Corplan Rap Sheet

Benson, Arizona
May 11, 2010 San Pedro Valley News-Sun
The Benson City Council was not persuaded on the idea of having a detention center built to house illegal immigrants without more proof that the federal government would pay for it. In a short discussion Monday night, the council heard from James Parkey of Corplan Corrections, headquartered in Texas. Corplan Corrections has proposed building a detention center near the Benson Municipal Airport using a $21 million bond the city would secure. Corplan said the bonds would be retired from funds paid by federal agencies to house illegal immigrants in the holding facility. But City Manager Glenn Nichols said he has checked with numerous agencies such as Immigration Customs Enforcement, U.S. Marshal's Service and U.S. Customs, and all stated they would only use such a facility if there is a valid contract. With no contract in place, Nichols recommended the council not proceed with plans to build the facility. Parkey, who attended Monday's meeting, said there would be no liability to the city, and Corplan Corrections is asking the city to back the plan so they can "go to Washington and find a contract." Councilman Al Sacco said the liability to the city is "our good name." The first-term council member said he would not support such a proposal ever. Parkey said with more illegal immigrants being apprehended by authorities in Southern Arizona, this proposal is Benson's opportunity to get ahead economically. Councilwoman Jo Deen Boncquet said the city could secure bonds and use funding on projects more beneficial to the city, noting that illegal immigration is a hot topic in Arizona right now, and Benson should stay out of the business. Vice Mayor Toney King said when he first heard the proposal in January, it sounded like a good business venture for the city, but now, with so many questions surrounding the project, the risks aren't worth it. Councilman John Lodzinski said with too many unanswered questions it's better to "keep my hand on the city wallet." Councilman David Lambert questioned the deal, stating if it was such a good investment, why didn't the company find sponsors or investors, instead of having the city secure the required funding. Mayor Mark Fenn said at this time he agrees with fellow council members, telling Parkey that Corplan should get the federal contracts in writing before coming to cities with the proposal. Councilwoman Lori McGoffin was not in attendance, and no action was taken on the issue.

April 28, 2010 San Pedro Valley News-Sun
Allowing a private detention center to operate in Benson is not in the city's best interest said Michelle Brane, the director of the detention and asylum program for the Women's Refugee Commission. In fact, Brane said private prisons like the proposed 200-bed facility are "horrible for rural communities." Corplan Corrections, a Texas Company, wants to build a 104,000-square-foot facility to house mostly women and children who are in the country illegally. The company known for building prisons and detention centers in the U.S., has promised the city big payouts if they sponsor the $27 million bonds needed to pay for the prison construction. Representatives of Corplan, including Toby Michael and James Parkey, have told city officials and council members that the bond is paid for through federal funding. Corplan Corrections has already selected a 25-acre parcel that would hold the facility, that they are calling a "Family Residential Center of the Southwest," near Benson Municipal Airport. However, Brane said the promise of federal funding is not a true statement. "I have spoken to the Department of Homeland Security, and the Immigrations and Customs Enforcement because if Corplan were to get funding, it would be from them," she said. "At this point there are not any (request for proposals); there have been no discussions with the federal government. Nothing is a sure thing and in fact I would say highly doubtful." City Manager Glenn Nichols said city staff has moved forward with investigating whether this would be a good economic move for the city, and it will be discussed by the City Council during the May 10 regular meeting. Nichols said the biggest concern remains accountability. "We have seen nothing in writing from the Department of Corrections that this would definitely be funded," he said. The second concern is the city's liability if the bond were to go into default. Corplan Corrections says there is no liability on the city's part, but Nichols said they are not completely sure. Nonetheless, the direction the city will take will depend on how the council votes on May 10. Nichols said the council will be presented the information, discuss it and vote to either move forward with the process or stop it. Corplan Corrections has painted a picture of great economic promise if Benson moves ahead with the project. In closed-door meetings with council members, Corplan has promised a federally funded facility that would house 500 women and children in the country illegally and would create up to 150 jobs. The city has also been told they would get an increased revenue stream of $218,000 a year. Similar facilities have been proposed in New Mexico and Texas, and one became a failure in Hardin, Mont., where the city signed off on $27 million in bonds in 2007 for a 200-bed facility. The facility was constructed, but to this day sits empty with no federal grant funding or per diem fees as promised by Corplan Corrections. Kim Hammond, mayor of Hardin, has warned cities like Benson to tread lightly when considering the proposals brought forth by private companies like Corplan.

March 9, 2010 San Pedro Valley News-Sun
While members of the Benson City Council have been given private sessions to hear the sales pitch that might bring a detention center to town, residents Monday night had to hear the news second hand. Mayor Mark Fenn led the discussion, reciting a sales pitch he was given by Corplan Corrections, a Texas company that wants to build a 104,000-square-foot facility to house mostly women and children who are in the country illegally. Representatives of the project, Richard Reyes of Innovative Government Strategies, and James Parkey and Toby Michael of Corplan Corrections, did not attend the first public meeting regarding the proposal. Following the company pitch, Fenn said it would not be a detention center like the one proposed about six years ago when residents vehemently opposed a 500-bed facility off State Route 80. Instead, the facility, that could be built near the Benson Municipal Airport off Ocotillo Road, is being called a "Family Residential Center of the Southwest," a 25-acre project that would only house families and children. Fenn said it would be the first facility of its kind. Fenn said the center would be federally funded, but that is not really the case. The center would be paid for with revenue bonds the city would issue. The revenue from the federal per diem for residents would pay off the bonds, as long as the center wins a contract from the federal government. That is not guaranteed. The city would be responsible for retiring the revenue bonds, whether or not they win the bid. This would not be the first center of its kind. Parkey was involved in a similar project in Hardin, Montana. That city signed off on $27 million in bonds to fund the construction of a 200-bed center that was supposed to house women and children awaiting asylum, deportation or court. The prison was built in 2007, but remains empty to this day, and Hardin is now responsible for the bonds that are now in default. According to published reports, Parkey promised Hardin that Corplan Corrections would take care of everything; there would be no liability and the town would benefit economically because it would bring 150 high-paying jobs. In Hardin, $27 million in bonds were secured. Benson will have to create a corporation that would secure $21 million in revenue bonds to pay for the prison construction. Corplan Corrections has promised the bonds will be paid for by per diem fees that federal agencies will pay the private corporation over the next 21 years, at which time Benson would assume full ownership of the facility. Corplan Corrections has also looked at other cities searching for a council willing to build the family centers. In Las Cruces, N. M., city officials are still considering the exact same facility after questions were raised in February. However, approval may be harder to get now that a state senator has joined the debate. Sen. Jeff Bingaman, who represents Las Cruces, questioned whether or not the promise of federal funding is legitimate. The senator told reporters he was unaware of any federal initiatives to fund such a project, and if there were, the Department of Homeland Security would first put such a project out to bid, instead of taking a "build it and the money will come approach." Corplan Corrections pitched the same project in Las Cruces it is now trying to sell in Benson, stressing that it would not be a detention center. In a February public meeting in Las Cruces, Toby Michael of Corplan said, "This is not a detention center. It is an extended-stay center. We're not going to be housing criminals, but for the fact that they are undocumented immigrants ... there will be no bars, no cells, no razor wire on the fences. Residents will be housed in a safe and secure environment." While Corplan Corrections contends they are not proposing a detention center, residents of the facility will be held against their will. Fenn and other council members said they would proceed cautiously, noting they do have some concerns about the company's reputation and how the financing would work. But, Fenn told some weary residents in the audience that Benson could benefit from such a facility. "I have a feeling if someone was presenting a similar facility as a university with dorms, we would say great and would all embrace it," he said. "I realize that the nature of the center is very controversial. Do we as a city put our foot down and say as Americans we don't support this? At some time there could be up to 150 well-paying jobs. You have to balance all that. How much of our political opinion do we interject into city business? I will go on record saying I don't completely endorse this facility. The company may have a checkered history and background and a lot of questions to answer on finances." Fenn said if the facility isn't built in Benson, it will be built somewhere else where another city could reap the economic benefits. The council also defended their actions during the 25-minute discussions. In a short speech to defend the elected board, Councilman David Lambert said they have not gone behind the public's back in considering the measure, but have attended several personal meetings with Corplan Corrections. Lambert said no laws were broken in the meetings because only three council members were present at a time, therefore a quorum was never formed. Lambert did not say how many meetings council members have had with the developers. Councilwoman Lori McGoffin excused herself from the discussions entirely, citing a possible conflict of interest. The second-term councilwoman said Corplan Corrections has contacted her employer, the Medicine Shoppe, about providing pharmaceutical supplies to the facility once it opens. After discussions, the council directed city staff to continue researching the proposal. According to the Corplan Corrections Web site, the for-profit Texas company specializes in building detention centers for illegal immigrants, correctional facilities and prisons.

Corplan, Argyle, Texas
Oct 2, 2015
How Local Governments Got Burned by Private Prison Investments

Counties fell for a pitch on tax-free bonds for prisons and got nailed with millions in IRS fines.

James Parkey spent more than a decade crisscrossing the U.S. selling poor counties on a way to get rich quick. He’d help local governments issue tax-free bonds to build private prisons that would rent beds to the federal government, mainly to hold undocumented immigrants. Parkey’s model for financing lockups, which he promoted with help from a team of bond dealers, consultants, and lawyers, led to a boom in prison construction. While the jails succeeded in many places, almost two dozen defaults followed in cities and counties from Florida to Montana as the prisons struggled to fill beds amid the sudden glut. Then the IRS got involved. As of July, eight detention center deals were being investigated over their tax-exempt financing, according to an IRS document. Several other counties in Texas and Arizona have settled with the government, paying as much as $1.9 million and refinancing their prisons with taxable debt, including at least three developed by Parkey and his network. In most cases the deals were “basically snake oil,” says Bob Libal, executive director of Grassroots Leadership, a nonprofit in Austin opposed to private prisons. Parkey, an architect, got into the correctional facilities business in the 1970s, when Texas ordered counties to rebuild their crumbling jails. In the 1990s he founded Corplan Corrections in Irving to focus on prison design and development. “You do one, you do two, you do 10, you do 20, and I guess you’re an expert,” says Parkey, who declined to comment on tax issues. In the wake of the Sept. 11 terrorist attacks, he assembled a team to visit counties eager to kick-start their economies. It included two bond underwriters, a feasibility consultant, a Houston-based builder, and a rotating cast of private prison operators, including Emerald Correctional Management of Shreveport, La. They provided local officials with feasibility studies suggesting the facilities would pay for themselves with rental revenue from the U.S. Marshals Service and U.S. Immigration and Customs Enforcement. Counties were urged to build jails with two to three times more capacity than they’d need for local inmates. They also were advised to act fast to nail down that business, lest they “allow other counties or private developers to capture the market,” according to a report given to prospects by Parkey’s team. Local development authorities, some created specifically for the detention deals, owned the projects and issued bonds for them whose interest was exempt from federal taxes. The bond offering statements included a warning indicating that the IRS might take issue with the setup. They said the tax-exempt status could be “adversely affected” by the decision to house federal inmates at the jails. Since 1986, the federal use of projects built with tax-exempt bonds has been limited to 10 percent, to prevent bondholders from being paid with taxpayer dollars as well as getting the tax-free subsidy. But in 1998 the IRS allowed a single jail project to go ahead with tax-exempt financing because the federal use was intended to be short-term. Since then, developers have argued that their prisons should also qualify for tax exemption. Some have used nonrenewable short-term federal contracts to bolster their claims, according to Mark Scott, the former director of the IRS’s tax-exempt bond division. “They pushed the envelope hard,” he says. Polk County, one of the poorest in Texas, was eager to ink a deal with Parkey. In 2004 it created the IAH Public Facility Corporation to issue $49 million in tax-exempt bonds to build a jail to house immigrant detainees. Today, hundreds of the 1,054 beds in the detention center are empty. “I trusted the people, or we wouldn’t have gone forward with it,” says Tommy Overstreet, a county commissioner who voted for the facility. “At that particular time everything was go, go, go.” The Polk facility was initially a boon for the county, generating almost $1 million a year in revenue. Then things changed. The federal government stopped sending as many inmates amid allegations of poor medical care, insufficient food, and excessive use of solitary confinement. The population dropped further after President Obama issued executive orders in 2012 and 2015 suspending detention and deportation for millions of undocumented immigrants. In May 2014 the IRS served notice that it considered the jail’s tax-exempt financing improper. The county development authority, which has settled with creditors over $49 million in outstanding bonds, agreed in September to pay the IRS $980,000 to resolve the case. Parkey blames the woes in Polk and other counties on circumstances unique to each prison and to dwindling immigration enforcement. “We build them, design them, help communities to get the right operator with the right use, and try to make them successful,” he says. “We’ve had good luck with that, and we’re proud of it.” The IRS declined to comment on the Polk case or any others, saying it’s prohibited by law from discussing specific taxpayers. The underwriters say their decisions were informed by attorneys’ opinions. “With regard to the tax exemption of bond issues, we rely on recognized bond counsel’s opinion that the interest on the bonds will be tax-exempt,” says William Sims, managing principal at Herbert J. Sims & Co., a firm in Fairfield, Conn., that worked with Parkey on the Polk County deal. The law firm that advised Sims, Jenkens & Gilchrist, was dissolved in March 2007 after reaching a nonprosecution agreement with the Department of Justice in which it admitted that it developed and marketed tax shelters worth billions. In 2005 a Corplan consultant pleaded guilty in federal court to paying bribes to two county commissioners in Willacy County in connection with a prison contract there. The two commissioners also pleaded guilty. Corplan wasn’t charged. The next year, Parkey visited the same county to pitch another jail project. He and his team estimated the county would get $8 million within the first seven months of the contract, according to a federal suit filed against the county, Parkey, and others in 2009 by Juan Angel Guerra, then the county’s district attorney. Parkey was dropped from the suit in 2010, and the case was resolved in favor of the county in 2011. “He’s not a poster child,” Parkey says of Guerra. “It is what it is.” Parkey is now a consultant for Emerald Correctional Management. In August, a group from Emerald visited Anahuac, Texas, to pitch Chambers County commissioners on a deportation processing center that could be used by federal authorities. The deal was to be paid for with taxable bonds. The commissioners voted no. An Emerald spokesman didn’t return calls. In September, Parkey traveled to Cleveland, Texas, almost 60 miles northwest of Anahuac, where he met with business leaders at the Lions Club, according to a report in the Cleveland Advocate. “Not one tax dollar of yours goes into this,” he told the group. The bottom line: The IRS is going after counties that issued tax-free bonds to build jails used by federal agencies.

June 30, 2010 Arizona Silver Belt
Members of the Southern Gila County Economic Development Corporation (SGCEDC) hosted an invitation-only luncheon banquet at the Dream Manor Inn on Thursday, June 24, to further promote and rally support in favor of having a 1,000-bed prison built on state land out by the County Fair Grounds within Globe City limits. The luncheon cast the prison project in a very positive light, stressing the economic impact it will have for the communities of Southern Gila County. Opponents of the prison were not invited to attend, however. The press was also excluded, but was given admittance at the door with the request that no pictures be taken and no questions be asked. Special guests included Arizona State Senator Sylvia Allen and Arizona State Representative Bill Konopnicki, Gila Community College Senior Dean Dr. Stephen Cullen and Dean Patricia Burke, Globe Vice-Mayor Thea Wilshire, City Manager Kane Graves, county supervisors Mike Pastor and Shirley Dawson, County Manager Don McDaniel, Sheriff John Armer, and Emerald Companies Director of Business Development Mike Moore, F.C. Cuny Corporation President Chris Cuny, and Corplan Corrections President James Parkey. The meeting reiterated many of the same points made in previous presentations at Globe City Council. The main objective this time was to ask Allen and Konopnicki to make their support of a private prison to be built in Southern Gila County known at the state level. Allen was very receptive of the proposal after watching a DVD put together by the EDC and hearing from the EDC board members and city and county officials. Konopnicki was eager to hear how the project would benefit the local economy and said he supported the state building the prisons in rural areas throughout the state of Arizona. He did ask for more information about qualified workforce numbers as well as the exact per diem number. Konopnicki further requested more information on the expansion possibility that was touched on, with the option of increasing the facilities from a 1,000 to a 2,000-bed prison. He asked to have information sent to him in a summary form. Thea Wilshire gave a presentation about the need to diversify the local economy. Pastor commented on the need for expanded services to the region. Finally, Mickie Nye spoke of how the prison will benefit local families and businesses. Melissa Woodall concluded the presentation part of the luncheon saying “We are only asking for 1,000 beds, only 20 percent of the total amount. That is not too much.” The three gentlemen from the companies who build and operate the private prison ended with a plea “Is there anything our team can do to help this project? Is that a fair question?” On June 29, 2010, the Arizona Department of Corrections media relations office reported that the decision regarding the private prisons is still pending legal review and review of the technical logistics suggested in each proposal. There is currently no set date for the announcement.

