4/24/03 9:26 AM

The state may have a loophole to get out of a contract for the privately owned juvenile prison at Tallulah, according to a report by a bond attorney.

The contract is derided by critics for costing the state millions of dollars in management fees and dividends that are paid to the prison's politically connected owners.

That loophole may lie in the legality of the cooperative endeavor agreement between the state, the city of Tallulah and the prison's owners, said Washington, D.C.-based bond attorney Richard Marks of Piper Rudnick.

Marks, who is working for the Juvenile Justice Commission, wrote to commission Chairman Mitch Landrieu on April 18.

Two years ago, the Legislature tried to end its obligation under that agreement by cutting off funds to house juvenile offenders at the prison.

That attempt stalled when Standard & Poor's, a bond rating agency, threatened to lower the state's credit rating, a move that could cost the state millions of dollars in higher interest fees on all its outstanding debt.

Standard & Poor's, however, may back down on that threat if a court finds the cooperative endeavor agreement illegal, Marks said. Marks said the state cannot bring the matter to court. But attorney David Utter said a private resident or organization could do so.

"We're going to look hard at whether a lawsuit is in order," Utter, executive director of the nonprofit Juvenile Justice Project of Louisiana, said Wednesday.

The prison's principal owners are George Fischer, Verdi Adam and James R. Brown. Fischer served as chief of staff, campaign manager and transportation secretary for former Gov. Edwin Edwards and as health secretary during the administration of former Gov. Dave Treen.

Adam is a former highway engineer who has other business investments with Fischer. Brown is the son of the late state Sen. Charles Brown of Tallulah.

Senate Finance Committee Chairman Jay Dardenne, R-Baton Rouge, and House Appropriations Committee Chairman Jerry Luke LeBlanc, D-Lafayette, both said Wednesday they had not seen Marks' letter.

"We're paying a ransom because of a bad deal that the state entered," LeBlanc said.