Community Correctional facility in Adelanto, San Bernardino County, in a dispute over $1.6 million in kickbacks collected from prisoner phone calls. (See: PLN, Feb. 2005, p.39.) After meeting with Maranatha on November 17 and December 13, 2004, CDC set a January 31, 2005 deadline to settle or terminate the contract.
But Maranatha had another option. San Bernardino County houses 5,500 prisoners in its jails but has to release around 700 per month early due to a lack of space. Maranatha quietly negotiated a $3.8 million annual contract with the county to lease bed space, rendering CDC's threatened termination moot. CDC would now have to relocate the 500 state prisoners housed there.
Rather than lease the private prison, however, Maranatha ended up selling it a decision that generated even more controversy. In December 2005 the Los Angeles Times reported that a former California assemblyman working as a lobbyist for San Bernardino County allegedly convinced county officials to purchase the Victor Valley facility for $31.2 million, without disclosing that he also represented Maranatha Corrections.
Lobbyist Brett Granlund, a former assemblyman and former member of the state Board of Prison Terms from 2001 to 2002, reportedly told county officials that the jail was a quality facility" that could reduce overcrowding. The county's Board of Supervisors subsequently decided to buy the facility in April 2005. However, although Granlund was representing San Bernardino County as a client through Platinum Advisors, LLC, a Sacramento lobbying firm, under a $245,000 contract with the county, he neglected to mention that he also represented Terry Moreland, owner of Maranatha Corrections and Moreland Family LLC, who owned the jail and was another Platinum Advisors client.
An investigation into the county's purchase of the jail was sparked by allegations that County Supervisor Dennis Hansberger's top aide, Jim Foster, had committed ethics violations by using Granlund as an intermediary to purchase surplus county land. Foster, while denying the allegations, pointed his finger at possible improprieties in the jail purchase. He claimed that Granlund may have represented both the county as buyer and Moreland as seller, which was a conflict of interest.
Following a five-month investigation, Los Angeles attorney Leonard Gumport, who had been retained by the county to review the jail purchase, determined that Granlund had not received a commission from the transaction and did not unduly influence county officials. He also found nothing to indicate criminal behavior on anyone's part." However, Gumport did find that Granlund had encouraged officials to purchase the facility, had taken part in discussions regarding the transaction and had failed to disclose in writing that he also represented Moreland, the jail's owner. According to a former county legislative director, for years San Bernardino had not enforced a requirement that the county's lobbying firms make written disclosures of their clients.
The county released only a summary of Gumport's report, citing privacy concerns and the potential for litigation. The county rejected a public records request submitted by the Times and on January 10, 2006, the Board of Supervisors voted 4 to 1 to keep the report secret. County Supervisor Dennis Hansberger was critical of the statement released by the Board summarizing Gumport's findings, calling the county's response to Granlund's conflict of interest not even a slap on the wrist.
Granlund rejected this criticism, maintaining that he represented Moreland in dealings with the CDC and had not lobbied on Moreland's behalf for the county to purchase the facility. The people negotiating the jail, I don't know them, they don't know me&. They wouldn't know me if they found me in their oatmeal," he stated.
The jail, now renamed the Adelanto Detention Center, was renovated and expanded to 706 beds by Moreland as part of the purchase agreement. The improvements were completed behind schedule in late November 2005 and the county docked Moreland around $260,000 in fees for failing to meet the completion deadline. The renovations included converting large dorms with more than 100 beds each into two smaller units for security reasons, replacing porcelain toilets with stainless steel commodes, replacing drop ceilings with solid ceilings, and converting an open visitation room into a non-contact visit area.
Meanwhile two Maranatha Corrections employees, Gary Scott and Mario Gonzales, had filed suit against the company on December 17, 2004, claiming they were not paid all of their wages and were not allowed to take breaks. Their attorney, Philip Ganong, said the private prison operator may have skimped on staff positions and couldn't allow employees to take breaks in order to keep staffing up to standard. Such labor code violations could become the basis for a class action suit with penalties of up to $4,000 per employee.
