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The Rainmakers: banking on private prisons in the fleecing of small town America

By Beau Hodai

December 2009

The circus comes to town

Hardin: a sleepy town set in the rolling plains of southeastern Montana, 50 miles east of Billings, 15 miles north of the site of General George Armstrong Custer’s slaughter at the battle of Little Bighorn; population about 3,500; primary mode of economic production: agriculture. According to the City of Hardin website, the town was dubbed, the “City of Reason” sometime in the early twentieth century, due to its “potential for economic growth”—a prophetically ironic designation given recent events.

Not much happens in Hardin. The streets, set in a grid around simple ranch-style homes, run quiet and slow. At the heart of the city sits a large rectangular park—a few blocks from which sits the Broadway Flying J truck stop casino and bar, often home to long haulers playing electronic Keno and Poker, riding Interstate 90 from Chicago to Billings and all points west to its terminus in Seattle. The occasional crew of wrinkled Greyhound patrons file in looking to buy withered hot dogs and cigarettes.

Across the Flying J parking lot sits the Pizza Hut. A few miles east of the Pizza Hut, a short trip over a few frozen fields as the crow flies, sits the Two Rivers Detention Facility, a jail built to provide sorely needed jobs to the town and the neighboring Crow Reservation, and which has been sitting vacant since its completion in 2007. Hardin, at the time the idea to build the jail was pitched, had the highest unemployment rate in Montana and the reservation, with its corrugated tin shacks and tourist “trading post” emporiums filled with “genuine” Chinese moccasins and beads, is one of the most impoverished areas of the nation.

Still, despite the area’s vast need for employment, local officials have been unable to find any inmates to fill their jail and so the 464 dormitory-style structure with its twenty foot fences and rolls of razor wire, leads a lonely existence at the city limits. The town’s insurance policy on the jail expired November 1, and has not been renewed for lack of funds. Similarly, all utilities to the facility have been disconnected and the grounds “mothballed.” And so it sits, a $27 million folly, an asset being chipped away at by a cold wind blowing sheets of snow through the recreation yard where once, one of the jail’s sole occupants, a goat, used to graze during a brief period when the town’s animal control officer was housed there.

On the morning of Wednesday, September 23, 2009, something out of the ordinary occurred to disrupt the general atmosphere of atrophy in town, and which would set Hardin as the backdrop for much national and international speculation.

Three Mercedes SUVs, sans license plates and bearing detachable magnetic decals reading “City of Hardin Police Department” rolled into town. From the center of the decals the double-headed eagle crest of Montenegro glared out onto the dusty sidewalks and denizens of Hardin.

Piloting the miniature caravan was Michael Hilton, aka Miodrag Dokovich, aka “Captain Michael,” the Montenegro-born owner of American Private Police Force, a Santa Ana, California-based company which claimed to have paramilitary operations across the globe and offices in all 50 states; a subsidiary of a powerful-- though unnamed-- private security/armed forces corporation.

In reality, Hilton was nothing more than a con man, as Montana Governor Brian Schweitzer would later call him, “a low-level card shark;” a convicted felon who had spent 14 months in prison for theft and who had civil judgment of over $1 million outstanding against him for swindling investors in a development deal involving an assisted living residence in California.

One problem with the sudden presence of these unusually sleek law enforcement vehicles in Hardin, and what caught the eye of so many, was the fact that the city of Hardin has no police department and hasn’t since the 70’s. The town is the seat of Big Horn County and is policed by the county sheriff’s department.

There had been some talk of deconsolidating the county’s law enforcement, including a statement made by Al Peterson, Big Horn County school superintendent and vice president of Hardin’s economic development arm, Two Rivers Port Authority (TRA), wherein Peterson labeled Big Horn County Sheriff Lawrence “Pete” Big Hair, “the biggest drunk in the county,” but no mention had ever been made of any private police force.

