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Cascade County Regional Jail
Cascade County, Montana
Aramark
October 27, 2005 Great Falls Tribune
The kitchen supervisor at the Cascade County regional jail was arrested at the correctional facility Tuesday for allegedly smuggling illegal drugs, tobacco and smoking paraphernalia to inmates in exchange for a small fee. Kelly Jerad McCann, 21, appeared in District Court Tuesday on charges of transferring of illegal articles to inmates, a felony. McCann is an employee of ARAMARK Corp., a national company the jail contracts with to supply meals at the facility. Detention officers became suspicious when two inmates chosen at random tested positive for marijuana.

Crossroads Correctional Facility
Shelby, Montana
CCA/TransCor
February 19, 2010 AP
The Montana Human Rights Commission has rejected a discrimination complaint filed by American Indians who were subjected to group strip searches at a privately run prison in Shelby. Guards at the Crossroads Correctional Center in 2008 made the inmates strip before and after their traditional sweat lodge ceremonies. Prison officials said they suspected the ceremonies were being used to move contraband, although none was ever found. The prison denied the inmates were discriminated against, and the state Department of Corrections later agreed, with an investigation concluding the guards acted appropriately. The prison is run by Nashville, Tenn.-based Corrections Corp. of America. "It was our feeling that (strip searches) were used appropriately," Department of Corrections spokesman Bob Anez said Friday. "We continue to work with Crossroads officials to ensure the ongoing fair and appropriate management of all offenders." Helena attorney Ron Waterman said he represents roughly 30 Indian who were strip searched. Following the commission's 3-2 ruling Thursday, he said his clients were considering taking their case to state or federal court. "This was a series of strip searches conducted as people were going to exercise religious practices," Waterman said. "Fundamentally, we believe there was discrimination." Suspicions that the inmates were moving contraband were nothing more than a pretext to discriminate against the inmates, he said. The state investigation into the treatment of Indians at Crossroads followed an ongoing human rights complaint from The American Civil Liberties Union. In addition to confirming the strip searches, a May report that resulted from that investigation highlighted poor conditions at the sweat-lodge grounds, inappropriate comments from guards about the Indian ceremonies and a lack of attention to inmate grievances.

October 27, 2009 AP
The Montana Human Rights Bureau has dismissed a complaint that alleged the private Crossroads Correctional Center in Shelby was discriminating against Native Americans. Human Rights Bureau Chief Katherine Kountz said there was no reason to believe discrimination took place, according to a report released Tuesday by the agency. The case stems from an earlier finding that Native American inmates were subjected to strip searches after sweat-lodge ceremonies. Prison officials said the searches were a reaction to concerns over contraband. The inmates complained of inadequate facilities for their sweat lodge ceremonies, denial of items such as antlers to perform their religious ceremonies, the strip searches, and allegations of being mistreated for making the complaints. The American Civil Liberties Union, which filed the complaint on behalf of the inmates, said it believes that the Human Rights Bureau research affirmed their case. The ACLU said it plans to appeal Kountz's decision to the full Montana Human Rights Commission. "This is just the initial stage of the proceeding, and it was just one investigator's report," said ACLU Montana Legal Director Betsy Griffing. "We want to give the commission the opportunity to evaluate both sides of the issue."

May 22, 2009 Great Falls Tribune
The last of three people charged in the beating death of a Shelby man was sentenced Thursday to four years in pre-release in addition to 16 years of supervised probation. Toole County Attorney Merle Raph asked for a lenient sentence for Aaron Lee Evans, 38, because Evans helped officers find evidence and was willing to testify against the other defendants. Court documents state that on Dec. 30, 2007, Clyde Cosner and Evan's brother, Alden Tracy Evans, repeatedly hit, kicked, stomped and struck James Lee Jardine, 45, with his truck door while trying to evict him at the request of the Evans' sister-in-law. Aaron Evans, who pleaded guilty to accountability to assault with a weapon, drove to and from the crime scene and helped load Jardine's body into a pickup truck, which was left in a coulee by the dump about a mile east of Shelby. Raph said the investigation indicated that Tracy Evans, 44, was the primary aggressor and was responsible for planning how to get rid of the vehicle and the body. He committed suicide before authorities could arrest him. District Judge Dirk Sandefur agreed to buck typical protocol, which would send Aaron Evans to the state prison in Deer Lodge to be processed before heading to the Billings prerelease center, where he already was accepted. Raph and Aaron Evans' attorney Robert Olson feared for the defendant's safety if he was placed in prison because he once worked as a guard at the private prison in Shelby, and because he cooperated with investigators.

May 21, 2009 AP
A new report says that Native American inmates were subjected to group strip searches before and after sweat-lodge ceremonies at the private Crossroads Correctional Center in Shelby; but the Department of Corrections said the findings do not indicate a problem of discrimination. The lengthy report stems from complaints of discrimination at the prison that have culminated in an ongoing human rights complaint from The American Civil Liberties Union. The Department of Corrections and the governor's office released their own detailed report Wednesday. They said the agency first heard of the complaints of mistreatment against Native American inmates last August and that the ACLU of Montana got involved shortly later. Corrections spokesman Bob Anez said the agency believes the report found some individual issues that could be resolved, but does not find a "systematic pattern of racial or religious discrimination" as charged in original complaints. He said it appeared some of the issues resulted in a breakdown in communication down the command chain. The ACLU had a different take, saying the investigative report clearly shows inmates were mistreated. "Their report confirms there are serious problems at Crossroads Correctional Center," said ACLU Montana Legal Director Betsy Griffing.

April 22, 2009 AP
A spokesman for the Montana Corrections Department says they're investigating allegations that Native American inmates were mistreated and discriminated against at the Crossroads Correctional Center in Shelby. The private prison operates under a contract with the state. The American Civil Liberties Union said Wednesday that Crossroads violated the rights of Native American inmates. The ACLU of Montana filed a complaint with the state Human Rights Bureau alleging the inmates were subjected to en-masse strip searches, were denied the ability to properly celebrate sweat-lodge ceremonies and were retaliated against when they complained about the mistreatment. The complaint says the strip searches took place between mid-August and mid-October 2008. "While the en masse strip searches appear to have been suspended ... there is no assurance that they will not resume, and reports indicate that the searches could readily continue," the complaint says. Bob Anez, spokesman for the state Corrections Department, said the department "is aware of these allegations against Corrections Corporation of America and took appropriate action with CCA to resolve these claims, as indicated in the complaint." "As with all such allegations, the Department of Corrections takes these accusations seriously," Anez said in an e-mail to The Associated Press. "The department is investigating the allegations and will respond to the ACLU complaint." Crossroads spokeswoman Christine Timmerman referred questions about the complaint to Anez.

February 15, 2006 KXLF
A private inmate transport van hit black ice and crashed on Homestake Pass near Butte last night. No serious injuries were reported, but the eight prisoners were taken to St. James Healthcare for examination. Montana State Prison Warden Mike Mahoney said the inmates were not in the custody of the state Corrections Department. The inmates were being transported by TransCor America. Mahoney said the van was headed to Deer Lodge, where the inmates were to spend the night -- some at the Powell County jail and some at the state prison intake unit. Mahoney believes the inmates were being taken to Washington or Oregon.

January 20, 2006 AP and Great Falls Tribune
Putting the Department of Corrections in charge of transporting almost all prisoners in the state drew mixed reaction from lawmakers Thursday. DOC Director Bill Slaughter and other officials have been weighing the idea for some time, but raised it again following last week's escape of accused murderer Dueston Haggard near Helena. Currently, DOC transports about 47 percent of prison inmates, with the U.S. Marshals Service, local law enforcement and private contractors comprising the rest, department spokesman Bob Anez told the Law and Justice Interim Committee. The department is considering taking over transports for the Marshals Service and bearing more of the load for local law enforcement, he said. DOC is already assuming control of services from private contractor TransCor America when its contract with the state expires on June 30.

