Four pieces providing background information related to the Homeland Security detention center, or prison, soon to open on the Tacoma Tideflats, to be managed by the Correctional Services Corporation, based in Sarasota, Florida....
(1) a 3/27/02 News Tribune story about how the prison came to be sited at 1623 E. "J" St., where a former meatpacking plant stood (thanks to Tim Smith for this);
(2) the 7/31/02 News Tribune story reporting on Correctional Services Corp.'s contract to build a 140,000 sq.ft. 500-bed facility there (thanks again to Tim Smith);
(3) a mid-2003 "rap sheet" on Correctional Services Corporation (CSC), prepared by the American Friends Service Committee, reporting that abundant evidence exists for CSC's "mismanagement, financial impropriety, and outright abuse of its charges" at its various facilities;
(4) a 2002 piece by Sarasota Herald-Tribune reporter John Hielscher about the history of CSC, which was founded as the Esmor Corrections Corp. in 1987 by James Slattery, a man with a career in hotel management. A prison uprising protesting living conditions in an INS facility managed by CSC led to government charges of mismanagement and a cancelled contract. In 1998 Esmor Corrections moved to Sarasota, Florida, and assumed its present name. The company lost money from 1995 through 1999, and its stock price (NASDAQ: CSCQ) declined precipitously during that period from $10-16 range to the $2-3 range where it has stayed for several years; clearly, the company regards Homeland Security as a lucrative market for its services. Hielscher's piece does not point out that the company has political connections it has probably found useful: Stuart M. Gerson (http://www.ebglaw.com/atty_bio_29.htm), who has served on the CSC board since 1995 and became its president in Oct. 2001, was an Assistant Attorney General in the first Bush administration (and acting Attorney General in the first months of Clinton's presidency).
INS FAVORS TIDEFLATS SITE FOR NEW JAIL
By Martha Modeen
** Immigration: East J Street location is preferred for 500-bed unit because of environmental review **
The News Tribune (Tacoma, Wash.)
March 27, 2002
The U.S. Immigration and Naturalization Service expects to decide by April where on Tacoma's Tideflats to locate a new 500-bed jail for illegal immigrants.
For nearly two years, city officials have awaited word on whether the INS would approve Tacoma as a site for a facility with four detention buildings and three office buildings.
Tacoma is being considered for an INS detention center because it meets a federal requirement that such a facility be located within 25 miles of Sea-Tac Airport.
Auburn and Pacific rejected the project, but the Tacoma City Council likes it because it could generate more than 200 jobs and additional property tax revenues from the private company that will own and operate the facility.
A environmental review recently determined that the site of a former meatpacking plant at 1623 E. J St. is the preferred location. The Army Corps of Engineers ranked another location on Taylor Way and East 11th Street as also environmentally acceptable.
Though no decision has been made, Tacoma officials view the latest environmental findings as good news.
That's because a year ago INS officials wanted to designate Taylor Way -- not East J Street -- for the new jail, said Tacoma City Councilman Kevin Phelps. East J Street formerly had been designated an environmental cleanup site, and that concerned federal officials, he said.
U.S. Representatives Norm Dicks (D-Belfair) and Adam Smith (D-Tacoma) intervened on the city's behalf, arguing that East J Street site was the only acceptable one, given its distance from the Port of Tacoma and its isolation from surrounding neighborhoods.
They also said the Taylor Way site was problematic for Tacoma because it is in the path of the Port of Tacoma's existing and long-term growth area.
INS officials say they haven't made any decisions on a location.
"We're still evaluating the proposal and contractors," said INS spokeswoman Virginia Kice.
Phelps said he's not worried.
"I'm not concerned about it," Phelps said. "While they say no decision is final, it would take some very unusual circumstances to reverse" the environmental recommendation.
FLORIDA COMPANY WILL BUILD INS DETENTION FACILITY ON TIDEFLATS
By Kris Sherman
The News Tribune (Tacoma, Wash.)