Another issue, which brought about no small amount of uneasiness, was the fact that Hilton and APPF had just signed a contract with TRA to lease out the town’s empty jail for no less than 10 years. Hilton had, during meetings with town leaders, expressed some very ambitious goals for the facility, including the use of 5,000 acres adjacent to the jail for the training of his mercenary forces.

Enter the internet yahoos.

Rumors began to circulate and metastasize throughout the World Wide Web as to what evil was afoot in Hardin. Some theories had it that Hilton’s private army had taken over the jail as part of some nefarious New World Order plan to round up and detain Americans in strategically placed Federal Emergency Management Agency concentration camps.

Another theory had it that APPF’s presence in Hardin was only the first—an experiment—in President Obama’s evil plan to replace local police departments with heavily armed mercenary groups intent on forcibly administering the H1N1 flu vaccine—possibly toward the end of sterilizing or killing off rightwing rural populations hip to the fact that Obama is a communist stoolie of the Illuminati, the Shriners and the “international banker’s cartel.”

This theory was boosted by an anonymous email sent to Steve Quayle of internet Armageddon-flavored fame, and widely publicized by internet/radio celebrity, Alex Jones, of The email was a cry for help supposedly penned by a Hardin resident and laid out the conditions of the town in the most dire of terms, bearing a tone reminiscent of the warning delivered to audiences across America in the McCarthy-era classic, “Invasion of the Body Snatchers:”“They’re here already! You’re next! You’re next!”

The message claimed that APPF forces had, immediately upon arrival, began the construction of massive fences, blocking off all exits and entrances to the town and that it had already begun stopping and detaining motorists. Additionally, Hilton was said to have informed the city council that swine flu vaccination would be mandatory for all Hardin residents—those that refused would be locked down in the jail.

In closing, the unknown author wrote: “Things have changed so quickly in the last 24 hours! Things are not and will never be the same. We are indeed going into the prophesied 'four years of captivity for America'. I believe we are about to enter into a time of persecution that the Church in America has never known! We must prepare! The good news is that this is also the time when the Glory of God will manifest itself in a way we have never known!”

Even though none of the claims in this mysterious missive were true, and while the faithful awaited the final battle between Jesus and Satan, local businesses were inundated with phone calls from concerned individuals, former residents and media of all stripes.

Billings Gazette reporter, Ed Kemmick, related the level of paranoia to his readers: “Carrie McLeary, who lives outside Hardin but works in town as a store clerk, said she drove over to Forsyth to have a hog butchered Tuesday and found out later that her mother, in Spokane, had been trying to reach her all day. She said her mother and her friends "wanted to know how many casualties there were."” (“Battered for so long, Hardin has high hopes,” Billings Gazette, October 1, 2009)

Hoping to quell rampant speculation, TRA posted a statement on their website: “We welcome anyone to visit our town! There are no commandos in the streets. There is no fence or gate being built around Hardin. People are free to come and go as they please. APF (sic) is not running our town or our police force.”

In early October, Jones flew into Montana from his base in Austin, Texas, to assess the state of affairs in Hardin and broadcast live from the grounds of the Two Rivers Detention Facility. During his broadcasts from the town, he described in livid detail how he had been tailed through Billings Logan International Airport by a mob of Girl Scouts acting as spies for the Department of Homeland Security, and barked accusations at Becky Shay, Billings Gazette reporter-turned APPF spokeswoman, that the group was nothing but a front for Xe Services, formerly Blackwater USA.

The following evening, Shay held a tearful press conference in which she stated that she feared for her safety.

The APPF circus then dissipated as quickly as it had risen.

Prompting Montana Attorney General Steve Bullock to demand that APPF produce documentation to back their claims, investigative journalists had uncovered Hilton’s felony record and history of defrauding investors. He had filed—unsuccessfully—on two occasions for bankruptcy protection in the past decade and left a trail of embittered and fiscally-damaged business partners through California. At a court appearance in that state in late October stemming from the fraud civil suit, Hilton revealed that he was in fact destitute-- living in a small basement apartment-- and that APPF was essentially a corporation in name only; he had conned a few individuals into putting up the money for the website along with a storefront office space in a Santa Ana strip mall, and that was it—no parent company, no experience, nothing but empty promises and false representations.