January 19, 2006 Helena Independent Record
Escape charges won’t be resubmitted against two men who broke out of a prison transport van in Helena in 2004 because that might constitute “double jeopardy.” Deputy Lewis and Clark County Attorney Carolyn Clemens said on Wednesday that given past U.S. Supreme Court rulings regarding double jeopardy — being tried twice for the same crime — she believes any effort by her to refile the cases against Brian Holliday and William Brown would be barred. Clemens said she was disappointed by Helena District Court Judge Thomas Honzel’s decision to dismiss the charges last week on the wording of jury instructions. But she added that tacking more time onto the escapees’ existing life sentences was never her goal. “Trying them for escape in the first place was not to give them more time, as they are lifers anyway, but rather to let them and others know that we wouldn’t just turn a deaf ear on escapes in Helena,” she said. Holliday, Brown, Russell VanKirk and Jasper Phillips were charged with escape after they removed a screen from the back window of a private TransCor van and jumped out as the vehicle was parked outside Burger King on 11th Avenue while one of the guards made a dinner run. The defense attorneys asserted that the specific wording of instructions offered to the jury at trial — not challenged by prosecutors — indicated, in their opinion that their clients couldn’t have escaped because they weren’t in the custody of peace officers. A response brief filed by Deputy County Attorney Lisa Leckie stated that the legal definition requires the placement of a person in the legal custody of a governmental body as the result of the constraint or in custody of the person in one of three ways — by a peace officer pursuant to arrest, by transport, or by legal order.

January 13, 2006 Helena Independent Record
As law enforcement officers searched for an escaped murder suspect in Helena Wednesday, a district court judge ruled that two men who bailed out of a transport van at Burger King on 11th two years ago should have a new trial in that case. Judge Thomas Honzel stated in his decision that prosecutors failed to prove that Brian Holliday and William Brown were in the custody of peace officers when they climbed out of a back window in the TransCor America van in which they were riding en route to Montana State Prison in September 2004. Lewis and Clark County Attorney Leo Gallagher said Thursday that he was disappointed by the decision, but it didn’t come as much of a surprise given the judge’s response to prosecutors’ arguments in the case at a hearing on the issue held earlier this week.The defense attorneys asserted that the specific wording of instructions offered to the jury at trial — not challenged by prosecutors — indicated, in their opinion, that their clients couldn’t have escaped because they weren’t in the custody of peace officers. TransCor is a private company that was contracted to transport the prisoners.

January 11, 2006 Great Falls Tribune
The weekend fight at the Crossroads Correctional in Shelby that injured two correctional guards comes after repeated complaints that the state's only for-profit private prison is too crowded. Still, both the Legislature during its regular session last year, and the Corrections Advisory Council more recently, rejected plans to expand the prison. Two inmates reportedly received trivial injuries, but Patricia Keatts, whose son, William, is in the prison, said Tuesday that he called and told her he'd been stabbed in the neck and ribs and had six stitches. Corrections Department spokesman Bob Anez said the agency couldn't discuss inmates' medical conditions. Half the prison remains in lockdown. Crossroads has 508 state and 38 federal inmates. In November, when the Corrections Advisory Council met, it had 510 inmates, about 30 more than its emergency limit, according to a Corrections Department assessment of prison overcrowding. "The crowded conditions of these facilities, coupled with a shortage of about 50 correctional officers, creates a dangerous environment for both inmates and staff," the Corrections Department report said. Nonetheless, the Advisory Council balked at expanding Crossroads by nearly 300 beds. "There's a lack of work force up there. The population isn't there," said state Sen. Trudi Schmidt, D-Great Falls, who also sits on the Advisory Council. When Crossroads opened in 1999, local officials hailed it as a source of jobs. But Steve Chand, of the Washington, D.C.-based Corrections and Criminal Justice Coalition, said small rural communities often see that benefit dwindle over the years because of the high turnover among corrections workers. "What happens with that turnover rate is that the next thing you know, people are coming 20 miles to work, then 30 and 40. It's a problem," he said.

January 10, 2006 Helena Independent Record
District Court Judge Thomas Honzel didn't make a decision at a hearing Monday regarding a new trial for two convicts who bailed out of a prison transport van outside a Helena Burger King in 2004, but he certainly appeared to be looking closely at the defense's arguments. Honzel called Deputy County Attorney Lisa Leckie to a blackboard in the courtroom to explain her belief that instructions given to the jury in the case of Brian Holliday and William Brown would allow for the possibility that the men could be found guilty - on a grammatical, and as a result, a legal level. In addition, he quizzed Leckie intensely about why she didn't specify a certain sub-section of the law naming transport personnel in those jury instructions, thus eliminating the basis for defense tactics being pursued by public defenders Jeremy Gersovitz and Randi Hood that their clients weren't in legal custody at the time of their escape. Holliday, Brown, Russell VanKirk and Jasper Phillips were charged with escape after they removed a screen from the back window of a transport van operated by TransCor America as the vehicle was parked outside Burger King on 11th Avenue in September 2004. Shortly after the men's conviction, Gersovitz and Hood challenged that verdict on the basis that the specific wording of jury instructions - not challenged at trial by prosecutors - indicated, in their opinion, that the men could not have escaped because they weren't in the custody of peace officers. A brief filed by Leckie at that time stated that the legal definition requires the placement of a person in the legal custody of a governmental body as the result of the constraint or custody of the person in one of three ways - by a peace officer pursuant to arrest, by transport or by legal order.

January 10, 2006 Great Falls Tribune
A weekend fight between rival prison gangs at the private Crossroads Correctional Center in Shelby sent one prison guard to the hospital in Great Falls with a broken jaw. A second corrections officer, a woman, had some teeth knocked out, according to state Corrections Department spokesman Bob Anez. A third officer had superficial injuries, as did two inmates, who were among the six prisoners involved in the brief Saturday morning fight, he said. "Suffice it to say there were some homemade weapons involved," Anez said. Crossroads Warden James MacDonald later said a single weapon, a sort of puncturing tool, was recovered. The fight broke out in the dayroom, during the one hour a day that inmates in that area are allowed access to it, he said. According to the tape from the room's video cameras, it began at 10:36 a.m., and the dayroom was cleared by 10:42 a.m. However, the actual fight only lasted a couple of minutes, he said. As many as 26 inmates had permission to be in the dayroom at that time, although Anez said it hadn't been determined exactly how many of them were there.Three of the prison's six pods remained in lockdown Monday. About 250 of the prison's 508 state and 38 federal inmates are housed in those pods, Anez said.The Crossroads Correctional Center is the state's only for-profit private prison, and is run by the Nashville-based Corrections Corp. of America. Its last lockdown was Nov. 18, because of a similar incident, Anez said.

January 8, 2006 Billings Gazette
The private prison here was put under lockdown after a fight Saturday morning involving six to eight inmates, prison officials said. Three staff members and two inmates at Crossroads Correctional Center were injured during the altercation in a close custody housing unit. The situation was resolved within six minutes, the prison said in a news release. Two inmates sustained injuries that did not require outside medical attention. Three staff members were taken to the local hospital for treatment for non-life-threatening injuries.

December 30, 2005 Billings Gazette
The last two of four prisoners who broke out of a prison transport van at a fast-food restaurant here last year have been sentenced to more prison time for the escape. District Court Judge Thomas Honzel tacked 10 years onto the end of Russell R. VanKirk's murder sentence and added 20 years to William L. Brown's earlier murder sentence. The two others involved in the escape, Jasper Phillips and Brian Holliday, were sentenced earlier. In September 2004, the four broke a screen of the private prison transport van when it stopped at a Burger King. The prisoners were en route to Montana State Prison when the guards stopped to buy dinner for the men. Phillips was caught by one of the guards before he could make it out of the parking lot. The other three were caught within hours.