July 31, 2002
Correctional Services Corp. of Sarasota, Fla., will build and operate a 500-bed detention facility for the U.S. Immigration and Naturalization Service in a former meat-packing plant on Tacoma's Tideflats.
Construction is expected to begin immediately on the $115 million, 140,000-square-foot facility at 1623 E. J St., said Garrison Courtney, public affairs officer at the INS office in Seattle.
The facility will create 120 new jobs, ranging from food preparers to security officers. It will be ready in about a year.
The detention facility -- it's not really a jail, Courtney said -- will hold undocumented immigrants for anywhere from a day to much longer stretches of time for reasons ranging from paperwork snafus to criminal charges.
In many cases, charges might be dropped if a detainee agrees to go back to his or her country, Courtney said.
Tacoma City Councilman Kevin Phelps said the facility will bring family-wage jobs and a good business relationship to the city.
"They've really worked hard to build the facility in a place that's right for the city and right for them," he said.
CORRECTIONAL SERVICES CORPORATION: A RAP SHEET
American Friends Service Committee
[Date uncertain: mid-2003?]
--CSC was losing money from 1995 through 1999 before finally turning a profit in 2000 (Sarasota Herald-Tribune, “Correctional Services faces challenge of fixing its bottom line,” 3/18/02)
--According to the Sarasota Herald-Tribune (“Correctional Services has poor second quarter,” August 15, 2001), the company lost $421,000 or 4 cents per share in the second quarter in 2001compared with a profit of $1.34 million or 12 cents per share, for the year-ago period.
--Last fall, the company launched a restructuring plan that lead to the closings of seven facilities that lost a combined $600,000 in the third quarter. The company also cut its executive staff by 25 percent and stopped routinely granting its employees raises. (Sarasota Herald-Tribune, “Correctional Services faces challenge of fixing its bottom line,” 3/18/02)
--In March of this year, the company announced that it’s revenues in the fourth quarter of 2002 were down by $2 million.
CSC FACILITIES ARE PLAGUED BY ABUSE AND DISTURBANCES
--Crowley County Correctional Facility in Colorado, one of the facilities CSC later sold for revenue, was briefly shut down in March 1999 after a 500 prisoner uprising that required the assistance of over 50 state riot control officers. An investigation concluded that CSC had not trained its guards adequately.
--In June of this year, a CSC nurse in its Mansfield, Texas juvenile bootcamp facility was convicted of negligent homicide after a youth at the facility died of a rare lung infection that went untreated and turned to pneumonia (Dallas-Fort Worth Star-Telegram, “Nurse convicted of lesser offense,” 6/29/02)
--In June 1995, immigrants held in CSC’s Elizabeth NJ facility rioted. The facility was so badly damaged that it had to be closed. An investigation by the INS found that “poorly paid, ill-trained guards physically and verbally abused detainees” (Dallas Observer, “Unhappy Campers,” 9/27/01).
--Dade County, Florida cancelled a contract with the company when they discovered that CSC was deliberately keeping juvenile prisoners past their release dates in order to make more money. An assistant Public Defender in Dade County was quoted as saying, “they are a completely greedy company. They have a Costco approach to [corrections]” (Dallas Observer, “Unhappy Campers,” 9/27/01).
--In another Florida facility, CSC guards were found to be staging “gladiator fights” between juvenile inmates and were accused of severe punishment and brutality. The contract for this facility was cancelled eight months early after the facility failed its second state review in a row. (The Data Center, 2001)
--In Louisiana, the state took its Tallulah Correctional Center back from CSC in 1999 after accusations of “brutality and inadequate schooling and mental services” led to a walkout by guards and an investigation and lawsuit from the US Justice Department. (Data Center, 2001)
--In May of 2001, three youth escaped from the Cypress Creek Correctional Facility in Florida. A Department of Juvenile Justice investigation later discovered that CSC guards in had not been keeping the prison’s doors locked; that the facility’s master control panel frequently gave false readings, which means they could not tell whether the doors were secure or not; and that in one case, a guard actually handed the youth a key to the facility. (St. Petersburg Times, “Report explains teen’s escape,” 8/25/01).
