Feds will not charge former private Idaho prison operator over falsified timecards
The U.S. Justice Department has declined to press criminal charges in connection with an investigation into allegations of contract fraud and public corruption at a private prison in Idaho.
The FBI began investigating the Idaho Correctional Center last year. The facility had been run by Corrections Corporation of America and was known for being so violent that inmates dubbed it “Gladiator School.”
The company had been accused of knowingly understaffing the prison and falsifying records to cover up thousands of hours of vacant guard posts.
The Justice Department investigation looked into whether the company defrauded the state under its $29 million annual contract and whether state officials tried to delay or prevent an investigation into the matter.
U.S. Attorney Wendy Olson said Wednesday that the probe was complete, and the agency did not find probable cause to file charges.
Olson said the review showed that some Corrections Corporation of America employees falsified staffing reports, but they were relatively low-level workers. No one at the assistant warden position or higher was aware of the fraud at the time it was committed, the investigation found.
Additionally, she said, the employees responsible for billing didn’t know about the false reports, and since the prison company was paid based on number of inmates – not number of guards – there wasn’t direct evidence that the fraud was intended for financial gain.
There also was no evidence anyone with the Idaho State Police, the Idaho Department of Correction or the governor’s office sought to delay, hinder or corruptly influence a state investigation into the staffing allegations, Olson said.
She said a series of miscommunications and incorrect assumptions between agencies made it seem that there were improper obstacles to an internal probe and led to reporters and a federal judge receiving erroneous information.
“While these miscommunications ultimately gave rise to suspicion of an effort to delay, hinder or influence a state criminal investigation, such miscommunications, unsupported by any other evidence, do not rise to the level of criminal misconduct,” Olson said.
Olson noted the federal investigation looked only for violations of federal or criminal statutes.
“There were a number of other actions or inactions that may be of concern to the state agencies, to the voters, to whatever,” she said. Those include the sloppy communication between state agencies and oversight of the contract.
Idaho leaders from the governor’s office, attorney general’s office, corrections department and state police department either declined comment or didn’t respond to phone or email messages Wednesday.
Corrections Corporation of America public affairs director Jonathan Burns said the company appreciates the work of the FBI and U.S. attorney and respects their decision. “With the investigation resolved, CCA has fulfilled the commitment our company made from the beginning to make Idaho taxpayers whole,” Burns wrote in a statement. “CCA’s goal is to provide every person entrusted to our care with safe, secure housing and quality rehabilitation and re-entry programming.”
The Idaho State Police Department was originally asked to investigate operations at the prison in 2013 after an Associated Press investigation showed the company was giving state officials falsified documents to cover up thousands of hours of understaffing.
The FBI took over after the probe failed to launch for more than a year. At the time, internal police documents showed the state law enforcement agency had a potential conflict of interest in the case.
Corrections Corporation of America had operated the prison south of Boise for more than a decade, but after the falsified staffing documents were uncovered, the state correction’s department hired an auditing firm to determine how many hours the prison was understaffed in violation of the company’s contract.
The auditing firm determined the company left more than 26,000 hours of mandatory guard posts understaffed or inadequately covered during 2012, though CCA disputed those numbers as inflated.
Idaho Gov. Butch Otter reached a settlement agreement with the company in 2014 – long before any law enforcement investigation had been completed. Under the settlement, CCA agreed to pay the state of Idaho $1 million. In exchange, Idaho dropped any right to sue over staffing.
WHAT IS CORRECTIONS CORPORATION OF AMERICA?
A private prison management company based in Tennessee. It began operating the Idaho Correctional Center when it opened in 2000. When Idaho put the ICC management contract out to bid in 2008, covering about 2,100 offenders, it was again awarded to CCA. The state paid CCA $29 million a year to operate the state’s largest prison.
In 2009 reports began surfacing of increased violence, drug use and understaffing. The ACLU in 2010 filed a class-action “gladiator school” lawsuit against CCA over numerous incidents of violence at the ICC. The case was settled in 2011.
In late 2012, rumors began circulating that CCA was falsifying staffing reports given to the Idaho Department of Correction by using “ghost workers.”