December 14, 2005 Independent Record
Last week, a Helena District Court judge tacked 10 years onto the 90-year sentence already being served by a convicted murderer who escaped from a prison transport van parked outside of a Helena Burger King in 2004. Judge Thomas Honzel sentenced Brian Holliday to 10 years for the escape, six months in jail for attempted theft, and another 10 years for being a persistent offender. The sentences are to run concurrently to each other, and consecutive to his sentence for murder. Two of Holliday's fellow escapees - William Brown and Russell VanKirk - are scheduled to be sentenced for their involvement later this month. The fourth member of the group, Jasper Phillips, pleaded guilty to the escape charge shortly after the incident and received a five-year sentence to be served consecutively to the sentence he was already serving at Montana State Prison. Holliday, Brown, VanKirk and Phillips were charged with escape after they removed a screen from the back window of a transport van operated by TransCor America as the vehicle was parked outside Burger King on 11th Avenue in September 2004. At trial, defense attorneys unsuccessfully argued that their defendants couldn't legally be convicted of escape because they weren't in official detention as defined by Montana law at the time they bailed out of the transport van. Despite the jury's unwillingness to accept that argument, the defense attorneys filed documents with the court last month requesting a new trial for their clients on the basis that the TransCor guards aren't peace officers as described in Montana code. Prosecutors discount that argument, and the judge has not yet made a ruling in the case.

December 8, 2005 Independent Record
Lewis and Clark County prosecutors discount a recent argument by public defenders that two men who bailed out of a prison transport van outside a Helena Burger King last year should receive a new trial based on a legal technicality. Deputy County Attorney Lisa Leckie argued in a brief filed in Helena District Court Tuesday that a Powell County jury that found William Brown and Brian Holliday guilty of escape in October did not err in its decision, and the guilty verdict should stand. "It's a matter of grammar," said Leckie Wednesday, explaining that she disagrees with the interpretation outlined in a recent brief by public defenders Randi Hood and Jeremy Gersovitz of what conditions constitute "legal detention." Hood and Gersovitz asserted in a document filed shortly after the completion of the trial that Brown and Holliday could not have escaped from the transport van because they weren't in official detention by Montana's legal definition. Holliday, Brown, Russell VanKirk and Jasper Phillips were charged with escape after they removed a screen from the back window of a transport van operated by TransCor America as the vehicle was parked outside Burger King on 11th Avenue in September 2004. In opposition to the defense's argument that the prosecution failed to prove at trial that TransCor employees were "peace officers" as required by the legal definition of "official detention" that was included in the jury instructions, Leckie asserted that the criteria for detention is actually more broad. Leckie's brief states that the definition requires the placement of a person in the legal custody of a governmental body as the result of the constraint or custody of the person in one of three ways - by a peace officer pursuant to arrest, by transport or by court order. For that reason, she denies that the defense has legal grounds to be granted a new trial by the judge in the case.

December 2, 2005 Billings Gazette
The lawyers for two men who bailed out of a prison transport van outside a Helena Burger King, sparking a manhunt in a neighborhood last year, are asking the trial judge to set aside a guilty verdict recently handed down by a jury in the case. Public defenders Randi Hood and Jeremy Gersovitz filed the motion this week, arguing that prosecutors failed to present evidence at a trial last month that would prove that employees for TransCor America fit the legal definition of peace officers. The attorneys contend that their clients, William Brown and Brian Holliday, couldn't have escaped from the transport van, considering they weren't in official detention by Montana's legal definition. It took jurors in Powell County 30 minutes after a two-day trial in Deer Lodge in October to convict Holliday of escape and attempted theft and Brown of escape. Jasper Phillips pleaded guilty to his involvement shortly after the incident and received a five-year sentence to be served consecutively to the sentence he was already serving in Montana State Prison. Russell VanKirk also pleaded guilty and is awaiting sentencing. VanKirk, Brown and Phillips were charged with escape after they peeled a screen off a back window of a transport van as the vehicle was parked outside Burger King on 11th Avenue in September 2004. Holliday was charged with escape as well, but prosecutors tacked on a charge of attempted theft because he rushed up to a couple sitting in a pickup truck and attempted to hijack their vehicle. On the day of the escape, one of the transport van guards immediately apprehended Phillips in the parking lot at Burger King, and Holliday was arrested in the area soon later. VanKirk and Brown eluded police for a longer period. However, they were both arrested within hours of the escape. Deputy County Attorney Carolyn Clemens said Thursday that she was in the process of reviewing the motion and will file a written response with the court.

November 17, 2005 Independent Record
A proposal to expand a privately run prison in Shelby to relieve overcrowding was panned Wednesday by a number of lawmakers who said they could not support further privatization of the state's prison system. A similar idea was floated during the 2005 Legislature as one of several options to deal with the state's rapidly rising inmate population, but was passed over by a corrections subcommittee. Nashville-based Corrections Corp. of America, which runs the 512-bed Shelby prison, said it could complete the expansion in about a year, although it would need a license from the state to fill the facility. No cost has yet been calculated, said Tony Grande, vice president of state customer relations. Several council members, who are appointed by the governor, said they could not support such a proposal and advocated for expansion in other areas, such as community corrections and minimum security facilities, to ease overcrowding. ''I think we need to look at other options and where we want to have more people and the fact that we have so many prisoners who are not violent offenders,'' Rep. Gail Gutsche, D-Missoula, said. Sen. Jim Shockley, R-Victor, said ''we need more less-secure facilities at a cheaper price'' and suggested exploring development of a 36,000-acre ranch used by inmates at the prison in Deer Lodge before expanding private operations.

November 4, 2005 Independent Record
Two of four inmates who escaped from a prison transport van in Helena last year were found guilty in connection with the incident by a Powell County jury this week. It took jurors 30 minutes following a two-day trial in Deer Lodge to convict Brian Holliday of escape and attempted theft, and William Brown of escape. Jasper Phillips pleaded guilty to his involvement shortly after the incident and received a five-year sentence to be served consecutively to the sentence he was already serving in Montana State Prison. Russell VanKirk - who is serving a life sentence for the 1995 murder of Helena resident Tamara Pengra - waited until last week to enter his guilty plea. On the day of the escape, one of the transport van guards immediately apprehended Phillips in the parking lot at Burger King, and Holliday was arrested in the area soon later. VanKirk and Brown eluded police for a longer period of time. However, they were both apprehended within hours of the escape. Public defenders for the men argued at trial that their clients could not possibly have escaped given that they weren't in "official detention" at the time of the incident. Attorneys asserted that the guards who manned the transport van owned by a private company - TransCor - didn't meet the legal definition of peace officers as is written in the law. Following the escape, officials with the Montana Department of Corrections reviewed the state's contract with the company, and agreed to keep it as long as several policy changes were made. Among those changes was a rule that prisoner transports stop only at secure facilities, and local authorities be notified of gas stops. Sack lunches will be used. In addition, a chase car will follow vanloads of the most dangerous convicts, prisoner data sheets and photos will be carried in the vans, and the DOC will be e-mailed about such transfers.

February 3, 2005 Shelby Promoter
The proposed 500-bed prison expansion at Crossroads Correctional Center may be in trouble. A front page article in the Feb. 1 Great Falls Tribune reports, "State Corrections officials Monday proposed a $7 million, 152-bed expansion at the regional jail in Great Falls." It also described the plan as the "favorite of five proposals now under consideration by the Legislature." Shelby Mayor Larry Bonderud pointed out, "Expansion has been a plan for the past eight years, adopted by several administrations and several heads of Montana Department of Corrections." Until recently, it was generally agreed there would be an expansion of beds at CCC. "Now, for some reason, that philosophy has changed, and the past eight years' proof that it has been cost-effective for Montana taxpayers suddenly appears to be thrown out the window. It's a political philosophy of not wanting to invest in the private sector," charged Bonderud.

February 2, 2005 Montana Standard
Gov. Brian Schweitzer strongly hinted Tuesday he doesn't want to vastly expand the state's private prison in Shelby. Schweitzer met with three officials from Corrections Corporation of America, the Tennessee company that owns the Crossroads Correctional Center in Shelby, Montana's first and only private prison. But Schweitzer pointed out that Montana already houses about 13 percent of its inmates in a private prison, which is roughly twice the national average of around 6 percent.