In a sad testament to either the trusting nature or the desperation of the town government, it was Hilton who eventually pulled out of the deal and returned to California—no ride out on a rail, no tarring, no feathering—just a lot of sad people sitting on an empty jail, scratching their heads.

While Hilton and the international media have pulled stakes and packed up, it remains business as usual for Hardin officials trying to save their town. Some consideration has been given to converting the empty jail into some sort of low income housing; an indoor paintball park; or possibly a very large greenhouse for the production of medical marijuana. None of the ideas have stuck.

Instead, as the jail continues to weather the elements, local eyes have turned to the idea of a “knacker” plant for the production of horse meat to meet the demands of the expanding East Asian market.

Texas flood

It began in 2004. James Parkey, owner, president and founder of Corplan Corrections, based out of Argyle, Texas, met with then Montana Governor Judy Martz at Las Vegas McCarran International Airport while Martz was en route to the Western Governors Association meeting in Santa Fe. Accompanying Parkey at the impromptu meeting was Corplan pitchman/consultant, Monty Montgomery. Montgomery had worked in the past with county commissioners in both Texas and Nebraska as an economic development supervisor in the construction of private jails designed by Corplan.

Parkey boasts the design and development of 33 private jails/detention centers through New Mexico, Texas, Idaho, Louisiana and Colorado, dating back to the 1980s. The roots of Corplan, along with private prison giants, Corrections Corporation of America and Geo Group (formerly Wackenhut), date back to this particularly fecund period of American history for proponents of “tough-on-crime” legislation. Through the 80’s and 90’s, the U.S. prison population boomed to about 2.5 million-- an 800 percent increase over the number incarcerated in 1970, one year prior to Nixon’s waging of the War on Drugs. For men like Parkey, subsequent mandatory minimum sentencing and “truth in sentencing” guidelines have been no less than a boon which has led to a gold rush.

However, with the U.S. prison population leveling out in recent years and more and more states facing severe budgetary crises which have led lawmakers to question the wisdom of such guidelines, the larger private prison corporations have moved on to the greener pastures of immigration reform. The nation’s top two private jailers, Corrections Corporation of America and Geo Group have reported revenues in the hundreds of millions of dollars to over 1 billion in recent years thanks to tough-on-immigration laws. As such, both corporations have constructed massive tent cities for immigrant detainees and prisons for immigrant offenders throughout the Southwest.

Unfortunately for Parkey and other members of his private prison construction consortium-- a group of bond underwriters, construction companies, consultants and smaller private prison operators such as Community Education Centers, Inc. (CEC, formerly Civigenics) and Emerald Companies Corporation—the most substantive contracts with the Federal Bureau of Prisons, Immigration and Customs Enforcement and the U.S, Marshals Service are snapped up by the big dog corporations. So, while CCA and Geo maintain a steady diet of Mexicans, CEC and Emerald gnaw—for the most part-- on the scraps of state, county and municipal adult and juvenile inmate populations. While these smaller corporations have worked hard to garner their share of the immigration dollar, contracts they have gained are not nearly as expansive as those maintained by larger corporations.

As such, these smaller corporations often don’t have the amount on cash on hand needed to independently develop their own jails and detention centers.

Enter the rainmakers.

Parkey and/or one of his pitchmen approach an economically-depressed and isolated community -- though preferably within 100 miles of a federal courthouse-- and convince local government leaders through a period of wooing, wining, dining and otherwise bedazzling—sometimes bribing-- that a private prison, jail or immigrant detention center, is just the thing to cause long-dormant clouds of cash to burst open and rain prosperity down on their blighted town.

Bond underwriter and core consortium component, Municipal Capital Market Group (MCM), commission Howard Geisler of North Carolina-based GSA Limited, to draft a feasibility study. The study invariably indicates that the time and placement of such a facility is indeed ideal.