--In March of this year, state inspectors in Newport News, VA reported that two patients in a CSC treatment center for young men with emotional disorders suffered broken bones due to staff members improperly restraining them. Inspectors are investigating four other complaints against the facility ranging from sexual misconduct between patients and staff, staff assaults on patients, and improper care. (Associated Press, “Patients suffer broken bones at state treatment center,” 4/12/03).
CSC HAS HISTORY OF SHADY DEALINGS
--In Maryland, CSC officials admitted to “destroying dozens of reports of force against teens in 2000, and an investigator with the juvenile justice agency concluded that cases of abuse were hidden by employees who destroyed records the two previous years.” (Baltimore Sun, “State says assaults on jailed teens drop,” 12/5/01)
--Seven CSC employees brought a whistleblower suit against the corporation after they were fired for telling state officials that their supervisors instructed them to falsify the facility’s documents. The employees claimed that they were “told to forge signatures and backdate reports so the company wouldn’t lose it’s $31.3 million contract with the state Department of Juvenile Justice,” (Lakeland Florida Ledger, “1 of 7 plaintiffs wins in lawsuit,” (8/10/01).
--Earlier this year, CSC was levied a record $300,000 fine by the New York State Lobbying Commission after it was revealed that the corporation had been buying votes in the state legislature. The corporation failed to report free transportation, meals, and even workers it furnished to staff the political campaigns of legislators in an attempt to keep millions of dollars in state contracts. The corporation is under investigation by the Albany and Manhattan district attorneys, who may bring criminal charges against company officials (New York Times, “Company gets record fine for its gifts to lawmakers,” 2/27/03)
CSC FACING TOUGH TIMES AHEAD
By John Hielscher
** Correctional Services faces challenge of fixing its bottom line **
In late December, Maryland Lt. Gov. Kathleen Kennedy Townsend announced the state would phase out a troubled juvenile center that critics charged was poorly run.
Several months earlier Correctional Services Corp., the Sarasota-based company that managed the Victor Cullen Academy in western Maryland, had paid the state a $600,000 penalty for failing to provide adequate security staff and teachers, among other deficiencies. The company had promised to improve its service and treatment programs at Cullen. "The progress was not adequate," said Townsend aide Michael Sarbanes. Juvenile justice advocates had complained that Correctional fostered a culture at Cullen that allowed staff members to get away with beating youths. They also said the center lacked proper treatment programs and educational services.
Correctional, with a contract to run the center that expires June 30, did not oppose the state's decision to scale down Cullen and send more of its teens to community programs aimed at reducing juvenile crime. Company President and Chief Executive James F. Slattery said Cullen's rural setting made it difficult to recruit employees who were properly trained to handle troubled teens.
Correctional has been making other cutbacks. Faced with declining populations at the prisons it manages, the company launched a restructuring plan last fall that included closing seven facilities that lost a combined $600,000 in the third quarter. The company would not identify those facilities. Managers such as Correctional are paid a daily rate for each inmate. If occupancy isn't high, the facility doesn't make money for the operator. "This happens to a lot of providers, that you find a particular business opportunity is not successful and you have to exit," said Bernard Wagner, the company's chief financial officer. The company now operates 35 adult or youth detention centers with beds for more than 8,000 inmates in 14 states and Puerto Rico. That includes five juvenile facilities in Florida -- Polk County Youth Development Center, Bartow Youth Training Center, Cypress Creek Academy in Lecanto, Hillsborough Academy in Tampa and Joann Bridges Academy in Greenville -- with a total capacity of 630 inmates.
In addition to the closings, the company has slashed its executive staff 25 percent by cutting 19 people. And while not calling it a salary freeze, Wagner said raises are not being routinely granted this year to its 4,000 employees. "People are up on a regular basis for salary increases," Wagner said. "We may have elected to defer some or not give some at all."
