Operation Mississippi Hustle

See also: Chris Epps

Operation Mississippi Hustle is an ongoing federal investigation initiated in 2014 or earlier by the United States Attorney and prosecuted in the United States Court for the Southern District of Mississippi. It has examined the relationship between officials of the Mississippi Department of Corrections and various prison contractors and subcontractors. The investigation resulted in indictments against the Commissioner of the Department of Corrections, who on November 5, 2014, resigned from his state office and as president of the American Correctional Association. By 2016, indictments had been issued against eight other corrupt officials, consultants, and contractors.

Overview

On November 6, 2014, the United States Attorney for the Southern District of Mississippi disclosed indictments he had obtained against the Commissioner of the Mississippi Department of Corrections, Chris Epps, and his associate, consultant and Republican former state house member, Cecil McCrory. They alleged that beginning as early as 2005, Epps had begun to take bribes that had been passed through McCrory and another consultant, Robert Simmons, from various contractors and subcontractors for the state and that those payments had been structured to fall beneath the mandated reporting amount so that bank deposits would not come to the attention of federal banking authorities. Epps resigned the previous day. Epps also resigned his position as the president of the American Correctional Association on the same day. Both defendants became cooperating witnesses, at first, with the intention of assisting with the identification of the originators of those bribes who were to be prosecuted with the help of both men.

Epps had originally appointed to the Commissioner post in 2002 by Democratic Governor Ronnie Musgrove, and was retained by his successors, Republicans Haley Barbour, and finally, by Phil Bryant. The amounts of those alleged bribes grew to the point where they reached a total of at least $1.47 million. Over the next two years, many more indictments were filed by the U.S. Attorney against those alleged to have provided the bribes who indicated that further indictments would be forthcoming. A year after entering a plea of guilty, McCrory requested that he be allowed to change his plea to one of "not guilty," a matter that had not been decided for many subsequent months. Many other defendants pleaded "guilty," others "not guilty," still more cases were postponed for pleadings, and one defendant committed suicide shortly before his case was to first be heard. Numerous corporations were ordered by the presiding Federal judge, Henry Travillion Wingate to produce business records. Some complied, others ignored the subpoenas, and four requested that the information they were willing to provide be kept under seal, which the judge took under advisement.

On November 1, 2016, while still awaiting sentencing, Epps was arrested for breaking into the home he had forfeited to the federal government as a part of his plea bargain. He had removed light fixtures and other items which were recovered after the thefts from his previous domicile nearby, which he had once again occupied.[1]

Prosecutors

Investigations

According to Leake County Sheriff Greg Waggoner, he had been responsible for initiating the federal investigation. In 2009, he said, Epps's MDOC leased the buildings for what became the Walnut Grove Transition Center from McCrory, and also gave him the contract to operate the male and female facilities. The center charged newly released inmates $20 a day for room and board in dormitories, augmented by another $6 daily, per bed, from the MDOC. Residents complained about the lack of supervision of inmates. According to Waggoner "It looked like everything new that happened with MDOC, Cecil was involved in," Waggoner said. "They were not supposed to be out at all." "If I ran my facility like that, Epps would have shut me down, but it seemed like there was no problem when McCrory did it." Although the town's mayor, William Grady Sims, had no correctional experience, McCrory made him the warden of the Center. Sims was reported to have taken a female inmate to a motel in nearby Carthage for sex in November 2009 and Sheriff Waggoner became involved. He reported the allegation to MDOC, which assigned an internal investigator to assist his department in an investigation. Investigators from both agencies jointly talked to the female inmate, gathering evidence to refer the case to the county district attorney. In the spring of 2010, before they could do so, the MDOC investigator came to Waggoner and told him it was over. "We're closing the case down," he told Waggoner, who was "shocked" and asked, "What do you mean?" "You could tell he wasn't happy about it but that he was given orders." Waggoner said firing a man who committed a felony doesn't end an investigation. It ends when the man is indicted and brought to justice; "If you have knowledge of a felony and chose not to pursue it, you're negligent in your duty." Stunned by the MDOC's termination of the Sims investigation, Waggoner called U.S. Attorney John Dowdy for advice. Dowdy said he contacted the FBI afterward to report the situation. The FBI launched an investigation against Sims and eventually Epps, and named it, "Mississippi Hustle." [2]