A public “private facility corporation” (PFC) is developed by the county as an entity capable of issuing bonds, but without the ability to levy taxes—which is a key point in asserting the safety of the venture; there is no way the development can be paid off through municipal taxes.

MCM and Herbert Sims & Co. (another bond underwriter) produce a bond document detailing most everything from construction to operation.

The bonds are sold and requests for proposals (RFP) go out. Interestingly enough, the facility’s operator and designer/builders are already listed in the bond agreement. Often these companies are the only respondents to the RFPs. In some cases, no bids are requested by the PFC at all.

There are three usual recurrent pairs of operators and builders-- though the underwriters, designer and analyst used remain unchanged through the vast majority of these scenarios: CEC and Hale-Mills Construction; Emerald and McInnis Brothers Construction (both of which are based out of Louisiana); Management and Training Corporation (MTC) and HMC Contracting South Texas, LLC (an incarnation of Hale-Mills).

The facility is then built; it either fails or succeeds-- the community deals with the consequence—all contractors involved in the facility’s development having been paid in advance out of the bond sales.

Following the Las Vegas meeting, Parkey and representatives from Hale-Mills, Municipal Capital Markets Group and CEC, were invited to meetings in Billings with local officials hosted by the Big Sky Economic Development Authority.

The initial pitch proposed by the consortium was the development of a 500 bed detention facility in Billings. Neither city nor Yellowstone County officials were interested. However, Hardin Economic Development Director Paul Green was present at the meetings and invited the consortium to look into the possibility of construction east of Billings.

In October of 2004, Geisler drafted the first of two feasibility studies for the project. The first study found that there was indeed a demand to be met by a 330-plus bed facility. A second study conducted in January, 2006, showed a need for upwards of 400 beds.

The city formed their PFC, TRA, following the first study, and in 2006, following Geisler’s second study, issued $27 million in tax-exempt project revenue bonds. These bonds were billed as low risk, as they could not be paid through tax revenues. Rather, they were to be paid off through revenues generated through per diem payments received from other jurisdictions to house overflow inmates.

The bond prospectus stated that the city would receive $1.00 per inmate per day—an estimated $100,000 per year-- while the facility operator (at that time slated to be CEC/Civigenics) was to receive a base rate of $44.63 per prisoner per day.

The prospectus also laid the terms for a guaranteed fee of $19,884,930 to be paid to the designer/builders of the jail, Hale-Mills. While neither Parkey’s name nor Corplan appear anywhere in the bond statement, Parkey is an architect by trade and bills himself as a designers of prisons. Parkey declined to comment on his compensation in the deal, but it is fairly safe to infer he drew his pay out of this nearly $20 million cut.

The bonds were underwritten by MCM, Herbert J. Sims & Co., and sold through U.S. Bank National Association, the bond trustee. For their work, the bond underwriters were paid $1.6 million.

Following the project’s completion, TRA was unable to find any prisoners within the state to house in the jail, so it began looking out of state. Hardin offered its services to the Wyoming Department of Corrections, which stated after an inspection of the jail, that the facility was unfit to contain long-term felony offenders—which, indeed it was, having been designed and built as a dormitory-style jail intended to temporarily house low-risk inmates awaiting trial or sentencing. Rather than do business with Hardin (50 miles from the Wyoming border), Wyoming continued to send its excess prisoners to Virginia and Oklahoma. In addition to the town’s woes, the Montana Attorney General issued an opinion stating that it was illegal for Hardin to import out-of-state inmates for their jail. The city was later successful in reversing the opinion, but it did them little good.

Desperate to find other states interested in doing business, and with bond service payments rapidly piling up, Hardin officials began approaching any and all other states with an inmate surplus, even offering the jail as housing for Guantanamo Bay detainees in April, 2009. The offer was never taken seriously by the Obama administration, but earned Hardin a few minutes of international attention. Without any prospect for business in the remote future, Civigenics exited southeast Montana along with Parkey, Geisler, MCM, Hale-Mills and nearly $30 million in cash.

