PROFIT, POLITICS, PAIN — Huge profits and sweet setups for Wall Street darlings; rape, squalor, murder in lockups — and the price for Florida taxpayers
Dara Kam and staff researchers Niels Heimeriks and Michelle Quigley contributed to this story.
The data came in under the door.
Paula Dockery had been looking for numbers on the cost of running prisons, with no luck.
Suddenly, there they were, in a manila envelope slid anonymously under the Republican senator’s office door.
The Senate was weeks away from voting on the largest prison privatization in U.S. history, a $1.4 billion deal that would put almost all South Florida prisons, work camps, work release centers and annexes into private hands.
Dockery, an opponent, had been tipped off that her written requests for prison information were being forwarded to her own party’s leadership, which was making an all-out push for privatizing. Better to avoid putting her requests in writing, a state prisons official warned her.
The cloak-and-dagger approach should come as no surprise: For more than a decade, Florida’s private prison deals have been fueled by hard-ball politics, lavish campaign contributions and back-room maneuvering intended to blunt critics and keep contracts coming, a Palm Beach Post investigation found.
Sweetheart deals promising taxpayers millions in savings have been based on dubious calculations and contrived formulas.
Dangerously low numbers of corrections officers — including local guards with criminal backgrounds — and a national track record of human rights violations continue to dog the state’s three prison operators.
That hasn’t stopped Tallahassee from paying private prison operators almost a half-billion dollars in the last three years.
Politics always has been part of the equation. Signing private prison financing into law in 1993, then-Gov. Lawton Chiles publicly grumbled that the law was written by the industry.
GEO and Corrections Corporation of America in particular have spent millions on lobbying and politicians, stepping up the pace in 2010, just before lawmakers quietly slipped the massive privatization bill into the state budget.
“It was not just lobbying,” said former state Sen. Larcenia Bullard, a South Florida Democrat of the high-profile privatization push the next year.
In an interview before her death in March, Bullard, a crucial swing vote, said, “It had gotten to a point where there were indirect threats, subtle things happening that you would not expect.”
Some things weren’t so subtle. Money for projects long championed by Bullard disappeared, she said.
No one, Bullard said, directly threatened her bills. But there were comments made in hallways, she said. Lawmakers and others began escorting Bullard to the Senate floor for a vote on prison privatization, to shield the ailing lawmaker from nonstop arm-twisting.
GEO alone had nine lobbying firms on its payroll. And those lobbyists had friends in high places.
South Florida lobbyist Bill Rubin was a longtime friend of Gov. Rick Scott. A GEO subsidiary hired his firm to lobby the executive branch as Scott’s campaign gathered steam.
The same GEO subsidiary hired high-powered lobbyist Jim Eaton in late 2011, a few months after Eaton’s longtime friend, Steve MacNamara, was appointed the governor’s chief of staff.
From Jeb to Arnold
Behind the scenes, Donna Arduin, a diminutive financial consultant with powerhouse credentials, played a key role in the push to privatize.
Since at least 2007, Arduin’s firm was a paid consultant to Florida lawmakers. She advised Rick Scott’s campaign, is credited as the architect of Scott’s “7-7-7” job creation plan and headed planning for his first budget.
Partners with Arthur Laffer, known as the father of supply-side economics, Arduin had been state budget adviser to Jeb Bush before Arnold Schwarzenegger hired her away to be the director of California’s Department of Finance. And she had her own ties to GEO.
Within weeks of leaving her California job, Arduin was appointed to the board of a GEO Group real estate spinoff specializing in prison properties. Although the spinoff was not owned by GEO, 72 percent of its business came from the prison company.
Arduin’s appointment raised eyebrows because California unexpectedly decided to reopen two shuttered prisons, including one owned by GEO. Both prison operators got no-bid contracts. Both prisons were more expensive than all but one comparable state prison.
Arduin denied any involvement in private prison decisions, though, and a state review agreed there was no conflict of interest.
Arduin was not bashful about using her California connections to benefit the spinoff, according to a 2006 profile of the economist in Duke University’s magazine. During the interview, the reporter wrote, Arduin saw that the publicly traded company’s stock was dropping.
He watched Arduin call California’s director of state prisons and asked if the director was interested in immediately announcing that the state would lease prisons from the spinoff, a move likely to boost the stock price.
There was another connection to GEO. In 2005, Arduin purchased a $720,000 Broward County home with David Ericks, a well-connected lobbyist whose firm was representing GEO by 2007.
