Work-release contractors have links to sheriff

St. Tammany work-release programs run by businessmen connected to sheriff

In theory, the St. Tammany Parish sheriff’s work-release program, like others in Louisiana, exists to provide offenders on the cusp of freedom a chance to serve their time outside prison walls, earning money and learning new skills at private jobs while living in a halfway house instead of a cell block.But in recent years, the program also has become a business opportunity for contractors with ties to Sheriff Jack Strain, but without much experience in rehabilitating prisoners.

Critics, including the civil-rights advocacy group Louisiana United International, say the arrangement allows the well-connected to profit from the labor of the incarcerated.

Strain disputes that, saying that everyone — inmates, taxpayers and the companies that run the program — wins under the setup.

St. Tammany Parish has had a work-release program since a few months before Strain became sheriff in 1995, when his predecessor, Pat Canulette, built a large halfway house housing about 190 inmates on Production Drive in Slidell.

The operation was run in-house until just a few months ago, when Strain began leasing the premises to a private concern, St. Tammany Workforce Solutions LLC, that was organized in March.

The notion of privatizing the work-release program goes back to January 2008, when Northshore Workforce Solutions LLC was formed and proposed to build a new halfway house, with a capacity of 231 inmates, at its own expense on Champagne Street in Covington, adjacent to the St. Tammany Parish Jail.

To do it, the company needed a zoning change granted by the Parish Council over the objections of some Covington officials, notably then-Mayor Candace Watkins.

Northshore’s officers include Marlin Peachey Jr., who ran Strain’s victorious campaign in 1995 and has long served as the sheriff’s campaign treasurer. Strain hired Peachey as warden of the parish jail in 2000, without advertising the job publicly.

Peachey left the Sheriff’s Office in 2009 to help launch the work-release program, after being recruited by construction company owner Jimmy Laurent, a contributor to Strain’s campaigns. Thomas Parks is also listed as an officer in the firm.

Strain said business owners on the west side of the parish had been pestering him for years to create a work-release program there, to mirror the one in Slidell.

He said he was reluctant to spend the money, but then he was approached by Laurent, who proposed a private operation. Strain liked the idea and signed a deal with Laurent, who then brought in Peachey to help run it.

“Government is finding out that many times private business can be more efficient than government ever dreamed of.” JACK STRAIN, St. Tammany Parish sheriff

Paul Perkins, who runs Louisiana Workforce, perhaps the state’s largest private work-release program manager, said Peachey called him several years ago to ask for tips on how he ran his business.

Peachey told Perkins then he was planning to start one on the north shore.

Things have worked out well, Strain said: The Covington facility has been a steady source of income for the Sheriff’s Office.

But as that endeavor took off, Strain said, the halfway house on Production Drive in Slidell was becoming less and less profitable.

He provided the New Orleans Advocate with a spreadsheet indicating that the facility netted his office $626,301 in profits as recently as 2009.

But since then costs jumped, and it was due to lose money for the first time this year.

Asked why, Strain cited as a major factor a change in state policy that no longer allowed the sheriff to charge inmates for transportation to and from work.

His spreadsheet shows the sheriff had never billed more than $62,423 for transportation. Meanwhile, from 2009 to 2011, his personnel costs at the facility shot up by roughly $230,000, operating costs jumped by more than $70,000 and the cost of supplies rose by more than $60,000. Overall, the sheriff’s expenses went up by one-third during that time.

Unorthodox solicitation

Strain said that, although he believes in work-release programs, he doesn’t think they should cost taxpayers anything, and he preferred the idea of closing the halfway house to subsidizing it. Instead, he decided to see if anyone wanted to take it over.

Rather than pursuing a formal solicitation, Strain said, he asked the weekly Slidell Independent to publish an article about his desire to privatize the facility.

The newspaper did, and according to the sheriff, four interested people or groups contacted him. Strain said he met with each one, and decided the leading candidate was an outfit called St. Tammany Workforce Solutions LLC, which was incorporated in March.

The company’s founding documents list the firm’s address as 141 Production Drive, even though St. Tammany Workforce did not sign its three-year contract with Strain’s office until June.

Like Northshore Workforce, the officers of St. Tammany Workforce have ties to Strain.

Brandy Hanson is a former employee of the Sheriff’s Office. Her Facebook page lists David Hanson, a captain with the office who heads the K-9 unit, as a friend. Several other members of the Hanson family work for the Sheriff’s Office, and Strain has reported recent campaign contributions from Curtis Hanson, David Hanson and Gerald Hanson.

Jarret Cole Keen is also listed as an officer. A campaign finance report for Strain lists a $75 graduation gift in 2011 for Keen, 22, as an expenditure.

