ARKANSAS

Executive Office of the Governor

Office of the Chief Inspector General

Office of Investigations

Executive Summary

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Date: September 8, 2000 Case Number: 200004030001

I. Introduction:

On April 3, 2000, the Office of the Chief Inspector General, Executive Office of the Governor, received a complaint from Ken Kopczynski, Legislative Assistant, Florida Police Benevolent Association, Inc., Tallahassee, Florida alleging that Clayton Mark HODGES, Executive Director, Correctional Privatization Commission (CPC) may have violated the provisions of Florida State Statute (FSS) 957 (Correctional Privatization Commission Act) when HODGES took an honorarium from Management & Training Corporation (M&TC), a bidder to the CPC.

Additionally, Kopczynski alleged that Ronald T. JONES, formerly employed by the CPC, violated the provisions of FSS 957 in that JONES accepted employment with the Corrections Corporation of America within two years after leaving his employment with the CPC.

II. Allegations:

It is alleged that Clayton Mark HODGES violated the provisions of Florida State Statute (FSS) 957 (Correctional Privatization Commission Act) when HODGES took an honorarium from Management & Training Corporation (M&TC), a bidder to the CPC.

It is alleged that Ronald T. JONES violated the provisions of FSS 957 in that Jones accepted employment with the Corrections Corporation of America within two years after leaving his employment with the CPC.

Ill. Investigative Findings:

It was unsubstantiated that HODGES violated the provisions of FSS 957 by accepting an honorarium from the M&TC.

It is substantiated that HODGES violated the provisions of FSS 112.3149 (6) in that he failed to report the receipt of the honorarium related expenses within the prescribed time.

It is substantiated that Ronald T. JONES violated the provisions of FSS 957 in that JONES accepted employment with the Corrections Corporation of America within two years after leaving his employment with the CPC.

Executive Summary

Report of Investigation 200004030001

IV. OTHER FINDINGS

During the course of this investigation, it was noted that the procurement and travel practices of the CPC did not contain sufficient checks and balances to ensure proper accountability.

The CPC did not currently have dedicated legal support.

FSS 957 does not have any enforcement mechanism.

It was noted that during the course of this investigation, Ken Kopczynski reported the possible conflict of interest to the Ethics Commission. On May 17, 2000, Investigator Keith Russell, called and informed this investigator that investigation number 00-15 was initiated by the Ethics Commission regarding Kopczynski’s concerns.

V. Program Recommendations:

The Department of Management Services (DMS) should exercise oversight over the CPC.

DMS may also wish to consider providing dedicated legal support to the CPC.

The DMS Inspector General’s Office may wish to consider a review of the procurement and travel practices of the CPC. This review would focus on the apparent lack of checks and balances in the approval process for travel and procurement.

Prepared By: Jeffrey W. Kelly Date: 8 September 2000

Executive Office of the Governor

Office of the Chief Inspector General

Office of Investigations

Report of Investigation

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Agent: Jeffrey W. Kelly Date: August 25, 2000

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I. Introduction

ALLEGATIONS:

1. It is alleged that Clayton Mark HODGES violated the provisions of Florida State Statute (FSS) 957 (Correctional Privatization Commission Act) and FSS 112.3149 (Solicitation and disclosure of honoraria) when Hodges took an honorarium from Management & Training Corporation (M&TC), a bidder to the CPC.

2. It is alleged that Ronald T. JONES violated the provisions of FSS 957 in that Jones accepted employment with the Corrections Corporation of America within two years after leaving his employment with the CPC.

II. FINDINGS

Allegation 1: Clayton Mark HODGES violated the provisions of FSS 957 and FSS 112.3149 in that HODGES accepted an honorarium from the Management & Training Corporation (M&TC).

Based on the information obtained via personal interviews and the review of pertinent documentation it was unsubstantiated that HODGES violated the provisions of FSS 957 by accepting an honorarium from the M&TC.

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It is not substantiated that HODGES violated the provisions of FSS 112.3149 (6) in that he failed to report the receipt of the honorarium related expenses within the prescribed time.

