Idaho: FBI Declines to Press Criminal Charges against CCA for Falsified Staffing Records

by Joe Watson and Mark Wilson

The FBI will not pursue criminal charges following a 15-month investigation into allegations that the nation’s largest for-profit prison company, Corrections Corporation of America (CCA), understaffed the Idaho Correctional Center and falsified records to hide thousands of hours of vacant shifts, which resulted in increased levels of violence at the facility.

“The FBI’s detailed and thorough investigation did not produce evidence of a federal criminal violation,” U.S. Attorney Wendy J. Olson announced on May 22, 2015. “Rather, the evidence showed that the false entries and understaffing could be attributed only to relatively low-level CCA employees.”

“No evidence obtained during the investigation showed that any CCA employee at the assistant warden level or above participated in creating the falsified rosters, or affirmatively knew that rosters were falsified at the time they were falsified,” she continued. “Likewise, no evidence showed that the false entries were made by the low-level employees with the intent to defraud the state of Idaho of money or property, as is required under the federal criminal fraud statutes.”

Olson said the FBI probe also determined that no officials with the Idaho State Police, the governor’s office or the Idaho Department of Correction (IDOC) made any attempt to interfere, block or influence the investigation. She noted that miscommunication was to blame for creating the appearance of malfeasance by state officials.

“The evidence shows a series of miscommunications and uncorrected assumptions that led to incorrect reports in the media and incorrect statements in related civil federal court proceedings that the Idaho State Police were conducting a criminal investigation, when in fact they were not,” Olson declared.

The FBI initiated its investigation in March 2014 to determine whether CCA or its employees had defrauded the State of Idaho by falsifying staffing hours and understaffing shifts at the Idaho Correctional Center (ICC) from 2008 to early 2014. Idaho Governor Butch Otter had ordered the Idaho State Police to conduct its own investigation a year earlier, but the department bowed out to avoid any potential conflict of interest after meeting with the FBI.

CCA agreed in February 2014 to pay $1 million to reimburse the state for the falsified staffing hours at ICC. A 2013 forensic audit by KPMG, a company hired by the state, found that CCA had breached its $29 million annual contract to operate ICC by failing to staff the 2,080-bed facility during the prior year by more than 26,000 hours.

Almost 4,500 of those hours had been double-booked according to the KPMG audit, which meant “one or more CCA employees were listed as holding multiple posts in a mutually exclusive manner, i.e. they would not have been in both places at the same time.”

About 8,700 hours were filled by CCA employees who were not guards, while almost 10,000 hours were entirely unstaffed because a guard either showed up late for a shift or left early. In all, the understaffed guard posts amounted to 500 hours per week, and were equivalent to six missing shift positions every day, the audit determined.

Even worse, according to KPMG, those figures were based on a “conservative approach” to the audit, which may have understated “the number of hours that could potentially be identified as unstaffed using the criteria provided to [KPMG] by the Idaho DOC.”

CCA disputed the audit findings, arguing the figures were inflated. In a five-page response, the company said KPMG’s review was “characterized by a number or errors, faulty assumptions, misunderstandings of the contract, and other flaws.”

In paying the $1 million settlement, CCA sought to conclude the matter. In return, Governor Otter agreed the state would waive its right to sue over the understaffing and falsified records at ICC.

“We’ve worked openly with the state toward resolution and have reached one that they agree makes the taxpayers whole,” CCA spokesman Steven Owen wrote in an email to the Associated Press.

The American Civil Liberties Union, meanwhile, was not satisfied with the settlement. “Idaho taxpayers have been cheated out of potentially millions of dollars, and who knows for how long,” the ACLU of Idaho said in a statement after submitting an open records request to the Idaho State Police, the corrections department and the governor’s office for “everything related to how the settlement of $1 million was reached with [CCA].”

Several years earlier, the ACLU had filed suit against CCA on behalf of prisoners at ICC, which had become known as a “gladiator school” due to rampant violence. [See: PLN, Feb. 2012, p.30]. The ACLU claimed the extreme level of violence created unconstitutional conditions at the facility.

CCA settled the case by agreeing to increase staffing levels to comply with its contract with the state, but on June 11, 2013 the ACLU moved the federal district court for a show cause hearing due to CCA’s “significant and persistent” violations of the settlement by falsifying ICC staffing records. [See: PLN, Oct. 2013, p.28].

“We now know ... that CCA reduced security staffing by thousands of hours and falsified its reports to hide these violations, all the while reaping undeserved profits by not providing the staff it was paid to provide,” the ACLU stated in its motion, which was supported in part by an affidavit from CCA employee Susan Fry, who accused IDOC officials of failing to properly monitor the company’s contract.

“It appears to me that the IDOC Compliance Monitors either were deliberately ignoring daily violations of staffing requirements, or their supervisors at IDOC are, because ICC violates staffing requirements daily that have to be apparent to the Monitors,” Fry stated.

“Employees were being placed on the shift schedule who were not present within the building or who were actually working in other areas and in some cases were no longer employees of CCA,” said T.J. Angstman, an attorney representing ICC prisoners. “This was being done to fraudulently show the State of Idaho that ICC was fully staffed when in fact it was not and to hide culpability for the injuries suffered by the plaintiffs.”

CCA admitted that some of its ICC employees had, indeed, falsified staffing records for six months during 2012. [See: PLN, May 2013, p.22]. However, the company downplayed the extent of the fraud, stating only that “there were some inaccuracies.” CCA chief of security Shane Jepsen and assistant chief of security Daniel Melody were fired in connection with the falsified records, though they claimed they were scapegoats. According to documents obtained by the Associated Press, Idaho prison officials had been aware since at least 2010 that CCA was violating its contract by understaffing ICC.

On September 16, 2013, federal district court judge David O. Carter held CCA in contempt for violating the terms of the settlement agreement in the ACLU’s lawsuit. Five months later the company was ordered to pay $349,018.52 in attorney’s fees and costs in the case. See: Kelly v. Wengler, U.S.D.C. (D. Idaho), Case No. 1:11-cv-00185-S-EJL.

The State of Idaho took over operations at ICC on July 1, 2014, although the state still houses some of its prisoners at a CCA-operated facility in Colorado. According to an August 2015 news report, Shane Bauer, an investigative reporter with Mother Jones magazine, has filed a Freedom of Information Act suit against the FBI, seeking documents related to the agency’s lengthy investigation into CCA’s falsified staffing records at ICC.

Sources: www.fbi.gov; www.idahostatesman.com; Associated Press; www.spokesman.com; www.blogs.barrons.com; “Report: Idaho Department of Corrections,” KPMG (Dec. 19, 2013); www.washingtonpost.com; www.sfgate.com; www.seattlepi.com; www.courthousenews.com

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