His address on that form is the same as that of Vickie Keen, who is also listed on the campaign report as getting reimbursed for money spent on baseball signs and banners.

The third officer in St. Tammany Workforce Solutions, Allen Tingle, is listed in campaign finance reports for Strain as getting reimbursed for $2,200 to repair a campaign Mardi Gras float. Tingle is a partner with his father, Rufus Tingle, in a construction firm. Rufus Tingle and Selene Tingle, who is Allen Tingle’s wife, each donated $2,500 to Strain in 2011.

Strain acknowledged his relationships with the principals in both of the firms that run his work-release programs, saying he considers them supporters of his.

He stressed that support for him, whether political or financial support, was not a prerequisite for getting a contract, however.

“I know pretty much I think all of the individuals, the operators of both facilities. Friends? I have a lot of friends in St. Tammany Parish. I have been sheriff for 17 years; I’ve been in this profession for 32 years. I certainly am acquaintances to all of them, as I am with many other of the contractors who work for the Sheriff’s Office.’’

As for his somewhat unorthodox solicitation, Strain said he doesn’t believe any of the sheriffs that have set up private transitional work programs followed any sort of formal bidding process.

That view was supported by Perkins of Louisiana Workforce, who said he’s gotten his contracts by simply talking to sheriffs, one by one.

West Feliciana Parish Sheriff J. Austin Daniel said he hired Louisiana Workforce after Perkins approached him. Daniel said he didn’t do any comparisons with any other places or seek other proposals; he knew that Louisiana Workforce already contracted with other parishes nearby, and he knew their reputation, he said.

Privatized programs are becoming increasingly common throughout the state, although they are still the exception rather than the rule. They all must be accredited by the state Department of Corrections, which also mostly handles the screening of inmates for the programs.

Two outfits have the lion’s share of the private work--release business in the state: Louisiana Workforce and LaSalle Management Group.

The former has contracts with the sheriffs of five parishes: East Baton Rouge, West Feliciana, Livingston, Iberia and Terrebonne. LaSalle runs programs for sheriffs in five parishes — Catahoula, LaSalle, Jackson, Claiborne and Lincoln — and one prison, Richwood Correctional Center.

The state also contracts directly with two private operators: City of Faith, in Monroe, and CINC, in Lake Charles.

How they work

The way work-release programs typically work is like this: When an inmate is nearing the end of his term and expresses a desire to go into a transitional work program, he signs up. If he’s eligible, he’s transferred to the halfway house; it’s up to the operator of the halfway house to find the inmate a job.

Inmates are paid by their private employers, but the work-release program gets to keep up to 62 percent of their wages or $63.50 per day, whichever is less. The program can also charge for various items such as snacks and phone service.

On top of that, the programs generally get to keep the bulk of the per-diem payments that would usually go to the sheriff.

For instance, Northshore Workforce gets paid $12.39 per prisoner per day by the state, or $372 per month for each work-release inmate at its Covington facility.

In Slidell, the formula is a little different; St. Tammany Workforce gets $7.75 per inmate per day from the state, or about $233 per month per inmate.

Louisiana United International, a civil-rights advocacy group, released a report Wednesday that criticized the St. Tammany program as financially abusive and claiming that in some cases, up to 75 percent of inmates’ wages were taken. If so, that would violate state law, which says that deductions for room, board and other administrative and incidental costs, taken together, cannot exceed 70 percent of the gross wages earned by inmates.

Strain said he’s never heard any allegation that the programs were overcharging prisoners, and if they were, he’s confident the inmates would complain and the Department of Corrections would crack down.

The Covington facility provides Strain’s office with a net profit of about $250,000, which comes from the $3 per inmate per day fee. Strain expects do just as well with the Slidell facility now that it’s privatized: Not only will his office collect $3.50 per inmate per day there, it will pull in about $56,000 per year in rent.

Some other sheriffs do substantially better than that. Perkins, of Lousiana Workforce, says he remits $10 per day per inmate to the sheriffs who contract with him.

The cooperative endeavor agreement Strain signed in June calls for St. Tammany Workforce to lease the facility from his office for $4,650 per month. Asked how that price was derived, Strain’s office provided a broker’s price opinion conducted in May by Coldwell Banker Commercial.

The comparable properties the broker examined were light industrial warehouses, including one on the same block, that had rents ranging from $3.70 per square foot to $7.20 per square foot per year. Because of “age, functional obsolescence” and other issues, the broker said the halfway house probably should command a rent of $3.10 per square foot per year, the document says.

Northshore Workforce could collect enough money to cover its monthly rent from just two inmates who have reasonably high-paying jobs.