February 1, 2005 Great Falls Tribune
State Corrections officials Monday proposed a $7 million, 152-bed expansion at the regional jail in Great Falls. That would scrap an earlier plan to double the size of the private prison in Shelby as a means of managing an ever-increasing prisoner count. If the Legislature approves, it could signal a significant shift in the way the state handles its felons. The plan, which is the favorite of five proposals now under consideration by the Legislature, also calls for a 287-bed expansion of the prerelease system and cancellation of federal contracts for about 90 prisoners in Shelby. When it originally contracted with the Corrections Corp. of America, which operates the private facility in Shelby, the state reserved the right to occupy all the beds in the facility. It requires five months notice to exercise that option. State Budget Director David Ewer, who helped craft the new option, said it reflects the Schweitzer administration's desire to move away from the private prison industry in Montana. It "gives a good sense of where this admin is going philosophically," Ewer said. Sen. Trudi Schmidt, D-Great Falls, and Rep. Tim Callahan, D-Great Falls, both of whom serve on the committee, are wary of more private prison beds.

January 26, 2005 Shelby Promoter
The option of an expansion of the Crossroads Correctional Center (CCC) prison is being hotly debated in the 2005 legislature. A conflict has arisen from comments made by Senator Jim Shockley, of Victor, before a legislative budget panel on Tuesday, Jan. 18. He believes there is no guarantee that $7 million paid to Corrections Corporation of America (CCA) in per diem fees over the past five years will not be lost if the state does not purchase the prison. "Before we spent $13 million dollars we should have read the contract, and I'm the only one who did," said Shockley. Shockley brought the contract, obtained from the Toole County Clerk and Recorder's office, to an attorney who works for the Montana Department of Justice for review. "We're not sure that we could get a clear title, because it's part of a $715 million loan package, with 32 other CCA facilities," stated Shockley. "We got out-lawyered. The contract is slanted toward CCA. Their lawyers wrote it in their best interest and the state's lawyers didn't catch it. The lawyers for the state who reviewed the original contract did a very poor job. "The people running the Department of Corrections now were not the ones there in 1998," added Shockley. "They relied on CCA's good faith, using an informal agreement. There is no unilateral agreement that they have to sell the prison to us if they don't want to." The $9.14 per diem rate is paid to CCA toward the debt retirement of the institution. The other per diem rate of $43.60 is a daily operational rate per inmate.

January 20, 2005 AP
A Corrections Department plan for coping with the growing number of inmates hit a snag Thursday when skeptical lawmakers questioned whether it was the best deal for the state. The subcommittee working on the agency's budget balked at approving the proposal and asked corrections officials to come up with alternatives. They want scenarios that could include expanding the state prison near Deer Lodge, enlarging regional prisons, adding cells at Shelby and greater use of prerelease centers. "The long and short of it is there are so many unknowns," Rep. John Witt, a Carter Republican and member of the subcommittee. "Before we go out and say here's $13 million, we need to understand what our options are. The panel's delay in acting on this portion of the department's budget request did not bother Director Bill Slaughter, who said an ultimate decision on where to spend the money is critical. "There's a philosophical discussion going on. Do we want to get deeper into the private prison business, get out or stay at the level we're at?" Slaughter said. The subcommittee also has questions about the contract the state has with Corrections Corp. of America, which owns the Shelby prison, Witt said. Sen. Jim Shockley, R-Victor, has raised concerns about provisions in the contract that require the state to pay $9.14 for each inmate per day as a credit toward Montana's possible purchase of the facility. Since the state has not expressed an interest in buying the prison, Shockley has wondered why the state agreed to pay the money, which so far has amounted to $7 million. In a meeting with Gov. Brian Schweitzer on Thursday, Shockley urged consideration of less-expensive options to erecting more pricey cellblocks at the state prison or buying more space at Shelby. "We could do it cheaper in the long run if we build minimum security," Shockley told Schweitzer. "My idea is to keep the cost down."

January 19, 2005 Great Falls Tribune
A state senator Tuesday raised questions about Montana's contract with the company owning the 560-bed private prison in Shelby — and whether it's wise for the state to finance another 500-bed expansion at the site. "I think we could add (beds) at Deer Lodge and we would be better off," said Sen. Jim Shockley, R-Victor. Shockley, a member of the Law and Justice Interim Committee and a state corrections advisory council, said the current contract with Corrections Corp. of America (CCA) doesn't guarantee the state gets credit for nearly $7 million it's paid toward owning the private prison in Shelby. "Why compound that?" he said. "We have a contract where we don't know what it says, at best. There's a chance that all this money we paid them will go for naught." Under the current contract, the state makes two payments to CCA: $43.60 per inmate per day for operating the prison and another $9.14 toward a possible purchase of the prison. Shockley said there's nothing in the contract that guarantees the state can use the money accumulated from the second payment toward buying the prison. The state also isn't earning any interest on that money. "We may have been out-lawyered (on the contract)," he said. Corrections officials consider the $9.14 per inmate per day payment as "rent" rather than a down payment on the building, he said.

November 22, 2004 AP
Three maximum-security inmates pleaded not guilty Monday to escaping from a prison transport van in a restaurant parking lot in September. A fourth inmate plans to enter the same plea next month, prosecutors said. The inmates, several of them convicted murderers, were among six being transported from the Crossroads Correctional Center in Shelby to the Montana State Prison at Deer Lodge on Sept. 2 when the TransCor America van stopped at a Helena restaurant for food. Four men broke out of the van through a window and two were nabbed quickly. The other two were subjects of an intense manhunt for hours before being arrested in a nearby residential neighborhood. The state immediately suspended its $311,000 annual contract with TransCor following the escape and demanded tighter security measures for movement of inmates. The company complied and has since resumed work. TransCor was also asked to pay $23,516 to cover the state and local government costs of recapture. Officials have refused to say how the inmates were able to unlock their hand-cuffs and leg shackles without a key.

September 22, 2004 Billings Gazette
The company responsible for four maximum-security inmates who escaped in Helena earlier this month will be asked to pay $23,516 to cover the state and local government costs of recapturing them. In a letter to TransCor America this week, the state Department of Corrections submitted a bill for $21,708. That was the expense incurred by the Helena Police Department, Lewis and Clark County sheriff's office, Montana Highway Patrol, the state Criminal Investigation Bureau, Lewis and Clark County Search and Rescue, and the American Red Cross. Joe Williams, head of the centralized services for the department, said Wednesday his agency will send a separate bill for $1,808 to the Nashville-based company. The four inmates, three of them convicted murderers, were among six being transported from the Crossroads Correctional Center in Shelby to the Montana State Prison at Deer Lodge when the TransCor van stopped at a Helena restaurant for food. Four men broke out of the van and two were nabbed quickly. The other two were captured within the next eight hours after an intensive manhunt in a residential neighborhood. Officials have refused to say how the inmates were able to unlock their handcuffs and leg shackles without a key.

September 14, 2004 Helena Independent Record
The company in charge of a transport van overwhelmed by convicts Sept. 2 will be back hauling prisoners today. Montana Department of Corrections Director Bill Slaughter said TransCor agreed to make changes. The company, a subsidiary of Tennessee-based Corrections Corporation of America, also agreed to pick up the tab for the search, which is estimated to be at least $20,000.The convicts used some sort of tool to free themselves of handcuffs, leg irons and waist restraints. They were being transported from the CCA-run Crossroad Correctional Facility in Shelby to the maximum security Montana State Prison at Deer Lodge, after their behaviour deteriorated and officers found weapons and tools in their cells.

