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Mother Jones explores Perry's Connection to the Private Prison Industry

Texans should not be surprised by this recent article in Mother Jones (Tim Murphy, "Flush With Prison Industry Dollars, Rick Perry Pushed Privatized Prisoner Care," September 1) that explores the governor's relationship to the private prison industry. The article delves into recent developments that happened during the last Texas legislative session, specifically moves by Governor Perry to privatize the prison health care system.

"Perry's rush to privatize prison health care is consistent with the approach he's taken throughout most of his ten years as governor: slashing public services under the guise of austerity, and then contracting those services out to the well-connected businesses that have made his rise possible. As he put it during his re-election campaign in 2010, as the private prisons industry filled his war chest with donations, "Texas is open for business." To his critics, those words have never rang truer."

According to Mother Jones several prison privatization bills failed to move forward and policy changes that would have empowered the governor's office with new authority.  One effort would have transferred the authority for the state’s prison health care board to Perry by giving him the power to appoint the majority of the committee members.

The article also touches upon the limits in authority for the Texas Commission on Jail Standards.  According to our pal at Grits for Breakfast, before 2003 TCJS had statutory oversight over five private prisons that housed only federal or immigration detainees through intergovernmental agreements with counties. The Mother Jones article quotes Texas criminal justice advocate who states:

"One of the things that the commission has always wanted is to have control over the private prisons," says Ana Yanez-Correa, executive director of the Texas Criminal Justice Coalition, which monitors prison reform in the Lone Star State. "Obviously [the Governor’s office] didn’t like that so this session they tried to dilute the power of the commission by merging it with two other entities."

The article provides quite a read.  Here's hoping that Perry's presidential aspirations will continue to bring the relationship between the governor's office and private prison companies to light. 

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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