No Criminal Wrongdoing Found in Overpayments to Florida Private Prisons
by David M. Reutter
In May 2007 the Florida Department of Law Enforcement (FDLE) issued a 22-page report which found that $12.7 million in overpayments to the state's private prison contractors did not result from an intent "to steal or defraud." PLN previously reported on this investigation, which was ordered by Gov. Charlie Crist after the overpayments were discovered by state auditors. [See: PLN, June 2007, p.32; Nov. 2007, p.38].
The private prison contractors involved, GEO Group (formerly Wackenhut Corrections) and Corrections Corporation of America (CCA), were under contracts supervised by the state's Correctional Privatization Commission (CPC). The Florida legislature created the CPC in 1993 to oversee limited privatization of the state's prisons. The commission was abolished in 2004 after numerous scandals; one of its executive directors was fined by the state Ethics Commission, while another is serving time in federal prison for embezzlement of CPC funds.
The FDLE report found that the legislature had reviewed the contracts and annual budgets, so nothing had been hidden. "There was no evidence that the budget requests were fraudulent or incomplete," the report stated. Nor was there any evidence "that any group or individual ever solicited or accepted any compensation in return for decisions that were favorable to the vendors." In other words, it was business as usual.
The CPC was aware that money was going to the private prison contractors for unfulfilled services, but the agency did not want to "ding the vendor," one CPC staffer told the FDLE. "Inspector General [Steve] Rumph advised FDLE that he did not suspect there was any 'evil intent' by members of the CPC, but rather an attempt to make the private prisons successful," the report found.
Under Florida law, privately-run prisons are required to operate at a 7% savings over public prisons. That has never been achieved as it would require state officials, who serve as stewards of the taxpayer's money, to "ding the vendor" and hold them accountable for providing the services for which they are paid. As a result, Florida's taxpayers were dinged for $12.7 million by the state's private prison companies.
It wasn't a total loss, however. In December 2007, CCA agreed to pay Florida $1.55 million to settle the state's overpayment claims; GEO Group had previously settled for $402,541. Thus, the state recouped less than 16 cents on the dollar for overpayments to its private prison contractors.
Source: St. Petersburg Times; Office of Executive Investigations, Correctional Privatization Commission Report, FDLE Case No. EI-14-0084 (May 9 2007)
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