September 10, 2004 Helena Independent Record
Deep vibrations in the night awakened me. For a moment, looking out the window was like watching some cop show on TV, where the choppers pin the inner-city bad guys in blinding pillars of light as loudspeakers tell them to “throw down your weapons.” The massive helicopter and the searchlight sweeping the homes of sleeping residents fit the script exactly except for one thing—this was Helena, not L.A. As it turned out, a lot more than the choppers and searchlights fit the script for a Hollywood cop show. Four convicts, who were being transported between Montana prisons, had just broken out of a van while its driver ducked into Burger King for some fast food. One, a convicted killer, was now loose within blocks of the home of his former victim’s family—hence the choppers and searchlights in a city where sleep is rarely disturbed by such events. But to make a short story long, the questions are now pouring forth about how it was possible for four men, supposedly all chained at ankle, wrist and waist, to break out of an armored prison van and flee into the night. But at least part of the answer started a decade ago, when then-Gov. Marc Racicot tossed hundreds of millions of tax dollars into an ambitious spending plan that included, for the first time in Montana’s history, private prisons. It would also be great if such a move had actually made Montana’s state government “more efficient and more effective,” as Racicot promised. Neither thing happened, however, as last weekend’s episode illustrates. The privatization was just the latest domino to tumble in the national Republican plan to turn the lucrative business of government over to the private sector. Prisons—yeah, give ’em to contractors. Last weekend’s incident in Helena, without question, is a direct outgrowth, since, as it turns out, TransCor America, a division of Corrections Corporation of America, was recently contracted by the state to transport prisoners. As it turns out, some of the people who were around the Capitol when Racicot rammed through privatization are still around. Jim Smith, for one, was and is the lobbyist for the Montana Sheriffs’ and Peace Officers’ Association. He is also the current mayor of Helena. According to Smith, prisoner transportation duties had been previously undertaken by the counties. Smith says: “We felt like we were performing a good service” and “saving the state money.” The problem, it seems, was with legislative approval for the funds to reimburse counties for their expenses. After successive legislatures refused to make the appropriation, Smith says the counties “gave notice in February that we were going to have to discontinue” prisoner transportation. Then came a miracle of modern politics. Although no money existed to reimburse county governments for their expenditures, suddenly money was found to contract with a private company. The privatization of prisons and prison services in Montana deserves a second hard look. One early promise, that Montana would not serve as a dumping ground for out-of-state prisoners, has already gone by the wayside. Now, dangerous prisoners roam residential neighborhoods at night, having walked away from a supposedly “armored” prison transport van.

September 10, 2004 Billings Gazette
On the day that four inmates escaped from a prison transport van parked at a city Burger King, the transport service's parent company received an award as "outstanding business of the year" from Gov. Judy Martz. Corrections Corp. of America, the firm that runs Montana's private prison in Shelby, owns TransCor and had received the Desiree Taggart Memorial Award on Sept. 2, hours before four maximum security prisoners escaped custody of TransCor workers while en route from Shelby to Deer Lodge. "It's unfortunate that the escape by four prisoners occurred in Helena on the same day that CCA was being given this award," said Chuck Butler, Martz's spokesman. "It is one of those unfortunate coincidences. Certainly, CCA had earned the award." The award was presented to company officials about a mile from the fast-food restaurant where the inmates made their escape.

September 9, 2004 Montana Standard
The days of Burger King dinners may soon be over for Montana prisoners and the private agents who transport them. State corrections officials handed a list of demands on Wednesday to leaders of TransCor, the private prisoner transport service from which four inmates escaped last Thursday, among them: No more eating out. The transport van was stopped at a mid-town Helena Burger King for dinner and a trainee of the company was left in charge of six maximum security inmates while her colleague — a fully-trained officer — went inside the restaurant.

September 9, 2004 Helena Independent Record
TransCor, the private prisoner transport service from whose custody four inmates escaped here last week, offered a job to Corrections Director Bill Slaughter several months before the state inked a deal with the Tennessee-based company, records show. Slaughter told legislative auditors in the spring that TransCor approached him to take a job, a memo from the Legislative Audit Division shows. Slaughter told the company he had no current plans to resign. Auditors, who were asked to investigate the contract, concluded that Slaughter had broken no laws. The memo was written on April 12, just days before TransCor's contract to transport prisoners in Montana went into effect.

September 5, 2004 Helena Independent Record
Anyone living in Helena's Central neighborhood where two escaped murders were hiding late Thursday night has to be thankful that local law enforcement officers were so quick to react and so thorough in their search. A situation with all the ingredients of a disaster was defused after an anxious night of roadblocks and intensive neighborhood searches on the ground and from the air. Either of the two convicts was capable of committing further hideous crimes, including murder, taking hostages or taking on police in a standoff. Once mobilized, law enforcement officials responded immediately and deserve everyone's sincere thanks for an excellent job of keeping the escapees in a controlled area. But those minutes and decisions made just before the escape cause us to ask several questions. Most of them have to be directed to officials at the Montana Department of Corrections, which only recently changed its method of transferring prisoners. Earlier this summer it awarded the job to TransCor of America, a division of Corrections Corporation of America. The firm also runs the state's only private prison in Shelby. The six maximum security inmates (two prisoners never left the van) were being transported from Shelby to Deer Lodge, a routine transfer, according to Department of Corrections Director Bill Slaughter. If the transfer was routine, we have to wonder if it also is a matter of routine for guards escorting prisoners to stop at a fast food restaurant in the middle of town for a quick burger? It's a long trip from Shelby to Deer Lodge, but couldn't they pack a lunch? At least, couldn't they have used the drive-through? We have to wonder if two guards are enough to handle six maximum security inmates? Especially when one of the guards leaves the van and goes into a restaurant? We have to wonder if the van, which apparently was peeled open with the inmates' bare hands, was sufficiently armored to transport such deadly cargo? We have to wonder if a transport van should even be allowed to stop in an area so familiar to a convict, in this case VanKirk? And one especially disturbing question came from members of the Pengra family, who wondered why they weren't notified of the escape?

September 4, 2004 Montana Standard
Thursday's escape attempt wasn't the first for convicted murderers Russell VanKirk and William Brown. In fact, both of the men attempted on separate occasions to break out of the private prison in Shelby earlier this year, according to officials with the Montana Department of Corrections.  While Public Information Specialist Sally Hilander could not provide details about the efforts of the men to obtain their freedom, she said VanKirk was written up for an escape attempt on June 1 this year, while Brown was written up for similar activity on May 27. Before that, VanKirk attempted to break out of a Corrections Corporation of America facility in Tennessee in January 1998. At that time, Montana prisoners were being held there due to overcrowding in Deer Lodge. Brown tried to make a break from the Anaconda-Deer Lodge Jail following his arrest for deliberate homicide in May 2001.  Brown was charged and convicted of that first escape attempt, but not the most recent effort.  VanKirk was not formally charged with either of his previous escape attempts. Hilander said both of the men were being moved to Montana State Prison at Deer Lodge Thursday night because they had been reclassified as maximum security prisoners due to disruptive conduct at the private prison in Shelby. The Shelby facility doesn't have the proper accommodations for prisoners with that inmate status.

September 4, 2004 Billing Gazette
Two private inmate transport agents and their Tennessee employer have been temporarily suspended from moving Montana prisoners as officials investigate the Thursday escape of two convicted murderers from a transport van stopped here at a Burger King.  In all, four inmates escaped from the van , operated by TransCor, a subsidiary of Corrections Corporation of America, the nation's largest private corrections company. The breakout occurred Thursday evening as the van was idling in a Burger King parking lot near the Capitol for a dinner break. Two convicts were caught shortly after the escape. Two others, killers Russell VanKirk and Leonard Brown, remained on the lam for hours prompting a manhunt that lasted until after 1 a.m. Corrections Director Bill Slaughter said he temporarily suspended TransCor's 4-month-old contract as his agency and others try to answer some questions including: How did the inmates slip out of their shackles and handcuffs before the breakout? How did the prisoners rip the wire mesh covering the back windows of the van? Where was the guard who was supposed to be watching the van as her partner went into Burger King? Why didn't agents use the drive through?  "I don't know that I've ever seen a more potentially dangerous situation," Slaughter said. "We took this deadly serious."  The escapees were among six inmates being transferred to the Montana State Prison at Deer Lodge from the Crossroads Correctional Facility in Shelby because they had recently been reclassified as "maximum security," said Mike Mahoney, warden of the Montana State Prison. The Shelby prison, run by CCA, the parent corporation of TransCor, has no maximum security wing, Mahoney said. The only such wing is the one at Montana State Prison.  Mahoney said he wasn't exactly sure why the men were reclassified to maximum security, but said they may have been too poorly behaved to safely stay in Shelby.  The six inmates were traveling in a 12-passenger van, said Ashley Nimmo, director of marketing and communications for TransCor. One of the agents had worked with the company since April when TransCor inked its contract with the state. The other was recently hired and was still receiving on the job training after her graduation from the company's two-week training program in July.  The trainee was left in charge of the inmates as the fully trained officer went into the Burger King restaurant, Nimmo said, adding that such a situation does not violate TransCor safety policies.