June 9, 2010 Arizona Silver Belt
At two consecutive city council meetings in April, the Globe council members heard from a group of men representing three corporations: Emerald Correctional Management, Corplan and Cuny Corporation. These men addressed the council regarding their desire to put in a bid with the Arizona Department of Corrections to construct a private, 1,000-bed prison in the City of Globe. The men presented estimates of economic growth that sounded almost too good to be true. According to Mike Moore of Emerald Corrections, “the city could get a monthly revenue check per inmate per month but it would depend on the monthly per diem that the state pays. It does pay and it’s a sizable number.” The group of business men went on to say the entire project would be $60 to $100 million in construction, and the goal would be to hire local workforce for 70 percent of the construction. They also promised to help the city with expansion of the sewer infrastructure. The city council took two hours to reach a decision, but in the end, a 4-2 vote in favor of supporting Emerald Corrections’ bid to build the prison was approved. A deal too good to be true? Well, there might be more than meets the eye. Case Study: Hardin, Mon. In 2004, Mr. James Parkey of Corplan - the same James Parkey who spoke to the Globe city council - proposed the construction of a private prison in Hardin, Mon., a small rural city suffering from economic stalemate. A team of experts spoke to the city officials, selling them hope of economic prosperity through the private prison business. The 450-bed prison was supposed to generate 150 secure jobs and at least $100,000 in annual per-prisoner revenue. The companies involved, Corplan as the developer, Cuny Corporation as the civil engineer of the project, and Civigenics as the prison operators, promised to realize the project from start to finish. To pay for the prison, the city of Hardin would have to conduct a bond sale. Prior to the construction, Parkey promised the city officials an economic feasibility study, which was carried out by Howard Geisler, a consultant specializing in prisons, and who had worked together with Parkey in a number of other cities. The study presented facts and figures that a Montana state auditor later described as providing “little methodology” and lacking “historical data to support anticipated prisoner counts.” The auditor went on the say the report made “a number of assumptions made related to financial viability that appear to be unfounded.” The prison was built, and the three companies involved received their payments and Hardin prepared itself for its first prisoners. In this case, however, they built it, but no one came. Hardin became so desperate to get prisoners in their prison, that they requested taking sex-offenders and later even Guantanamo Bay prisoners. Since the prison had been built for less high profile inmates, with 24-bed cells, Hardin’s requests were turned down. Hardin’s detention center never received the expected prisoners and the city has been in bond default for the last two years. A post on the detention center’s website reads, “any person or parties interested in operating or leasing space in the Hardin Detention Facility should contact...” “Do a lot of research” -- The pain is still throbbing in Hardin, Mon. After contacting the executive director of economic development and the mayor, the only comment given was “do a lot of research.” Hardin, Mon. is one of the most prominent cases, where Corplan and its partners have left a city with an empty prison. Corplan’s website lists a number of sample prisons that they have built that are surviving. However, it does not list Hardin. Neither are a number of other cases, where things ‘went wrong,’ including facilities in LaSalle County, Texas, Pioche, Nev., Lindsay, Okla., McLennan County, Texas, Las Cruses, N.M., and St. Luis, Ariz. In Willacy County, three county commissioners who were working very closely together with Corplan were indicted on bribery charges. Parkey’s and Corplan’s actions have caught attention in the media. Dan Rather reported on a few cases, especially the prison in LaSalle, Texas. Frank Smith, of the non-profit organization Private Corrections Working Group, has been following Parkey and Corplan over the years. Smith warned that the economic feasibility report must be read very closely and to expect that there may be exaggerations or left out aspects. The economic feasibility study “sells” the project more than examines it in some cases. When asked why nothing has been done legally against Corplan, Smith named a number of small factors that may be reasons why is some cases nothing was done. In Globe’s case, Corplan, Emerald Corrections, and Cuny Corporation have asked for support for a bid in response to a request for proposals put out by the Arizona DOC. In Hardin, the three partner corporations told the city that the prison operator, Civigenics, would provide the service of having prisoners housed in the facility. This could be a major difference in the success or failure of the proposed Globe project. The Arizona DOC will be awarding the contracts for the prisons by June 30, 2010.

April 23, 2010 Texas Observer
State Rep. Eddie Lucio III, a Brownsville Democrat, is following in his father's footsteps by joining forces with Corplan Corrections, a scandal-plagued prison development company. Lucio is representing Argyle, Texas-based Corplan Corrections in its bid to build an immigration family detention center in Weslaco, a Rio Grande Valley town that is in Rep. Lucio's district. State Sen. Eddie Lucio, Jr., also a Democrat Brownsville, “consulted” for Corplan in 2003 and 2004. Corplan and its CEO, James Parkey, specialize in selling desperate communities on risky government-financed prisons with promises of jobs and economic development. Typically, the company talks local governments into financing speculative jail facilities and then leaves the community to figure out how to keep them open. In recent years, Corplan has been at the center of numerous controversies, including a bizarre prison-building scheme in Hardin, Montana that involved a private military force called American Police Force run by an ex-con. The prison cost the small town $27 million but never housed any prisoners. In one of his latest gambits, Parkey has approached city officials in several towns across the U.S. – Benson, Arizona; Las Cruces, New Mexico; and Weslaco, Texas – with a proposal to build a new detention center for immigrant families. Parkey’s reputation, however, has caught up with him in Las Cruces and Benson, where officials have nixed the deal. That’s not the case in Weslaco. Weslaco Mayor Buddy de la Rosa told me that he was first introduced to Parkey two or so years ago and the project has been in the works ever since. Corplan, he said, is handling all the details. The company recently brought Rep. Lucio on as an attorney for the project. Weslaco is in Lucio’s district. In February, Lucio and Parkey spoke to the Weslaco City Commission and urged the commissioners to pass a resolution giving Corplan authorization to file a “grant application” for the facility, according to minutes from the meeting. (De la Rosa said he has not seen the application and doesn’t know to whom it will be submitted.) It might be a lousy deal for the city – if it's a deal at all. "James Parkey and Corplan are prison developers who get paid when a prison is built," said Bob Libal, an anti-private prison organizer with Grassroots Leadership. "It's not necessarily in their interest to make sure the prison project is successful." The Weslaco project is particularly fraught with risk, Libal says, because the Obama administration has all but done away with detaining immigrant families. In August 2009, federal officials removed immigrant families from the T. Don Hutto Residential Center, a privately-operated jail near Taylor that attracted international attention after advocates and detainees reported inhumane conditions. The Obama administration has also let Bush-era plans to add new family facilities expire, said Michelle Brane, director of detention and asylum programs at the Women's Refugee Commission. “To my knowledge – and I spoke specifically with Immigration and Customs Enforcement about this – they insist they don’t have any requests for proposal out there or any plans for building a new family detention facility,” said Brane. “I think they’re being duped frankly.” Mayor de la Rosa said that he wasn’t aware of the shift in federal policy but said it may explain why he hasn’t heard from Parkey or Lucio recently. “They have been remarkably quiet for the past several weeks,” he said. Representing Corplan appears to be a Lucio family business. According to Texas Ethics Commission filings, state Sen. Eddie Lucio, also a Brownsville Democrat, worked as a “consultant” for Corplan in 2003 and 2004 at a time when the company was part of a consortium of private prison interests seeking to build a 2,000-bed immigrant detention center in Raymondville, the seat of Willacy County. (I did a feature story on Raymondville's prison boom in 2006. You can read the whole gruesome story here.) During that time, Lucio also represented other corporate entities involved in the bid: prison construction company Hale-Mills, prison operator Management and Training Corp., and Aguirre, Inc. Here's what I wrote in 2006: The consortium needed a deal closer and found one in state Sen. Eddie Lucio Jr. The Brownsville Democrat had worked as a "consultant" for Corplan and Management & Training in 2003 and 2004, according to records filed with the Texas Ethics Commission. He had suspended his consulting work in 2005 in the aftermath of the bribery scandal, but Hale-Mills hired him this year for the federal detention center project. Lucio says Hale-Mills paid him "to figure out what kind of impact this will have on the community, to talk to the general public to see what their feel is." [Former Willacy County Attorney Juan] Guerra alleges that Lucio made multiple appearances in Raymondville pressuring the commissioners to select Management & Training over Corrections Corp. "As far as I'm concerned, had it not been for Eddie Lucio the commissioners would not have gone and put the county in a $60 million debt," Guerra says. "In my opinion, in his position as a senator he let our commissioners, including me, know where he stood... Once your senator lets you know what he wants, it's hard to go against [him]." In 2005, Lucio ended his consulting work with Corplan after two Willacy County commissioners pleaded guilty to accepting cash bribes in exchange for their votes to award a contract for another Raymondville prison. Amazingly, no one was ever indicted for supplying the bribe. Sen. Lucio no longer appears to be working for Corplan, at least according to personal financial disclosure statements for the last four years filed with the Ethics Commission. Rep. Lucio’s involvement with Corplan is not disclosed on his latest disclosure filing. The form was turned in on February 16th, the same day Lucio appeared at the Weslaco City Commission meeting. It's not clear why Corplan is not listed as a source of occupational income. For some, the whole thing stinks. “I think that raises some pretty serious questions especially when he’s presenting false information to a local body that’s in his district,” said Libal. “Does it break any law? I don’t know. Does it seem like a big conflict of interest? Yes.”

Coryell County Jail, Gatesville, Texas
November 13, 2006 Killeen Daily Herald
A Willacy County official has a word of caution for the Coryell County Commissioners' Court as it considers a private prison vendor as a remedy for its overcrowded jail facility. "Have your sheriff talk to our sheriff. He will let you know what kind of problems he is having," said Juan Guerra, who pulls double duty as both county and district attorney in Willacy County. Guerra said his county has struggled through criminal investigations that saw two of its county commissioners convicted, and it is also is in danger of defaulting on a bond payment because it hasn't received enough federal prisoners to generate the needed revenue to sustain the facility. Coryell County Commissioners are expected to open a proposal from Innovative Government Strategies to construct and operate a jail facility when they meet in regular session at 10 a.m. Monday in the Coryell County Courthouse. According to the documents turned in by Innovative Government Strategies, the proposed project team includes James Parkey, with Corplan Corrections Inc., for developer, Hale-Mills for construction company, Municipal Capital Markets Group for financing, Deborah L. Williams for architecture and engineering and CiviGenics-Texas Inc. for management and operations. Coryell County Attorney Brandon Belt previously expressed concern about the proposed operator, saying that CiviGenics had been at the center of controversy recently. However, it is not just CiviGenics that has a troubled past. The commissioners' consideration of the group comes just days after a federal judge sentenced former Willacy County Commissioner Israel Tamez to six months in jail for his role in a bribery scandal connected to a $14.5 million prison project to construct a U.S. Marshals Service jail. On Nov. 9, U.S. District Judge Andrew Hanen handed down the sentence and also gave Tamez three years' probation and imposed a $25,000 fine. Tamez and former Commissioner Jose Jimenez, who died of cancer before being sentenced, pleaded guilty in January 2005 to taking more than $10,000 in kickbacks, Guerra said. Former Webb County Commissioner David Cortez also was involved in the scandal and was convicted in March 2005 of funneling the bribes to the Willacy County commissioners in exchange for their votes to hire a consultant in the prison project, Guerra said. Cortez is scheduled to be sentenced Nov. 20. "My understanding was, as far as implicating the company, it has not been implicated, but the commissioners have been convicted," Guerra said. "Our records indicate that when (Cortez) came before the commissioners when this happened four years ago, he represented himself as a private consultant for Corplan." In May 2005, Willacy County, on Guerra's instructions, filed a civil suit against Corplan and Hale-Mills alleging that the two companies were parties to the bribery. The suit later was dismissed, Guerra said. Guerra said he could not say whether a federal investigation was still pending, and U.S. District Court offices were closed Friday for the federal holiday. Willacy County Sheriff Larry Spence could not be reached either. Guerra said the lack of competitive bids when Willacy was building its third federal facility – against his advice and despite the criminal implications – was not only suspect, but something that possibly lost Willacy County millions. "No one is checking to see if you are getting your money's worth," he said. "Because we don't know if that facility cost $50 million to construct." In fact, Guerra said according to information he received from experts, the project, which was for a facility to house Immigration and Customs Enforcement detainees, could have been done for between $30 and $35 million. "The information that I got, from experts that reviewed the expenses, says they could not justify the $50 million. They padded the construction costs by an extra $20 to $15 million," Guerra said. "What is funny you get commissioners that are indicted for taking $10,000. I am just wondering who are the real crooks?"

Hall County Corrections, Hall, Nebraska
June 4, 2003
At the same time Hall County is trying to decide whether a new county jail should be funded publicly or privately, Grand Island Area Economic Development Corp. President Monty Montgomery is working for a private prison firm -- the same firm he recommended to Hall County supervisors. "I have a debt of honor to them," Montgomery said of Corplan Corrections of Argyle, Texas. "I do it on my own time, and I don't do it on business time." Montgomery first introduced Corplan Corrections to the Hall County Board of Supervisors in 2001, after starting work as president of the Grand Island Area Economic Development Corp. that July. That same year, he also arranged and accompanied four supervisors on a tour of a 1,097-bed jail Corplan worked on in Garza County, Texas, just southeast of Lubbock. Corplan worked on a similar but smaller 548-bed jail in Haskell, Texas, where Montgomery was then economic development director. Montgomery said it was that association with Corplan officials, a more than four-year effort, that led to his "debt of honor." Because Corplan worked with Haskell for no pay for four years before the community finally settled on and constructed the privately funded jail, Montgomery feels a need to return the commitment. "I'm helping friends of mine," Montgomery said of why he represents Corplan County supervisors most recently toured jails in Kansas and Iowa in pursuit of construction and operational ideas. However, the county is awaiting an attorney general's opinion on whether a private jail is even a legal option for the county. Besides pitching Corplan Corrections to Hall County, Montgomery has also represented the firm to Huron, S.D., which is considering a jail there. (The Independent)

March 12, 2003
A dozen Hall county corrections staff members listened on Tuesday as the spokesman of a national organization opposing private jails and prisons told the Hall County Board of Supervisors why such facilities pose a threat to the public, jail staff and inmates. "I think it hit the nail on the head," Hall County corrections Cpl. Tom Hansen said of the presentation. "They are unsafe entity and are unsafe in your community," Brian Dawe, executive director of Corrections USA, told the board about private jails. In a passionate and well-rehearsed 20-minute presentation, Dawe cited studies from the Federal Bureau of Prisons, the U.S. Marshals Service and academicians detailing that private prisons cost more and have more escapes, riots and assaults that publicly run jails. "Our concern is the operator -- are we government employees or private company employees?" Hansen told The Independent. "We're not about to jeopardize our homes and property." (The Independent)

Smith County Jail, Smith County, Texas
November 7, 2005 Tyler Morning Telegraph
Smith County commissioners picked Lee Lewis Construction Inc. of Lubbock, along with Dallas architects Wiginton Hooker Jeffry PC, with which to enter into negotiations for the design and construction of a new Smith County Jail. In Monday's meeting of the Smith County Commissioners Court, Commissioner JoAnn Hampton explained that the three private firms that responded to the recent Request for Proposals were evaluated according to a specific set of criteria. The next highest was Correctional Services Corporation, with a score of 55, she said. Hale-Mills received 51 points. The court, with Gary's help, also looked at the potential legal entanglements of each of the three firms, after they were forced to reject an early RFP due to the legal troubles of bidder CorPlan.

August 25, 2005 Tyler Morning Herald
If the instructions weren't explicit enough before, Smith County officials say, they'll make it perfectly clear: The private firms offering proposals to build a new jail complex must disclose all their legal troubles immediately. Assistant District Attorney Michael Gary will send a letter on Friday, he told attendees at a public hearing on the jail that county commissioners held in Lindale on Thursday. Smith County officials are wary of such lawsuits because in July, they threw out a proposal by Corplan Corrections for a new facility after learning of a growing scandal in Willacy County. Their vote was not based on the bribery-related convictions of three county officials there, but on the "contingent liability" of a lawsuit filed in May against Corplan and Hale-Mills Construction by Willacy County. They wish to avoid any more such surprises, they say. The private proposals were one issue that emerged at the public hearing attended by more than two dozen citizens at the county offices in Lindale. Sheriff J.B. Smith began the hearing with a brief presentation on jail overcrowding, followed by County Judge Becky Dempsey explaining what overcrowding is doing to the county's finances.

August 24, 2005 Tyler Morning Telegraph
A general partner of Hale-Mills Construction says his firm's proposal to build a criminal justice complex for Smith County is in full compliance with the county's request for proposals, and that a lawsuit filed by Willacy County alleging that his firm conspired to bribe officials there will soon "dry up and blow away." Smith County commissioners have expressed concern that not one of the five proposals submitted last week included the disclosure about lawsuits and criminal charges that they asked for in the request for proposals. And all five lead firms have either sued or been sued over construction projects or jail operations in that period. The merit of the lawsuits filed by or faced by each of the companies is not the issue, county commissioners say; it's that they didn't tell the county about the lawsuits when asked in the RFPs. In July, Smith County threw out a proposal by Corplan Corrections for a new facility after they learned of a growing scandal in Willacy County. Their vote was not based on the bribery-related convictions of three county officials there, but on the "contingent liability" of a lawsuit filed in May against Corplan and Hale-Mills by Willacy County. The lawsuit claims that Corplan and Hale-Mills conspired to bribe county commissioners, to be selected for a $14.5 million project.

June 27, 2005
It's no longer a choice between public and private, Smith County officials say - it's a matter of combining the best of both to come up with a workable solution to jail overcrowding. In Monday's jail workshop session, county commissioners agreed in principle that a new jail should be publicly financed, privately built and run by the county. County Judge Becky Dempsey added, "It's more cost effective for us to do our own financing." That's because generally, government entities can borrow money more cheaply. Corplan, when discussing financing the facility itself, cited an interest rate of 5.125 percent. Smith County, on the other hand, could get an interest rate of 4.8 percent or less. Over the 20-year life of millions of dollars worth of bonds, that extra point of interest would add up. "Just a slight difference in interest rates over 20 years could prove quite costly," Judge Dempsey said.

Two Rivers Detention Center, Hardin, Montana
The Rainmakers Banking on private prisons in the fleecing of small-town America. By Beau Hodai (Click here)
The Strange Fruit of Desperation: How con men and paranoiacs learned to love the Hardin huskow.
By Beau Hodai (Click here)
PCI and Prison Legal News help uncover the background of APF (Click here)
Prison Legal News expose (Click here)
June 23, 2010 Billings Gazette
Hardin’s economic development authority is patching broken pipes in the city’s never-used Two Rivers Detention Center in hopes of finally landing a contract for the 464-bed jail, the agency’s executive director said Wednesday. Two Rivers Authority’s Jeff McDowell said pipes froze and burst in about a dozen places when the heat was turned off temporarily last winter. “Who wants to lease a facility that you can’t flush the toilets?” McDowell said. “We’re trying to make it so if someone does want to move in there, it’s essentially operational.” McDowell said the first leaking pipes in the jail — discovered in December — were connected to the fire sprinklers. Those were repaired for about $5,000 in January, he said. More leaks were discovered in late spring. Several have yet to be fixed, and McDowell said the combined price tag for all the repairs would be about $8,000. The burst pipes were confined to administrative areas of the jail and caused no major damage to the 92,000-square foot structure, said Two Rivers Authority acting president Albert Peterson. The plumbing problems are the latest in a long sting of setbacks for the $27 million jail, which was completed in 2007 and promoted as a means of jump-starting rural Hardin’s struggling economy.

