05/22/01

By Steve Ritea

Capital bureau/The Times-Picayune

BATON ROUGE, LOUISIANA -- Even after rampant abuses forced the state to seize control of the Tallulah Correctional Center for Youth in 1999, the three private owners of the facility, with ties to former Gov. Edwin Edwards, might still be getting more than their fair share of state money, a new audit suggests.

A report issued Monday by Legislative Auditor Dan Kyle said the three men have made nearly $9 million from the facility since 1995 and will make $600,000 this fiscal year. The state payments are scheduled to continue until construction bonds for the juvenile prison are paid off in 2012, after which the three men will retain ownership of the facility.

Kyle noted that the men formed a company to build and operate the prison, and the state paid them a rate based on the number of inmates housed there.

"When the state took over the facility, the rate paid to the company was reduced," he said. "The question now is: Was the reduction enough? And if the company is making abnormal profits, then the appropriation could be reduced to a level where they made only normal profits."

Kyle said the Legislature has the power to reduce the payments, which were negotiated by the Foster administration. That appropriation is included in the 2001-02 state budget, which comes up for debate in the House today.

Sen. Donald Cravins, D-Arnaudville, chairman of the Senate Judiciary B Committee and a frequent critic of the Department of Corrections, said he plans to hold lengthy hearings on the issue after the session.

"In my mind, I just don't know how the heck you justify putting together a contract like that," Cravins said.

In 1994-95, during Edwards' last administration, Trans-American Development Associates was selected to build and operate the Tallulah youth prison"even though the company had no prior experience constructing or operating correctional facilities," the audit said.

That company is owned by George A. Fischer of Metairie, Edwards' former campaign manager; Verdi Adam of Baton Rouge, head of the state highway department under Edwards; and James R. Brown, a friend of Edwards and son of the late state Sen. Charles Brown of Tallulah.

Edwards told auditors that he was not involved in the selection of Trans-American, but he had Department of Corrections Secretary Richard Stalder meet with Fischer and Brown. Although Fischer "probably spoke with him (Edwards) about the arrangement," the former governor said he left the arrangement "up to Secretary Stalder's discretion," according to the audit.

Stalder told auditors he left the decision up to Donald Walker, who was then mayor of Tallulah, the report says.

Walker said he was approached by Brown. Brown said Walker asked him for help with economic development in Tallulah, according to the audit.

In 1995, the state agreed to pay the company $52.88 per inmate per day and then $62.88 when an additional portion of the prison was completed, housing a maximum of 686 youths.

But in 1997, the contract was amended under the Foster administration to make sure the company continued to receive payments even if the state took over Tallulah.

The arrangement guaranteed payments of $16.62 per day for each of 686 inmates, regardless of how many actually were housed there, the audit says.

The same day the contract was amended, the owners of Trans-American refinanced their debt and obtained $7.6 million in additional funds. The following day, the company paid its three owners $2 million in dividends, according to the audit.

The amendment took effect in September 1999, when a variety of abuse complaints -- ranging from beatings and inadequate clothing to failure to provide education and appropriate health care -- prompted a state takeover of Tallulah.

The per diem rate, increased to $17.10 in 2000, continues to be paid for 686 youths, although a federal court reduced the maximum capacity to 440.

Stalder disputes the characterization that the state is paying for empty beds.

"We are paying for buildings that were originally designed to house offenders that are now utilized to provide space for administrat(ors), . . . the Boys Club, and medical and mental health services," he wrote in response to the audit. "We use every square foot of the facility. We are not paying for offenders not actually housed at the facility. We are paying for Œbeds built,' not Œbeds occupied.' "

The Legislature can cure "any perceived disproportionality" by reducing those payments, he said.

Officials at the Juvenile Justice Project of Louisiana, a watchdog group monitoring youth prison conditions, said the audit suggests "this facility was set up with money in mind and not our kids in mind," said Derwyn Bunton, an attorney with the organization.

Problems have persisted since the takeover, Bunton said, including reports of inadequate supervision by guards, fostering more youth-on-youth violence.

"Our patience is wearing thin with their ability to properly run the facility," Bunton said.

Stalder said Tallulah has vastly improved since the takeover. Tallulah houses many violent offenders, and altercations are not always avoidable, he said.