In May, 2009, the bonds issued by TRA for the construction of its 85,000 square feet of emptiness went into default.

According to a 2007 memo filed with the Montana Legislative Auditor by Senior Performance Auditor Steve Erb, the facility was built on assumptions arrived at through flawed feasibility studies compiled by Geisler. According to Erb, “the analysis provides little methodology associated with its determination of potential prisoners to house at the facility. There are a number of assumptions made related to financial viability that appear to be unfounded, to include future incarceration rates… and local willingness to incur proposed prisoner per diem rates.”

Erb went on to state that he had uncovered other counties in Parkey’s home state which had encountered similar problems with the consortium’s development schemes.

One such example was La Salle County, Texas. The county had issued $21.8 million in revenue bonds with a 12 percent interest rate and a six percent underwriter fee to go to the bond underwriter, MCM.

According to Erb, La Salle county officials had stated that they were unable to meet the over $2 million annual bond service payments and that debt created by the facility’s development had outstripped any benefit.

Paul Green no longer works for the city, but has his own private consulting firm in Hardin. Green worked closely with the consortium in the development of the jail and said that, given the fact Hardin had been on rough times since the Holly Sugar Corporation sugar beet refinery closed in 1979, local officials looking for a way out of economic malaise didn’t look very deeply into Parkey’s past.

Indeed, had local officials looked into the consortium’s past, they would have discovered that, at about the time Parkey was arriving on their doorstep, a jail both Corplan and MCM had been involved in developing in 1993 in Pioche, Nevada, and which had sat vacant for more than a decade, was being purchased by Lincoln County, Nevada, for $500,000-- pennies on the dollar for the $3.5 million issued in long since defaulted municipal bonds.

As the city’s economic development director, Green said alarms began going off. “I was getting calls from people as far away as Alaska—people telling me that private jails and these people are nefarious.” So, in 2004, Green traveled down to three rural communities in southwest Texas which had Corplan-developed detention facilities in various states of completion or operation, intent on checking out the group’s claims for himself. One of the facilities Green visited was the West Texas Detention Facility in lonely Sierra Blanca, Hudspeth County.

“One day I saw those guys out there working, then that night they had a barbeque and a band and stuff. The next morning they’re in officer’s uniforms—so they went straight from construction to working as security officers, and that impressed me,” said Green. “They’re a small community like us and everyone there; if they wanted a job, they got a job.”

Hudspeth was in fact very similar to Hardin in some ways: population about 3,500, 70 miles from a major city (El Paso), high rate of unemployment and a largely uneducated work force.

Green didn’t say who exactly it was in Hudspeth County he had spoken to about the consortium’s dealings in the desert, but whoever these individuals were, he said they spoke highly of Parkey and company.

Other people in Hudspeth County were a little less than enamored with the deal, though it seems Green did not have an opportunity to speak with this group.

As stated by Erb in his 2007 memo, the Texas Criminal Justice Reform Coalition disagreed with the consortium’s feasibility study for Hudspeth County, compiled by Geisler, and stated that, based on their own findings, that the facility would most likely cost the county $500,000 per year. Still, the issuance of $23.5 million in revenue bonds was pushed through despite the fact that most of the county’s residents had no knowledge that the facility was to be financed through municipal bonds.

In 2003, a group of citizens gained a restraining order against the West Texas Detention Facility Corporation (the PFC headed by Sheriff Arvin West and two county commissioners), the Hudspeth County Commissioner’s Court, and bond underwriters Herbert Sims & Co. and MCM, on the grounds that the they had violated Texas Open Meetings Law in approving the bonds without public knowledge. A Texas district court judge later voided the order and the bonds were issued.

Today, Hudspeth County Judge Becky-Dean Walker, head of the commissioner’s court, and who is listed as the detention facility’s contact on the Corplan website, still denies that any bonds were ever issued by the county toward the construction of the facility.

