Iowa prison security review contractor didn’t disclose past bribery lawsuit settlement to state officials

playShow Caption
Hide Caption

CGL Companies, hired to probe prison security, didn’t disclose lawsuit State rules require companies bidding on contracts to disclose information about adverse events. CGL Companies did not disclose a 2018 settlement.

Des Moines Register Officials of the company hired to conduct a review of security failures in Iowa’s prison system did not disclose some details about the organization’s past, including a lawsuit accusing it of bribery.  State rules require companies bidding on contracts to disclose information about adverse events, including lawsuits against them. CGL Companies, however, did not disclose the £750,000 settlement in 2018 of a Mississippi attorney general’s lawsuit alleging racketeering by CGL subsidiary CGL Facility Management.

The allegations were in connection with a massive bribery scandal involving a state corrections official. A spokesman for the Iowa Department of Corrections told the Des Moines Register that it has no problem with the lack of disclosure because it considers the subsidiary a separate company from CGL Companies. “CGL Companies submitted the proposal, not CGL Facility Management.

It is our understanding that only CGL Facility Management is involved in the Mississippi issues, not CGL Companies,” the spokesman, Nick Crawford, said in an email. Neil Gordon of the the Project on Government Oversight, a nonprofit government corruption watchdog group, said denying the link between a company and its wholly owned subsidiary is just “corporate name games.” “It’s the typical corporate dodge.

When one part of the business does bad, all the other parts of the business try to distance themselves, even though under the surface they’re all pretty much one giant network,” said Gordon, who investigates contractor misconduct. Iowa corrections officials also defended their decision to hire CGL Companies, the higher bidder of two vying for the project, even though it has potential conflicts of interest related to the outcome of the review. The other bidder was the consulting firm Creative Corrections.

Unlike that company, CGL Companies:

  • Is heavily involved in the design of new criminal justice facilities.
  • Has longstanding business interest in the private prison industry.
  • Is the subsidiary of a global construction giant.

The top Democrat on the state legislative subcommittee overseeing the Iowa Corrections Department’s budget called the findings worrisome given that a possible recommendation of the review would be to replace Anamosa State Penitentiary. The review, covering the entire Iowa prison system, was launched in the wake of a March prisoner escape attempt at the maximum-security Anamosa penitentiary that left two prison employees dead. “If they have a history of bribery, I would question the results of their study,” said Sen.

Todd Taylor of Cedar Rapids, who also is a former official of the union representing state corrections workers. “We’ve had a lot of problems. We’ve had murders.

We’ve had very bad staff morale. We’ve got overtime through the roof,” Taylor said of the system’s problems. “What we should have at end of the day is a transparent … open-the-books kind of thing. I don’t want to have anything to do with the situation in Mississippi.”

More: ‘Tough’ assignment: New Iowa prison security chief takes over as issues, incidents continue after killing of 2 workers A CGL spokesperson referred questions to corrections officials and did not respond to additional requests for information or comments.

What Iowa is paying CGL to do

CGL’s nearly £500,000 contract calls for it to “provide a qualitative and quantitative review of safety and security within the correctional system.”  The Iowa Department of Corrections sought bids for the review in April after Anamosa inmates Thomas Woodard Jr. and Michael Dutcher were charged with the March 23 murders of correctional officer Robert McFarland and registered nurse Lorena Schulte during an escape attempt in the prison infirmary.

The two also were charged with the attempted murder of inmate McKinley Roby and the second-degree kidnapping of dental assistant Lorie Matthes. More: ‘They were good people’: Current, former Anamosa prisoners remember victims in prison attack The two men, who pleaded guilty this summer to the charges and were sentenced to life in prison, had access to tools in their prison jobs: Dutcher worked at an Iowa Prison Industries wood shop, and Woodard was a member of a prison maintenance detail. Despite prison policies forbidding such access, they had acquired hammers and a metal grinder from a maintenance shed for use in their escape attempt.

More: Inmate charged in Anamosa killings had assaulted staff, planned a jail escape, records show, yet was on work detail Woodard admitted in his plea and sentencing hearing that he used the hammers to bludgeon McFarland, Schulte and Roby as well as to threaten Matthes.  The incident led to demotion of the prison’s warden to a correctional counselor and demotion and reassignment of its security chief

The decision to hire a contractor to conduct the review came at the same time the union representing corrections employees, supported by allies in the Iowa Legislature, was calling on state officials to bring in the U.S. Justice Department’s National Institute of Corrections for an independent investigation. The CGL review is due by the end of the year.

What CGL didn’t disclose in its bid documents

In Iowa, companies vying for state consulting and purchasing contracts are required to disclose potentially damaging information within the last five years including:

  • Criminal cases against the company or its principal employees.
  • Lawsuits.
  • Legal and administrative settlements.
  • Contract terminations for any reason.
  • Debarment from bidding for state or federal contracts.