September 3, 2004
Two convicted murderers escaped from a prison transport van while it was parked a fast-food restaurant, but they didn't get very far.  Five hours after breaking the windows of the van to escape while one of the guards went into Burger King on Thursday, Russell Rex VanKirk was arrested just blocks away, said Helena Police Chief Troy McGee. William Leonard Brown was captured early Friday sneaking through yards nearby, he said. VanKirk was taken to the hospital to be treated for cuts. "He's being well guarded," McGee said. They were among four men who escaped from the van at 6 p.m. The other two escapees were immediately captured.  (AP)

September 3, 2004
Two convicted murderers escaped from a prison transport van Thursday evening at a fast-food restaurant here, Lewis and Clark County officials said.  Russell Rex VanKirk and William Leonard Brown were among four men who broke a window out of the van at 6 p.m. VanKirk, Brown and two others escaped the van after one of the two guards had gone into Burger King. One inmate was badly cut by the glass and was treated at St. Peter's Community Hospital. Another was quickly apprehended and two remained in the van, McGee said.   Gov. Judy Martz was trying to acquire helicopters and night vision equipment to aid the search, Slaughter said.  The men were being taken from the private Crossroads Corrections Center in Shelby to the Montana State Prison in Deer Lodge by TransCor, a company recently contracted by the state to transport inmates.  (AP)

June 22, 2004
The U.S. Marshals Service has agreed to pay a higher rate to hold federal prisoners at the private prison in Shelby, gaining the state about $260,000 a year, corrections officials said Monday.  "We just sat down and figured out what we were going to do with this issue," said state Corrections Director Bill Slaughter. "We needed money, and (the U.S. marshal) needed to keep the (prison) pod alive."  For the past year, the U.S. Marshals Service has been holding an average of 80 prisoners at the Crossroads Correctional Center south of Shelby. The prison is run by Corrections Corp. of America, but the state has final say over which prisoners are held at the facility. A contract between the Marshals Service and the state expired last month, but Slaughter said he was able to negotiate a new contract at a higher price.  The federal government also agreed to pay the higher rate retroactively, he added. The federal government will pay $51 per day per inmate, with $9 of that amount going to the state to help pay off the construction cost of the prison. CCA built the prison several years ago and the state is in the process of paying off the construction costs by buying the prison from CCA.  (Tribune Capitol Bureau)

September 21, 2003
The private prison near Shelby has been gaining inmates and inching toward profitability this summer, but so far hasn't had to accept inmates from outside Montana, the prison's warden says.  "I don't foresee the need for out-of-state (inmates) at this point in time," said Jim McDonald, warden of Crossroads Correctional Center just south of Shelby.  An increase in state inmates and a new contract to house Montana prisoners in the custody of the U.S. Marshals Service have boosted the Shelby prison's inmate population. The prison had reduced its staff 40 positions to a low of 115, but is now bringing staff back on, McDonald said.  "We're at about 125 staffers and are seeking more to employ," he said.  Crossroads is owned and operated by Corrections Corp. of America (CCA), and money-saving moves by the state last year had dropped the prison's population below the level CCA considered profitable.  That prompted CCA and Shelby leaders to ask the 2003 Legislature to approve a bill allowing the private prison to accept federal prisoners and inmates from outside Montana.  The Legislature approved the measure, but CCA has yet to import inmates to its Shelby facility.  "When the bill passed, we were actively pursuing (out-of-state inmates)," McDonald said. "Now, we've seen the needs right here in the state continue to grow."  The prison has a maximum capacity of 512 inmates. Its population late last week stood at 395, including 53 prisoners from the Marshals Service in Montana.  CCA estimates the prison needs 425 inmates to turn a profit, McDonald said.  He said the prison can accept up to 85 prisoners from the Marshals Service and is budgeted to hold 370 inmates from the state. Under state law, the two different types of inmates must be kept separate from one another at the prison.  McDonald said there are two main reasons Shelby is seeking more inmates: more methamphetamine-related arrests and convictions and increased law enforcement efforts because of new homeland security measures.  "I feel we're going to reach (the state maximum) in very short order," McDonald said. "It's just a sad fact that we see that coming. We're here to provide the service for the state."  When prison and Shelby officials pitched the bill allowing out-of-state inmates, they also said it might be possible to house federal inmates who had been convicted in Montana and are being held in federal prison somewhere else in the country.  Many of these federal inmates are from Montana's Indian reservations, and moving them to Shelby would allow them to be closer to their relatives.  But McDonald said it's unlikely these transfers could happen any time soon.  The U.S. Bureau of Prisons classifies its prisoners by "risk level" rather than geography, and changes in federal law or policy may be required to transfer inmates according to where they came from, he said.  "The subject hasn't even been broached with the Bureau of Prisons yet," he said.  While out-of-state inmates aren't part of immediate plans for the Shelby facility, local officials have talked about whether the prison could be expanded to house up to 1,000 additional prisoners.  The Crossroads building and site were constructed to be able to expand to a facility that could house up to 1,500 inmates.  Toole County Commissioner Allan Underdal said local officials have been investigating what it would take to expand the prison and perhaps take in federal inmates on a much larger scale.  "That's a good economic-development tool, because with the federal prisoners comes a better pay scale for those who are working the federal end," he said.  "It's hard to turn down any sort of economic development, even if it's prisoners. People aren't standing in line to get in Montana to provide jobs, so we have to pursue them."  However, Underdal emphasized that any expansion would have to be approved by the state -- and any concrete steps in that direction are in the distant future.  "Our first priority has been to fill the prison we have right now," he said. "Timing is everything, and I'm not sure if the timing is right right now (for expansion), or in a couple of years. ... We just like to plan ahead."  Joe Williams, head of the Corrections Department's Centralized Services Division, points out that state law forbids any expansion of the private prison without state approval.  He said expansion at the Shelby prison is part of the department's long-range plan, if prison bed space is needed.  "The Legislature and we know as well ... that when we do expand, we'll be expanding in Shelby," Williams said.  (Great Falls Tribune)

September 2, 2003
A convict who was waiting to be sentenced for killing another inmate was found hanged in his cell over the holiday weekend, prison authorities said.  Jon LeBeau, 32, was found early Monday by prison guards during a routine check. Medical personnel were unable to revive him, and the preliminary ruling was that LeBeau committed suicide.  LeBeau arrived at the Montana State Prison in 1996, after being convicted of burglary and forgery in Missoula County. LeBeau broke into the Christian Science Church and stole a boom box and some checks, which he later forged for more than $800.  Earlier this year he was convicted of killing another inmate, Thomas Rose, 20, with a 12-pound slab of marble. The death of Rose was the first at the private Crossroads Correctional Center at Shelby.  (Great Falls Tribune)

June 4, 2003
Montana's only private prison in Shelby could be accepting out-of-state prisoners this summer following changes the 2003 Legislature adopted.  Crossroads Correctional Center Warden Jim MacDonald said he hoped prisoners would begin arriving in Shelby by the end of July.  The 2003 Legislature repealed a ban on accepting out-of-state prisoners in an effort to stop the flow of red ink at Crossroads. MacDonald said the facility has been losing money since a state budget crisis forced the Department of Corrections to pull hundreds of inmates out of the private prison.  Department spokesman Joe Williams said the revised rules governing out-of-state inmates will be a part of a new, two-year contract with Crossroads currently under negotiation. Williams expects those new rules to require Crossroads, owned by the Corrections Corp. of America, to provide the department with a list of inmates the prison wants to bring into the state. Montana officials could then reject inmates they find unsuitable, because of gang connections or HIV/AIDS, for example.  Crossroads would not be allowed to bring in maximum-security inmates and all out-of-state inmates would remain separate from Montana prisoners. Also, Montana prisoners would still be given priority for available beds in the facility. Williams said he didn't think out-of-state inmates would cause any problems at Crossroads, which has had "an excellent record so far."  As part of the negotiations, Montana has agreed pay $52.74 a day for each inmate housed at Crossroads, up from the $50.11 the state was paying after cutting the daily rate last summer during the budget crunch.  (AP)