After first consulting for House Speaker Marco Rubio, Arduin’s firm was hired as budget consultant to the Senate president’s office. It was at about that time, said former Senate budget chief J.D. Alexander, that Arduin floated an audacious idea: Why not privatize huge swaths of Florida’s state-run prisons?
Through the back door
It would be difficult to overstate the scope of the 2011 plan that followed: No other state had offered up so many prisons to for-profit businesses.
And much of the billion-dollar deal circumvented normal channels.
Alexander disputes criticism that the proposal never got a full airing. And then-Senate President Mike Haridopolos insisted the bill was vetted in the sunshine.
However, the plan was not crafted by the Department of Corrections and did not go through the usual bill and committee process.
Instead, it was slipped into the fine print of a massive budget bill.
“It had the look, the smell, the feel of it all being done under the radar,” said Michael Hallet, a criminology professor with the University of North Florida. “It was a rush to judgment.”
To Hallett and others, the sheer logistics of such a massive transfer appeared unworkable.
“Anyone who told the legislators and governor this could be achieved with no problems basically doesn’t know what they are talking about,” said David Bachman, former deputy secretary of Corrections.
“Obviously, lobbyists and hired guns will say whatever, but the governor and others were not getting good advice.”
Ousted by governor
Caught in the crossfire was Ed Buss.
Buss came to Tallahassee in 2011 accompanied by political fanfare: Hired to lead DOC, the highly regarded Indiana corrections chief was hailed by Scott as an innovative cost-cutter.
He arrived Feb. 14. On Feb. 15, he was given bullet points on privatization and told to present them to legislators.
In sworn testimony, Buss said he was unaware a massive privatization push was on the horizon. He had no role in putting together a required plan that would prove taxpayers saved with privatization. He signed off on it as a done deal drafted by the governor’s aides and legislative staff.
By then, the governor’s office ensured the corrections agency would be somewhat muzzled: Scott’s press secretary had instructed corrections officials to not discuss any issues in speeches or public appearances without first getting clearance from the governor’s office.
Six months after arriving, Buss was ousted. In an abrupt about-face, Scott said the two had the Tallahassee version of irreconcilable differences.
Buss has said under oath that he wasn’t pushed out because he differed with the governor over private prisons. But he raised hackles among privatization backers: Buss told the Tallahassee Democrat’s editorial board he supported a police union lawsuit seeking to halt the plan.
MacNamara, Scott’s iron-fisted chief of staff, reportedly was unhappy with Buss’ lack of public enthusiasm over the issue. And no one backing privatization was happy when Buss’ deputy emailed the governor’s budget office, saying the transition to private prisons would cost $25 million.
The email was sent in May. Buss was out in August. His deputy resigned in October.
Halted by court
The Florida Police Benevolent Association, which represented state prison corrections officers, had sued by then, arguing the Legislature didn’t have the authority to essentially change public policy with a budget add-on.
The issue wouldn’t die. The state kept right on accepting bids. It took a second court ruling before the bidding finally stopped.
Then, last year, two bills essentially adopting the same plan popped up in the Senate’s rules committee. The committees whose members had experience on prison issues — criminal justice, for instance — never got a chance to vote on them, said New Port Richey Republican Mike Fasano, then-chairman of the Senate’s criminal justice appropriations subcommittee.
And a new element had been inserted into one of the bills. No one would have to prove private prisons were cheaper to operate before a contract was signed.
“The bill would have stripped all requirements that government needed to do due diligence,” said Judith Greene, a nationally recognized expert on criminal justice policy and director of Justice Strategies Inc., a New York research and advocacy group.
“People who were serious about fiscal responsibility couldn’t wrap their votes around something so absurd.”
There was an even more basic issue, said Fasano. The state had thousands of empty public prison beds on its hands.
“We mothballed prisons because the prison population has not grown as fast as we expected,” Fasano said. “So why were we getting more prisoners to private prisons when there is more than enough room in our own?”
The push was coming from Haridopolos’ office and the governor’s mansion — especially MacNamara, lawmakers said.
The campaign wasn’t gentle. When a skeptical Fasano blasted the proposed legislation, Haridopolos stripped him of his committee chairmanship.
“It is shameful how this all went down,” Fasano said. “It embarrassed the Senate like never before.”
Bill analysis edited
Meanwhile, committee staff analysis of the bills, which lawmakers rely on to make decisions, left out information.