June 23, 2010 Independent Record
When Gov. Brian Schweitzer met recently with leaders of Hardin and the city’s mothballed, 464-bed jail, he got an unexpected surprise: an apology. “They said, ‘You didn’t create our problem and you didn’t add to our problem,’” he said this week. ‘We are here to apologize.’ ” Hardin Mayor Kim Hammond and Jeff McDowell, executive director of Hardin’s Two Rivers Authority, which owns the jail, offered their olive branch at a face-to-face meeting on June 12 in Billings. The Hardin leaders requested the sit-down. A little more than two years ago, Hardin officials hosted a rally in the Montana Capitol with a busload of school children accusing Schweitzer of trying to quash their plans to fill the jail with out-of-jurisdiction inmates. Some students carried signs reading “We’ve Been Schweitzerized. Was It As Good For You Governor As It Was For Us?” Hardin’s economic development arm built the jail as a way of drumming up jobs for the economically hard-pressed area. Hardin has no need of a jail. The city has no police force and anyone picked up in the city limits is housed in the Big Horn County Jail. Town officials built the jail with no contracts in place to fill its 464 beds. Two Rivers has since defaulted on the $27 million in revenue bonds sold to build it. The jail has never opened. The jail’s recent history has been a curious one. Last March, town officials voted to offer the empty jail as a place to house terrorism detainees from Guantanamo Bay, Cuba. Federal officials nixed that idea. Last September, an ex-con and Serbian immigrant going by the title “Captain” Mike Hilton cut a deal with city leaders saying he would run the jail, build a paramilitary training facility next door and even deliver food to Hardin’s hungry. Hilton and his company, American Private Police Force, were later exposed as phonies. Since then, Hardin has elected a new mayor and the Two Rivers Authority has a new leader. Neither would return calls to Lee Newspapers seeking comment about their apology to the governor. Schweitzer had earlier looked into a plan to use the building to house Bureau of Indian Affairs inmates. He said in a recent interview that he wasn’t sure he could re-start those negotiations. But he did offer to help. “I said I would help them brainstorm,” he said.

March 15, 2010 AP
The leader of the Crow Tribe said Monday the southeastern Montana tribe is considering buying or leasing a long-vacant jail just outside the reservation. The proposal to take over Hardin's Two Rivers Detention Center remains in the planning stages, but Crow Chairman Cedric Black said talks are under way between the tribe and city representatives. One potential use for the dormant, 464-bed facility would be to remake it into a drug and alcohol treatment center. Black Eagle said that was just one of several options on the table. In recent years, the jail has been at the heart of a running feud between Hardin and state corrections officials who say the facility is not needed. With no inmate contracts despite years of aggressive marketing of the jail, the $27 million economic development project has turned into an embarrassment for rural Hardin - and a potential financial liability. City officials two years ago rejected an earlier takeover proposal offered by the Crow. The city saw that plan as a stealth attempt to annex part of Hardin, which is about 45 miles east of Billings. In 2008, the jail went into default on its bond payments. And last year, it was targeted by a California con artist, Michael Hilton, who convinced the city he was backed by investors eager to build a military training facility on the site. Hilton's scam fell apart amid revelations about his criminal history, and since then the city has been increasingly desperate to find inmates.

January 11, 2010 KULR 8
A Texas appraiser spent the day at the Hardin Jail in an attempt to determine what the facility is worth. Board members with Two Rivers Authority said the appraisal is required to get insurance on the facility. Ben Boothe, an independent inspector from Texas traveled to Montana to do the appraisal. Boothe has previously worked with Corplan Corrections, the group that brought the jail to Hardin. He was suggested to the TRA board because of his experience with facilities like the Hardin Jail. He will be reimbursed for his travel expenses and paid $5,000 dollars. TRA officials expect the results by the end of February. The $27 million dollar jail was built in 2006 and paid for with private revenue bonds.

November 17, 2009 KULR 8
An apparent disconnect between state and local government could be a leading factor in the ongoing struggle to fill the Hardin Detention Center, along with a misleading feasibility study. The $27-million dollar Two Rivers Detention Center in Hardin was completed in September 2007 to the surprise of many state officials. Two Rivers Authority's website says in June 2004, then-Governor Judy Martz held the first meeting in regard to the Hardin jail at a Las Vegas airport with several people including the jail's architect James Parkey with Corplan Corrections. However, Martz said she barely remembers the meeting and that it was a non-specific business pitch that she was not interested in. "My administration had not one thing to do with this prison," said Martz. "We never okayed anything, that would've been something that would've had to go through the legislature. So, we had nothing to do with it period." Martz's Corrections Director Bill Slaughter said he was surprised to see Hardin moving forward with the detention center without contracts from any federal, state or local agency. "They really started construction without a population identified to go in there," said Slaughter. Montana law gives communities some flexibility for building a detention center. TRA board members chose a route that does not include the state's involvement. It consists of using local government statutes to build a jail. A consortium of out-of-state companies designed and built the jail and provided a private funding plan. The architect, Corplan Corrections, used a design approved by the American Correctional Association. "ACA has their own design requirements and it (the Hardin jail) meets those design requirements," said Paul Green, former executive director of TRA. "so, where's the hiccup?" The attorney for the Montana Department of Corrections said the state has its own requirements that the Hardin jail does not meet. "The department of corrections doesn't house, if any inmates, in a jail. We house our prisoners in prisons and this is not a prison and that's one of the reasons we're reluctant to put our prisoners in there," said Diana Koch, chief legal counsel for the Department of Corrections. When asked if she believed that the jail could rectify that, Koch said, "No there's not because of the way it was built." State Senator Steve Gallus, who co-chairs the state Corrections Advisory Council, said it would have turned out much differently if the people who built the Hardin jail followed the Private Prison Citing Act. "Their facility would be, in my opinion, open and have inmates and employees and it would be a benefit to the people of Hardin," said Gallus. The consortium of companies who built the jail provided a feasibility study for the project. It was paid for by the bond underwriter for the project, Municipal Capital Markets Group. The 40-page document states several times that the Montana Department of Corrections is the primary focus as a potential user for the jail. "There were some things promised to Hardin I think, but those people who promised them are no longer on the scene. So, now what," questioned Bill Joseph, TRA board member. You keep moving forward said Joseph and keep looking to land a contract to fill the jail. "You know when Noah started building the ark, somebody said it isn't going to rain and he said well I'm committed now, and we're committed. We've got the ark, and now we just got to wait for rain," said Joseph. TRA board members said they are currently pursuing several leads to bring prisoners to the jail. The Hardin jail was paid for with $27 million dollars of private investments.

October 18, 2009 Billings Gazette
When American Police Force pulled the plug on a deal that could have given it control over Hardin's empty jail, Gov. Brian Schweitzer said Hardin city officials "have been duped by con artists over and over and over and over again." He's not the only person who believes that. The story of Michael Hilton - the shadowy founder of APF whose documented propensity for fraud fed the impression that he was trying to pull a scam on the city of Hardin - has been told by newspapers and other media all over the country in recent weeks. Less talked about is the possibility the governor was referring to - that the original scam may have been perpetrated by the consortium of companies that talked Hardin into building the detention center in the first place. "Hardin was a cookie cutter deal," municipal bond expert Christopher "Kit" Taylor said - the same basic proposal pitched by the same group of companies to dozens of communities, mostly in Texas but in other parts of the country as well, that were looking for economic development. But at least most of the other prisons built on speculation eventually had some inmates and were making money, if not as much as promised by the groups who developed them, Taylor said. "The problems aren't as extensive as they are in Hardin because in Hardin they have no prisoners," he said. Though the Texas consortium behind the Hardin prison still has defenders, there were warning signs that it was promising more than it could deliver. Flaws seen in study -- In November 2007, two months after the jail was completed, a report from the state's Legislative Audit Division called into question the feasibility study that helped convince Hardin officials that there would be a need for the 464-bed facility. "There are a number of assumptions made related to financial viability that appear to be unfounded," the report said, and flaws in the data and methodology made it impossible for local officials to "validate the analysis with any confidence." The feasibility study was conducted by GSA Ltd. of Durham, N.C., a company that had performed similar studies for similar prison projects involving the same group of developers. "When I saw it was the same set of players, I said, 'They're all in bed together.' GSA doesn't get paid unless another prison's built," Taylor said. Taylor was executive director of the Municipal Securities Rulemaking Board from 1978 to 2007. The board was created by Congress in 1975 to write rules regulating the behavior of dealers in the municipal securities market. In Hardin and elsewhere, Taylor said, private-prison consortiums pitch their deals as risk-free economic development projects. They are touted as being risk-free because they are funded by tax-exempt revenue bonds that can be repaid only by money earned on the projects, not by taxing local residents. Project revenue bonds, as they are known, were traditionally used by local governments to fund the construction of things like sewer and water systems, projects for which there was an obvious public need. And the bonds could be paid back by a virtually guaranteed revenue stream - the fees paid by property owners who had to have the services. Kevin Pranis, an analyst for New York-based Justice Strategies, wrote about the use of such bonds to finance correctional facilities in "Prison Profiteers," an anthology of criminal-justice pieces published by Prison Legal News. Pranis said bond investors have to rely on the opinion of bond issuers "who have a stake in making prison bonds looks as safe as possible." While bond documents like the one issued for the Hardin project are full of information about how quickly prison populations have grown in recent years, they "contain little or no information about sentencing and correctional policy reforms, shifts in public opinion or other trends that would weaken the case for new prisons," Pranis wrote. The bonds are sold -- To build the Hardin jail, the Two Rivers Port Authority, an economic development agency created in 2004 by the Hardin City Council, issued $27 million worth of revenue bonds. That was in 2006, several months after the Texas-based consortium that originally pitched the deal submitted the only design and construction bid advertised for by the city of Hardin. The deal was brokered by James Parkey, owner of Corplan Corrections in Argyle, Texas, who specializes in the design and development of prisons as economic development tools. The bonds were sold by Herbert J. Sims and Co. and Municipal Capital Markets Group. For their services, Sims and Municipal Capital collected $1.6 million in underwriters' fees. Dealing in prison-related bonds has been a lucrative business for Municipal Capital. Texas Monthly magazine reported in 2006 that the company had earned $5.4 million by financing $92 million in project revenue bonds to build three jails in a single Texas county, Willacy County. The Hardin construction contract went to Hale-Mills Construction of Houston, which was paid $19.8 million. The facility was to be run by CiviGenics-Texas. Corplan has put together similar deals, many involving Municipal Capital Markets and Hale-Mills Construction, but sometimes with different operators. When Parkey first pitched the idea to Hardin, Emerald Cos., another big player in the corrections industry, was named as the prospective operator. Schweitzer said the common denominator in all the projects is that "rainmakers" go into small towns and counties with high unemployment rates and present complete packages, offering to take care of design work, bond sales, construction and operation. In theory, all the governmental entity has to do is issue the bonds in its name and then sit back and collect the revenues. Taylor said problems arise because the companies make their money regardless of whether the prison ever gets enough inmates or is opened at all. "That's true of the bond lawyers, it's true of the underwriters, it's true of the feasibility study," he said. Taylor said the municipal bond market is even more lightly regulated than the general bond market. Virtually the only rule is that bond issues have to be accompanied by an official statement, and the statement "can't be knowingly false and misleading. Those are the only requirements today," he said. "That is nowhere near what is required in the corporate area." Schweitzer also said Hardin officials should have known that Parkey and his company, Corplan Corrections, "had a shaky reputation." In 2006, a consultant doing work for Corplan was convicted of funneling bribes to two county commissioners in Texas in connection with development of a detention facility there. The two commissioners were also convicted on bribery charges. Parkey, who did not return phone calls seeking comment, has previously said he had nothing to do with the criminal activities. Parkey defended -- One of Parkey's defenders is Paul Green, who was the economic development director for the city of Hardin in 2004, when Parkey first pitched the prison idea. Green said he visited three or four towns in Texas and Arizona that had prisons developed by Parkey and his associates, and in each case local authorities had nothing but praise for Parkey and the prisons he helped build. Parkey was also known for staying involved in projects for years, something he wouldn't have done if short-term gain were his only goal, Green said. As late as last month, two years after the Hardin prison was built, Parkey was still involved in that project. After Greg Smith was suspended as director of Two Rivers Authority, Parkey personally asked Green if he would meet with APF frontman Michael Hilton, which Green did. Green said he came away from the encounter convinced that Hilton didn't have the wherewithal to make good on his grandiose promises to Hardin, but he was still impressed by Parkey's evident concern for Hardin. "That's why I have a high regard for James," he said. Willacy County, Texas, Sheriff Larry Spence has also been generally happy with the way things turned out in his county. He said he was on the "public facility corporation" - similar to Two Rivers Authority, established as the bond-issuing entity - when Corplan helped develop a county jail and detention facility for the U.S. Marshals Service in the county. Both of those facilities are doing well and are paying the revenue bonds off on schedule, he said. Spence said the latest project - a 1,000-bed detention center built with the idea of temporarily detaining illegal immigrants caught along the nearby Mexican border - has been doing less well. It filled up initially and was quickly expanded to 3,000 beds, Spence said, but lately its inmate population has been hovering at around 1,000 and may be in trouble. He said he wasn't involved in that project directly. In Hudspeth County, Texas, County Judge Becky Dean-Walker also expressed satisfaction with the $23.5 million West Texas Detention Facility, built by the same consortium. There was trouble finding enough prisoners at first, she said, but the facility added 500 beds last year. "To me that's just a business," she said. "They've been very good for Hudspeth County." Taylor, the bond expert, said the problem in some areas has not been a lack of prisoners but unanticipated costs associated with the facilities. Some of the Texas prisons have been built in sparsely populated counties with little infrastructure in place, and building a prison requires them to install expensive water and sewer lines, on the taxpayer's dime. In other cases, cities and counties have had to hire more police or sheriff's deputies to handle big increases in traffic, and in counties nearly all the prison workers end up being commuters coming from many miles way. "The upshot was, they barely got any money from the operation of the prisons," he said. It started in Billings -- One thing often overlooked in all the attention focused on Hardin is that the Texas consortium originally had its eye on Billings. On the Two Rivers Authority Web site, a timeline said the project's origins go back to June 2004, when Parkey and one of his associates met with then-Gov. Judy Martz at the airport in Las Vegas, as she was on her way to the Western Governors' Association annual meeting in New Mexico. It isn't clear who arranged that meeting, but Parkey came to Billings the following month at the invitation of the Montana Department of Commerce. Among those present at a gathering hosted by the Big Sky Economic Development Authority were people from Hale-Mills Construction and Emerald Cos., the proposed operator, and Mike Harling, an executive vice president of Municipal Capital Markets Group. The list of other attendees makes it clear how important the proposal was and how seriously it was being taken. All three Yellowstone County commissioners were there, along with the chief of police, the sheriff, the mayor, city officials, three representatives of the Department of Corrections and staff people representing all three members of Montana's congressional delegation. In a packet of information addressed to Martz, Corplan laid out its proposal for a 500-bed adult detention center to be built in Billings. It was described as a "turnkey" operation that would be completed in 12 months and turned over to local officials. Corplan told of having designed and built 33 correctional facilities in five states. Green, the economic developer from Hardin and a former employee of the Big Sky EDA, was also invited to the meeting. He said Billings officials clearly had no interest in a prison. But in Hardin, people were still kicking themselves for having failed to make a bid for the private prison that ended up being built in Shelby. Green and Parkey started talking that day about the possibility of taking the Billings prison concept and moving it 50 miles southeast, to the struggling town of Hardin Parkey and his associates found a much warmer welcome there.

October 15, 2009 KULR 8
Billings could have been the site of a private detention facility just like the one in Hardin. A KULR-8 News investigation found that the city of Billings was the first place where the facility was pitched. In the summer of 2004 Corplan Corrections out of Texas proposed a 500-bed, secure, adult detention facility to Yellowstone County and the city of Billings. In the Statement of Qualifications, or a several-page proposal presented to then-Governor Judy Martz on June 28, 2004, the pre-packaged group of companies laid out its plan. The team behind the project consisted of Corplan Corrections for management, design and engineering, Hale-Mills for construction, Eversole-Williams Architecture, Municipal Capital Markets Group for financing, and Emerald Correctional Management to operate the facility. In another document obtained from the Big Sky Economic Development Authority, the team said the $25-million facility would be financed by revenue bonds purchased by private investors, and that after 22 years the sponsor would own the facility. Yellowstone County Commissioner Jim Reno said they and the city immediately passed on the proposal. "It just didn't make financial sense," said Reno. "It sounded too good to be true, but it just never penciled out for us." Yellowstone County Sheriff Jay Bell, then undersheriff, said he and former Sheriff Chuck Maxwell stated that they would not use such a facility. "We wouldn't have a real interest in it because of the expense that it would cost the tax payer of Yellowstone County," said Bell. "Our theory is that it's always cheaper to stay at home rather than in a motel." The proposal from Corplan Corrections was referred to the city of Hardin. The founder of the city's economic development branch, Two Rivers Authority, remembers being put into contact with James Parkey that same year. "When I talked to them they talked about how people that were working in the facility would get insurance, that they would get an education and they would work around the farmer's and rancher's schedules and I was like that's beautiful, that's fantastic because that's the hardest thing for new, young ag people to do is to find a way to insure their families," said Paul Green. In June of 2006 Two Rivers Authority broke ground on the detention facility paid for through revenue bonds. It promised to create jobs and heavy revenue for the city. However, it has sat empty since completion two years ago. Commissioner Reno said they also passed on the project because of a lack of commitment to use such a facility from the Montana Department of Corrections. Commissioner Reno said it is not unusual for Yellowstone County to receive a couple calls a year from groups wanting to build a private prison in the region. He said they prefer to keep correction institutions county-owned and operated.