“The county did not issue the bonds. There was some stuff that went through and the county signed some papers on it, but the county did not issue the bonds,” said Walker. “I tell you, they have to have us in order to get their prisoners, okay? They have to have the county to get their prisoners and actually, it’s the sheriff who calls the shots—they have to have him in order to get their prisoners.” She insists that the jail was solely financed by some group of private investors whose names she does not remember. She says the facility is not owned by the county, the PFC, Emerald (the facility operators), or Corplan. It is, she says, the sole responsibility of the “private investors.”

However, according to the bond statement on file with the Texas Bond Review Board, the West Texas Detention Facility Corporation issued $23,480,000 in revenue bonds as a public instrumentality of Hudspeth County for the construction of the facility in 2003. As per the terms of the bond agreement, the county was to then lease out the facility and the land it occupies from the PFC using per diem revenues, the rental payments to be used in service of the bonds with interest. According to the Texas Bond Review Board, the county already owes some $17 million in interest on the bonds issued for the facility which opened its doors in 2004 and which had a difficult time finding inmates and making payments during its first few years of operation. Last year, the county spent $610,000 servicing the bonds through project revenue and paid some $1,673,587 to the bond trustee, U.S. Bank, in interest.

As per the bond agreement, McInnis received over $15 million as designer/builder of the facility; MCM and Herbert Sims & Co. received $1.4 million; and Emerald gained a 15 year contract with a guaranteed $20,065,000 in the first three years of operation.

According to Walker, the facility has done great things for the county.

“It’s helped the county tremendously,” said Walker. “We get about $45,000 per month, average; it’s up a little, down a little.”

According to Warden Don Franklin, the facility is currently housing 514 immigrant detainees. The primary facility has enough room to hold 574. The facility was also built with another 500 beds available for overflow expansion. Franklin said all of the detainees were provided to the county by either USMS, ICE or the Border Patrol, though he would not disclose the amount of publicly subsidized per diem rates received by the facility for the prisoners.

“If we were a public entity, that would be public record, but we’re private, so I no, I can’t tell you that,” said Franklin. “We’re in competition, if you understand—with other facilities.”

According to Geisler’s numbers—if they can be relied on in this case—the average per diem rate paid out by USMS to private detention centers in the Hudspeth region at the time of the jail’s development was $36 per day— $22 less than the level at which Hardin would begin to be paid $1 per inmate per day by CEC.

Even at this optimistic rate, it is highly unlikely the facility is making Hudspeth county anywhere near $45,000 per month as Walker asserts. Even with a continuous maximum jail population, the county would only stand to gain a little over $17,000 per month—even at double the rate Hardin had been promised, the jail would still fall a solid $10,000 below Walker’s claim.

However, little information is available outside of Walker’s word on the jail’s viability, as articles such as per diem rates in public-private ventures are often shielded from open records laws as “trade secrets.”

“Congregation of crooks:” legacy of corruption

Had Paul Green and other Hardin officials looked a little more thoroughly into the consortium’s past—beyond barbeques in the west Texas night and construction workers moonlighting as guards—they might have also found something of the consortium’s long history of bribing public officials to pull off deals that benefited private investors far more than the impoverished counties they were meant to serve.

For example, on March 25, 2005, while Hardin officials were knee-deep in the project planning stages of their disastrous foray into corrections, David Cortez, a Corplan consultant, went before a federal judge and pled guilty to charges of giving $10,000 each in bribes to two Willacy County, Texas commissioners. The commissioners, Israel Tamez and Joe Jimenez had both pled guilty to accepting the bribes that January. Additionally, Willacy County Auditor Armando Rubalcaba had been indicted that February and pled guilty to embezzling more than $100,000 from the county’s private facility corporation established to oversee private prison development.

Walker said that she is unaware of any such improper influence occurring in Hudspeth County.