Kopczynski reported that HODGES violated the provisions of FSS 957 during May 17 - 23, 1997, when HODGES went to Hawaii and met with management and staff of the M&TC (Exhibits 1, 2, 3, 31 and 32). The M&TC is a registered lobbyist corporation within the State of Florida (Exhibits 4, 5, and 6) and had previously bid on several contracts initiated by the CPC (Exhibit 7). M&TC did not receive the contracts. HODGES did not make any claim to the State of Florida for travel related expenses for this particular trip, although he did report it as time worked (Exhibits 8, 9 and 10). A Senior Vice President for M&TC advised that his company had paid for HODGES’ travel, lodging, and food expenses for the trip. The Senior Vice President was not sure of the exact breakdown of the expenses, but thought that the amount of $1,800.00 was a little high as he believed that it may have been less than $1,800.00 (Exhibit 32). HODGES was required to file a Statement of Financial Interests (Form 1) and an Annual Disclosure of Gifts From Governmental Entities and Direct Supported Organizations and Honorarium Event Related Expenses (Form 10) no later than July 1, 1998 (Exhibit 12). On June 24, 1997, HODGES filed the required forms but did not list that he received the honorarium related expenses (Exhibits 13 and 14). On August 4, 1997, HODGES hand delivered an amended Annual Disclosure of Gifts From Governmental Entities and Direct Supported Organizations and Honorarium Event Related Expenses (Form 10) reflecting he received an estimated $1,800.00 in honorarium expenses (Exhibits 11, 15 and 16). Hodges missed the filing date of July 1, 1998, but filed within the 60-day grace period, even though he was not sent a reminder memorandum (Exhibits 28 and 29).

Allegation 2: It is alleged that Ronald T. JONES violated the provisions of FSS 957 in that JONES accepted employment with the Corrections Corporation of America within two years after leaving his employment with the CPC.

Based upon the information obtained via personal interviews and a review of the pertinent documentation it is determined that this allegation is substantiated.

JONES was employed as an Operations and Management Consultant for the CPC. JONES left the CPC in June 1998 for employment with the State of Ohio. JONES subsequently left the employment with the State of Ohio in April 1999 and obtained employment with the Corrections Corporation of America (CCA), within a year of leaving employment with the CPC (Exhibits 17 and 18). On June 23, 1997, JONES received information regarding dual employment and the pertinent code of ethics restrictions. Therefore, he should have been aware of the prohibitions of employment with the CPC and the possible conflicts of interest

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(Exhibit 19). The CCA operates two correctional facilities under contract with the CPC and operate a Juvenile Offender Correction Center under contract with the Department of Juvenile Justice (Exhibits 20, 21 and 22). JONES’ duties at the CCA do not entail any management or supervisory responsibility over the Florida facilities since his duties include gathering statistical information for the corporation (Exhibit 30).

III. OTHER FINDINGS

During the course of this investigation, it was noted that the procurement and travel practices of the CPC did not contain sufficient checks and balances to ensure proper accountability. HODGES approved his own travel authorization and vouchers for reimbursement of travel expenses and vouchers for reimbursement of expenses other than travel (Exhibits 23, 24, 25 and 26).

HODGES’ procurement practices, because he allows the potential bidders to review the draft Request For Proposals may result in no bid protests, but makes the contracts susceptible to collusion among bidders.

The CPC does not currently have dedicated legal support. HODGES stated that when he started the CPC he obtained legal assistance from DMS, then later hired a legal advisor. Subsequently, the legal advisor left the CPC and currently the CPC plans to coordinate legal issues with the DMS General Counsel. The CPC needs dedicated legal support to review procurement issues and provide guidance to ensure there is no breach of the procurement procedures. The legal support is also needed to provide the CPC Executive Director guidance on other issues, such as potential conflicts of interest.

FSS 957 does not have any enforcement mechanism. While the statute lists prohibited activities, such as the post employment restriction, the statute does not provide for any remedies of situations where the statute is not followed. The Ethics Commission has not been charged with resolving violations.

HODGES performed contract work with the City of Youngstown, Ohio, and utilized materials, such as a contract monitor manual, which was generated as a result of the CPC expending funds. HODGES claimed all the materials were public records (Exhibit 27). HODGES’ actions may have violated the Conflict of Interest Statutes.

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IV. Program Recommendations

The Department of Management Services (DMS) should exercise oversight over the CPC especially in the areas of travel authorization and procurement. This oversight would ensure integrity and efficiency by having subject matter experts involved in these areas.

DMS may wish to consider providing dedicated legal support to the CPC.

Agent Signature: Jeffrey W. Kelly Date: 25 August 2000

Supervisor Signature: Date: 8 August 2000