Yet, in making that report in connection with its bid for the security review, CGL omitted the fact that its facility management subsidiary had been the subject of a 2017 lawsuit accusing it of a “conspiratorial scheme” to funnel bribes and kickbacks to the Mississippi commissioner of corrections.

The company’s bid materials said it and its officials had neither been convicted nor had a civil judgment rendered against them in connection with public contracts, theft, forgery, embezzlement, falsifying records, making false statements or receiving stolen property. The bid also does not mention lawsuits that had been settled or resolved through arbitration, although such disclosures are required under Iowa procurement rules. More: Iowa lawmakers vote to increase corrections budget, pay health insurance for families of slain Anamosa employees

Such disclosures do not automatically disqualify a bidder. Failure to disclose the information, however, is considered a serious issue, according to Department of Administrative Services’ guidance to bidders. “Failure to disclose these matters may result in rejection of the Proposal or termination of any subsequent Contract,” the document says.

State procurement officials approved CGL Companies’ assertions without requesting further information. A public records request for bid materials and communications did not produce any documents indicating they had asked the company to clarify the statement. The guidance makes no distinction between companies and their subsidiaries. 

Are the companies really separate?

Despite Iowa officials’ assertion that CGL Companies and its CGL Facility Management are separate, the companies display a high degree of integration.

Email addresses for employees at both companies use the same domain as the company’s main web address, and listings for the facility management operations point to the company’s main website. The website’s location page lists CGL Companies’ main office in Miami and GGL Facility Management’s office in Atlanta as being among “Our Offices,” without distinguishing between the two.  CGL Facility Management CEO Joe Lee is listed on the site as a member of CGL Companies’ top leadership, and his photo is shown directly adjacent to that of CGL Companies CEO Eli Gage. More: Iowa corrections officials bring in Minnesota, South Dakota officials to investigate Anamosa prison killings

The website says CGL Companies provides “A 360-Degree Approach to Justice” with a “vertically integrated” platform providing a “single source solution.” CGL Companies is itself a subsidiary of El Paso, Texas-based Hunt Companies Inc., a global construction firm, which likewise makes no distinction on its website between CGL Companies and CGL Facility Management. Records related to a Dallas County, Texas, contract with CGL Companies describe it as having a facility management “division.” Bid documents describe CGL Facility Management President Greg Westbrook as CGL Companies’ “president of facility maintenance,” without reference to a separate company. His LinkedIn page describes CGL Facility Management as “part of CGL Companies.” 

Lee, the Facility Management CEO, is described on the company’s website as heading “CGL’s Facility Management division.” A bid submitted by CGL Companies to the state of North Dakota in 2019 described a CGL Facility Management executive as CGL Companies’ senior vice president in charge of “CGL’s facility management operations.” And documents prepared in connection with a Georgia state contract with CGL Facility Management are listed as “prepared by CGL Companies.”

Asked whether CGL Companies, under state rules, should have disclosed the lawsuit against its subsidiary, officials from the Iowa Attorney General’s Office referred questions to the Department of Administrative Services, which manages state contracts and bidding. Administrative services spokesperson Tami Wiencek echoed the Department of Corrections’ assertion that CGL Companies and CGL Facilities Management are separate. “It is our understanding only CGL Facilities Management is involved in the Mississippi issues, not CGL Companies,” said Wiencek.

CGL’s subsidiary accused of funding kickbacks to Mississippi prison chief

The civil case against CGL Facility Management was filed as a result of an FBI probe of corruption in the Mississippi prison system that ended up sending more than a dozen people to jail and yielded millions of dollars in seized funds and settlements.

The investigation, code-named “Operation Mississippi Hustle,” uncovered corruption going back as far as 1997 involving the Mississippi Department of Corrections, Corrections Commissioner Christopher Epps and companies doing business with the department. The case has led to several rounds of indictments, starting with one against Epps in 2014. Federal prosecutors said Epps was at the center of a network of corrupt officials, consultants and government contractors involved in fixing government bids and funneling millions of dollars to him. 

Epps eventually received a 19-year prison sentence after pleading guilty to money laundering and tax charges. In 2015, Irb Benjamin, a former Mississippi legislator and prison warden whom CGL had hired as a consultant, was accused of passing money to Epps in exchange for contracts. Benjamin pleaded guilty, among other things, to funneling payoffs to Epps in relation to £4.8 million of contracts the state of Mississippi had made with CGL Facility Management.  

More: £27 million recovered from contractors in Epps prison bribery case, AG says Benjamin admitted to the allegations under oath when he pleaded guilty to bribery in 2016 and was sentenced to 16 years in prison.  In the state’s civil suit, officials accused CGL Facility Management of having a “backroom” relationship with Epps and Benjamin involving a total of £10 million in state contracts.

CGL’s construction, for-profit prison ventures raise conflict-of-interest concerns

CGL Companies has been contracted to perform hundreds of projects around the world in design, construction, analysis and management projects in the criminal justice arena, often working alongside its parent company, Hunt.