“As far as I know, there has been no money under the table. I do know that nobody has been arrested. I can’t set here and tell you that nobody ever took a bribe from them or anything, but as far as I know, they didn’t… at least not to the point of getting caught,” said Walker.

The commissioner’s court attorney who represented Hudspeth County in getting the restraining order overturned and pushing the bonds onto the market was Ramon Vela, City Attorney for Weslaco, Texas, located over 600 miles away in Hidalgo County.

Vela is one of several Texas public servants and developers being sued by former Willacy County Attorney and District Attorney Juan Guerra for his role in what Guerra has dubbed “Operation Goliath,” a massive “kickback” scheme involving the development of private prisons throughout Texas.

Guerra (code name: “David”) says Vela, despite his role as a public servant, is a de facto Corplan consultant. Indeed, while Vela’s Texas Bar Association profile quotes him as proudly stating his allegiance to the people of Weslaco, an issuance “discount” of $327,219 was built into the Hudspeth bond agreement from which the county was to cover legal fees incurred by its counsel, Vela, along with additional trustee fees paid to U.S. Bank.

Guerra says Vela essentially usurped his role as County Attorney in Willacy County to ensure the issuance of nearly $200 million in project revenue municipal bonds for the construction of two immigrant detention facilities.

The last project Vela brokered in Willacy was the issuance of $109 million in project revenue municipal bonds for the 1,000-bed expansion of a massive “tent city” for immigrant detainees outside of Raymondville, Texas.

The initial complex, brokered by Vela, MCM, Herbert Sims and Co., MTC and Hale-Mills, was erected in 2006, financed through $50 million in bonds issued by the county, and occupies 54 acres of former cotton fields on the humid Gulf Coast. Designed to hold 2,000 immigrant detainees, the complex consisted of 10 massive dome-like structures, surrounded by a double layered security fence and a patrol road. Under the $109 million renovation, (about half of the bonds from the initial 2006 project were repackaged and resold on the bond market) a new housing unit consisting of 43 two bed “separation cells,” and 20 50-person dormitories was added to the existing complex..

Hale-Mills made $44.42 million; MCM and Herbert Sims made $5.24 million; and Vela, Geisler and U.S. Bank divided up $591,390 for their time.

As an interesting aside on MTC’s role in this exercise in mass incarceration, it should be noted that former MTC Director of Business Development and Texas, New Mexico and Utah Director of Corrections, Lane McCotter, left the firm in the early years of the Iraq War to oversee Abu Ghraib prison.

Meanwhile, back in Willacy County, up to his neck in “Operation Goliath,” Guerra presented his findings of private prison-related corruption in Texas to a grand jury, which returned indictments stating improper influence against such high level characters as then-Vice President Dick Cheney, former Attorney General Alberto Gonzales and Texas State Senator, Eddie Lucio.

Cheney had maintained some $85 million in investments in the Vanguard Group—another big player in the detention of illegal immigrants—outside of his vice presidential blind trust.

Lucio, while working as a state senator, had received at least $300,000 from Parkey and other private prison firms including MTC for his work as a “consultant.”

For his trouble, Guerra had his district attorney’s offices ransacked by the Raymondville Police Department and the Texas Rangers—all of his files and computers seized. He was arrested on bogus charges no less than three times—the end result of this campaign, he asserts, cost him his re-election in 2008. District Judge Manuel Banales, who Guerra refers to as a “lap dog,” later dismissed the private prison corruption indictments.

Speaking to rampant corruption linked to his trade in Willacy, Parkey claims neither involvement nor knowledge of any wrongdoing.

“I think they just worked a deal among themselves and split some fees,” said Parkey. “I don’t really know… we had nothing to do with it.”

As for his jilted clients in Hardin, Pakey said, “I have no opinion on it—it’s a local issue and there’s been enough printed on it, that I don’t know there’s anything new to be said about it.”

Parkey said he’s still working on prospective leads to help the ailing town, but declined to name any names or any specific ideas.