STREET THROWS THE BOOK
Wall Street has thrown the book at Correctional. Its stock traded as high as $16.88 in 1998, but it has since fallen to about $1.50. The company lost money from 1995 through 1999 before turning a $5.8 million profit in 2000. Correctional has not released its full 2001 results, but through Sept. 30 it had lost $6.28 million. That included a $7.88 million charge to earnings in the third quarter from its restructuring program.
The biggest players in the private prison management industry, Corrections Corporation of America and the Wackenhut Corp., have struggled as well during a period of belt-tightening and recession. While some private prison operators have made money, most of their stock prices have served hard time, losing half or more of their value in the past two years. The national incarceration rate slowed in recent years, and many states have built as many prisons as they need. In addition, violence and disorder at some privately run facilities have raised concerns about whether companies can properly manage them while competing for profits.
Occupancy at the facilities Correctional Services owns, leases or manages has declined during the recession. States and cities have cut down on the number of adult criminals and juvenile delinquents they are sending to private detention centers. Some governments have cut back due to the weak economy, and others are paroling inmates at higher rates. But some analysts believe the private prison industry is ready for a breakout. The crime rate tends to go up during poor economic times, and that means more business for companies that house prisoners. The aftermath of Sept. 11 and beefing up of homeland security also could translate into profits for prison managers, said analyst James R. MacDonald of First Analysis Securities in Chicago. "There are some pockets where we've had some pretty good growth," he said.
BUSINESS OPENING UP GLOBALLY
Slattery founded Esmor Corrections Corp. in 1987 in Melville, N.Y., following a career in hotel management and development. The company first sold its shares to the public in 1994. But a prison uprising in 1995 at one of its facilities has dogged the company's reputation. Detainees trashed an Immigration and Naturalization Service office in Elizabeth, N.J., to protest living conditions. Though no one escaped or was seriously injured, the INS blamed the company for mismanagement and canceled its contract. Correctional faulted the INS for keeping detainees at the facility for too long. Slattery moved the company's headquarters to Sarasota in 1995 -- as with many corporate relocations, he was looking for warmer weather and a better quality of life. The company was renamed Correctional Services Corp. and set up business on the 10th floor of the Sarasota City Center on Main Street. In 1998, Correctional merged with Youth Services International, a Maryland company that was a national leader in running youth detention facilities. Youth Services, which operates as a subsidiary, now has 24 facilities and 3,800 juveniles under its care.
Private firms handle a small but growing percentage of the nation's prison population. Just 85,000 of the 1.9 million jail and prison beds nationwide were provided by private firms as of early 2000, the most recent period for which statistics are available. Private operators say they can run a prison for 10 percent to 15 percent less cost than a government agency. The private managers say they are cheaper because they have less bureaucracy than a government. Salaries for guards, counselors and other staffers are usually lower, and benefits such as retirement are less expensive.
MacDonald, the Wall Street analyst, said other countries are opening up to private prison management. Canada began outsourcing its prisons last year, Latin America and Australia now have about 10 percent in private management and South Africa just opened its first private detention facility. "It's an international business," he said.
SOME KEY CHANGES
Correctional has recently made some key management changes. Ira Cotler, the chief financial officer since 1996, left last year and was replaced by Wagner, a former Uniroyal Technologies executive. Michael Garretson, the executive vice president and chief executive officer, left in January and was replaced this month by Thomas Rapone, who had been vice president of government relations with Prison Health Services. In addition, Slattery, who was paid $482,000 in 2000, was replaced as chairman of the board in October by Stuart M. Gerson, a former acting U.S. attorney general who has been on Correctional's board since 1995. Gerson is seen as having valuable government contacts to develop new business. "Jim (Slattery) is confident he has the team in place that is going to be able to continue on with the restructuring and produce business in the future," Wagner said. The company plans to sell off $23 million in assets, and expects to save about $2 million per year in cuts to general and administrative costs. Slattery has said the drop in prison occupancy rates will be a short-term trend. "Increases in parole rates combined with economic slowdowns traditionally lead to increased need for correctional services," he said. "We believe this historical pattern will be repeated and its effect felt in 2002 and beyond."