October 12, 2009 TPM Muckraker
With the unraveling of the deal for the shadowy American Private Police Force to take over and populate an empty jail in Hardin, Montana, it's pretty clear that the small city got played by an ex-con and his (supposed) private security firm. But an investigation by TPMmuckraker into how Hardin ended up with the 92,000 square foot facility in the first place suggests that, long before "low-level card shark" Michael Hilton ever came to town, Hardin officials had already been taken for a ride by a far more powerful set of players: a well-organized consortium of private companies headquartered around the country, which specializes in pitching speculative and risky prison projects to local governments desperate for jobs. The projects have generated multi-million dollar profits for the companies involved, but often haven't created the anticipated payoff for the communities, and have left a string of failed or failing prisons in their wake. "They look for an impoverished town that's desperate," says Frank Smith of the Private Corrections Institute, a Florida-based group that opposes prison privatization. "They come in looking very impressive, saying, 'We'll make money rain from the skies.' In fact, they don't care whether it works or not." The Pitch -- In June 2004, James Parkey, a Texas-based prison developer and architect, met at the Las Vegas airport with Judy Martz, who at the time was the Republican governor of Montana. Described by the Texas Observer as a "polished salesman" for the booming private prison industry, Parkey presents himself on his Web site as a beneficent savior for local communities hit hard by the decline of the manufacturing sector. Parkey, who runs a company called Corplan Corrections, was seeking to sell Martz on a prison project for her state. His method is to promise a full-service team to handle the entire project from soup to nuts -- what one source described as a "turn-key system." That team includes a construction firm to build the prison, a prison operator to work with local officials to find prisoners, then run the facility, underwriters to sell the bonds, and even a consultant to do an economic feasibility study. "They walk into a municipality and say, you don't have to do a thing, we'll take care of everything," Christopher "Kit" Taylor, a municipal bond expert who has followed Parkey's operation, told TPMmuckraker. State officials eventually referred Parkey to the city of Billlings. From there, he was directed 50 miles east, to rural Hardin -- where he found a receptive audience. Parkey promised the town's brass that his team would take care of everything. The project would generate 150 solid jobs. The prison operator in Parkey's team pledged to pay the town a business license fee and at least $100,000 in annual per-prisoner fees. To officials in a county whose poverty rate is double the national average, that seemed like too good an opportunity to turn down. Big Pay Day -- For Parkey and his crew, the deal soon paid off. The prison's designer and builder, Hale-Mills Construction of Houston, was guaranteed a maximum price of $19.88 million, according to the official bond statement obtained by TPMmuckraker. The exact amount the firm ultimately received isn't known. And Hardin's $27 million municipal bond sale, conducted in 2006, netted the underwriters -- a pair of companies called Herbert J. Sims, of Connecticut, and Municipal Capital Markets Group (MCM), of Dallas -- a total of $1.62 million. Other players recruited by Parkey -- lawyers, surveyors, and the North Carolina-based consultant who conducted the feasibility study -- reaped $169,750. It's not known how big a cut Parkey took, and he didn't respond to calls for comment. Hardin itself didn't make out nearly so well. Not a single inmate has ever slept in the jail, and the town hasn't seen a cent of revenue from the project. The bonds, which were to be paid back through the anticipated -- but non-existent -- revenue, have gone into default. The prison "was built on spec," says Taylor, the muni bond expert, who has looked at the Hardin deal. "[The consortium's] whole premise was hell, we don't care what happens to the bonds." That's left Hardin with an empty jail that it so desperately wanted to fill that it begged first for sex offenders from the state, then for Gitmo inmates from the Feds, and, finally, for some kind of salvation from the American Private Police Force. A Compromised Consultant? -- Central to Hardin official's expectations for the deal was the feasibility study that Parkey's team conducted, which concluded that the project was all but certain to pay off. But that study appears to have been not only deeply flawed, but essentially rigged from the start. A Montana state auditor found in a 2007 memo that the study -- carried out by Howard Geisler, a North Carolina feasibility consultant specializing in prisons -- was racked with problems. It provides "little methodology" regarding its estimates of potential prisoners for the jail. It lacks "historical data to support anticipated prisoner counts." And it makes "a number of assumptions made related to financial viability that appear to be unfounded," including "potential improvements to local aviation facilities." In addition, Geisler's study failed to mention that bringing in out-of-state prisoners is potentially illegal under Montana law -- even though that idea was held up as a key method for recruiting prisoners. The state's attorney general challenged Hardin over the provision, and though a judge ultimately sided with the town, it was only after a year of legal wrangling. Perhaps those flaws aren't surprising. The study was paid for by one of the underwriters, MCM, which had worked frequently with Geisler in the past. A truly independent feasibility study, says Taylor, the muni bond expert, would involve multiple firms making bids to do the job for the city. Geisler was clearly aware while writing the study of the conflict of interest inherent in the set-up. On one page, he notes in bolded text that, "to assure independence," his fee "is not contingent upon the sale of the Bonds." But Taylor calls that "a smokescreen." "[The passage] is trying to give a sense of legitimacy to the deal, when that's not the case at all," he told TPMmuckraker. Indeed, the study was in fact the third such report produced on the subject -- and the second by Geisler -- over a two-year period, according to a Montana source close to the process. The first two studies -- the other of which was done internally by Hardin -- came to ambiguous conclusions as to whether the project would succeed. After the first two reports, says the source, "the MCM people had [Geisler] come back and do another. That's when they decided it made sense to go forward." To this day, some local officials defend the study, arguing that it's easy to criticize with the benefit of hindsight. Dan Kern, Hardin's economic development director in late 2005 and early 2006, told TPMmuckraker he's not sure why support for the project evaporated after the jail was built. "Everybody told me that this was a great project and there was a need for it," he said. But Taylor says if the official bond statement, which includes the feasibility study, was false or misleading, the bond players have legal liability. Beyond Hardin -- It looks like Hardin isn't the only place where the the lavish promises of Parkey's consortium failed to pan out. The Montana state auditor's memo notes that, in three separate jail deals with Texas counties, pushed through by Parkey's team, "current revenues are insufficient to cover operating and debt expenses." And in 2005, three Texas county commissioners were convicted on bribery charges in connection to one of those Parkey-led projects. As in Hardin, MCM acted as the underwriter, and Hale-Mills handled construction. All of the companies in the consortium either declined to comment for this story or did not return calls and e-mails.

October 9, 2009 KULR
In June of 2006 Two Rivers Authority began constructing the 464-bed detention facility in Hardin. James Parkey, who is the president of Corplan Corrections in Argyle, Texas is the jail's architect. KULR-8 spoke with Juan Guerra who is the former district attorney for Willacy County, Texas. Guerra said he investigated Corplan in 2001 and 2002 on possible corruption in connection with a private prison being constructed in that county. Guerra said his investigation resulted in the convictions of four people; the county auditor, two commissioners, and a man Guerra said was a consultant for Corplan who Guerra said plead guilty to giving the commissioners money so that they would award the contract to build the jail to Corplan. Parkey was not charged with any wrongdoing in the case, but Guerra has a strong opinion about his business. "He puts packages together and goes around to different areas across the country. He used to only be in Texas, now they are all over the country, using the same routine. What they do is promise all sorts of things. There are millions of dollars in bonds, revenue bonds and then they go into default. They make their money upfront and within a month they are out of there. They're not there to make sure this thing runs," said Guerra. Parkey was seen touring the Hardin facility last month when Two Rivers Authority was in contract talks to lease the jail to the California-based firm American Private Police Force, or APF. Al Peterson, TRA vice president, said Parkey was in Hardin strictly because of his intimate knowledge of the facility. Parkey was said to be present at a meeting between TRA and APF in early September in California. When KULR-8 called Parkey at his home/business office in Argyle,Texas to find out what if any his current involvement is with the Hardin Jail and to discuss Guerra's claims we were told that he was on a trip for two weeks. Officials with a Corplan constructed jail in Bailey County Texas said it took them a year to get prisoners, but they are happy with the facility. Juan Guerra is now in private practice in Texas with a focus on private prisons. He said it is a multi-billion dollar industry riddled with problems. Two Rivers and CiviGenics contracted to operate the jail in the beginning. Community Education Centers, Inc. aquired CiviGenics in June of 2007. Peter Argeropulos, senior vice president for business development could not be reached for comment on the issue involving the Hardin Jail. KULR-8 was told he was on vacation. However, a spokesperson for CEC said the company currently has no involvement with the facility.

March 2, 2008 Helena Independent Record
A new, empty jail built to bring jobs and prisoners to Hardin might not be able to open and pay its bills on time, even if it wins the only state corrections contract now under consideration. Backers for the jail, however, said this week they’re still very interested in the contract and plan to pursue it, along with other prisoner pools, to get the jail up and running. The Two Rivers Detention Center, a 464-bed jail built by the economic development arm of the city of Hardin and a consortium of private out-of-state companies, needs about 250 inmates to make enough money to open its doors and begin to repay the $27 million in bonds sold to build it. The first payment on the debt is due on May 10, said Michael Harling, the Texas investment banker behind the project. If the jail, which was completed late last summer but has never opened and has no contracts to house inmates, misses that payment, it will be in default on its bonds. The jail’s financing package includes a fund to cover bills while investors deal with default, he said. That money is expected to run out in May 2009. But representatives of the state Department of Corrections said last week that the only state corrections contract currently considered is for 116 sex offenders not 250 inmates. What’s more, they said, the agency hopes to have the contract filled by April 1, 2009, but it could be as late as July 1 — two months after the Hardin jail would need to be generating revenue to stave off financial crisis. July, Harling said, “is too late.” The jail must have some revenue stream before then in order to remain a going concern. The fact that the sex offender contract is for 134 fewer inmates than the center anticipated it needed to open doesn’t mean the facility can’t make ends meet with the contract, should it win the bid, said Greg Smith, executive director of the Two Rivers Authority. “It would probably be feasible to do it with less,” he said, because the sex offender contract would likely include treatment and other more expensive services than the mostly custodial care of ordinary inmates. “We’re extremely interested,” Smith said. However, he said the authority is cautious because the contract has not yet been issued and has been pushed back several times. Additionally, Smith said he worries the contract might be written to favor the three nonprofit correctional contracting companies in the state that typically win state correctional contracts. Backers for the jail say the lockdown was built on the expectation that the state would house inmates there. But state officials say they never had such an understanding and don’t need the jail space. The jail was built with no state contract in place. Bob Anez, a spokesman for the Department of Corrections, said that Two Rivers has never invited Corrections officials to the facility and no one from the agency has ever been inside. The Hardin jail then turned to out-of-state inmates as a source of money, but Attorney General Mike McGrath ruled last year that such a thing is against Montana law. The jail, which is now at the center of a lawsuit, occupies a unique place in Montana correctional law. Legally, the facility is like a county jail, not a private prison, although its 464-bed capacity puts it more in line with the 512-bed private prison in Shelby than with even Montana’s largest county jails. The jail was built by the Two Rivers Port Authority, the economic development arm of the city of Hardin, along with a group of mainly Texas companies that have helped build private prisons in other states. As a city-owned jail, the facility is one-of-a-kind, said Diana Koch, the Department of Corrections’ top lawyer. No other Montana city has its own jail. It doesn’t make sense for Montana cities to build their own jails, said Dan Schwarz, Yellowstone County’s chief deputy attorney, because Montana law requires counties to incarcerate all city inmates for free. Even more curious: The city of Hardin doesn’t have a police force. All suspects arrested in Hardin are done so by Big Horn County authorities and housed in the 36-bed Big Horn County jail. The city of Hardin doesn’t have any of its own inmates and has no use for the jail. Big Horn County is not part of the jail project and is not interested in housing inmates there, said Greg Smith, executive director of the Two Rivers Authority. That the facility is a “jail,” not a “prison,” is an important distinction, Koch said. By law, only certain kinds of inmates can be held in jails, including people awaiting trial and witnesses in a trial confined to be certain they testify. Generally speaking, convicted felons remanded to the Department of Corrections to serve out their sentences are not held in county jails. The law does not forbid such a thing, Koch said, but it has only happened once in the last 12 years and involved a single inmate. That lone case was before a new section of law was passed in the 1990s that created regional prisons and the state’s only private prison. Regional prisons are joint projects of counties and the Department of Corrections in which the county jail shares space with space dedicated for state inmates. The state section of the lockdown is designed to state specifications and the state is a partner in the project from the very beginning, Koch said. Montana has regional prisons in Great Falls and Glendive. Montana also has one privately owned prison in Shelby built after lawmakers in 1997 wrote a new section of law allowing such a prison. That law spells out an exhaustive process entities must follow to become a private prison, including obtaining a license from the Department of Corrections. Such a license cannot be issued unless the department deems the prison necessary to house state inmates and has money from the Legislature to house inmates there. The Hardin prison didn’t follow those laws and is not a licensed private prison. Under certain circumstances, out-of-state inmates like the kind Two Rivers is courting can be housed in Montana’s private prison. The state’s regional and private prisons didn’t solidly replace the rare possibility of housing state inmates in jails like the Hardin lockdown, Koch said. “We just don’t foresee that there would be a reason to do that since we have the regionals and the private prison,” she said. “Now that we have that option, I really doubt we would (house state inmates in a jail) again.” Smith said the jail never wanted to house state inmates long-term. Instead, he said, the authority hoped to house only a select subset of state inmates: recently sentenced prisoners waiting in county jails until a cell comes open at Deer Lodge or another state correctional facility. “Those are the ones we’ve always wanted,” he said. Those inmates can be housed in jails and, in fact, state contracts with every county jail in Montana to house those prisoners. Such inmates might stay in the jail from only a few days to a few months. Last year, such inmates waited in county jails for an average of 33 days before moving into a Corrections’ facility, Anez said. The department has never identified a special contracted jail to house such inmates as a need and has never appealed to the Legislature for money for such a project. No one from Two Rivers has ever contacted the department about using the Hardin jail for that purpose, Anez said, adding that consolidating such temporary inmates in one location would create a transportation problem. Say a convict was sentenced in Butte, Anez said. Why move the man to Hardin for a few weeks only to drive him to Deer Lodge when a cell becomes available? Additionally, the state doesn’t have enough of those inmates to begin to fill a 464-bed jail. Currently, the state had 59 men and 14 women felons waiting in county jails.

February 13, 2008 Billings Gazette
As told by state and Hardin officials Tuesday, the history behind Hardin's empty, 464-bed prison hinges on one enormous - and expensive - misunderstanding. Officials from the south-central Montana town and its economic development arm, Two Rivers Authority, told the state Corrections Advisory Council that they had a gentlemen's agreement with Montana to house state inmates at the privately run prison. But Bill Slaughter, former state corrections director, current agency officials and lawmakers on the council said they never had such an agreement and never envisioned the prison as part of the state's correctional system. "We didn't sign any contracts with this group; there are no e-mails or promises," Slaughter said. "I don't know what to tell you. I was actually surprised they were under construction." The council, headed by Lt. Gov. John Bohlinger and composed of lawmakers and others with interests in Montana's criminal justice system, acts only as an advisory group to the Department of Corrections. The committee does not have the authority to change state law or approve prison contracts with Two Rivers. Hardin city officials worked with a Texas consortium to build and finance the $27 million prison. It was completed this summer and promoted as a way to bring 100 new jobs to the economically depressed town at the edge of the Crow Indian Reservation. The prison needs about 250 inmates to make enough money to open its doors and begin to repay the millions needed to build it, Hardin officials said. Michael Harling, one of the Texas financers of the project, said in an interview after the meeting that the financing package includes enough money for the prison to sit empty until May 2009. After that, the prison would be nearing a financial crisis. But by not repaying its bonds until then, the prison would technically be in default on its debt. State and federal officials have said they don't need any of the prison's 464 beds, and state law forbids the prison from housing out-of-state prisoners, according to a recent opinion by Attorney General Mike McGrath. The Two Rivers Authority and the city of Hardin have since sued the state, asking a Helena judge to throw out McGrath's opinion. The city-owned prison was built without a single contract, Hardin City Attorney Rebecca Convery told the committee, because they were told the state wouldn't enter into contracts with a prison that wasn't yet built. Paul Green, a Hardin businessman who worked at the city's economic development branch several years ago when the prison was in the planning stage, said he met with Slaughter then and walked away feeling that the state would fill the prison if the city built it. "While there is a need, (Slaughter) said they can't sign a contract with a facility that isn't built yet," Green said. But Slaughter and Diane Koch, a Corrections Department lawyer, said the only way the state ever contemplated using the prison was to temporarily house local felons after they'd been convicted and were on their way to other state facilities. The state has contracts with every county jail in Montana to hold felons until the state has room for them elsewhere. "It would be maybe five or 10 inmates," Koch said, "not enough to fill a 464-bed facility." Sen. Trudi Schmidt, D-Great Falls, a member of the advisory council, sits on the eight-member panel that helps draft the Department of Corrections budget. She asked Two Rivers and Hardin officials why they didn't come to the panel's meetings in 2005 when lawmakers were crafting the agency's two-year budget. "I guess I'm wondering why the city of Hardin never knew what was going on in the Legislature," she said. Schmidt and others also questioned just what kind of detention center the Hardin prison is. Montana has one private prison in Shelby that houses mostly state inmates, under a contract with the state. The state also has contracts to house inmates at regional prisons in Glendive and Great Falls. Those prisons were built and owned by the counties and function as county jails. The Hardin prison is not a purely private prison like the Shelby facility, nor is it the Big Horn County jail, said Greg Smith, executive director of the Two Rivers Authority. The county does not support the prison, he said in an interview after the meeting. Convery told the panel that the prison is city-owned but will be privately run by a for-profit company for at least the next two years. That would make it the only entity of its kind in the state. The authority sought out-of-state inmates after state and federal officials said they didn't need the space.

January 23, 2008 The Gazette
The Two Rivers Detention Center was built as an investment in Hardin. But a legal tangle with the state has left the jail unused and the security of the investment threatened - for the people offered jobs at the jail, for Hardin's economy and for investors who bought mutual funds that financed the $27 million project. That means no income and no cash flow to make a $960,000 interest payment that is due May 1. Two Rivers Authority holds $27 million in tax-exempt revenue bonds for the detention center, some $20 million of which went into building the facility. The bonds are not general-obligation bonds, so the landowners of Hardin and Big Horn County won't be held responsible for repayment. In December, the developers said that if the detention facility had about 250 inmates by March it might be able to get money flowing and avoid default. Lacking a court order allowing it to take out-of-state inmates and without contracts for any inmates, it's unlikely that the facility will open in time to stay out of financial trouble. Two Rivers Authority leaders maintain that the Department of Corrections and a former director, Bill Slaughter, supported the idea of the facility. However, they say, state policy has changed, threatening the detention center's future because the state won't contract to send Montana prisoners there. Two Rivers Authority Executive Director Greg Smith said the state must remain consistent in its policies to maintain a good investment culture. He said he also is concerned about the effects on out-of- state investors - whether they are individuals whose savings is threatened by a financial loss on bonds or a large corporate investor. "It is important that the state really care about people who are investing in this state," he said. "We're not the wealthiest state in this union, and we need people who want to invest in us. "To me, somebody who is investing in Hardin is investing in the state of Montana." Smith said the $27 million is not a huge amount of money when spread across investors around the United States, but on the individual level the investment could be important to those people who put their retirement or savings into a mutual fund. "Who knows, there could be people in Montana," Smith said. Michael Harling, executive vice president of Municipal Capital Markets Group, an underwriter of the bonds, said the $27 million in bonds was purchased within a few weeks of becoming available in late April 2006. If bonds go bad, the mutual fund that is holding them is going to lose some market value, Harling said. The effect of the loss is that every participant in the pool of investors also loses a little. That scenario plays out only in relation to Two Rivers Detention Center if a person is invested in a mutual fund that holds some of the Hardin bonds, Harling said. "It's a small ripple, but it is fair to say that people in Montana who have their savings invested in tax-exempt mutual funds stand a chance to lose part of their asset value," he said.