While no arrests have been made, or indictments filed alleging corruption in Hudspeth County, Texas or in Big Horn County, Montana, two deputy sheriffs, Ken Witt and Rick White, in Waco, McLennan County, Texas, know their sheriff is on the take and have the paperwork to prove it. The two have been working over the past few years to stop the consortium’s bid to take over the county sheriff’s jail and build a new one—one, which now sits awaiting prisoners directly adjacent to one of Waco’s two previously existing jails. They have also been pushing for the indictment of Parkey for bribing local officials—a tough road when everyone around you is on the take, they say.

In Waco, just off Texas State Highway 6, sits a jail built by the consortium, containing 931 beds and slated to be operated by CEC, the end result of a $49 million project spearheaded by Corplan and financed through municipal project revenue bonds.

Hale-Mills got a $37.5 million slice of this pie; Underwriters MCM and Herbert Sims & Co. received $1.47 million.

While the jail is not yet operational, Witt, who is also president of the McLennan County Sheriff Officer’s Association, says the facility was built with the intended eventual outcome of replacing the existing 830-bed county-operated jail and filling the pockets of the private prison operators with what amounts to a per diem bounty on the heads of prisoners.

This, says Witt, is a huge problem, as there is no guarantee that existing deputies will be hired on to work in the facilities, should they chose to compete for their old jobs at a 40 percent pay cut from a corporation well known for its anti-union predilections.

In 2008, Witt and White went before the McLennan County Commissioner’s Court to testify against the proposed new private county jail and were told they would not be allowed to address the court during the discussion on the jail, but would have to confine their statements to three minutes each during the public discussion part of the proceedings.

“Man, you never seen a good ‘ole boy system like this. God dang it-- I had to be escorted into Commissioner’s Court, because they was afraid these guys was gonna jump me and White and beat the crap out of us right there in Commissioner’s Court,” said Witt referring to “union busting” elements loyal to the sheriff and CEC.

The Commissioner’s Court Judge, Jim Lewis, who denied Witt and White the opportunity to air their objection to the private jail, is also head of the PFC created to issue the bonds for the jail’s construction.

McLennan County first became acquainted with the world of private prisons in 1998 when CEC leased an empty jail dating back to the 1960s in downtown Waco from the county. That, says Witt, was when the trouble began.

According to a 2003 contract between McLennan County and CEC (then Civigenics-Texas, Inc.), Sheriff Larry Lynch is the recipient of $0.21 per day, per inmate housed in the facility of 283 “beds.” At maximum capacity the jail can hold 326 inmates. The jail, in order to meet its basic expenses must run at 159 inmates—although the sheriff still gets paid, even if the inmate population falls below this number. This amounts to about $12,000 per year for Lynch. At maximum capacity, the sheriff stands to make $25,000 per year from CEC in this kickback scheme.

As in the cases of Willacy and Hudspeth counties, the man posing as McLennan County Attorney, Herb Bristow, is another paid consortium consultant—appearing as legal counsel working for the private firm of Haley and Olson, and brokering deals worth hundreds of millions in speculative jail municipal bonds for the consortium in various counties throughout Texas and Oklahoma.

“We didn’t even need the jail. We’ve got the downtown jail… and we’ve only grown 35 inmates per year over the last ten years. I had the jail standards director come down and explain that to the Commissioner’s Court—and they know it,” said Witt. “Since I’ve been here, it’s only grown 300 inmates… if we take back our downtown facility from CEC and put our own inmates there—even if it’s contract inmates, we can put them in our jail and make the money straight to ourselves.” Rather than housing their own inmates in their own jails, the county has been sending excess inmates to another CEC-operated jail—which it, in turn, pays per diem rates to-- 150 miles away in Wise County.

This group—the consortium—says Witt after more than a decade of fighting their profiteering schemes, is nothing more than a “congregation of crooks.”

This article is posted on PLN's site with permission of the author. Condensed versions of this article appeared in the February and March 2010 issues of "In These Times," at the following links:

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