Monday, December 16, 2013

'Corruption,' 'fraud' alleged in Montgomery County private prison scheme

In Montgomery County, the commissioners court this morning will discuss potential lawsuits against a former county commissioner, a consultant, and a private prison developer for sweetheart deals involving two correctional facilities. The former commissioner received loans from the developer that weren't disclosed at the time the county entered into contracts. The larger of the two facilities lost its tax-exempt status after county inmates projected to fill it never materialized. The story from the Conroe Courier (Dec. 14) opened:
In three separate letters, Montgomery County Attorney J D Lambright has demanded the repayment of almost $13 million he says are the financial damages to the county due to a “breach of fiduciary duty” relating to the construction of two county facilities.

The letters, sent Dec. 6, allege former Precinct 3 Commissioner Ed Chance, former county employee/consultant Linda Breazeale and Jim Galloway, with Conroe-based developer Alliance Development LLC, all benefited from the overcharges related to the Joe Corley Detention Center and the Montgomery County Mental Health Facility. They further state that Chance and Breazeale, along with Alliance’s “schemes, fraud and misrepresentations” knowingly caused the financial damages.
The letters demand Chance pay the county $500,000, Breazeale pay $242,275 and Galloway pay $12.2 million. Each was given 30 days to pay the debt or risk a civil suit. As of Friday afternoon, Lambright said he had not heard from any of the parties regarding the letters. ...

Precinct 3 Commissioner James Noack said he read the letters and supports Lambright’s decision to recoup the costs.
“I think it is dead on,” Noack said. “I think these people knew exactly what they were doing. This was a well planned, well executed maneuver by power hungry, greedy, untrustworthy individuals.”

However, Precinct 1 Commissioner Mike Meador disagreed.

“We haven’t proven any damages yet,” he said. “I think it is premature to add Ed and Linda in. … If it is proven we had damages, we can re-talk it.”
In particular, reported the paper, "Lambright said Chance, who served as county commissioner from 1986 to 2012, never disclosed to the county that he accepted payments from an Alliance-related entity in excess of $500,000." The letter to Chance declared that, “While the county was overpaying for facilities, you were personally profiting,” alleging a "pattern of misrepresentation and corruption of the process." A law firm representing Chance "said the $500,000 the letter states his client owes was in fact two loans Chance received from Galloway for an unrelated real estate venture."

This is yet another situation where a Texas county unwisely launched a speculative, entrepreneurial jail scheme that was supposed to generate extra revenue but went bust when they couldn't find contract prisoners to fill the beds. Reported the Courier:
The Corley Center, which houses 1,288 beds, opened in 2008 and was financed with approximately $44.8 million in bonds. The 100-bed MCMHTF opened in spring 2011 and was financed through the sale of $33 million in bonds.

However, the jail bonds lost their tax-exempt status in August after the county couldn’t fulfill its commitment of 30 percent local inmates at the Corley Center. In May, county commissioners unanimously agreed to sell the Corley Center for $65 million in cash to Florida-based The GEO Group Inc.

In June, commissioners decided to sell the MCMHTF for a minimum bid of $38.5 [million]. Last month, GEO offered the county $35 million, but the county rejected that bid. That item is scheduled for discussion Monday in executive session by commissioners.
See related Grits posts:


Anonymous said...

If the remaining three commissioners voted to accept the contract and had no potential for conflict of interest, what's the beef?

Anonymous said...

Where's "...the beef?"

Let's say that you murdered your stockbroker (i.e., Alan Stanford, who was nearly beaten to death in Joe Corley). So you bribe a juror. That juror manages, during deliberations, to convince the other 11 to acquit.

Do you think that might be a problem? (Well not for you, but for the D.A., for instance.)

This is not entirely hypothetical. In Willacy County, for instance, where Hale Mills was the contractor and Corplan and Municipal Capital Markets were the rainmakers, three county commissioners were convicted of corruption in the financing and building of an immensely overpriced prison. Thanks to the immense compassion of Alberto "I can't recall" Gonzales, no bagman supplying those five-figure bribes was ever prosecuted.

Beefy enough for you, o carnivore?