December 4, 2007 Billings Gazette
The attorney general's opinion issued Monday may leave Hardin prison investors empty-handed, but a loss won't happen overnight, the lead investment banker on the project said. The $27 million that paid for the construction and startup costs of the facility was issued in revenue bonds. The bond holders, or owners, are some of the largest institutional bond funds in the U.S. that manage billions of dollars, said Michael Harling, executive vice president of Municipal Capital Markets group Inc., the Texas firm that underwrote the project. The investment firm set up the transaction to secure the private activity bonds. The bonds are tax-free because the issuer is a governmental entity - Two Rivers Authority, the economic development arm of the city of Hardin. And because they are repaid through revenue generated by the project, the bond holders are the ones on the hook if no money comes in. Regardless of whether the prison ever opens, the next interest payment, of $960,012, is due May 1. The first principal payment of $615,000 and an interest payment of $960,012 are due Nov. 1, 2008. Nearly $2 million in interest has already been paid on the bonds. A debt service reserve fund - about $2.6 million - was set aside from the original funding. That money can be used if the facility doesn't have revenue to makes payments. However, using the fund causes difficulties. "The problem is, once that reserve fund is tapped, it becomes an event of default," Harling said. "(A default) casts a sort of pallor over it in the financial world. That isn't great, and we don't want that." The funding includes about $19 million for construction that has been paid to the designer and builder, Hale-Mills Construction of Houston. Harling figures the facility would have to open with about 250 prisoners by around March to have revenue flowing in time for the May 1 payment. Two Rivers Authority has one contract in the works with the Bureau of Indian Affairs, but it is still being completed. The contract isn't for enough prisoners to make opening the facility feasible. In the bond project's official statement, potential owners were warned of the risk of funding the Hardin project without contracts that secured revenue. According to the feasibility study commissioned by the underwriters and released in January 2006, Two Rivers had no assurance that it would get enough contracts, or a guaranteed number of inmates, to make its payments on the bonds. Also, the "primary market focus" was the Montana Department of Corrections and was based on the assumption that Two Rivers would be awarded at least one publicly bid contract, according to the study. Harling said it was a reasonable risk because studies showed that state and federal agencies needed prison space and the Corrections Department "indicated but didn't guarantee it would utilize the facility," he said. That indication apparently changed between 2005 development meetings, which Harling said Corrections officials attended, the April 2006 issuance of bonds, groundbreaking that June and construction completion this summer. He blames the problem on the state of Montana and the Corrections Department. The state's refusal to allow Two Rivers to contract with other states, specifically Wyoming, to take prisoners led to Hardin's asking for an attorney general's opinion. That opinion was issued Monday and affirmed that the facility can't take out-of-state inmates. "We bought into the risk of there's sufficient inmates, because they are out here," Harling said. "But for somebody to, as far as I'm concerned, change the rules once we get open, is just wrong. "Or, somebody should have said in 2005, 'By the way, it's not legal to do what you want to do,' " he said. "You can't just stick your head in the sand after you said, 'We really like the idea and it's a good project,' and then two years later say, 'We say it's not legal any more.' " The two attorneys listed in the bond project's official statement were not available for comment. Investment was a risk, study reported -- Bond holders took a risk by funding the Hardin prison project without contracts that secured revenue, according to a feasibility study commissioned by the underwriters. The study by Howard Geisler, of GSA, Ltd. based in North Carolina was completed in January 2006. Here are some of the project's "potential obstacles to project success," from the study: • No assurances that Two Rivers Authority would enter contracts or that any contract would yield enough money to meet financial obligations; • TRA had no contractual guarantee that any specific number of detainees would be held for any defined period; • TRA had no contractual guarantee that Montana Department of Corrections would not build more space or that other detention facilities would not be built to "service the target market," and that the state of Montana was the primary market focus, based on the assumption that TRA would be awarded one more publicly bid contracts. It further states that future economic conditions, legislative change and government policy could change the numbers of persons for which the state is responsible or has the fiscal resources to house," the study states. "Several federal agencies are viewed as potential users and their use level will be dictated by government policy and budget allocations." "The factors listed above define potentially significant risks to potential purchasers of the bonds, and the vast majority of them are linked to influences over which the Authority (TRA) has no meaningful degree of control," the study states. Here are the "factors mitigating the potential obstacles" listed in the study: • The U.S. Marshals Service uses local detention facilities across the country to house prisoners and the Montana District needed beds. • The DOC had publicly stated that it might need to send prisoners out-of-state because of the space crunch and was looking for non- profit groups to build and operate specialized treatment facilities. The total contracted bed capacity at the time was 376. • The center is located near Billings, where the Marshals Service holds people who are appearing in federal court. "In addition, the population concentration in the Billings area produces a significant impact on the (DOC) with a large number of individuals in its custody being from the area," the study states. Also, the DOC was soliciting offers to build a methamphetamine treatment center. "The Billings area, and particularly the nearby reservations represent a significant source of individuals charged with offenses related to possession of this drug," it states. • There are seven Indian reservations in Montana "Nationally, tribal jails are in general in deplorable conditions and are typically overcrowded," the study states. "Native Americans also represent a significant percentage of the (DOC) population while many Native Americans convicted of federal crimes are housed in Federal facilities throughout the United States. To that end the proposed center offers a resource to relieve pressures on the tribes and (DOC) as well as to return incarcerated individuals nearing completion of their sentences to a location nearer their home where visitations by family are possible."

November 16, 2007 Helena Independent Record
Backers of a brand new but empty $20 million detention center in Hardin tried Thursday to convince two lawyers on Attorney General Mike McGrath’s staff to change a draft opinion so the jail can house out-of-state inmates. Chris Tweeten, McGrath’s chief civil counsel, and Jennifer Anders, an assistant attorney general who wrote the draft opinion, were noncommittal after lawyers and an investment banker for the Hardin jail made pitches to alter the conclusion. Attorneys for the city of Hardin and Municipal Capital Markets Group Inc., a Dallas, Texas, investment banking firm that issued the $27 million in revenue bonds to finance the Two Rivers Regional Detention Facility in Hardin, will respond in writing to the draft legal opinion next week. Tweeten said the opinion is only a draft at this point, and the attorneys haven’t made any final recommendation to McGrath, who reviews and often makes revisions in the final version. But, Tweeten said, “There have been relatively rare instances where we have changed the opinion 180 degrees from where the draft is.” At issue was a draft attorney general’s opinion requested by Rebecca A. Convery, city attorney for Hardin. She asked whether the state Corrections Department has the authority to decide whether convicts from out-of-state law-enforcement and correctional agencies may be housed in a multi-jurisdictional jail like the one in Hardin. She also inquired whether a multi-jurisdictional detention center may contract for the confinement of prisoners committed to an out-of-state correctional facility. The draft opinion concluded that a multi-jurisdictional jail may not contract to house out-of-state inmates because that authority has been reserved for the state Corrections Department under “very narrow circumstances.” There is evidence of “a legislative intent not to allow the interstate exchange of inmates to and from Montana,” the draft said. Convery said the Hardin facility is not seeking permission to house convicted felons from out-of-state prisons or the federal correctional system for the long term. Instead, she said, the Hardin jail would be used to house post-conviction felons on a short-term basis of no more than two years. Tom McKerlick of the Two Rivers Authority, Hardin’s economic development arm that owns the facility, said officials believed the project had the support of former state Corrections Director Bill Slaughter, But he said it lacks the support of Director Mike Ferriter, who took over the state agency in July 2006. In addition, U.S. Marshal Dwight Mackay of Montana had told them the U.S. Marshals Service was interested in space at the Hardin facility, but, as it turned out, the private prison in Shelby got the contract instead. “Quite honestly, we were told by the Marshals Service and the state, you build it and we will come,” Convery said. She said the jail has lined up some short-term contracts from out of state, but the Montana Corrections Department won’t allow them. Michael W. Harling of Dallas, executive vice president of Municipal Capital Markets Group Inc., said the facility has $27 million at risk. That was the amount of the revenue bond issue, including $20 million for the construction, and to cover payments during a few months of transition before opening. Every day the jail isn’t occupied it owes $7,000, he said. The jail, designed to hold 464 prisoners, would employ 105 people with an annual payroll of $2.5 million if filled to capacity. Tweeten asked if the jail supporters had tried to make any changes to state law at the Legislature that might allow the facility to hold out-of-state prisoners. The jail backers said they had no indication that they lacked the support of the Corrections Department. D. Hull Youngblood, an Austin, Texas, attorney representing Municipal Capital Markets Group, took issue with the draft opinion suggesting that one section of the law involving state prison facilities “trumps” another involving community corrections programs. “Statutes can co-exist without overturning each other,” he said. The draft opinion said: “The Legislature clearly intended to limit the authority of any correctional facility or governmental agency, other than the state through the Department of Corrections, to contract for the placement of Montana inmates out-of-state or to receive offenders from other jurisdictions.” It adds: “While the interstate exchange of convicted felons may be an acceptable practice in other states or facilities, it is not one that our Legislature has freely sanctioned.” Youngblood said the Hardin prison “was not developed, planned and built in a vacuum.” He said much discussion took place. Tweeten suggested the Hardin jail backers could seek clarification from the Legislature when it meets again in January 2009.

Willacy County Adult Correctional Facility, Raymondville, Texas
The Rainmakers Banking on private prisons in the fleecing of small-town America. By Beau Hodai (Click here)
August 28, 2013 THE BOND BUYER

DALLAS – Bonds issued for Willacy County, Texas’s $7 million jail in the town of Raymondville are among several being audited by the Internal Revenue Service to determine whether its bonds should lose their tax exemption, according to County Judge John F. Gonzales. Gonzales disclosed the audit at a meeting of the Willacy County Commissioners Court earlier this month, according to the Valley Morning Star of Harlingen. The south Texas county, which has invested heavily in the prison industry, has a large stake in the tax-exempt status of the prisons. The county seat of Raymondville has earned the nickname “Prisonville” because of its heavy concentration of private lockups, most housing federal inmates on immigration violations. Refinancing the $3 million of outstanding bonds as taxable would cost the county about $200,000, Gonzales said. The jail was built using 2004 bonds bearing 7.5% coupons on maturities of 2029 with yields of 7.75%, according to the Municipal Securities Rulemaking Board’s Emma Web site. The original $7.65 million of unrated bonds were issued in the name of the County Jail Public Facility Corp. of Willacy County. Underwriters were Herbert J. Sims & Co. and Municipal Capital Markets Group. The law firm of Jenkins & Gilchrest served as bond counsel. According to the official statement for the 2004 deal, interest rates would rise to 140% of the original issue rate if the deal were found to be taxable, or the issuer could redeem the tax-exempt bonds at a price equal to 105% of principal, plus accrued interest. Bonds become taxable if more than 10% of the proceeds are for private use, such as a corporate prison company, and more than 10% of the payments for debt service are from private parties. The county built the jail with plans to use excess capacity for holding inmates for the U.S. Marshal’s Service to provide additional income. Earlier this month, the 96-bed jail held 75 prisoners, including 64 held by the Sheriff’s Department and 11 by federal agencies. In addition to the conduit issuer for the county jail, county commissioners created the Willacy County Local Government Corp. and the Willacy County Public Facility Corp. to issue bonds for privately operated prisons for federal inmates. Standard & Poor’s on Aug. 15 affirmed its triple-B rating and stable outlook on the Local Government Corp.’s $75 million of taxable revenue bonds issued in 2011. With interest, the debt will amount to $189.6 million at payoff, according to Willacy County District Attorney Bernard Ammerman. The debt was issued for what is known as “Tent City,” a prison for low-risk inmates. In February, the Public Facility Corp. refunded as taxable $20 million of revenue bonds for another prison. Those bonds were rated BBB-plus by S&P with a stable outlook, despite what analysts called “the correction industry’s inherent volatility.”

October 21, 2009 Valley Central
Former Willacy County District Attorney Juan Angel Guerra has filed a federal lawsuit against Texas State Senator Eddie Lucio, Jr. and 28 others. The former district attorney alleges that Lucio and the others used their positions to derail an investigation into private prisons in Willacy County. Guerra claims in his 35-page lawsuit that he secured three corruption convictions against three Willacy County officials in state and federal courts. The former district attorney claims he was investigating the April 2001 death of inmate Gregorio de la Rosa when he began to uncover a massive kickback and corruption scheme between the private prison companies and public officials. Guerra claims then-U.S. Attorney General Alberto Gonzales ordered then-U.S. Attorney for the Southern District of Texas Don DeGabrielle to halt a public integrity investigation. The former district attorney claims that several public officials with connections to the prisons dragged his name through the mud and raised false criminal charges that ultimately cost him a bid for re-election and obstructed the investigation. The lawsuit names the following defendants: • Texas State Senator Eddie Lucio • Willacy County • City of Raymondville • Former Willacy County Judge Simon Salinas • Raymondville Police Chief Uvaldo Zamora • Special prosecutor Mervyn Mosbacker • Special prosecutor Gustavo Garza • Raymondville Police Detective Daniel Cavazos, Jr. • State District Judge Migdalia Lopez • State District Judge Janet Leal • Willacy County Sheriff’s Department Deputy David Martinez • Willacy County District Clerk Gilbert Lozano • Corporation Wackenhut Correction Inc. • Hale Mills Construction Inc. • Hale Mills Construction Ltd. • James Parkey, Corplan Correction, Inc. • Corplan Correction Inc. • Michael Harling, Municipal Capitol Market, Inc. • Municipal Capitol Market Inc. • Ramon Vela • Phil Parker, Hale Mission Construction • J. C. Conner, Management and raining Corporation, Inc • Management and Training Corporation, Inc • Bill Bryan • R Scott Marquardt, Management and raining Corporation, Inc • Texas Rangers Captain Clete Buckaloo • Former U.S. Attorney for Southern District of Texas Donald DeGarbrielle • U.S. Attorney for Southern District of Texas Tim Johnson • Former U.S. Attorney Alberto Gonzales Among the accusations are engaging in organized criminal activity, accepting of an honorarium, abuse of official capacity, official oppression, murder and manslaughter. The former district attorney had secured a criminal indictment involving similar accusations against former Vice President Dick Cheney and several others named in this new lawsuit back in November 2008. The case was thrown out but Guerra continues to fight against abuses in private prisons in Texas and other states.

June 28, 2009 Brownsville Herald
It took about five years, but state Sen. Eddie Lucio Jr. seems to have phased out his paid consulting jobs for construction and engineering firms. Last year, however, he still received at least $25,000 in consulting fees from the Houston-based TEDSI Infrastructure Group, according to his personal financial statement on file with the Texas Ethics Commission. "I was fulfilling a prior obligation on a contract that I had with TEDSI which expired in 2008," Lucio wrote in a statement to The Brownsville Herald Wednesday. Lucio, D-Brownsville, did not say what he did for the firm, but in 2002 said that he would set up meetings and introduce the firm to officials in Brownsville. In 2004 amid mounting criticism of possible conflicts of interest, Lucio told the Herald that he would phase out consulting for firms that do business in the Rio Grande Valley and the state. Besides consulting for TEDSI, Lucio also was retained by CorPlan Corrections of Dallas, Management & Training Corp. of Utah, Aguirre Inc. of Dallas, and Dannenbaum Engineering Corp. of Houston. At the start of 2005, Lucio severed ties with CorPlan, Aguirre, and MTC amid federal inquiries into the federal detention center in Willacy County. A Webb County commissioner and two former Willacy County commissioners were convicted of bribery. Companies involved in the project were not accused of any wrongdoing. Lucio also stopped consulting for Dannenbaum, which he said he introduced to the Brownsville Navigation District. The BND paid Dannenbaum $15.4 million of $21.4 million spent toward developing a still non-existent international bridge at the Port of Brownsville. But, he continued consulting for TEDSI until last year. Lucio's prior financial statements show that in 2007 TEDSI paid him from $10,000 to $24,999 and $25,000 or more in prior years. Lucio had been on CorPlan's payroll since 1999. Aguirre, MTC and Dannenbaum then contracted him, but in interviews prior to 2004 he wouldn't specifically say when or how much each paid him. It was not until 2004 that Lucio started specifically listing the companies that retained him in his financial statements and these, coupled with prior interviews with the senator, reflect that the five firms paid him at least $340,000. Embattled former Willacy County District Attorney Juan Angel Guerra obtained an indictment against Lucio last year, charging him with profiting from the elected office. Administrative Judge Manuel Bañales Jr. dismissed the indictment following arguments from Lucio's attorney, Michael R. Cowen, that the indictment was defective and that Guerra was seeking revenge against those who he perceived to be his political enemies.