May 7, 2003
A District Court judge from Malta is expected to rule on whether to throw out evidence in the deliberate homicide case against a Shelby inmate, officials said.  District Judge John McKeon heard arguments in a hearing in District Court in Shelby Tuesday on disallow evidence defense attorneys for Jon LeBeau argue was unlawfully obtained.  LeBeau, 31, pleaded innocent to murdering 20-year-old Thomas Rose Jan. 9 with a leather anvil in the gymnasium at the Crossroads Correctional Center.  The death was the first fatal assault at the private prison since it opened in September 1999.  (Great Falls Tribune)

April 23, 2003
Shelby's private prison could begin receiving at least a few federal prisoners within a matter of weeks, but probably won't get enough state and federal prisoners from outside of Montana to do much rehiring for a few months.  Shelby prison officials already have been working with the U.S. Marshal's office to bring in one type of federal prison, those who have been convicted but are awaiting their sentencing and permanent placement.  With the bill signed into law, MacDonald aid he and his parent company will begin seeking contracts with other state's prison systems and the Bureau of Prisons, for federal prisoners who have been sentenced.  (Great Falls Tribune)

April 22, 2003
Bills allowing out-of-state prisoners at Shelby's private prison, outlining development of state coal holdings and revising rules for citizen ballot measures are among the bills Gov. Judy Martz has signed as the Legislature winds down.  The governor has signed 413 bills through April 18, including one to protect the $25 million, 512-bed prison built in Shelby more than three years ago by Corrections Corp. of America.  Lawmakers and corrections officials have insisted since the beginning of the session that the Crossroads Correctional Center needs out-of-state inmates to stay in business.  (Great Falls Tribune)

April 10, 2003
A bill allowing Shelby's private prison to import out-of-state prisoners was approved by the House in a preliminary vote Wednesday, moving it one step closer to law.  North central Montana civic leaders and legislators say the change is needed so the prison can remain open during what's expected to be a temporary lag in its use by state prisoners.  At the urging of sponsor Edith Clark, R-Sweet Grass, the House voted 63-37 to accept the Senate version that stripped off two House amendments that Shelby prison supporters disliked. One stripped amendment would have imposed a three-year "sunset" on the importing of prisoners. The other would have banned the importing of federal prisoners.  But Rep. Kathleen Galvin-Halcro, D-Great Falls, said a sunset date would allow the Legislature to check whether the program to import prisoners is working.  Rep. Steve Gallus, D-Butte, said private prison backers broke their 1997 promise that Montana would not import prisoners.  And Rep. Paul Clark, D-Trout Creek, said with the expanding trend the Shelby facility soon will be seeking "international terrorists" as inmates.  "I hope that everything that the supporters were promising is true," said Scott Crichton, executive director of the Montana American Civil Liberties Union. "But we still think it is a mistake to use corrections for economic development, especially if it means expanding private prisons.'  (Tribune Capitol Bureau)

April 4, 2003
The Senate Judiciary Committee Tuesday approved a bill to let Shelby's private prison import out-of-state prisoners, after removing House amendments that prison supporters opposed.  The committee voted 8-1 to move House Bill 451 to the Senate floor.  "This bill will allow the Corrections Corporation of America to keep the Shelby prison viable until the state sends more prisoners there again in the next few years," said Rep. Edith Clark, R-Sweet Grass, the bill's sponsor.  It needs to be able to import out of state prisoners temporarily because the state Correction Department drastically cut the number of prisoners it sent to the Shelby prison starting last summer.  Corrections released a few hundred prisoners early because of the state's budget crunch, but Corrections Director Bill Slaughter expects the prison system to start filling up again within a couple of years.  He supports the bill, saying if CCA closed the Shelby prison the state would have to pay to ship 300 inmates out of state. The Senate committee accepted two amendments offered by Clark to reverse action taken by the House Judiciary Committee. They would end a proposed three-year sunset on the importing of prisoners and a ban on importing federal prisoners sentenced in other states.  (Great Falls Tribune)

February 17, 2003
The private prison at Shelby would be allowed to take prisoners from other states under legislation endorsed Saturday by the House.  House Bill 451, which lawmakers approved 81-18 in a preliminary vote, would overturn a ban on out-of-state prisoners at privately owned prisons.  Some lawmakers, however, complained that the Shelby facility was approved on the condition that it would not import prisoners, a prohibition put into law in 1999. "Here are two sessions later, and all of the sudden they're changing the rules," said Rep. Paul Clark, D-Trout Creek. "It kind of undermines the integrity of the process for me."  (AP)

February 13, 2003
A split House Judiciary Committee voted 12-6 Wednesday to let the private prison in Shelby bring in out-of-state prisoners to fill empty beds. Even some supporters had strong reservations about changes in the measure, and the committee added several tough amendments. The committee added amendments to exclude bringing in federal prisoners convicted in other states and to require that out-of-state prisoners be physically separated from Montana prisoners and be returned to their home states at least three months before they are released. Shelby officials said the change is needed to keep the Crossroads Correctional Center open during what's expected to be a temporary drop in state prisoners. Toole County officials say the $25 million, 512-bed facility has been an economic boon to the area since Corrections Corporation of America opened it in 1999. Even some committee members who supported the measure expressed strong reservations about changing policy that allowed private prisons, but banned them from bringing in prisoners from other states. Rep. Scott Sales, R-Bozeman, said he dislikes private prisons and wishes the state never had gotten into them, just as he wishes the state never allowed game farms. But, he said the state needs to allow prison imports to shore up the prison temporarily because it made a commitment to Toole County and to prison operator CCA. "I think this bill stinks, but I will hold my nose and vote for it," he said. Committee Chairman Jim Shockley, R-Victor, said the private prison was approved on the condition that it not import prisoners. "We got screwed, we got lied to, we got deceived," Shockley said, who nonetheless voted for the bill. Rep. Brad Newman, D-Butte, said Montana would get "the worst of the worst" prisoners. Newman, a prosecutor, said Montana itself "sent some bad actors" to private prisons in Texas and Tennessee a few years ago. It doesn't make sense for states to ship out first time offenders convicted of minor charges who won't be imprisoned long, he added. Rep. Paul Clark, D-Trout Creek, said the Legislature shouldn't break its commitment to the public to avoid out-of-state prisoners. CCA took the risk of coming to Montana and lawmakers shouldn't bail them out, he added. Rep. Steve Gallus, D-Butte, charged that CCA is using the state's budget crisis, which caused the Corrections Department to release some prisoners early and reduce the inmate population of the Shelby prison, as an excuse to expand the Shelby by as many as 1,000 beds to handle "federal thugs." (Great Falls Tribune)

February 5, 2003
The state's only private prison is losing money and needs to bring in out-of-state inmates to make ends meet, Corrections Department and prison officials told the House Judiciary Committee on Tuesday. " Crossroads Correctional Center is a business," said Allan Underdal, a Toole County commissioner. "It is no less important to our town than Malmstrom is to Great Falls or the universities in Missoula and Bozeman ." Rep. Edith Clark, R-Sweetgrass, has proposed allowing the Shelby private prison to take out-of-state convicts. Her House Bill 451 would reverse the section of Montana's 1999 private prison law - that Clark helped get on the books - that bars out-of-state prisoners. "I'm unfortunately older now," said Clark . "And I'm wiser." Clark and other state and local officials said the private prison is a safe, important part of the Hi-Line economy and shouldn't be jeopardized. The 512-bed private prison opened in 1999. At the time, Warden Jim MacDonald said, the company didn't think it would need out-of-state inmates because Montana 's prison system was growing fast. It appeared that the Shelby prison would be full in a matter of months, he said. But last summer, as tough economic times came to state government, the state started withdrawing prisoners to cut expenses. Today, the prison has 324 inmates and is about 35 percent vacant, MacDonald said. The prison is losing money and has had to lay off employees, he said. "Reducing quality of service and reduced public safety is not an option," MacDonald said Bill Slaughter, director of the state Department of Corrections, said the state can't afford to lose the private prison. Eventually, he said, Montana 's prison population will grow again, and the state will need a place to house its offenders. Although the bill itself doesn't mention it, Slaughter said any contract between the state and the company would have certain safeguards. Montana would get first bids on all open prison cells. Department officials would be able to screen incoming out-of-state inmates to make sure they didn't have dangerous diseases or gang connections. And no out-of-state inmates would be released into Shelby or any other community in Montana. The prison had its first major problem earlier this month when a 20-year-old inmate serving time for bad checks was beaten to death in the prison gymnasium by another inmate. Although only one person spoke against the bill, a recent poll suggests that the overwhelming majority of Montanans do not support the idea of allowing out-of-state inmates. A Gazette State Poll conducted in mid-December by a Washington , D.C. , research firm showed that 72 percent of Montanans rejected the idea. An unofficial poll of Toole County voters in December showed that 78 percent of county residents support accepting out-of-state inmates. Betty Whiting, a lobbyist for the Montana Association of Churches, offered the lone voice of dissent. "We're opposed to private prisons," she said. "We the people should be more responsible for our prisoners." (Billings Gazette)