Indictments

On November 6, 2014 the Federal Government of the United States announced that it had indicted Epps on corruption charges;[3] these charges originated from dealings with the for-profit prison industry.[4] The federal indictment stated that McCrory, a former Mississippi Republican House member and businessperson who served as the chairperson of the Rankin County School District's board of education, provided Epps with kickbacks and bribes totaling more than $1 million. Those transactions included a $200,000 payment, part of the mortgage of Epps' primary residence in the Jackson area. The resulting increased equity and another bribe payment were leveraged by Epps to buy a condominium and trade up the latter for a larger, more expensive condo. In exchange, Epps directed contracts to McCrory-owned companies for prison-services contracts, as well as to companies that hired McCrory as a paid consultant. Per the indictment, the activity started in 2007 and ended on March 12, 2014. Epps entered an initial plea of not guilty, and he received a bond of $25,000.[5]

McCrory was an ex-judge and former Sheriff's investigator as well. He started a prison commissary company, G.T. Enterprises, selling it to the Centric Group holding company, which owns the Keefe Commissary Network (KCN), for a substantial profit. McCrory also had gone to work for Correctional Communications Inc. "I brought Cecil in in 1996 to help me with political connections," said owner and consultant, Sam Waggoner. "I do all the work, and Cecil did the political stuff. I talk to him about twice a year." Waggoner, of Carthage, said the scandal had affected his business, and he worried he'd lose some of the 40 or so contracts he and McCrory had earned during the past two decades. "Nobody wants to be associated with the company because of the stigma," he said. "But he did no contracts with the county jails, no connections with the sheriffs or anything like that." When the news was first released, Sam Waggoner claimed he was "shocked" to hear about the McCrory/Epps indictments, although he subsequently pleaded guilty to bribery.[6][7]

In November 2014 Governor Phil Bryant, formerly the State Auditor, ordered rebids of the four operating contracts that had been awarded to Utah-based Management and Training Corporation (MTC) by Epps and instructed interim Corrections Commissioner Richard McCarty to stop negotiations with MTC over renewing a $60-million-a-year contract to manage the four private prisons that held 4,000-plus state inmates. MTC had been sued for mistreatment of inmates in two of those prisons.[8]

McCrory plea bargained to lesser federal charges. He had begun working as a consultant to Utah's Management and Training Corporation, GEO Group's successor operator Mississippi for state contracts. It had held a $60 million contract to operate three Mississippi prisons: Walnut Grove Correctional Facility, East Mississippi Correctional Facility and Marshall County Correctional Facility, which had been managed by GEO Group, and Wilkinson County Correctional Facility, which had been managed by the Corrections Corporation of America. MTC fired McCrory, claiming they had known nothing of his criminal activities.

In February 2015 Epps pleaded guilty to corruption-related charges:[4] one count of filing a false tax return and one count of conspiracy to launder money.[9] As part of the plea, he forfeited two Mercedes Benz vehicles and his two residences.[10] Epps and McCrory blamed each other for beginning the bribery scheme. Sentencing was first scheduled for June 9, 2015,[9] but a day earlier, the U.S. Attorney for Mississippi said the sentencing was indefinitely delayed, as they were pursuing additional indictments.[11]

Harrison County Supervisor William Martin, a former prosecutor, was indicted in February 2015, but committed suicide hours before he was scheduled to appear on charges of bribery and corruption.[12]

Sam Waggoner pleaded guilty in August 2015 to a single count of bribery, waiving indictment in yet another plea bargain. In November his sentencing was postponed due to his undergoing heart surgery. He admitted to federal Judge Henry Travillion Wingate that he paid more than $108,000 in kickbacks to Epps from a consulting contract with prison phone company Global Tel-Link (GTL).[13] GTL had been given the Mississippi prison telephone business monopoly. As a result of the prosecutors efforts to further and more specifically quantify the many millions of dollars of damages suffered by the state of Mississippi as a result of the bribery scheme, Waggoner's sentencing was once again delayed until after a hearing scheduled for June 9, 2016.[14]

The indictment of former Democratic state Senator Irb Benjamin for bribery of Epps in connection with the contractual drug and alcohol treatment his company provided to MDOC prisons was announced on august 22, 2015. In addition, Benjamin was paid $862,000 to acquire and maintain American Correctional Association accreditation for jails in three different counties, including Washington and Chickasaw counties. Passing ACA standards was required of all three if they were to be awarded contracts to hold state prisoners. He became the warden of the Alcorn County jail, even though he lived 200 miles away, near Jackson. Epps was the president of the ACA until his indictment became public.[15]