CGL also is directly involved in for-profit corrections. According to court records, it owns a for-profit detention facility in Georgia in concert with LaSalle Corrections, which operates it alongside 16 other correctional facilities around the country. More: Prison officials lock out safety inspectors in Coralville weeks after killings at Anamosa penitentiary

CGL has been listed as a partner with LaSalle in additional proposals around the country to build or operate private prisons. Gordon, the procurement expert, described CGL’s involvement in prison design, construction and management as “a red flag” because it could give the appearance of bias to the Iowa review should it recommend new prison construction, outsourcing or privatization. More: Iowa prison staffing levels before Anamosa State Penitentiary killings were near their lowest level in 30 years

“It’s not that they can’t be a neutral arbiter in a situation like that. But it doesn’t look good, and they’re always going to be tempted to kind of put their thumb on the scale and give the answer that’s going to result in more business for them down the line,” he said. Taylor, the top Democrat on the Iowa Senate panel overseeing the Iowa Department of Corrections, said he is “deeply, profoundly concerned” about potential conflicts of interest with CGL.

“I question that they might be more interested in their profit, their bottom line,” he said. “The part that’s the most scary, or worrisome, is the for-profit part. And that maybe they would put profits in front of outcomes.” Sen.

Julian Garrett, the Justice Appropriations Subcommittee’s Republican chairman, declined to comment, saying he needed time to review the Register’s findings. Rep. Lee Hein, a Republican who represents Jones County, home of the Anamosa Penitentiary, underscored the need for the review.

“The tragedy that took place at Anamosa last spring highlighted the need for an outside evaluation of ASP and the entire corrections system to ensure that the people working these challenging jobs have what they need to do it as safely as possible,” he said. He also said he is confident the bidding process was fair. “The Department of Administrative Services, which oversees the contracting process for contracts of this nature, works to ensure that the bids are awarded in a fair and timely manner,” Hein said. “I have no reason to believe that their handling of this contract was an exception to the fair processes they follow.”

What the prison security review entails

The state contract for a “qualitative and quantitative review of safety and security within the correctional system” requires CGL to “work in partnership” with department officials and provide a “thorough analysis” of  “all aspects of correctional operations” in relation to security.

That includes reviewing and providing recommendations regarding:

Bidding process doesn’t necessarily favor low bidder

To provide fair and high-quality government contracts, government bids are expected to be rated objectively. In most cases, that means hiring the low bidder. Yet Iowa’s process for awarding consulting projects leaves the decision almost entirely up to a largely subjective scoring by the agency involved — in this case, the agency whose failures are being scrutinized.

Nick Crawford, a spokesman for the Iowa Department of Corrections, said a “group of experienced and knowledgeable” Department of Corrections employees, whom he declined to name, reviewed the proposals from the only two companies that bid on the projects: CGL Companies and Creative Corrections. They assigned them scores of 1 to 10 on a variety of factors, based on their opinions of the companies based on factors such as their proposed activities and experience. They scored CGL 19% higher on those subjective ratings than Creative Corrections, a contractor for several federal agencies including the Justice Department and Department of Homeland Security. 

Creative Corrections’ website lists security systems reviews as one of the company’s core specialties. In its bid documents, the company claims it has done similar reviews  at facilities in the U.S. and Mexico. In 2018, it conducted a security review of Mexico’s state prison systems on behalf of the U.S. State Department — although that fact was not specifically highlighted in bid materials.

In its bid documents, CGL identified three of 15 participating staff members as having specific previous experience with security issues. Most, including the project lead, had experience in prison system planning or the design and construction of new prisons, jails and courthouses. Creative Corrections’ seven proposed consultants included a former Federal Bureau of Prisons official with experience in security and special operations, a former assistant administrator at for intelligence and counterterrorism at the Federal Bureau of Prisons and the former chief of security for the Wisconsin Department of Corrections.  

Three had direct experience as correctional officers. Four had served as wardens, assistant wardens or associate wardens at state or federal prisons. The project lead was not a security specialist, but had served in senior corrections roles, including as warden of two minimum security prisons.

CGL listed only one person with experience as a warden and did not specify whether any had experience as correctional officers. Cost — the only purely objective factor — was scored in relation to the other scores. So even though cost accounts for 30% of the possible score, a low bidder can receive fewer “cost points” than the high bidder.  In fact, CGL was given an edge, though small, in cost points on its £468,000 bid despite the fact it was 18% higher than Creative Corrections’ £396,000 bid for the same work.

State Sen.

Todd Taylor of Cedar Rapids, the top Democrat on the legislative committee overseeing the Iowa Department of Corrections, said that leaves him suspicious.

“It makes me concerned that it was a foregone conclusion, that they were trying to write the scores to pick the outcome,” he said

Leave a Reply

Your email address will not be published. Required fields are marked *