“What happens if you privatize prisons is that you have a large industry with a vested interest in building ever-more prisons.” -- Molly Ivins, 2003

New McLennan County private jail has structural problems

The controversial new CEC jail in McLennan County isn't getting off to a very smooth start.  According to a Waco Tribune ("McLennan County to take possession of new jail pending final requirements," Feb. 24) article last week, the job done by prison construction crew Hale Mills appears to be cracking, literally:

The Jack Harwell Detention Center on State Highway 6 officially will be turned over to McLennan County this week after the jail’s builder satisfies a few final conditions. The 816-bed jail originally was to be turned over to the county the first week of January. The builder, Hale-Mills Construction Ltd., completed construction on the facility nearly two months ahead of schedule.

But the company encountered some last-minute problems as it put some final details on the facility. Last month, for example, hairline cracks began appearing in the concrete cinder blocks making up the jail’s interior walls.

The Jack Harwell facility in McLennan County has long generated controversy, and these latest problems are probably not endearing the company to local residents. Readers of Texas Prison Bid'ness will recognize the name Hale Mills as well.  The prison construction firm, involved in numerous prison development schemes including a controversial jail in Burnet County, was one of three companies allegedly involved in the Willacy County bribery scandal back in 2005. Three south Texas county commissioners plead guilty to receiving bribes, but no company officials were ever charged with a crime. 

We'll keep you updated on developments from McLennan County.

As N-Group scandal emerges in Governor's race, have lessons been learned?

Some may say that Gov. Rick Perry is dredging up some pretty old dirt to throw at U.S. Sen. Kay Bailey Hutchinson.  But the N-Group” scandal (Jay Root, "Perry swings back hard during final campaign week," AP, February 23rd) Perry is trying to hang around her neck is actually the playbook from which other private prison development scams appear to have been run – most recently, the infamous, outrageous saga that unfolded last year in Hardin, Montana, where local officials got bilked by a development consortium from Texas that convinced them to build a prison on speculation that a contract would soon follow.  No contract ever materialized, but the developers collected their fees and moved on.

Sen. Hutchison denies any direct involvement, but the record clearly shows that her husband Ray was deeply enmeshed in a private prison development scheme that wreaked financial mayhem across six Texas counties.  “N-Group Securities” was the brainchild of Patrick and Michael Graham, two brothers from Houston.  The enterprising Graham brothers jumped into the private corrections field in the midst of the massive prison population boom in Texas.

The N-Group was launched in 1987, at the start of Texas Governor William Clements’ second term.  The Grahams recruited a stellar set of important and politically influential Texans as business associates, including ex-Governor Mark White and Ray Hutchison, a former state senator and Texas Republican Party chairman.  With these connections to the Texas political elite, the Grahams were able to persuade six county boards to float almost $75 million in revenue bonds to finance construction of the N-Group’s rent-a-cell prisons on speculation.

County officials eagerly signed up for the development schemes after being assured that contracts to house prisoners would be forthcoming from the Texas Department of Criminal Justice.  Hutchison helped the counties establish development corporations to float the bonds, and he served as counsel for the their issuance. Drexel Burnham Lambert, the notorious (now defunct) Wall Street junk-bond house, underwrote the bonds.

By the time the six prisons were constructed, however, Ann Richards had been elected Governor.  After she took office, TDCJ managers decided that the dormitory-style facilities did not to pass muster with agency standards.  They refused to provide contracts to house prisoners.

By 1994 the Grahams were nearly buried in lawsuits filed by angry junk-bondholders, and Patrick Graham was under indictment in one Texas county on charges of criminal anti-trust violations.  Yet the brothers were able to link up with Fred Hofheintz, ex-Mayor of Huston, and extend the reach of their business into Louisiana.  The long version of the story about their failed prison development scheme in Jena, LA remains for telling another day.  But the tangled web in Louisiana snagged another high-placed Texas official, TDCJ director Andy Collins, who Patrick Graham had recruited to join the development scheme as a prospective manager of the Jena prison.   

The Jena development deal quickly unraveled, however.  In January 1996, four days after Collins resigned from his post as head of TDCJ under pressure from the head of the prison board, Patrick Graham was arrested in Houston by the FBI.  The indictment charged that he had agreed to accept $150,000 as a down-payment on a $750,000 fee he had solicited to engineer a prison escape for a former computer executive serving a 75-year sentence in Huntsville for the murder of his wife.   