December 13, 2008 Brownsville Herald
This year's Willacy County grand jury investigation into alleged criminal activity surrounding for-profit prisons and high-profile public officials is not the first, and District Attorney Juan Angel Guerra said it is tied to an earlier investigation. A federal inquiry resulting in convictions in 2005 stirred up a dust storm in Raymondville when it looked into a money-for-votes and bribery scheme to favor firms involved in the Willacy County Adult Correctional Center, a project that started in 2000. The firms, which did business in Texas and were involved in the project, were CorPlan Corrections, Aguirre Inc., Management & Training Corp., and Hale-Mills Construction, according to Guerra and public records. That federal investigation resulted in the bribery conviction of former Webb County commissioner David Cortez - identified in federal court records as the representative of "a company" - who gave $39,000 over three years from 2000 to 2003 to several officials to secure their votes on the Commissioners Court for the firm's participation in the jail project. However, that firm is never mentioned by name in the court record. Federal officials would not discuss the case, so the reason for the omission could not be learned. Among the officials who received money in return for favoring a jail consultant - also unnamed in the court record - and whom Cortez represented were Israel Tamez of Raymondville, at that time a Willacy County commissioner, and the late Jose Jimenez of Sebastian, also a Willacy commissioner. Cortez, Tamez and Jimenez all pleaded guilty, the federal court record shows. U.S. District Judge Andrew S. Hanen sentenced Tamez to six months in jail, three years probation and a $25,000 fine. Cortez was sentenced to three months in jail, followed by a period of six months of home confinement, two-years probation and a $25,000 fine. Jimenez died in 2006, while Cortez and Tamez were sentenced in late 2006 and directed to serve their sentences last year. The unnamed companies were never charged. The dust storm never quite settled after those convictions. Court records show that a series of continuances delayed when the sentences would begin. Tamez did not serve his sentence until last year. Jimenez was convicted but died before sentencing. In reference to the Jimenez and Tamez cases, Assistant U.S. Attorney Jim McAlister told the court in the fall of 2005: "Both defendants are actively cooperating in helping the government identify and prosecute other individuals involved in unlawful activity. The investigation is ongoing and both defendants are expected to continue their efforts in assisting the government. The government and the defendants agree that sentencing Mr. Tamez and Mr. Jimenez at this time could result in a miscarriage of justice." McAlister's motions to continue Cortez's case are sealed. However, federal court records show that Cortez gave money to yet a third elected official, so that he would favor corporate interests involved in the design, construction, financing, maintenance and management of the Willacy correctional center that was to house federal inmates. During Cortez's sentencing in 2006, his lawyer, Mike DeGeurin Sr., of Houston, told Hanen: "I think, to convince people that he (Cortez) is still a person you can count on to get things done, he (Cortez) makes some payments to Mr. (Israel) Tamez and a couple of others - two other commissioners that, we'll leave their names unspoken." However, Jimenez was the only other person charged, aside from Cortez. There were believed to be additional conspirators, known and unknown, the federal record shows. Neither the third commissioner to which DeGuerin referred, nor the other conspirators that McAlister referred to in 2005, was never mentioned by name or location in court documents and was not part of the court record. DeGeurin did not respond to a recent request for comment. Tamez's attorney, John David Franz, of McAllen, also could not be reached for comment. Jimenez's lawyer, Nemecio E. Lopez Jr. of Harlingen, declined to talk about the case. Enter Guerra and his investigation into the management and operation of for-profit prisons in Willacy County, which led to the recent indictments of, among others, U.S. Vice President Richard B. Cheney, former U.S. Attorney General Alberto Gonzales and state Sen. Eddie Lucio Jr., D-Brownsville. The indictment charges Cheney and Gonzales with profiteering from the jails and neglect of conditions due to self-interest. The indictment against Lucio charged him with influence peddling in receiving consulting fees from the firms for services he would not have been requested to provide were it not for his official position. Guerra now says the FBI and Texas Rangers told him in 2006 that "higher-ups" in both agencies directed their agents to halt the federal inquiry into the original money-for-votes and bribery scheme. Spokeswomen for the U.S. Attorney's Office for the Southern District of Texas declined to comment on Guerra's allegations, and Tela Mange of the Texas Department of Public Safety said no one in the department knew anything about Guerra's allegations, including the Texas Rangers. The FBI did not return a request for comment. Guerra says that he reopened the investigation because he wants to ensure justice is done before he leaves office at the end of this month. "If I know that a crime has been committed, I have to make a diligent effort to make sure that the crime is addressed in my tenure. My job is to make sure that criminals don't get away. That is what a prosecutor does," he said. James M. Parkey, president and founder of CorPlan, on Monday verified for the Brownsville Herald that Cortez had been one of the firm's consultants, but said he had not known of any payments from Cortez to Tamez, Jimenez or others. "Our position is that Mr. Cortez pleaded guilty," said CorPlan's lawyer, Edmundo O. Ramirez, of McAllen. There is no other position, he said. Public records - yearly financial statements that the Texas Ethics Commission requires of elected officials - show that Lucio was one of CorPlan's consultants. The Nov. 17 indictment against Lucio alleges that because of his position he received consulting fees from six firms, including CorPlan Corrections, Aguirre Inc., Management & Training Corp. , and Hale-Mills Construction. Guerra said the firms were tied to the Willacy County 500-bed jail project, which county commissioners approved in 2000. Parkey said he was not at liberty to disclose the services Lucio provided his firm without Lucio's consent. Lucio told The Brownsville Herald in 2002 that he received consulting fees from the firms for introducing them to public officials and setting up meetings. In 2002, Parkey said, "Public relations doesn't require a product in terms of written material. He (Lucio) keeps our name in front of people." Texas Ethics Commission records show that Lucio listed receiving at least $135,000 or more from CorPlan Corrections, Aguirre Inc. and Management & Training Corp. in 2003 and 2004. Hale-Mills is not on the list. Lucio also told The Brownsville Herald in 2002 and again in 2005 that he had been consulting for CorPlan since 1999 and that Aguirre and Management & Training Corp. soon contracted with him for consulting, marketing and public relations. He would not say at that time when or how much money each company paid him. It was not until 2004 that Lucio reported the companies in his personal financial statements to the Texas Ethics Commission, which requires that officials list retainers and sources of income. Lucio's chief of staff, Paul Cowen (uncle of Lucio's lawyer, Michael R. Cowen) said in 2002 that the fees had been reported, but under the umbrella of Rio Shelters Inc., a firm owned by Lucio that provides advertisements on bus shelters. Hale-Mills and Aguirre Inc. did not return a request for comment Tuesday, and Carl Stuart, communications director for Management & Training Corp., said, "We just don't make comment on pending litigation." During the inquiries in 2005, Lucio wrote to CorPlan Corrections, Aguirre Inc. and Management & Training Corp. advising them he was taking a leave of absence because news reports had named the three companies as those involved in the building and management of the facilities in Willacy County. Lucio at that time brought copies of his letters to the Brownsville Herald. Cowen, Lucio's lawyer, on Monday said he has instructed his client not to comment "as long as Mr. Guerra is in office." Contrary to his client's Nov. 17 indictment, which presiding District Judge J. Manuel Bañales dismissed Dec. 1, Lucio did not do consulting work for Hale-Mills, Cowen stressed. (Bañales also threw out the indictments against Cheney and Gonzales on Dec. 1.) "In fact, we ask the public to take all of Mr. Guerra's accusations with a grain of salt, and to consider the misrepresentations he has already been caught making under oath in this case," Cowen said in a written statement to The Brownsville Herald. Cowen said he and the senator are disappointed that Guerra continues his vendetta against Lucio, even after the court dismissed all charges against the senator. Lucio has to do outside work to earn a living, Cowen said, noting that the senator is paid only $600 a month by the for his legislative services. Cowen said Lucio earns less than the minimum wage, and cannot support his family on $7,200 a year. "However, he has been very careful to ensure that any work he does is not only legal, but also wholly ethical," Cowen said in a written statement. Lucio has gone to great lengths to ensure that the consulting work complies with all legal and ethical requirements, Cowen said, noting that he requested a formal attorney general's opinion on whether a legislator can provide consulting, marketing and public relation services to clients who have dealings with government officials. Cowen said Lucio also consulted with two attorney generals, the Texas Ethics Commission and hired a private attorney to ensure that his business affairs followed the law. In a July 2003 opinion, Texas Attorney General Greg Abbott told Lucio that laws do not categorically prohibit a legislator from representing a client's interests before government officials or entities. Still, Abbott said, legality depends on the specific facts of a case. Abbott wrote that Lucio did not elaborate on the nature of his clients' businesses nor on his dealings and communications on their behalf. Furthermore, whether a public servant's outside employment creates a conflict of interest frequently requires resolving fact questions, which is beyond the purview of the opinion process, Abbott's opinion states. Abbott wrote that a legislator should be aware of the provisions in Chapter 36 of the Texas Penal Code. A legislator may not solicit or accept any benefit unless it falls within one of the exceptions recognized by the code, the opinion states. Abbott noted that the primary exception allows a legislator to accept fair compensation for work performed in a capacity other than as a public servant. "Should you have a specific concern, you may wish to consult with private counsel," Abbott advised Lucio. Lucio told The Brownsville Herald in 2002 that he did not consult with an attorney. Cowen on Monday said that Lucio provided legitimate services to the firms that contracted him. "Senator Lucio has nothing to hide, and is happy to have a competent, unbiased prosecutor review all of the evidence in this matter. Unfortunately, Mr. Guerra's words and actions show him to be neither unbiased nor competent," Cowen said. Guerra vehemently denies that his charges against Lucio are part of a vendetta against the senator. "The problem with Eddie Lucio is that he has not explained what he does for these companies," Guerra said. During a recent court hearing, Guerra said that if a jury found companies hired Lucio because he is a senator and not because of services he provided "then that's kickbacks and that's it." On Thursday Guerra said, "He (Lucio) says that he has permission from the attorney general, but the attorney general opinion did not give him permission (to receive fees from the firms). And then he said he got permission from the Texas Ethics Commission, and he has not produced one document showing that. The accusation that I have a vendetta is a smokescreen." Bañales on Dec. 1 dismissed all charges against the high-profile defendants. And Wednesday, he removed Guerra from bringing any further charges in the cases against Lucio and others in which he has a "clear bias and prejudice." However, even though Guerra appears hamstrung in his proclaimed quest for justice, the saga may be nowhere near an end. DA Pro Tem Alfredo Padilla, whom Bañales appointed to review the indictments, said Thursday that he wants to present all of the evidence that Guerra gathered to a new grand jury, which will be impaneled early next year.

December 8, 2008 Valley Morning Star
District Attorney Juan Angel Guerra said Monday that state Sen. Eddie Lucio's elected position conflicts with his job as a consultant for companies that work within his jurisdiction. Guerra said he believes that companies hire Lucio because of his position as a state senator and that Lucio uses his influence to obtain the consulting work. "These people are hiring him because of his position and not because of his skills," Guerra said in an interview. "There's no way to justify it." Lucio could not be reached for comment Monday afternoon. Guerra said that Lucio could work as a consultant but not within his state Senate District 27, that includes Cameron, Kenedy, Kleberg, Willacy and part of Hidalgo counties. Lucio was first elected in 1991. But Edmundo Ramirez, a McAllen attorney who represents Ronald Holmes, an attorney for CorPlan Corrections in Dallas, one of the companies for which Lucio is a consultant, noted the Texas Ethics Commission has sanctioned Lucio's work as a consultant. "The ethics commission has found nothing wrong with those payments," said Ramirez said, referring the consulting fees Lucio is paid. Lucio owns an advertising and public relations firm in Brownsville. "Sen. Lucio gets hired because of what he brings to the table," Ramirez said. "He's a PR man. He's a good one. He brings value to the table. "Regardless of what Mr. Guerra believes, (payments) are legal and have been properly reported by Sen. Lucio. The law is the law." The Texas Attorney General's Office sanctioned Lucio's work as a consultant in a legal opinion issued in July 2003. Texas law states that "it must be the services rendered and not the status of the public servant rendering the services that is of value to the person for whom the services are performed," the Attorney General's opinion noted. CorPlan, a prison consulting company, requested on Monday that a judge quash Guerra's subpoena that orders the company to appear in court Wednesday. Guerra said he wants CorPlan to appear in court to disclose the nature of the services it pays Lucio to perform. Last month, Guerra pushed for grand jury indictments against Lucio, Vice President Dick Cheney, former U.S. Attorney General Alberto Gonzales and several local elected officials. State District Judge Manuel Bañales threw out those indictments. But Michael Cowen, Lucio's attorney, believes Guerra will try to re-indict Lucio before Guerra's fourth term expires Dec. 31. The grand jury is set to meet Friday for its last scheduled session before its term expires Dec. 31, District Clerk Gilbert Lozano said. Cowen will request that Bañales on Wednesday disqualify Guerra as prosecutor, arguing Guerra's "personal animosity toward Lucio creates a conflict of interest." Guerra filed subpoenas on Dec. 5 to order CorPlan, Management and Training Corp., Aguirre Inc., Hale Mills Corp., TEDSI Infrastructure Group Inc. and Dannenbaum Engineering Corp. to appear in court. Lucio has worked as a consultant for these companies. CorPlan, Management and Training Corp., Aguirre and Hale Mills are companies that worked on a $14.5 million prison project that was the focus of a bribery scandal that led to the convictions of former Willacy County commissioners Israel Tamez and Jose Jimenez and former Webb County Commissioner David Cortez.

September 19, 2008 Valley Morning Star
Willacy County residents make up more than half of employees at a county-owned prison and a detention center that holds illegal immigrants, said the company that runs the operations. Criminal background checks screen out about 2 percent of people who apply for jobs at the 525-bed prison and the 3,000-bed detention center, said Carl Stuart, a spokesman for Management and Training Corp. in Centerville, Utah. But three years after the detention center opened, the local job pool is "tapped out," Stuart said in an e-mail. Now the company recruits more employees from outside the county, he said. County residents make up about 73 percent of employees at the detention center that the company operates for U.S. Immigration and Customs Enforcement, Stuart said. The country's largest illegal immigrant detention center employs about 700 workers, said Jackie Roberson, Raymondville's economic development manager. The detention center pays starting wages of about $9.36 an hour, Stuart said. Locals make up about 53 percent of employees at the county-owned prison that holds prisoners for the U.S. Marshals Service, Stuart said. The prison pays starting salaries of about $17 per hour. The prison employs about 200 workers, Roberson said.

August 28, 2007 Valley Morning Star
Willacy County Commissioner Aurelio Guerra on Monday questioned a contract that could pay more than $27 million to the company that runs an illegal immigrant detention center here. Wednesday, members of the Willacy County Local Government Corp., the non-profit organization that oversees the 2,000-bed detention center, will travel to Dallas to close a deal that’s expected to hire Management Training Corp. to run a 1,000-bed expansion. The $111.5 million contract with the U.S. Immigration and Customs Enforcement would pay Utah-based MTC a “fixed annual fee” of $27.4 million when the detention center’s average monthly inmate count falls below 2,500, the contract states. The government would pay MTC $27.4 million plus $4.42 a head for each illegal immigrant when the detention center’s average monthly inmate count exceeds the 2,500 mark, the contract states. “It can be one inmate and we’re obligated to pay $27 million,” Guerra said. “In past agreements, there weren’t fixed fees.” Under a current agreement, a federal contract pays MTC $27.75 a head for each illegal immigrant held in the 2,000-bed detention center that averages about 1,500 detainees a month. But the contract does not bind the county to pay MTC $27.4 million a year, said Michael Harling of Municipal Capital Markets Group in Dallas. The contract would not tap into the revenue that the county needs to repay its debt, Harling said. First, the government’s money will go to pay the county’s debt, Harling said. Then it will go to pay the county, he said. “To the extent there is enough money, they will pay MTC,” Harding said.

February 25, 2007 AP
The engine of the old, borrowed camper chugs away in the parking lot of the county jail – three goats, a rooster and a horse alongside. It is the temporary home and office of Willacy County District Attorney Juan Angel Guerra. Mr. Guerra, 52, has brought down public officials and continues investigations. Most recently, he filed – and then dropped – motions to have the sheriff and two elected officials removed from office. Now, he says, they're all out to get him. A special prosecutor raided his office recently and filed public theft charges against Mr. Guerra. They were dropped Friday. Depending on whom you talk to, Mr. Guerra is either a lone-wolf champion for South Texas justice or a chronic malcontent with some shady dealings of his own. "He's just been fighting with us for so many years," said Paul Cowan, chief of staff for state Sen. Eddie Lucio. "Anything you want to do, he wants to fight it, fight it, fight it. We have no problems working with any other officials. The problem lies with him." In 1991, with just two years' experience practicing law in a mechanic's garage, county commissioners appointed Mr. Guerra to fill in after the incumbent district attorney died. He began investigating the big landowners and business owners for crimes such as embezzlement and receiving double federal payments for fictitious crop losses. Now, Mr. Guerra has gone after the contractors involved in building private jails. County, state and federal lockups, and now the huge pods of the 2,000-bed immigration detention center, make a bleak campus on the former farmland. Mr. Guerra's investigation into a bribery scheme involving federal prison contracts led to guilty pleas by three former Willacy and Webb county commissioners. Mr. Guerra now says he wants to know more about Mr. Lucio's consulting contract for the prison company that built the $60 million federal complex of tent-like domes. Mr. Lucio said Mr. Guerra was upset about legislation he passed that left the county with only one state district judge – Migdalia Lopez, one of the officials Mr. Guerra wanted out of office. Mr. Lucio would not disclose his consulting fees for the prison deal but said they were "modest" and legal. He said the prison had been a win for the county. "We've brought more than a thousand jobs to that county, and Johnny Guerra has not brought one," he said. Mr. Guerra says another company was prepared to build the facility for $35 million. "In six weeks they spent $60 million," he said. "There's no way that thing cost $60 million." Two weeks ago, Mr. Guerra skipped court to go to Austin and look for a sympathetic ear. When he came back, a special prosecutor appointed by Judge Lopez had taken Mr. Guerra's computers and many of his files. Mr. Guerra now maintains he can't do his work. According to Judge Lopez's order appointing the special prosecutor, a grand jury complained that Mr. Guerra was pressuring them for an indictment in a sexual harassment case. The special prosecutor is Gustavo Garza, Mr. Guerra's four-time political opponent. Mr. Garza recently charged Mr. Guerra with three counts of felony theft by a public servant and one misdemeanor obstruction charge for trying to prevent officers from searching his office, but a judge Friday dropped the charges. Mr. Guerra has threatened to dismiss hundreds of cases in retaliation, but so far only four have been dropped. Townspeople don't know what to make of it. "It's a mess," said Polo Gracida, who came to watch court on Tuesday. "I don't know whether he's a hero or not. We're definitely due for a change."