For instance, staffers cited two state audit memos showing private prisons were cheaper to run.
What the analysis didn’t say was that those same memos sharply criticized certain private prison operations, and questioned how savings were calculated.
The 2009 memo criticized “high rates of prison security violations” at privately run South Bay and Lake City prisons. On average, the report noted, the two had more than double the number of security violations than the state’s public prisons.
The following year, a new memo examining privately run Bay, Moore Haven, Graceville and Gadsden prisons pointed out that the DOC had found repeated security violations. One prison operator was fined $95,000 for failing to conduct background checks on employees.
Just as important, both memos cautioned that the state method of calculating savings was at best controversial and in some cases, distorted.
For example, the costs to run privately operated Gadsden were compared to the costs of running state-operated Lowell prison. But Lowell offers specialized and pricey health care services. Gadsden doesn’t.
The result, wrote auditors, is that the private prison’s reported savings were “artificially high” when compared to the public prison.
None of that made it into the committee staff reports.
And while a 2010 Texas study praising private prison savings was emphasized, no mention was made of an Arizona study released that same year. The review made national headlines after it found few, if any savings from privatization. Similarly, a 2-year-old Florida think tank paper which found no clear proof Florida was saving money on its private prison deals was ignored.
“I looked at the data,” said Alexander of state auditors’ concerns.
But, said the budget chief, “I took it with a grain of salt because it was difficult to sort out what the true apples-to-apples comparisons were on the issue.”
Bottom line costs
Dockery started her own search for numbers.
What she got surreptitiously under her door told her there were problems with the way the state calculated savings from private prisons. Absent elaborate formulas used by the state to calculate savings, four of the state’s private prisons actually were more expensive than similar public prisons in 2009-‘10; a fifth prison saved only a few pennies per inmate.
Alexander saw the figures, too. He wasn’t impressed.
“I did not put a lot of stock in those numbers,” he said. “I think there were games played by unions and private prison supporters when it came to numbers and data.”
But, said Jack Miles, Dockery “was asking all the right questions.” Miles headed the Department of Management Services, the agency overseeing state contracts with private prisons.
Plucked from the business world by Scott, Miles favors privatization of certain government functions if savings can be proven.
However, he expressed frustration that there was no sure way to ensure taxpayers were getting the most bang for their buck. As state auditors had pointed out, the formula for calculating savings generated dubious results.
Miles recalls frequently talking with and emailing MacNamara on privatization. But no records of emails between Miles and McNamara about prisons exist, state officials say.
In fact, according to the governor’s office, there are no records of any emails from MacNamara to anyone about private prisons, though privatization was a critical issue and MacNamara was the governor’s point person on issues.
There’s a reason, MacNamara said.
“I’m 60 years old and type with two fingers. Most of my work is done over the phone and at face-to-face meetings. It’s easier for me and more practical.”
MacNamara says he “may” have had discussions about prison privatization with his friend, GEO lobbyist Jim Eaton. But Fasano believes he had a much more direct involvement. “There is no question he was the puppet master.”
Pressure built to pass the 2012 privatization plan. And it seemed unthinkable that the GOP-dominated Senate leadership would fail to keep its troops in line long enough to pass the legislation.
Republicans, though, were poised to defect. In fact, three Republicans were leading the charge against privatization: Fasano, Dockery and Jack Latvala, the longtime Clearwater senator.
Former Citrus County Sheriff Charlie Dean was among the GOP senators willing to bolt. Partly it was because Dean was not convinced it would save money.
But Dean, who favors privatization in some areas, also was hesitant to turn over prison keys to a profit-making business. “Prisons should not be designed to make money off inmates,” he said.
By the time privatization came up for a vote, Sen. Ronda Storms told The Post, tension had turned toxic. “It’s so hostile right now.”
Twice, Haridopolos pulled the bill because there weren’t enough votes on the Senate floor to pass it. One vote was then rescheduled to occur when a senator planning to vote “no” was expected to be absent.
Just before the vote, Niceville Republican Don Gaetz, now Senate president, warned lawmakers who voted no that they could come up empty-handed if they needed a budget item from Alexander, the Senate’s budget chief.
“The burden lies heavy on those who vote no,” he chided.
The absent senator came back. Bullard, with her escort to her seat, voted with the majority. So did nine Republicans.
The bill failed by a single vote.
Dara Kam and staff researchers Niels Heimeriks and Michelle Quigley contributed to this story.