Graham had claimed he could use his connections with Andy Collins to have the prisoner assigned as a low-security trusty at a prison in Galveston where he could easily escape.  Graham, a pilot, promised to arrange false identification documents for the prisoner, and fly him to Costa Rica, a country with no extradition agreement with the U.S.  Patrick Graham pleaded guilty in 1997 for the foiled prison escape.  He received a prison sentence of ten years.

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State Budget Problems may Lead to Private Prison Closure

There is one fact that may impact prison capacity over the coming years – like other states -- Texas is dealing with serious budget problems. The Governor has issued his typical mandate -- asking state agencies to find ways to reduce their budgets by five-percent.  Additionally, legislative leaders in the state House and the Senate have suggested that closing prisons is definitely on the table as they work to manage the state’s correction budget.

"Closing prisons? It's absolutely on the table," said House Corrections Committee Chairman Jim McReynolds of Lufkin. "As tight as our budget situation looks, we cannot unravel the fledgling system of diversion and treatment programs that are paying big dividends now for the states. And there's only one other place to look prison operations."

The state's pending budget shortfall in 2011 may result in the closure of the privately run units.  Senator John Whitmire, who chairs the Criminal Justice Committee, has specifically mentioned the Mineral Wells lockup which is managed by the Corrections Corporation of America.

In recent weeks, Whitmire has publicly suggested that the state consider closing the privately run, 2,100-bed Mineral Wells Unit and perhaps aging prisons that are much more expensive to operate and maintain than newer ones.

The Texas Department of Criminal Justice submitted their plan for reducing the agency’s annual budget to the Governor.  The plan does not call for the closing of prison units – private or otherwise.  Rather the focus on cutting costs targets eliminating job positions and reallocating the community supervision funding that was appropriated in 2007 and has contributed to the flat prison population that makes closing prisons a possibility. 

However, according to an analysis by The Statesman, some $10.7 million in funding for 817 beds in privately run prisons would be eliminated, reducing the state’s prison capacity. 

Advocates that promote alternatives to incarceration are asking agency officials and state policymakers to close prisons rather than reduce community corrections funding. 

Looks like this may shape up to be quite a battle in the 2011 legislature.  Time will tell if there is political viability that will lead in the actual closing of state prison units.  We will keep y’all posted as talks develop. 

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Breaking News - TX Attorney General: Sheriffs cannot accept salary enhancements from private prison corporations

In a big ruling today, the Texas Attorney General's office has ruled that County Sheriffs cannot accept salary enhancements from private prison corporations. The ruling, in response to a query by Yvonne Davis, chair of the House Committee on Urban Affairs, is summarized:

Neither the Texas Constitution nor Texas statutes authorize the person holding the office of county sheriff to be paid an administrative fee by a private organization.

Read the full ruling here.  The ruling will specifically affect the financial relationships that private prison corporation CEC has with several Texas sheriffs.  As we've reported (in our #4 Private Prison Story of 2009),

For years CEC has been paying McLennan County Sheriff Larry Lynch (and his precedessors) a "stipend" for the nominal oversight of additional prisoners in the company's downtown facility.  According to state law, Sheriffs must authorize a private detention company's presence in the county under its jurisdiction. In 2008, Waco Sheriff Larry Lynch continued to receive the kickback despite a contentious debate over whether to build a new CEC facility in McLennan County.  Former State Representative Kevin Bailey, then Chair of the Committee on Urban Affairs, requested an opinion of the Attorney General, and a bill was filed in 2009 (though ultimately wasn't successful) to outlaw the practice.  Debate flared once again this September, when Tommy Witherspoon at the Waco Tribune reported that long-standing payment practice of the Sheriff by CEC would not expand despite a new CEC lock-up opening in McLennan. Witherspoon's investigative reporting also uncovered that Limestone County Sheriff Dennis Wilson, whose county annual salary is $49,457, is paid a $24,000 stipend yearly by the county in its contract with CEC.

The ruling will certainly be seen as a victory by the McLennan County Sheriffs Officers Association and CLEAT, who fought vigorously against private jail expansion in Waco.  We'll keep you updated on the responses of today's decision.

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