On February 11, 2016, consultant Robert Simmons was indicted for giving kickbacks to Epps from three contractors involved in constructing expansions of the Walnut Grove and East Mississippi Correctional Facilities including part of a $10,000-a-month fee he got from AJA Management and Technical Services of Jackson and more from a second unnamed contractor. He also gave Epps kickbacks on fees involving contracts given to Sentinel Offender Services of Irvine, California, which supervises probationers and parolees, allegedly paying Epps $1,400 a month of his $4,000-a-month consulting fee.[16] When pleading guilty before U.S. District Judge Sul Ozerden in Gulfport on February 18, Simmons admitted it was, "the cost of doing business in Mississippi."[17]

In April 2016, McCrory informed the court that he wanted to change his plea bargain to "not guilty" and requested a trial. As a consequence, Epps' sentencing was again postponed, this time until July 18, 2016. Epps had been scheduled for sentencing on April 11, 2016, after pleading guilty to money laundering and filing false tax returns.[18]

The sentencing of Epps and Brandon businessman McCrory last scheduled for July 19, 2016, was again delayed by Judge Wingate to give their defense lawyers additional time to review materials concerning how much money was gained by 15 corporations paying bribes to the pair. Prosecutors hope to use the evidence to increase the recommended prison sentences for Epps and McCrory. Epps faces a possible 23 years after his 2015 guilty plea to money laundering and filing false tax returns related to $1.47 million in bribes. Numerous companies denied knowing their consultants were making kickbacks to Epps and others. GEO's Finance Director John Tyrell testified that, "We often have consultants..." Geo was paying McCrory $5,000 monthly, which now-retired President and Chief Operating Officer Wayne Calabrese later increased to $10,000. Tyrrell did not answer the question as to why the amount was doubled, but speculated it may have been because on August 10, 2010, GEO Group, absorbed Cornell Companies in a merger. Cornell had been operating the extremely dysfunctional Walnut Grove Youth Correctional Facility.[19]

Assistant U.S. Attorney Darren LaMarca announced in June that eleven more people may face criminal charges in the Epps' bribery cases. Ten more people could face federal indictments; another could face state charges which are expected by mid-July. LaMarca estimated that the corruption's net benefit to contractors exceeded $65 million. Investigators have determined that Epps demanded bribes to exercise his influence, not only at the state level, but among county supervisors. Epps controlled where state inmates were placed, giving him influence over local jails. Cecil McCrory pleaded guilty to a single count of money laundering conspiracy and faces up to 20 years in prison. He has agreed to forfeit $1.7 million in assets. Based on the prosecutors' $65 million estimate, federal sentencing guidelines recommend a maximum of 23 years. However, his lawyer asked the judge to sentence Epps only based on the bribes he collected. If the lower amount of $1.47 million is used, Epps faces a recommended sentence between 14 and 17 1/2 years giving Wingate latitude. Because of his cooperation in providing information about those paying the bribes, prosecutors will recommend Epps get a shorter sentence. Calculating benefit to 16 contractors necessitates examining their accounts. On June 30, John Colette, Epps' defense attorney said he received more than 1,500 pages of documents in the previous week and would require at least 30 days to review them. Four companies are asking Wingate to shield their information from public view: Four more haven't responded to subpoenas. Wingate said he would hold a hearing by July 16, 2016, to consider requests for protective orders, and to consider contempt orders be lodged against companies which have failed to respond to disclosure requests.[20]

On July 20, 2016, in a seven count indictment returned by a federal grand jury, Dr. Carl Reddix, an obstetrician/gynecologist and owner of Health Assurance LLC, a Jackson, Mississippi firm, was charged with paying bribes and kickbacks to Epps in return for contract awards with the MDOC and for-profit prison operators.[21] The contracts for four for-profit Mississippi prisons held by Wexford Health Sources were sequentially taken and subsequently awarded to Reddix. In 2008, his company received a contract to "provide inmate health care services" at the Walnut Grove Correctional Facility, which was then renewed in 2011. Transfers of contracts for East Mississippi Correctional Facility and Marshall County Correctional Facility followed in 2012. The final contract was for Wilkinson County Correctional Facility, awarded in 2013. The attorney for Reddix said he had been the victim of a "shakedown."[22][23]