November 22, 2006 Express-News
The last of three county commissioners who pleaded guilty to a $39,000 bribery scandal involving contracts for a new federal detention facility in the Rio Grande Valley has been sentenced. Former Webb County Commissioner David Cortez, 72, of Laredo was sentenced Tuesday in federal court in Brownsville to three months in prison for funneling the bribes in 2002 to former Willacy County Commissioners Jose Jimenez of Sebastian and Israel Tamez, 60, of Raymondville in exchange for favorable votes in the selection of contracts for the 500-bed federal detention center here. U.S. District Judge Andrew Hanen also ordered Cortez to a two-year term of supervised release, including six months of house arrest. He was fined $25,000. Jimenez died before sentencing. Tamez, 60, was sentenced to six months in prison, three years of supervised release and a $25,000 fine. All three had faced 20 years in prison. Sheriff Larry Spence said the case had "drug out for so long." "I was surprised of the sentencing, but at the same time I am glad that they are getting finalized," he said. But it's still unclear if the case is over because authorities haven't made public where the money originated. Authorities have requested anyone else involved to come forward like the commissioners did, but no additional arrests have been made. A spokeswoman for the U.S. attorney's office in Houston declined to comment. Officials have said the companies hired to either design, build or manage the facility, which opened in 2003, were the Dallas-area firms CorPlan Corrections LTD and Aguirre Inc., along with Management Training Corp. of Centerville, Utah, and Hale-Mills Construction of Houston. Municipal Capital Markets Group Inc, of Dallas, underwrote the bonds. "It seems like all the people that have investigated this thing, if there was somebody else in there that they would have been found," said Mike Harling, executive vice president of the investment firm. He said public records showed Cortez was hired by CorPlan, but he suspected he could have made the bribe on his own will. No company employees have been charged. "Just because you hire somebody, and hire in the liberal sense, doesn't mean that you are responsible," Harling said. "If you haven't asked them to go out and bribe somebody, if they choose to do that and choose not to tell you, what can you say?" Cortez resigned from the Webb commission at the time of his guilty plea in 2005. Webb County Judge Louis Bruni said the case is a sad example of a bad decision.

November 9, 2006 AP
A former Willacy County commissioner was sentenced to six months in federal prison Thursday for taking bribes in return for votes on a federal prison contract. Israel Tamez, 60, of Raymondville, also must pay a $25,000 fine and serve three years probation after his release. Tamez and former Willacy County Commissioner Jose Jimenez of Sebastian pleaded guilty in January 2005 to conspiracy to commit bribery. Tamez admitted receiving cash payments totaling $10,000 for voting to select particular companies to design, build, maintain and manage the prison. Charges against Jimenez were dismissed earlier this year after he died.

July 23, 2006 Express News
The Willacy County attorney is speaking out against his county's new contract for a massive detention center because he said it involves companies still under a cloud from the 2004 bribery convictions of three elected officials. Juan Angel Guerra also accuses veteran Sen. Eddie Lucio Jr., D-Brownsville, of going back on his word by continuing to represent the same firms. Former Willacy County Commissioners Israel Tamez and the late Jose Jimenez were convicted in 2004 of accepting bribes in exchange for favorable votes regarding a 600-bed prison that opened in Raymondville, the county seat, in 2003. The third convicted official, Webb County Commissioner David Cortez, was an associate of CorPlan Corrections, a consulting company at the time of the prison project. Cortez was accused of funneling the bribe money for favorable votes on contracts. No company employees, however, have been charged. Federal prosecutors wouldn't comment on the case, but observers believe the investigation is ongoing because the commissioners' sentencing dates have been pushed back several times. Meanwhile, the same firms are building a 2,000-bed detention facility near the same prison. Willacy commissioners voted 3-2 on Monday to approve $60.6 million in bonds for the new facility, which is on a fast-track construction schedule to house mostly non-Mexican undocumented immigrants in a series of tentlike structures for U.S. Immigration and Customs Enforcement, or ICE. Utah-based Management Training Corp., or MTC, will operate the facility; Houston-based Hale-Mills Construction Inc. is building it; and Argyle-based CorPlan is consulting on the project, said Guerra, who is the county and district attorney. A May 27, 2005, letter from commissioners to the county's nonprofit corporation set up to oversee the federal prison project asked it to "terminate its contractual relationship with CorPlan," because a Willacy County lawsuit against the firm alleged it was involved with the bribes. "Now they are asking me to sign a contract that includes CorPlan," Guerra said. "I told the commissioners you can't have it both ways. First you pass the resolution saying you don't want to deal with CorPlan. Now you do a contract that I know for a fact includes CorPlan. So we are back to square one." The lawsuit was dropped in April. County Judge Simon Salinas said he wasn't aware of the letter and resolution that prompted it. It's probably too late anyway, he added. "The contract is already signed, the work is already begun," he said. Regardless, Salinas said, the county can't proceed under the assumption that leaders of the companies are criminals. "In this country we are innocent until proven guilty," he said. "And nobody out there pressed charges against the companies. ... Just because these (commissioners) plead guilty doesn't mean everybody in the world is guilty." Guerra favored Tennessee-based Corrections Corporation of America, or CCA, which offered to finance the detention facility on its own rather than through the county. He said the commissioners initially favored CCA, but later picked MTC. Commissioner Noe Loya said Guerra "is trying to find every excuse to hire CCA, and change our minds, but it's over." Guerra said he met with Lucio two weeks ago and the veteran lawmaker pushed MTC. "I asked him, 'Are you talking to me as my senator or as an employee of one of these companies?'" Guerra said. "He told me he was talking to me as a consultant." Lucio said he met with Guerra because it "appeared that he had quite a bit of influence on the Commissioners Court." Lucio said he told Guerra he favored MTC because it treats its employees well. Lucio said he thought CorPlan had been cleared because the lawsuit filed on behalf of Willacy County against James Parkey, president of CorPlan, was dropped and there have been no other arrests. Parkey did not return a call seeking comment. "My main focus on talking with Johnny (Guerra) was trying to sell him on the fact that MTC was a very reputable company," Lucio said. "I feel very comfortably speaking on their behalf and asking them to consider us and that was my main focus." According to the Texas Ethics Commission, Lucio reported in 2005 that MTC and CorPlan paid him a total of at least $50,000 through his Brownsville company, Rio Shelters Inc. In the wake of the bribery scandal, Lucio said he had stopped representing the firms and wouldn't again until the matter was cleared up. "I know there has been a case, a problem, a situation there where somebody associated with (Parkey) out of Laredo was indicted and convicted," Lucio said, referring to Cortez. "But when the lawsuit against him was dropped, I felt that he was exonerated." Told that the bribery investigation may still be open, he said: "If it is, I am not aware of it." Asked if he was being paid by MTC or CorPlan for encouraging the detention center contract, he said: "It's up to them if they feel I did a good job." Lucio said it was "very hard to draw a fine line" between his job as a lawmaker and his private work, but added: "I can tell you this: I do my best." "I get paid $600 a month to be a state senator, and I do it just about on a full-time basis," he said. Damon Hiniger, a vice president of CCA in Tennessee, said he was surprised by the county's decision because CCA was going to invest its own money, pay about $1.8 million in property taxes, and shoulder the risk. Judge Salinas said he was influenced by the bottom line, nothing more. "I have nothing against CCA, they are a good reputable company, but they are in the business to make their own bucks," he said. The detention facility is to open Aug. 1 with 500 beds, and then have 1,500 more available Oct. 1. It is part of President Bush's Secure Border Initiative.

May 25, 2005 Valley Star
Willacy County commissioners will request that the Willacy County Public Facilities Corp. break its contract with a company that is a defendant in a county lawsuit. But rankled members of the Public Facilities Corp. (PFC) said they would stand by their vote to hire Corplan Corrections, a prison consultant in Irving. If PFC members refuse the request, commissioners could remove them, County Attorney Juan Angel Guerra said Tuesday, following commissioners’ request on Monday that the PFC terminate its contract with Corplan Corrections. On May 12, the PFC voted to hire Corplan to begin work on a 500-bed addition to a $14.5 million federal prison. The project’s cost had not been estimated, officials said. On May 13, Willacy County filed a lawsuit against Corplan and Hale Mills Inc., the contractor in the prison project. Willacy County formed the PFC as a nonprofit organization charged with the development of the prison project. In the lawsuit filed by attorney Ramon Garcia, the Hidalgo County judge, Willacy County claims illegal action voided the contract that led to the prison’s construction. The prison project has been the focus of an ongoing federal bribery investigation that has led to the convictions of two former Willacy County commissioners and a former Webb County commissioner.

May 21, 2005 Valley Star
The Willacy County Public Facilities Corp.’s decision to hire a company that is a defendant in a Willacy County lawsuit could jeopardize the case, District Attorney Juan Angel Guerra said Friday. On May 12, the Public Facilities Corp. hired Corplan Corrections to expand the $14.5 million federal prison, a project that sparked a bribery scandal that led to the convictions of two former Willacy County commissioners and a former Webb County commissioner. The move would lead to the construction of a 500-bed addition to the prison, which opened with 500 beds in late 2003. The project’s cost had not been estimated, officials said. A day later, on May 13, Willacy County filed a lawsuit against Corplan, an Irving consulting firm, and Hale Mills Inc., a Houston contractor, claiming illegal action voided the contract that led to the prison’s construction. "It’s premature to enter into further contracts with those companies, especially with a pending lawsuit," Guerra said. Willacy County formed the Public Facilities Corp. as a nonprofit organization charged with development of the prison project. The Public Facilities Corp. owns the prison. Attorney Ramon Garcia, the Hidalgo County judge who filed the lawsuit on behalf of Willacy County, declined to comment on whether the Public Facilities Corp.’s action jeopardized the lawsuit. "I’ve been hired to represent parties regarding the facility that’s already been constructed," said Garcia, who Guerra said was working on a contingent fee that would pay him 40 percent of any damages awarded. "These are separate and distinct transactions." In the lawsuit, Willacy County claims former Webb County Commissioner David Cortez worked as a consultant to the two companies when he funneled about $39,000 to "several" Willacy County commissioners. In turn, former Willacy County Commissioners Israel Tamez and Jose Jimenez agreed to vote to select the companies for the project, the lawsuit claims. In March, U.S. District Judge Andrew Hanen convicted Cortez of funneling about $39,000 in bribes to "several" Willacy County commissioners in exchange for their votes to hire a consultant in the prison project. In January, Hanen convicted Tamez and Jimenez after they pleaded guilty to taking more than $10,000 in bribes in the project. An ongoing federal and state investigation is expected to lead to charges against at least one other Willacy County elected official, authorities have said.

May 18, 2005 AP
Willacy County has filed a lawsuit against two companies involved in a $14.5 million federal prison project that became entwined in a bribery scheme. The civil lawsuit was filed last week in state district court against Corplan Corrections of Argyle and Hale Mills Inc. of Houston. The suit claims the companies conspired to bribe county commissioners to select them for the construction project. Although the lawsuit does not specify damages, District Attorney Juan Angel Guerra said the financially troubled county could get title to the prison. "The contract would be null and void, so technically the prison would end up belonging to the county free of charge," Guerra said in Thursday editions of the Valley Morning Star in Harlingen.

March 25, 2005 San Antonio Express-News
A third former South Texas county commissioner charged in connection with a bribery scandal surrounding a detention facility in the Rio Grande Valley was convicted Thursday in Brownsville. Authorities said others could be charged. David Cortez, 70, of Laredo, a former Webb County commissioner, was charged, pleaded guilty and was convicted Thursday of conspiring to "obstruct, delay and affect commerce" for his role in helping secure a contract for the Willacy County Adult Correctional Center in Raymondville. He waived his right to have a grand jury investigate. The charge accused him of funneling at least $39,000 to help a consulting firm get part of the job. Cortez is cooperating with the FBI in an ongoing investigation, authorities said. He was released on a personal recognizance bond and is scheduled to be sentenced June 28. He faces a maximum penalty of 20 years in federal prison. The name of the consulting company he secured the bids for was not released. Two former Willacy County commissioners, Jose Jimenez of Sebastian and Israel Tamez of Raymondville, pleaded guilty Jan. 4 to accepting bribes of $10,000 or more for their votes awarding contracts to build the 500-bed detention facility used for federal inmates. Willacy County Sheriff Larry Spence said the Dallas-area firms CorPlan Corrections LTD and Aguirre Inc., along with Management & Training Corp. of Centerville, Utah, and Hale-Mills Construction of Houston, were the companies hired to either design, build or manage the Raymondville facility, which opened in 2003. "Most of these guys have worked together on several projects," Spence said. Asked to confirm that Cortez had worked for CorPlan, the firm's director, James Parkey, said by phone, "I have no comment on that. Obviously that's a tickly subject and I could refer you to my attorney." According to a charging document, "several Willacy County commissioners did solicit and receive things of value" from Cortez "in exchange for providing advantages not available to others interested in and competing for the selection of a consultant" for the facility. "It was further part of the conspiracy that several Willacy County commissioners did agree to tacitly and implicitly to provide (Cortez) and other corporate representatives with assurances in their capacity" as commissioners, that Cortez and the company he represented "would receive favorable consideration" in exchange for money, the document states. The commissioners agreed to accept the money in June 2000 and were paid around October 2002, according to court records.

February 10, 2005 Valley Star
Willacy County officials are "disappointed" in the U.S. Marshals Service’s placement of inmates in the federal prison that they built to bolster the county budget, County Judge Simon Salinas said Wednesday. This week, the inmate count stood at about 313 in the 500-bed prison, up from an average of about 260 from October to December, Sheriff Larry Spence said. But county officials had based their $3.8 million general fund budget on near-capacity inmate counts projected to generate $300,000. "They’re hitting us in the pocketbook," Salinas said. As part of an agreement, Management & Training Corp., the private firm that runs the prison, pays the county $2 a day for each federal inmate housed in the county-owned prison. County officials expected the inmate count to jump after last month’s meeting with U.S. Marshal Ben Reyna. Jan. 4, Spence and State Sen. Eddie Lucio, D-Brownsville, traveled to Reyna’s office in Washington, D.C., to discuss the drop in inmates. Lucio participated as a consultant to Management & Training Corp., the company that manages the prison. A year-end money crunch led the Marshals Service to transfer inmates to jails with lower housing costs, Spence said. In 2000, county commissioners entered into a contract to build the $14.5 million prison after the Marshals Service solicited the construction of a South Texas prison to hold its inmates. The prison opened in October 2003. Last month, a U.S. district judge convicted former County Commissioners Israel Tamez and Jose Jimenez after they pleaded guilty to taking more than $10,000 in kickbacks in the prison project.

February 7, 2005 San Antonio Express-News
State Sen. Eddie Lucio Jr., D-Brownsville, made the right decision by suspending his business ties, even if only temporarily, with three contractors connected to a federal detention facility at the center of a criminal investigation in the Rio Grande Valley. He should make it permanent. In announcing his decision, the South Texas legislator said he did not want any misperceptions about his business dealings. Lucio, president and CEO of Rio Shelters Inc. a marketing and advertising agency, has been on the payroll of the three companies involved in that public construction project for several years. His primary job was to introduce company officials to power brokers in the Rio Grande Valley. In interviews with the Brownsville Herald, Lucio said he has worked with CorPlan Corrections of Argyle, Aguirre Inc. of Dallas and the Management and Training Corp. of Centerville, Utah, since 1999 earning about $100,000 a year. If that is so, why didn't his employment with the three companies appear on his financial disclosure statements filed with the state until 2004? Lucio is correct when he says it is all about perception for a politician, and omitting vital information about his employers on his state officeholder reports raises serious questions.

January 20, 2005 Brownsville Herald
State Sen. Eddie Lucio Jr. on Tuesday temporarily suspended his consulting work for three companies involved with constructing and managing a Willacy County federal detention center — the focus of a federal bribery investigation. Lucio, D-Brownsville, told The Brownsville Herald on Wednesday that he has taken a “leave of absence” from representing James Parkey’s CorPlan Corrections of Argyle, Pedro Aguirre’s Aguirre Corp. of Dallas, and J.C. Conner’s Management and Training Corp. (MTC) of Georgetown, until the federal inquiry in Willacy County concludes. Lucio said he would reassess the relationship with the firms that pay him about $100,000 a year combined. The federal investigation already has resulted in the Jan. 4 convictions of Willacy County commissioners Jose Jimenez of Sebastian and Israel Tamez of Raymondville for accepting at least $10,000 in bribes in exchange for their votes in awarding contracts for the center’s construction. U.S. Attorney Michael Shelby has not charged the corporate representatives who allegedly bribed Jimenez and Tamez. Companies involved in the project also have not been accused of any wrongdoing. Lucio said Wednesday that he has been on CorPlan’s payroll since 1999 and that the other two firms soon contracted him. He wouldn’t say when or how much each specifically has paid him for marketing the firms and introducing them to public officials. The Herald found, however, that it was not until 2004 that Lucio reported the companies in his financial statements. Asked if he believed that the companies would pay him more than $100,000 a year were he not a senator, Lucio said that “it might seem like a lot of money, and it is in our area of the state, but there are senators and representatives that are making much more money on one case than I do in one year. So, I am not ashamed of what I make. I worked for that.”

January 13, 2005 Valley Morning Star
State Sen. Eddie Lucio on Wednesday stood behind his work as a consultant for a company involved in a $14.5 million federal prison project in Willacy County. Last week, Lucio was working as a consultant for Corplan Corrections and Management & Training Corp. (MTC) when he went to Washington D.C., to discuss a recent drop in the federal prison’s inmate count with U.S. Marshals Service Director Ben Reyna. The prison project has become the subject of an investigation that led to the conviction of two Willacy County officials of taking bribes from at least one of the companies involved in the design and construction of the prison, according to the U.S. Attorney’s Office. No company has been named as the source of the bribes. The prison has been struggling to maintain the number of federal inmates it houses. A decline in the number has hurt Willacy County financially. The county for months has been struggling to keep from plunging into debt. MTC requested the meeting with Reyna, Willacy County Sheriff Larry Spence said, since the Marshals Service sends federal inmates to the prison. "I think it helped. It kind of opened the door," said Spence, who traveled to Washington, D.C. with Lucio and County Commissioner Noe Loya. Lucio’s connection to the prison goes back for several years. In 1999, Lucio "introduced" Corplan Corrections to Willacy County commissioners as they began to plan for a federal prison here, Lucio said of the Argyle consulting firm that worked to develop the project. Among Lucio’s clients is Aguirre Construction, the Dallas firm that designed the federal prison. Lucio also works as a consultant for MTC, the Utah firm that manages the prison. Last week, U.S. district Judge Andrew Hanen convicted former Willacy County Commissioners Israel Tamez and Jose Jimenez of taking more than $10,000 in kickbacks in the federal prison project. Federal prosecutors charged Tamez and Jimenez received kickbacks "from particular corporate representatives who were selected in the competition" for the prison project. The 500-bed prison’s inmate count dropped from near-capacity in early October to about 240 in December, Spence said, noting MTC pays the county $2 for every prisoner. The financially embattled county projected $300,000 in federal prison money to boost its $3.8 million general fund budget. A year-end money crunch led the Marshal’s Service to transfer inmates to prisons with lower housing costs, Spence said.

