Three executives of an Indiana company set to take over Arkansas' youth prisons have histories of mismanaging juvenile lockups, records show.
Youth Opportunity Investments was awarded the $15.8 million yearlong contract on March 21, after the state procurement office disqualified the previous winner, Rite of Passage, a Nevada company, for problems it had running youth detention sites in other places.
Colorado recently terminated its contract with Rite of Passage because the "health, safety, or welfare of persons receiving services may be in jeopardy," according to 2018 state records.
In a protest letter dated March 12, Youth Opportunity challenged Arkansas' initial decision to award Rite of Passage the contract, citing Colorado's termination of the company's contracts.
Arkansas' request for proposal to run the sites required that the provider have a clean contract history, meaning no terminations because of "nonperformance" in the past five years.
Youth Opportunity also alleged in the letter that Rite of Passage exposed children to unsafe conditions and abusive guards.
Edward Armstrong, procurement office director, sided with Youth Opportunity, and said Rite of Passage shouldn't have won the bid because Colorado had canceled its contracts with the company.
But Rite of Passage associates insist that the company remains in good standing in Colorado. Those Colorado contracts weren't terminated for "nonperformance," but for licensure actions, said Little Rock attorney Debby Thetford Nye.
"Colorado has not issued charges against Rite of Passage," Nye wrote in a letter sent to Armstrong on Wednesday.
Only the two companies submitted proposals to operate the state-run youth lockups in Harrisburg, Mansfield, Lewisville and Dermott.
State policymakers say returning facilities to private control by July is key in overhauling the state's often-troubled juvenile-justice system. In November, Gov. Asa Hutchinson announced his intent to reduce incarceration of children.
The state locked up 402 children last year.
But Youth Opportunity's chief executive, Ronald Hunter, as well as Senior Vice President Brian Neupaver and Vice President Tyrene Green, had their own troubles running youth prisons, records show.
For instance, Indiana officials found that a facility managed by Hunter "clearly lacks leadership and experience in best-practice approaches to juvenile detention," according to a 2012 Indiana Youth Services Division inspection letter.
The letter noted the Cedarbridge Treatment Center met "minimal" requirements, and "has not demonstrated an ability to ensure long-term compliance with the Indiana juvenile detention standards or an ability to improve and maintain the quality of confinement."
The facility is "regularly faced with challenges stemming from a break or change in operational services, such as was observed in a recent lapse of medical services over a billing issue," the letter also said.
After a "long history of financial troubles," the facility closed in 2014, reported the Muncie Star Press.
When asked about these findings, Gary Sellee, a lawyer for Youth Opportunity, said the company's "success in the industry has come at a high cost of resources" and "will not be undervalued by the low cost of others' rhetoric."
Tom Masseau, executive director of Disability Rights Arkansas, said he's seen youth prison providers come and go -- "all with the promise of doing better than the previous provider."
The nonprofit has federal authority to monitor the facilities and has done so for the past five years.
"Youth entrusted to the care of the state have gone through many changes, every time with the hope that conditions and treatment will improve," he said. "Yet somehow the system is still in shambles."
STRING OF CONTRACTS
Other Youth Opportunity executives, Neupaver and Green, managed operations at Arkansas' largest youth prison in the past. While they were in charge, the 120-bed facility at Alexander was hit with reports of misconduct.
Neupaver used to be the chief operating officer of G4S Youth Services, a Tampa, Fla., company that managed Arkansas' largest youth prison between 2007 and 2016.
In 2014, Disability Rights Arkansas, a nonprofit with federal authority to monitor the facilities, issued a report that laid out allegations that guards at the Alexander lockup rewarded youths with candy bars for punching, slapping or bullying other inmates. The report also found that children said they had been physically abused by the lockup's staff members and assaulted in areas where video surveillance didn't reach.
Incident reports detailed kids being slapped, slammed against walls, with at least one suffering a broken arm, Masseau had confirmed.
Before G4S, a Texas company called Cornell Cos. Inc. ran the lockup. Green, now Youth Opportunity's vice president of program development, worked for Cornell and oversaw the Alexander center in 2006 and 2007, Texas records show.
Arkansas fired Cornell after a state investigation indicated that psychotropic drugs may have been used to improperly restrain the young inmates, according to a 2007 Arkansas News Bureau article.
Sellee said Arkansas officials recruited G4S to "fix problems at Alexander that occurred under prior contract operators. ... G4S ran the facility efficiently, cleaned up most of the problem areas, then was not chosen as the contractor when operation of the facility was subject to competitive bidding."
He didn't answer questions regarding Green's management of the Alexander lockup.
Rite of Passage now runs the facility, through a separate $34.1 million, three-year contract starting in 2016.
Watchdog groups say there's been some improvements at the facility since Rite of Passage took over, but many issues remain.
In the past three years, Alexander lockup guards committed acts of sexual assault, physical abuse and needless use of force against inmates, according to police reports, juvenile-court files and Arkansas Democrat-Gazette reporting.
'A GOOD PARTNER'
State procurement officials initially said the decision to give the contract to Youth Opportunity instead of Rite of Passage was final, but have since sent the matter to the Arkansas attorney general's office for review.
Rite of Passage "has no administrative recourse" and can only go through circuit court, Scott Hardin, spokesman for the state Department of Finance and Administration, which oversees the procurement office, had said.
Amy Webb, spokesman for the Department of Human Services, which oversees the Youth Services Division, declined to comment, "since Rite of Passage is asking for reconsideration."
In the letter sent Wednesday to Armstrong in the procurement office, Nye, the Rite of Passage lawyer, argued that the procurement office shouldn't have held the terminated Colorado contracts against Rite of Passage because those contracts didn't end because of "nonperformance." The dispute in Colorado is still unresolved, the letter said.
"The [state's] Determination is contrary to the Procurement Law and premised upon a misunderstanding of the facts," the letter read. "If left ... [the state's] actions will continue to violate the constitutional due process of Rite of Passage."
Michael Cantrell, Rite of Passage's executive director, also said -- in a March 22 news release -- that the "company is considering legal action to resolve this issue."
"We have worked hard to be a good partner with the state of Arkansas and worked hard to clean up the mess that the executive team of [Youth Opportunity] left here, as executives for G4S," Cantrell said in the statement. "We were hired to clean up their mess and now the state is going to hand them the contract we fairly won, without regard or concern about returning these facilities to this flawed applicant."
Arkansas' high-dollar contracts to run its youth prisons have been contested before.
In 2016, the state intended to give a $160 million, multiyear contract to Youth Opportunity to run the lockups.
But two Arkansas nonprofits that ran the sites for nearly two decades challenged the state's decision twice. Lawmakers then failed to approve the contract, prompting Hutchinson to turn over control of the lockups to the Youth Services Division.
A yearslong FBI investigation later revealed that the executive director of one of those nonprofits participated in illegal lobbying efforts to preserve its youth prison contracts with the state. Jerry Walsh of Magnolia-based South Arkansas Youth Services pleaded guilty in federal court to funneling more than $380,000 to a political lobbyist and state senator in 2018.
Masseau said Disability Rights Arkansas plans to "carefully and vocally monitor" the progression of the new provider, with the hope "that the state continues to push toward providing much needed services in the community to at-risk youth instead of finding more companies to pay to lock them away."
Sunday on 03/31/2019