On July 25, 2016, Teresa Malone, the wife of former Mississippi House Corrections Committee Chairman Bennett Malone, was indicted for giving bribes to Epps through McCrory on behalf of AdminPros LLC. Mark Longoria, CEO of Drug Testing Corporation of Houston, Texas, was also indicted for furnishing a bribe to Epps.[24] On August 3, 2016, Longoria, who had been recorded by Epps, pleaded guilty to a single felony count of bribery, but Teresa Malone pleaded not guilty.[25] Another indictment was announced in August 2016. Guy E. "Butch" Evans became the insurance broker of record for the Mississippi Department of Corrections in 2012. He was given exclusive access to sell policies and products to MDOC employees, receiving commissions from insurance companies. He kicked back $1,400 to $1,700 per month to Epps for 16 months, starting in January 2013. The Evans arrangement ended with the Epps indictment. Epps personally received at least $1.47 million in bribes for steering $800 million in contracts between 2006 and 2014.[26] Judge Wingate recused himself from trying the Reddix case, which will be heard by Judge Daniel Gordon.

Scheduled trials and sentencings

On September 15, 2016, Biloxi consultant Robert Simmons was sentenced to seven years and three months for his part in the MDOC bribery scandal. A sealed record filed by the U.S. Attorney's office indicated he had provided the government with “substantial assistance at great risk.” His cooperation, plus a clean prior record, led the judge to sentence him to less than the nine years required by federal sentencing guidelines. The Department of Justice had initially confronted him with considerable evidence against him, including video and audio recordings, and wiretaps. Simmons had been paid a $10,000 monthly fee by AJA Management & Technical Services Inc. of Jackson, Mississippi, for 18 months as it managed expansions of the Walnut Grove and East Mississippi state prisons. Simmonds kicked back a portion of that monthly fee to Chris Epps. Simmons admitted bribing Epps from 2005 to 2014, and Harrison county supervisor William Martin from 2005 through 2011. Martin killed himself just prior to the first hearing on his indictment in February 2015.[27] William Grady Sims pleaded guilty to interfering with a witness and received a seven month sentence, plus six months home confinement.[28] Sims had also been ordered on October 25, 2011, by Mississippi State Auditor Stacey Pickering to repay $31,530 for using city employees and equipment to work on both the privately owned Transitional Center and the Correctional Facility.[29]

Of the others who were charged with bribing Epps, former Alcorn County warden and Democratic state Senator Irb Benjamin's case was to be tried on October 3, 2016, but a deal was struck and he pleaded guilty on October 18.[30][31] He will be sentenced in early 2017 and faces 10 years in prison, plus a fine of up to a quarter-million dollars.[32] Longoria will be sentenced on October 13.[33] Wingate rescheduled trials to January 9, 2017, for Malone and April 3 for Evans.[34]

After his sentencing had been delayed twice, Judge Wingate reset Epps' sentencing for May 24-25. Although Epps' sentencing was delayed, Wingate has set sentencing for two other defendants, Rankin County businessman Cecil McCrory and Sam Waggoner, for Dec. 21-22.[35]