THE INVESTIGATIONS
The query into CCA began in February 2013 when then-Idaho Department of Correction Director Brent Reinke asked Idaho State Police Director Ralph Powell to investigate “discrepancies” in staffing records CCA submitted to the state. For the next year IDOC, the Attorney General’s Office, the media and the public assumed ISP was conducting an investigation into CCA. Here’s a timeline of events:
In February 2014, the state announced it had reached a $1 million settlement with CCA. When the media queried about the results of ISP’s investigation, ISP said there was no investigation, no detectives had been assigned to the case and it had no documents related to the investigation. Upon learning ISP never conducted an investigation, Attorney General Lawerence Wasden requested Gov. Butch Otter call for an investigation. Otter initially refused. But after reviewing the results of an independent forensic accounting report commissioned by IDOC, Otter on Feb. 18, 2014, told Powell “public interest would benefit from a formal criminal investigation” into the “acknowledged falsification of CCA staffing records.”
ISP began an investigation and within days “detectives were able to establish, based on initial evidence, the case is in fact a criminal fraud,” according to ISP documents. When ISP detectives met with the U.S. Attorney’s Office and the FBI to discuss “potential prosecution,” it was determined Idaho State Police “had a serious conflict and should not be involved in the investigation further.” The FBI took over the CCA investigation on March 6, 2014.
2013
January: An initial IDOC audit and Associated Press report raise questions about CCA possibly falsifying staffing reports.
Feb. 4: IDOC Director Brent Reinke asks Idaho State Police Deputy Director Ralph Powell to have ISP conduct an investigation into “discrepancies” in staffing records CCA submitted to CCA. IDOC starts its own CCA staffing audits of random date periods.
March 21: Gov. Butch Otter announces he appointed Powell as ISP director, replacing Col. Jerry Russell who retired in January.
April 3: After IDOC’s internal staffing audits show discrepancies, the agency decides to seek an independent outside audit and contracts with KPMG out of Seattle.
April 9: CCA provides IDOC results of its own internal staffing audit, which show 4,776 misrepresented hours over a seven-month period.
May 1: CCA offers IDOC an $117,000 payment adjustment for misrepresented hours. IDOC refuses the payment.
May 28: Otter meets with CCA executives and lobbyists. According to campaign finance reports, CCA has contributed $20,000 to Otter since 2003.
June 18: IDOC board decides not to approve CCA’s two-year contract extension and to put the contract out to bid.
Oct. 3: CCA tells IDOC it will not bid on the next contract to operate ICC when the state puts the ICC contract out to bid in November. Two of the nation’s other largest prison management companies also say they will not submit proposals, leaving the state few options.
Dec. 19: KPMG, the outside auditor, releases its final report that shows CCA possibly misrepresented nearly 26,000 hours in 2012.
2014
Jan. 3: Otter announces the state will take over operation of ICC when CCA’s contract end on July 1, 2014.
Jan. 14: An agent from the U.S. Department of Justice’s Office of the Inspector General contacts Otter’s communication director, Mark Warbis, to discuss the state’s dealings with CCA.
Feb. 2: IDOC and CCA reach a settlement agreement. CCA will pay the state $1 million. The settlement does not release CCA from potential criminal charges should they emerge. The IDOC board approves the settlement agreement Feb. 3. (Later in 2014 during election-year debates, Otter said that he had recused himself from settlement talks, but not in writing. Emails show that Otter’s staff participated in settlement talks, including reviewing the final agreement.)
Feb. 4: IDOC issues a press release announcing the settlement. Media inquire about the status of the ISP investigation.
Feb. 5: In a press release, ISP officials state they did not investigate the breach of contract between IDOC and CCA. ISP has no documentation as to when or why the determination was made not to conduct the investigation requested a year earlier. Powell tells the Associated Press he announced at IDOC meetings he attended that there was not a criminal investigation. No minutes were taken at these meetings and no documentation exists to confirm Powell’s statement.
Feb. 7: Attorney General Lawrence Wasden, upon learning there was no Idaho State Police investigation, sends a letter to Otter requesting the governor call for an investigation. Otter replies the same day in a letter stating there was no need for an investigation, saying that the ISP and the Ada County Prosecutor’s Office had concluded there was no basis for criminal charges or a criminal investigation. The governor’s office, state police and Ada County have no documents to back up these statements.
Feb. 18: Otter, after reviewing information, including the KPMG report, sends a letter to Powell stating “public interest would benefit from a formal criminal investigation” into the “acknowledged falsification of CCA staffing records.”
ISP immediately begins the investigation. Within days “detectives were able to establish, based on the initial evidence, the case is in fact a criminal fraud,” according to ISP documents. Detectives met with the U.S. Attorney and FBI to discuss “potential prosecution.” During discussions with the U.S. Attorney and FBI, “it was determined that the Idaho State Police had a serious conflict and should not be involved in the investigation further.”
March 6: FBI takes over the investigation.
This story was originally published May 20, 2015 at 2:20 PM.