Superior efficiency

Asked why a private company could remit hundreds of thousands of dollars to the sheriff’s office and still turn a profit running a work-release program, while the sheriff’s own program was running in the red, Strain cited the private sector’s superior efficiency.

“Government is finding out that many times private business can be more efficient than government ever dreamed of,” he said.

“It’s more expensive for the Sheriff’s Ofice to hire personnel; it’s more expensive for us to operate an entity because of liability and all of those things that go with it. ... At some point in time in the very near future, the sheriff-operated facility would have actually cost taxpayers money, and I think most taxpayers would tell you that’s not something they would applaud.”

Strain said one key difference is that the private operators have an incentive to find the highest-paying jobs for inmates they can, as they get to keep a high percentage of prisoners’ wages. Deputies were going to be paid the same either way, Strain said.

Both Northshore Workforce and St. Tammany Workforce are partly owned by men who also own construction companies that might be in need of labor from time to time.

Strain said he didn’t know whether either program steered any inmates toward firms owned by the same people overseeing the workforce programs, but he said he did not think it would present a conflict if they were. Pam Laborde of the state Department of Corrections said there is no prohibition on such an arrangement.

Strain declined a verbal request to provide a list of all companies that have used inmates from the St. Tammany work-release program, saying he didn’t want residents to cast aspersions on companies using inmate labor.

Peachey told the New Orleans Advocate that Northshore Workforce has never funneled any of its inmates into jobs with any companies owned or controlled by Northshore’s principals. None of the principals from St. Tammany Workforce returned calls seeking comment.

Strain acknowledged that the privately run work-release programs are not immune from problems — an inmate in the Covington program walked off a job site this week and stabbed a man — but he noted that taking the program in-house doesn’t change that.

In fact, in 1998, Strain demoted Charles Smith, who had been director of the work-release program, after it came to light that inmates were being used to work at deputies’ homes without pay, according to Times-Picayune news accounts at the time.

In 2002, the facility’s director, Capt. Jeannie Sullivan, was given a letter of reprimand when she placed her cousin, Darren Keith Craddock, in the program even though he had not been approved for it, The Times-Picayune reported.

Strain said the key question isn’t whether there are problems, but “what we do about it when it is discovered.” The sheriff’s office admits it, fixes it and moves on, he said.

A proud achievement

Peachey said the halfway house business is not an easy one; otherwise, “Everyone would be doing it.” The facility can house about 231 men, but it opened with only 30 inmates and still had to cover operating costs, paying utilities, food, salaries, insurance and significant startup costs, which included the building itself and vans to transport participants to their jobs, he said.

Today, the program has 225 participants, employs about 23 people and provides workers to about 85 employers in St. Tammany Parish and offshore. “We have cooks in restaurants, crane operators, welders, fitters, carpenters,” Peachey said.

Business owners who hire the inmates “love it,” Peachey said, because the workers show up on time, never missing work because of transportation issues.

“They can rely on us,” he said. If an employer doesn’t like a particular inmate, Strain noted, he just sends the inmate back and asks for another one.

Meanwhile, Peachey said, inmates have an opportunity to get GEDs, and they leave the criminal justice system with work experience and some savings. Peachey said he tells participants not to waste their money by buying things at the commissary or spending their weekly cash draw of $30 on fast food since they are provided a bag lunch. Instead, he said, they are encouraged to send money home. Child support also is deducted from their pay.

Strain called the program a proud achievement.

“I’ve been in this profession now for 32 years, and the work-release concept is the first of my experiences that truly does give men an the opportunity to turn their lives around,” he said. “We have multiple success stories out of our own work release center, where Slidell residents or St. Tammany Parish residents who have messed up, borne the cost of their own incarceration while in work release, got gainful employment, developed skills and went into businesses and become productive tax-paying citizens of the parish… It is something that we have for many years been proud of.”

Peachey said most of his charges earn between $8 and $13 an hour, but some participants land high-paying jobs, especially if they are skilled and earn overime. Peachey said inmates have earned $80,000, $100,000 and even as much as $150,000 annually. The program strives to find the best jobs possible for its participants — and has an incentive to do so.

The limitations imposed by the state on what work-release programs can keep — the lesser of 62 percent of gross wages or $63.50 per day — translates into $198 per week for an $8-an-hour worker, or up to $444 per week for a top earner.

“We think that we’re doing it right,” Peachey said, noting that the program is audited annually by the DOC and has received clean audits. The program also has an outside auditor who keeps an eye on “every penny of these guys’ money,” he added.

While the business has been successful, Peachey said, “it’s not something to retire on.”

Staff writers Laura Maggi and Claire Galofaro and Katie Moore of WWL-TV contributed to this report.