References

  1. ↑ Epps may have violated bond terms with burglary charge, Clarion Ledger, Jimmy E. Gates, November 2, 2016. Retrieved 3 November 2016.
  2. ↑ Epps probe, "Mississippi Hustle" started sex scandal, Clarion Ledger, Emily LeCoz, November 22, 2014. Retrieved 12 September 2016.
  3. ↑ Epps’ star falls in Miss. after federal indictment", Washington Times, Emily Wagster Pettus, November 8, 2014. Retrieved on 12 September 2016.
  4. 1 2 Blinder, Alan. "2 Former Mississippi Officials Plead Guilty in a Graft Case Involving Private Prisons." The New York Times. February 25, 2015. Retrieved on February 27, 2015.
  5. ↑ Epps pleads not guilty to federal bribery charges, WAPT, Tammy Estwick, November 7, 2014. Retrieved 12 September, 2016.
  6. ↑ Alleged kickback scheme: McCrory's connections vast,The Clarion-Ledger, Emily Le Coz, November 8, 2014. Retrieved on 12 September 2016.
  7. ↑ Businessman's sentence delayed in Department of Corrections scandal, Mississippi Today, Patsy R. Brumfield, April 13, 2016. Retrieved 15 September 2016.
  8. ↑ "Bryant orders prison contracts rebid" (Archive). WAPT. November 7, 2014. Retrieved on 12 September 2016.
  9. 1 2 "Former commissioner Of Mississippi Department of Corrections and local businessman plead guilty in federal court" (Archive). United States Department of Justice. Retrieved on 12 September 2016.Version at the website of the Federal Bureau of Investigation.
  10. ↑ Mitchell, Jerry and Jimmie E. Gates. "Chris Epps, Cecil McCrory plead guilty to corruption" (Archive). The Clarion-Ledger. February 25, 2015. Retrieved on 12 September 2016.
  11. ↑ Gates, Jimmie E. "Former MDOC Commissioner Chris Epps' sentencing delayed" (Archive). Clarion Ledger. June 8, 2015. Retrieved on Retrieved on 12 September 2016.
  12. ↑ County supervisor who committed suicide was targeted in Mississippi prison corruption probe, Fox News (AP), February 27, 2015. Retrieved 12 September 2016.
  13. ↑ "Sentencing delayed in Mississippi prison contract bribery case", Associated Press, November 5, 2015. Retrieved 10 November 2015.
  14. ↑ Judge delays sentencing for man who bribed Epps, WAPT News, April 14, 2016. Retrieved 12 September 2016.
  15. ↑ 1 Pleading guilty in prison bribery case, Jackson Free Press, Jeff Amy (AP), August 22, 2016. Retrieved 19 September 2016.
  16. ↑ Another man accused of bribing Epps over prison contracts, The Clarion Ledger, Jeff Amy (AP), February 16, 2016. Retrieved 29 May 2016.
  17. ↑ Bribes 'cost of doing business in Mississippi,' says consultant who pleaded guilty, Sun Herald, Anita Lee, February 18, 2016. Retrieved 14 September 2016.
  18. ↑ Epps sentencing delayed; McCrory wants to withdraw plea, The Clarion Ledger, Jerry Mitchell, April 11, 2016. Retrieved 14 April 2016.
  19. ↑ In Epps case, still unclear who else is implicated, Northeast Mississippi Daily Journal, Jeff Amy (AP), June 13, 2016. Retrieved 3 August 2016.
  20. ↑ Prosecutor: 11 more to be charged in Mississippi prison bribery inquiry, Associated Press, Jeff Amy, June 30, 2016. Retrieved 6 July 2016.
  21. ↑ Mississippi Doctor Charged with Bribery of Former Corrections Commissioner, Department of Justice, July 20, 2016. Retrieved 26 July 2016.
  22. ↑ Attorney: Alleged bribery a "shakedown", Jackson Free Press, Tim Summers Jr., July 21, 2016. Retrieved 21 September 2016.
  23. ↑ The Latest: Lawyer says doctor was hit by Epps shakedown, WAFF (Associated Press), July 21, 2016. Retrieved 28 July 2016.
  24. ↑ Former state Rep. Bennett Malone's wife charged in Epps' case, Clarion-Ledger, Jimmie E. Gates and Geoff Pender, July 25, 2016. Retrieved 26 July 2016.
  25. ↑ Man pleads guilty to plot to bribe ex-corrections chief, Sun Herald, Jeff Amy (AP), August 3, 2016. Retrieved 4 August 2016.
  26. ↑ Former insurance broker for MDOC indicted in Epps case, The Clarion-Ledger, Jimmie E. Gates, August 24, 2016. Retrieved 27 August 2016.
  27. ↑ Prison sentence was the real price of consultant’s bribery conviction, Sun Herald, Anita Lee, September 15, 2016. Retrieved 15 September 2016.
  28. ↑ Privately Run Mississippi Prison, Called a Scene of Horror, Is Shut Down, New York Times, Timothy Williams, September 15, 2016. Retrieved 17 September 2016.
  29. ↑ Longtime mayor of Mississippi town, William Grady Sims, accused of sexually assaulting an inmate, CBS News, October 26, 2011. Retrieved 20 September 2016.
  30. ↑ Warden who lives hundreds of miles from jail resigns, Mississippi Business Journal, November 24, 2014. Retrieved 19 September 2016.
  31. ↑ Former state senator to plead guilty in Epps bribery case, Mississippi Today, Patsy R. Brumfield, October 3, 2016. Retrieved 3 November 2016.
  32. ↑ Irb Benjamin pleads guilty in Epps bribery case, Mississippi Today, R.L. Nave, October 18, 2016. Retrieved 3 November 2016.
  33. ↑ Epps prison scandal defendant trials pushed back, Mississippi Today, Patsy R. Brumfield, September 2, 2016. Retrieved 8 September 2016.
  34. ↑ Epps prison scandal defendant trials pushed back, Mississippi Today, Patsy R. Brumfield, September 2, 2016. Retrieved 8 September 2016.
  35. ↑ Ex-corrections head Epps won't be sentenced until May, Clarion Ledger, Jimmie E. Gates, November 1, 2016. Retrieved 3 November 2016.

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