January 13, 2005 Brownsville Herald
Three companies with ties to state Sen. Eddie Lucio Jr., D-Brownsville, worked on the construction of the federal detention center in Willacy County, which is now the subject of an federal investigation into bribes. Inquiries already netted the Jan. 4 convictions of Willacy County commissioners Jose Jimenez, 67, of Sebastian, and Israel Tamez, 58, of Raymondville. They each pleaded guilty to accepting $10,000 or more in bribes from corporate representatives involved in the design, construction, financing, maintenance and management of the detention center, according to U.S. Attorney Michael Shelby. According to public records, the primary companies involved in the project include jail consultant Corplan Corrections of Argyle, design-builder Hale-Mills Construction of Houston, Aguirre Corp. of Dallas, and the Management and Training Corp. (MTC) of Utah, which manages the detention center. Federal Election Commission records also identify Corplan’s James M. Parkey as an architect with Aguirre Corp. Lucio has been on Corplan’s, Aguirre’s and MTC’s payroll for about four years for marketing, public relations and consulting work. He remains on the payrolls of at least Corplan and MTC, The Brownsville Herald found Wednesday. Asked if he was involved in wrongdoing, Lucio answered without hesitation. “Of course not,” he said. “You don’t even have to ask that.” In a prepared statement, Shelby said the two commissioners admitted to accepting a series of bribes from June 2000 through March 2003 in exchange for their votes awarding contracts for the construction of the detention center. In June 2000, The Brownsville Herald reported that Lucio authored legislation in 1999 clarifying that counties can enter into a contract with a private vendor for the design, management or construction of jails. Lucio was a consultant for MTC in 2000, which had been vying for the Cameron County detention center project. Lucio told The Brownsville Herald in 2002 and 2004 that Corplan, Aguirre, MTC and other firms contracted him for marketing, public relations and consulting work. He said this included introducing and setting up meetings with local governmental officials. Lucio’s 2003 financial statement filed in 2004 with the Texas Ethics Commission reflects that Aguirre paid him $10,000 to $24,999; TEDSI $25,000 or more; Corplan $25,000 or more; and MTC $25,000 or more. Lucio declined to tell The Brownsville Herald on Wednesday the specific amount of money Corplan and MTC paid him. He confirmed that he continues on their payroll, however.

January 8, 2005 Valley Morning Star
Willacy County commissioners will consider hiring attorney Ramon Garcia, Hidalgo County’s judge, to investigate whether there are grounds to sue companies involved in a federal prison project that paid kickbacks to two former commissioners. Friday, an attorney representing a company involved in the prison project vehemently denied Corplan Corrections was involved in any wrongdoing. Monday, commissioners will consider hiring Garcia to investigate whether there are grounds to file a civil lawsuit against companies involved in the $14.5 million federal prison and the current development of a $7.5 million county jail. "We’re not going to tolerate companies coming in to take advantage of small counties and offering kickbacks and going on like it’s business as usual," District Attorney Juan Angel Guerra said. "Whoever offers kickbacks is just as guilty as those taking kickbacks." Tuesday, U.S. district Judge Andrew Hanen convicted former commissioners Israel Tamez and Jose Jimenez of taking more than $10,000 in kickbacks in the federal prison project. Under the law, contracts that involve illegal activity are void, Guerra said. "Someone gave them that money," County Judge Simon Salinas said. "Whoever made these guys get dirty, they’re going to go down, too. I want them to pay for it. Someone’s going to take them on in the courtroom." The county could win "millions" of dollars in damages because a financial firm involved in the project has sold about $25 million in bonds — about $10 million more than the prison’s $14.5 million cost, Guerra said. But that bond money was used to pay interest, said Edmundo Ramirez, a McAllen attorney representing Corplan Corrections, a consultant in the federal prison project.

Willacy County Federal Detention Center, Raymondville, Texas
July 9, 2012 Valley Morning Star
Willacy County’s debt for privately operated prisons has swelled to the point where the county may never be able to pay it back, District Attorney Bernard Ammerman says. Comparing the debt to the ill-fated ocean liner Titanic, Ammerman says a private prison deal is on a collision course with an iceberg of debt that will sink the county financially. But County Judge John F. Gonzales Jr. and others say the district attorney is wrong, countering that Ammerman does not understand the types of bonds used to refinance the prisons. Attorneys who advise the Willacy County Local Government Corp. say the county and its taxpayers are not responsible for the debt connected to the so-called “tent city” detention center near Raymondville. The debt has grown as a result of construction and renovation costs at the “tent city,” Ammerman said. The detention center, originally built to house illegal immigrants, was refinanced last year and converted to house low-risk federal inmates from the U.S. Bureau of Prisons in the last year of their sentences, Gonzales said. A new agreement with the federal government assures the county there will be a steady stream of income from the contract to house prisoners, the county judge said. The Bureau of Prisons has contracted for 90 percent of the beds in the “tent city” or “dome structures,” and must pay whether they are used or not, he said. The facility is operated by Management and Training Corp., which also ran the illegal immigrant detention center, he said. Ammerman’s comments were prompted by a June 29 presentation of the annual county audit by Quentin Anderson of the Harlingen accounting firm Long, Chilton LLP. But Ammerman specializes in criminal law and apparently knows nothing about how the bonds were structured, said Gonzales and attorneys Ramon Vela of Weslaco and Dan Rios of McAllen. Even if the tent city fails financially, the Series 2007 bonds will never have to be repaid by the county, state of Texas or any city, Vela said. The tent city is operated by one of three public facilities corporations, Gonzales said. The other two PFCs handle financing for the U.S. Marshals detention center and the county jail, he said. The Willacy County State Jail, although located near the other facilities, is operated and financed by the state of Texas, the judge said. Each PFC has a board made up of the county judge and commissioners, Gonzales and bond attorneys said. The other two handle finances for the U.S. Marshals’ center and the county jail. Ammerman claims the arrangement would not protect the county if the tent city fails financially. If bondholders, who loaned money to build and renovate the tent city, are trying to collect their money after a default, they will also sue the county, he said. The PFC’s debt load was expanded last year to $189,586,801 to refinance old debt and convert the tent city to hold U.S. Bureau of Prisons inmates.

December 6, 2008 Brownsville Herald
The dismissal last week of indictments against a host of elected officials, including state Sen. Eddie Lucio Jr., in a Raymondville courtroom did not signal the end of attorney Michael R. Cowen's trips to this city of about 10,000 people. If Willacy County District Attorney Juan Angel Guerra sees himself as the biblical "David," as he has described himself, Lucio's attorney, Cowen, would be his "Goliath" this week. Both will square off Wednesday during a hearing before District Judge J. Manuel Bañales. Pundits predict that there will be plenty of slings. Guerra said he aims to show at the hearing that consulting fees Lucio received from six firms were illegal and not earned. Most of the firms did work associated with private prisons in Willacy County. Instead, Guerra maintains that the only reason the firms paid Lucio is because he has the word "senator" before his name. Cowen has said previously that Guerra is "vindictive" and his animosity against the senator rises to a conflict, rendering the DA incapable of pursuing any charges leveled at the senator. Guerra issued subpoenas Friday against the firms that purportedly paid Lucio, D-Brownsville, consulting fees, including the firms Management and Training Corp., CorPlan Corrections, Aguirre Inc., Hale Mills Corp., TEDSI Infrastructure Group, Inc. and Dannenbaum Engineering Corp. They were directed to attend the Wednesday hearing and provide documentation, including contracts with Lucio for his services. Public records from the Texas Ethics Commission show that Lucio received at least $300,000 from five of the firms from 2003 through 2007. It could not be confirmed if Lucio received money from Hale Mills Corp. as the grand jury indictment maintains. Lucio suspended his services to CorPlan Corrections, Management and Training Corp. and Aguirre Inc. in January 2005 amid the bribery convictions of two Willacy County commissioners and subsequently a Webb County commissioner, according to documents that Lucio provided to The Brownsville Herald. The commissioners were convicted in a bribery and money-for-votes scheme relating to construction and management of the Willacy Adult Correctional Center. The companies were not charged. Cowen did not respond to a request for comment for this story. A grand jury indicted Lucio Nov. 17 for accepting fees from the firms from January 2005 through September 2008, alleging that they paid him only because he is a senator. The indictment charged that Lucio ". . . has, with this action, made a personal profit as a result of his holding said office as a Texas senator for District 27." Bañales dismissed the indictment Dec. 1, agreeing with Cowen's contentions, including that the six-count indictment did not that Lucio had willingly, knowingly, or recklessly engaged in the alleged conduct. Guerra's goal is also to show that the Nov. 17 grand jury did not indict Lucio because of Guerra's vindictiveness or anger toward Lucio, but because there is evidence to support the jury's indictment that Lucio profited from his elective office contrary to law. Whether or not Bañales in the 10 a.m. hearing allows Guerra to present evidence against Lucio or if representatives of the firms even show up is up in the air.

July 26, 2006 Valley Morning Star
The county may be spending more than necessary to build a new detention center for illegal immigrants, Willacy County Attorney Juan Angel Guerra charged Monday. Guerra said that the companies behind the $60.6 million detention center over-billed the county by more than $15 million. Other companies could have constructed the project's 10 Kevlar-covered domes for $30 million to $35 million, Guerra said. "Nobody questioned it," Guerra said of county commissioners who voted 3-2 last week to borrow $60.6 million to build the 2,000-bed detention center. "The price is just ridiculous. Nobody did a comparison," Guerra said. "They spend more time when they buy a truck or a tractor, to call dealerships to see if they can get a better deal." Last month, commissioners entered into a two-year contract with the U.S. Department of Homeland Security to build the detention center that's part of a national crackdown on illegal immigration. In a contract, companies behind the project put the cost of construction materials at $20 million and the labor costs at $30 million, Guerra said. Commissioners planned to issue about $50 million to fund the project. But costs jumped to $60.6 million to include $3 million to buy equipment to operate the detention center, $3 million to set up a reserve fund and $3 million in interest payments. Guerra pointed to four areas in which he said the contractor "inflated" costs. While Kevlar material costs $3.3 million, the contractor billed the county for $4.6 million, Guerra said. While the contractor billed the county for $3.6 million to prepare the 53-acre site for construction, other companies said they could have done the job for $1.6 million, Guerra said. The contractor billed the county for $2.8 million for sewer work, but other companies said they could have done the job for $800,000. And other companies said paving the asphalt parking lot would cost $150,000, the contractor billed the county for $400,000, Guerra said. "We cannot justify these costs," Guerra said.

July 20, 2006 Valley Morning Star
State Sen. Eddie Lucio resumed consulting work with a company that he says offers Willacy County hundreds of jobs and a steady flow of revenue for years to come. Last year, Lucio suspended business with Management Training Corp. and two other companies involved in the development of a $14.5 million prison project that was the focus of a federal bribery investigation. That investigation led to the convictions of former Willacy County commissioners Israel Tamez and Jose Jimenez. In letters to the companies, Lucio wrote he was taking "a leave of absence" from consulting work "until this matter is resolved." At the time, Lucio asked the Texas Attorney General's Office and the state Ethics Commission to review his work as a consultant. "I can do business with companies that do business with the federal government," Lucio said the agencies determined. Lucio resumed work for MTC as the company sought a Willacy County contract to operate a $60.6 million detention center to hold illegal immigrants. Last week, commissioners voted 3-2 to give MTC a two-year contract to operate the detention center. "They're an outstanding operation," Lucio said of the Utah-based company that operates a 525-bed county-owned prison here. Lucio declined to disclose his fee. Monday, commissioners voted 3-2 to issue $60.6 million in bonds to build the detention center that's part of the U.S. Department of Homeland Security's crackdown on illegal immigration. "I think Willacy County will come out ahead," Lucio said. "I think it's a wonderful opportunity for hundreds of jobs." Lucio said his work with MTC was limited to a meeting with County Attorney Juan Angel Guerra. In the meeting, Lucio talked 30 to 45 minutes with Guerra, who recommended that commissioners hire Corrections Corporation of America, which proposed working with investors to fund the project's costs. "He had questions whether MTC was a reputable company," said Lucio, who owns Rio Consulting in Brownsville. "He was very, very out to get the commissioners to hire CCA. All we did was talk about the qualifications of MTC and why it would be a better deal." Under MTC's contract, the county will own the detention center, Lucio said. "It's a ($60) million asset at the end," Lucio said, referring to county payments that run through 2009. "This is going to be a ... facility for the future. They can continue the same situation. I'm going to push MTC to make sure they fulfill the wishes of Willacy County. What we need to do is insure that inmates are brought to that facility." Lucio said he stood behind company projections that show the federal government will fill the detention center with more than 1,800 illegal immigrants. "The federal government is in dire need," Lucio said of detention center beds. County commissioners Aurelio Guerra and Abiel Cantu voted against hiring MTC because they questioned whether the federal government could fill the detention center with illegal immigrants for which the company would pay at least $2.25 a head. But steps such as hiring more U.S. Border Patrol agents and the placement of National Guard troops along the border will increase arrests of illegal immigrants, Lucio said. "Even President Bush is beefing up the border," he said. "(But) nothing is going to stop people from (crossing the border) to seek the American dream. I think more people are going to get caught." Cantu and Aurelio Guerra also voted against the company's hiring because they argued that the federal government would restrict the county from spending detention center revenues on county expenditures. Lucio said he did not know the specifics of the contract. "That's up to the Commissioners Court to look into the specifics of the contract," he said. Lucio denied Juan Angel Guerra's claim that he was working for Corplan Corrections, an Irving-based prison consulting firm, in the detention center project. Juan Angel Guerra said Lucio told him that he worked for James Parkey, Corplan's president. Last year, Lucio said he suspended ties with Corplan, MTC and Aguirre Corp. of Dallas after Tamez and Jimenez pleaded guilty to taking more than $10,000 in bribes in exchange for votes to hire a consultant in the $14.5 million prison project that the companies helped to develop. Lucio said he resumed work with Corplan after McAllen attorney Ramon Garcia, Hidalgo County's judge, dropped a lawsuit against Corplan and Houston-based Hale Mills construction in April. "When they were exonerated ... it cleared the path," Lucio said. "I work for them anytime I like to. I like Mr. Parkey. He's a good man. As far as I'm concerned, he's a reputable person." However, Lucio said his work with Corplan did not involve the detention center project. Last month, Willacy County commissioners entered into a two-year contract with Homeland Security to construct tent-like domes to hold 500 beds by Aug. 2. As part of the contract, the detention center will expand to 2,000 beds within 90 days.

July 16, 2006 Valley Morning Star
Federal officials said last week that it's not their intention to fill up a 2,000-bed detention center that would hold illegal immigrants before deportation. But Willacy County commissioners are banking on a private prison company that claims the federal government will pay the county nearly $12 million to house 2,000 prisoners there. "I can't guarantee those numbers," Nina Pruneda, spokeswoman for the U.S. Department of Homeland Security's Immigration and Customs Enforcement in San Antonio, said of the inmate count. "It's not a question of filling beds," she said. "It's making sure we have operational beds ready." The $50 million detention center made up of 10 Kevlar-covered domes is part of the federal government's national crackdown on illegal immigration, officials said. Last month, county commissioners entered into a two-year contract with Homeland Security in the construction of tent-like domes to house 500 beds by Aug. 2. As part of the contract, the detention center would expand to 2,000 beds within 90 days. This month, commissioners picked Utah-based Management Training Corp. to operate the detention center. But the Willacy County Local Government Corp., a nonprofit board organized to oversee the project, failed to ratify the contract. Thursday, commissioners held off on the issue of $50 million in bonds amid concerns that the federal government may not fill up the detention center with prisoners for whom it would pay a daily rate per detainee. In South Texas, the new detention center would boost the number of beds open to illegal immigrants to 5,200, Pruneda said. The agency decided to build the Willacy County detention center rather than expand its detention center in Port Isabel, which houses 800 beds, Pruneda said. "The decision to open a facility in Willacy was an operational decision," she said. Wednesday, consultants warned that the federal government would likely restrict the county to the expenditure of "administrative" fees of as little as $2.25 a day per prisoner. The "county's current approach may open the county to substantial liability to the federal government," warned the law firm of Akin Gump Strauss Hauer & Feld of Washington, D.C. The consultants noted the federal contract specifies the county "shall not charge for costs which are not directly related to the housing and detention of detainees." "It specifically identifies costs for which the county may not charge, such as certain salaries, indirect costs and services and facilities that are not used by the federal detainees," the consultants wrote. The consultants cited a case in which Homeland Security required Pennsylvania's York County to return as much as $58.5 million after it allegedly spent detention center revenue on unauthorized expenses.

July 12, 2006 Valley Morning Star
The new detention center for illegal immigrants may not be the financial windfall that county officials imagine, the county attorney said. Willacy County Attorney Juan Angel Guerra warned commissioners that the federal government may restrict the spending of money generated by a new $50 million detention center. A contract with the U.S. Department of Homeland Security restricts spending to the detention of illegal immigrants, Guerra told commissioners. "It is very clear that you have to justify every single amount of money and if you can't justify it, the money goes back" to Homeland Security's U.S. Immigration and Customs Enforcement, Guerra told commissioners in a Monday meeting. Last month, the county entered into a contract with Homeland Security to sell $50 million in bonds to develop a 2,000-bed detention center to house illegal immigrants. In the meeting, Guerra warned that Homeland Security required Pennsylvania's York County to return as much as $58.5 million allegedly spent on unauthorized expenses.

July 6, 2006 San Antonio Express-News
Willacy County officials haven't formally decided who will get to build the state's largest immigration detention facility — but that hasn't stopped a Houston company from beginning work on the massive project. Hale-Mills Construction has had crews at the site of the planned $50 million jail for the past two weeks, leveling land and pouring concrete for the foundation. The company began working on the 2,000-bed facility after county officials signed an agreement June 19 with U.S. Immigration and Customs Enforcement to house detainees. Without a county decision on how to pay for it or, more importantly, who would be hired to build it, Hale-Mills began clearing a cotton field in Raymondville the next day. County officials are working out other details, such as how the county will pay for the facility's construction and if Hale-Mills will build it, Vela said. County Judge Simon Salinas said the company is working at its own risk and has no guarantees it will be chosen to finish the job. The county formed the public facilities corporation to issue $50 million in lease revenue bonds to investors to fund construction. Although no bonds have been issued and the county hasn't identified the corporation's governing board, that board is set to meet today to pick officers, consider hiring Vela as its lawyer and consider approving a contract with Hale-Mills. It will also consider hiring a private jail company to operate the facility after it is completed.