The indictment, issued on June 29, 2010, charged Edward L. Dugger and Joseph A. Deese with conspiracy to pay kickbacks; Dugger also was charged with extortion.
Dugger owned several businesses, but at issue was his creation of American Institutional Services (AIS) on June 23, 2004. “The sole reason his [company] was incorporated was to serve as a sub-contractor for Keefe Commissary in connection with its contract with FDOC involving prison canteens,” the indictment alleges.
The best way to get that business, Dugger seems to have concluded, was to buy his way in. He began when he took a trip to Nashville in August 2003 with then-FDOC Secretary James Crosby, Crosby’s sidekick Allen Clark, and other FDOC officials to attend an American Correctional Association (ACA) conference. While there, Dugger took the group to a country and western store and bought them $1,000 in clothes and boots.
Dugger also solicited Crosby to help one of his companies become a vendor for employee insurance. In mid-2004, he gave Crosby $1,000 for “facilitating the approval of Eddie Dugger Insurance as an approved post-tax payroll deduction vendor to sell various types of insurance to FDOC employees” and “to obtain better access than other vendors to meet [with] FDOC employees” inside state prisons to consummate insurance sales.
Crosby received an additional $5,000 in May 2004 as a kickback from Dugger. Crosby gave Clark $1,000, explaining that Clark would have to take full responsibility for the kickback payments if they ever came to light.
A June 2004 meeting between Keefe Commissary representatives and Dugger and Deese was arranged by Crosby and Clark. The meeting resulted in a business relationship between Keefe and AIS, which allowed AIS to “operate the visiting park canteens in FDOC prisons on a primarily cash basis.” It was later agreed between Dugger and Clark that 40% of the revenues generated by AIS as a result of this arrangement would be paid to Crosby.
Crosby approved AIS as a subcontractor for Keefe’s contract with the FDOC in August 2004, and AIS consummated the subcontractor relationship on October 1. The first kickback was paid to Clark on November 20, 2004; kickback payments ranged from $1,000 to $12,000 and totaled $130,000.
The scheme also included helping Keefe executives. On October 10, 2005, AIS issued a $5,000 check to pay a “personal credit card bill of a Keefe Commissary executive as a kickback for that individual’s role in increasing AIS’s commission under the AIS and Keefe Commissary subcontract from thirty percent (30%) to thirty-eight percent (38%) of sales.”
The extortion charge against Dugger alleges that from early January 2009 until late October 2009 he obtained Keefe Corporation property “by the wrongful use of actual and threatened fear of economic loss to its representative,” identified as “J.D.”
The indictment, in addition to carrying criminal sanctions, seeks forfeiture of Dugger and Deese’s assets – including $2,350,122.75 in proceeds that AIS obtained from its subcontract with Keefe and $102,019.11 confiscated by the FBI during a June 7, 2006 raid of AIS’s offices. The indictment further seeks $76,473.51 from Dugger individually.
The kickback scheme resulted in Crosby being sentenced to 8 years in federal prison, while Clark received 31 months. [See: PLN, Dec. 2007, p.32]. Crosby is currently serving his sentence at a federal prison near Pensacola. The federal prosecution of Dugger and Deese remains pending, with a trial date scheduled for April 4, 2011. See: United States v. Dugger, U.S.D.C. (M.D. Fla.), Case No. 3:10-cr-00167-TJC-MCR.
Additional source: St. Petersburg Times
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