In an unrelated matter, the CDC moved to reopen two other private prisons one year after mothballing them, by granting private prison companies no-bid, one-year contracts. One of the facilities, a 224-bed correctional center in the Central Valley town of McFarland, was contracted to Florida-based Geo Group, Inc. (formerly Wackenhut Corrections), which had run the facility for over a decade before it was closed. The other community corrections center, a 350-bed facility in Mesa Verde, was contracted to Massachusetts-based Civigenics. The McFarland contract was worth $3.5 million while the Mesa Verde contract was for $5.7 million.
The facilities had been closed in 2003 under the Davis administration, which claimed the state didn't need so many minimum-security prison beds. However, opponents alleged at the time that the decision to shutter the privately-operated facilities was a concession to the CCPOA, which strongly opposed prison privatization and which contributed heavily to Davis' election campaign. The Schwarzenegger administration's quiet decision to re-open the McFarland and Mesa Verde facilities with no-bid contracts, claiming the state now needed the beds, quickly ran into scrutiny by state lawmakers.
In an effort to influence the state to expand its use of private prisons, in November 2004 the Geo Group had hired former California Finance Director Donna Arduin ten days after she left her top-level job overseeing all of the state's spending. Arduin was placed on the Board of Directors of Corrections Properties Trust, a REIT (Real Estate Investment Trust) that owned the McFarland facility, which was a spin-off of the Geo Group. Correctional Properties Trust President Charles R. Jones announced Arduin's appointment by noting that Arduin's insight into the allocation of financial resources within the government appropriation and spending process will be a valuable resource."
When challenged about her new position with a private prison company that had, soon after her hiring, received a large state contract, Arduin replied, I don't know what conflict there would be." State Senator Gloria Romero retorted, The Department of Finance had to be in the midst of any negotiations on the prison contracts. This is absolutely amazing; talk about revolving doors. ... This is something that I believe truly crosses the line of integrity and ethics."
However, state auditor Elaine Howle found no conflict of interest in Arduin's hiring by the Geo Group, since Arduin had not been employed with the CDC and because the company's lease for the facility began long before Arduin was hired. Senator Romero had requested the audit, saying the no-bid contract smells bad.
The Geo Group also hired the Flanigan Law Firm, which has close ties to the previous Wilson administration, to lobby on their behalf, paying Flanigan over $37,000 for their politically-savvy services. Geo further retained Joe Rodota, a former Wilson advisor who served as policy director during the Schwarzenegger recall campaign. Additionally, Geo Group received the no-bid contract to operate the McFarland facility just two months after making a $10,000 donation to an initiative campaign committee tied to Gov. Schwarzenegger. The Geo Group had previously contributed $58,000 to Schwarzenegger's campaign coffers according to campaign reports. Schwarzenegger has refused donations from the CCPOA.
CDC spokesman Todd Slosek denied there was any connection between the McFarland contract and Geo Group's donations, noting the Geo Group was the only bidder for the contract. Of course, that may have been due to the fact that the facility was owned by Correctional Properties Trust, a Geo Group spin-off, which leases the prison to Geo.
While finding no conflict of interest in the Geo Group's hiring of Arduin, state auditor Howle had plenty of criticism for the CDC's contract with Civigenics to run the Mesa Verde facility. The San Francisco Chronicle reported that Civigenics had hired two retired CDC officials to lobby on their behalfDavid Tristan, a former CDC deputy director of operations, and Michael Pickett, a former warden and CDC deputy director for health services. However, the company did not disclose that it had retained Pickett and Tristan, who had left the CDC less than one year previously. California law prohibits certain officials from being involved with state contracts for one year after they leave state employment.
Senator Romero, criticizing Civigenic's use of recently retired corrections department officials, noted that the revolving door is spinning so fast it's now hit the [CDC] in the rear end." After Civigenic's employment of Pickett and Tristan was revealed, the CDC abruptly decided it didn't need to reopen the Mesa Verde facility after all, and canceled the Civigenics contract. Further, the company was disqualified for five years from bidding to run the facility; Civigenics has protested the disqualification. I guess we've had the rug pulled out from under us," said Civigenics Chief Operating Officer Peter Ageropulos.
Thus, the battle line for CDC prisoners has been drawn: The influence of privately-hired former political insiders v. the multi-million dollar donations paid by the CCPOA to California's politicians. (See: PLN, March, 2005, p.5, Pay to Play.)
Sources: Bakersfield Californian, GEO Group, Inc., Los Angeles Times, San Francisco Chronicle, Riverside Press-Enterprise, Sacramento Bee.
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