January 29, 2003
A man accused of killing a fellow inmate at the Shelby prison not guilty to deliberate homicide Tuesday in Toole County District Court.  Jon Beau, 31, is charged with murdering 20-year old Thomas Rose Jan. 9 in the gymnasium at the Crossroads Correctional Center.  (The Tribune)

January 24, 2003
A legislative budget panel Thursday recommended the state Corrections Department's 2004-05 budget stay as requested by Gov. Judy Martz, rejecting a "rollback" to 2000 spending levels.  By choosing the budget requested by Martz, the panel's majority rejected a "rollback" to 2000 spending levels that had been chosen as a starting point by Republican leaders on the first day of the Legislature.  Going back to 2000 spending levels would mean higher caseloads for an already overburdened parole officer staff, layoffs at the Montana State Prison, and the closure of the private prison in Shelby, a Helena prerelease center and a new treatment program for repeat drunken drivers, he said.  (Great Falls Tribune)

January 22, 2003
Authorities on Friday released the name of the Crossroads Correctional Center inmate who was killed in a fight with another prisoner.  The dead inmate was identified as 20-year-old Thomas Joseph Rose II, who was serving concurrent five-year sentences for writing bad checks and escape, officials at the private prison said.  Rose was sentenced in Sanders County in the summer of 2001 and had been transferred to the Shelby prison from the Montana State Prison in Deer Lodge on Dec. 19. Crossroads Warden Jim MacDonald said the name of the second inmate involved in the Thursday fight has not been released. An investigation into the incident continues, and charges are pending, he said.  In a written statement, prison officials said Rose died of injuries sustained in a fight in the prison's gymnasium Thursday afternoon.  State criminal investigators "have what they feel is the weapon" that the alleged assailant used in the incident, said Cecily Simons, Crossroads public information officer Friday afternoon.  "It's not a weapon that this inmate had been building or making over a period of time," Simons noted.  Rose's mother, Penny Rose, of Big Timber told the Tribune Friday evening that the investigating coroner indicated to her that her son was blindsided by the other inmate with a board and died from brain damage.  "There was no fight - my son was hit in the back of the head with a board," Penny Rose said, adding that she was told that her son didn't have any bruising on his hands.  "Everything came from behind; he didn't get a chance," she said from the home she shares with her son's father, Thomas Rose Jr., and their younger daughter, Aleise Rose.  MacDonald said the death was the first fatal assault at the prison since it opened in September 1999.  Staff at the facility was reduced beginning last fall when the state started releasing inmates to help make up for a $9 million Corrections Department budget deficit. The facility was designed for 512 prisoners but had only 344 inmates Thursday night, the warden said.  Montana Department of Corrections authorities were notified immediately of the incident and were on site at the Shelby prison Friday to assist the Department of Justice Criminal Investigation Bureau and the Toole County Sheriff's Department with the investigation, officials said.  Investigators are expected to release more information Monday.  "I imagine we'll have more stuff pouring in on Monday," Simons said.  The prison remained in lockdown Friday, and officials said all visitations and other activities through the weekend were canceled.  "We are allowing the inmates to be out in their day rooms to shower and kind of move about a little bit but they will not be moving about the building," Simons said.  Crossroads made more staff members available for the inmates to talk to if they needed, Simons said.  "Everyone feels terrible that it happened but they, I guess, are processing and doing their thing," she said. "We haven't had any major issues come of it."  Described by his mother as being family-oriented and a "real charmer", Rose enjoyed drawing, making tattoos, playing guitar and listening to music.  He attended Thompson Falls High School for about two years and received his GED in the 11th grade. After high school, he lived in various parts of Montana, including Libby and Helena.  "Everybody who knew him, that really knew him, they really loved him," Penny Rose said. "He was just a likeable guy. He'd do anything for you."  Rose, who would have turned 21 Jan. 21, had two young children, Benjamin Webber, 3, and Elizabeth Rose, 17 months. Whitted Funeral Chapel in Shelby is handling his funeral arrangements.  (Great Falls Tribune)

January 22, 2003
The state's private prison is losing money every day and may close if lawmakers don't let the facility take out-of-state inmates, Department of Corrections officials told lawmakers Tuesday.  "They're hanging on to see what this Legislature does," said Joe Williams, administrator of the agency's Centralized Services Division after a hearing of the Appropriations Subcommittee on Corrections and Public Safety. "They're nip and tuck. This has little to do with keeping (the company) afloat. But one of the ways they've done that, Williams said, is by pulling people out of the state's private prison, the Crossroads Correctional Center in Shelby, run by Corrections Corp. of America. The prison must have 430 inmates to break even, Williams said. Montana has only 340 prisoners at the prison, and state law forbids the company from bringing in inmates from out of state.  (Billings Gazette)

January 14, 2003
A man accused of killing a fellow prison inmate was arraigned Monday in District Court here.  Jon LeBeau, 31, is charged with murdering Thomas Rose, 20, Thursday in the gymnasium at Crossroads Correctional Center.  Rose "was struck in the head with a wood block," said Crossroads Warden Jim MacDonald.  (Great Falls Tribune)

January 10, 2002
An inmate at the Crossroads Correctional Center died Thursday after a fight with another inmate, officials said.  The fight happened at 4:25 p.m. in the gymnasium at the private prison.  Staff at the facility was reduced beginning last fall when the state started releasing inmates to help make up for a $9 million Corrections Department budget deficit.  The facility was designed for 500 prisoners but had only 344 inmates as of Thursday night, the warden said.  (Great Falls Tribune)

January 2, 2003
The companies that wanted private prisons in Montana now have exactly what they wanted: Citizens of the state pitted against each other in a dispute over how we can imprison even more people in Montana. That much was made clear this week with release of a public opinion poll finding Montanans opposed, by a margin of more than three to one, importing inmates from out of state at the private prison in Shelby. This is directly opposite the findings in another, albeit less scientific, survey of the Shelby-area's registered voters. In the past couple of weeks, the 512-bed prison near Shelby housed 340 inmates, down more than 150 from its peak just five months ago. In the face of that, the CCC's corporate owners have threatened to shut down the facility if they can't keep it closer to capacity. Already they've laid off 22 of the facility's 140-odd workers and demoted 12 others. Extortion? That's a little extreme, but we can't say it wasn't predicted. This will be an all-Montana prison, we were told five years ago. Hints that it might be something else resulted in a state law, passed in 1999, forbidding importation of prisoners. (Great Falls tribune)

December 30, 2002
Montana voters overwhelmingly reject the idea of bringing out-of-state convicts to the state's only private prison in Shelby, a new Gazette State Poll shows. By more than a 3-to-1 margin, a poll of 625 registered Montana voters said they oppose the notion of bringing out-of-state prisoners to the Crossroads Correctional Center just outside the Hi-line town of Shelby, seat of Toole County. Overall, 72 percent of those polled said they opposed the idea, compared with 21 percent who said they supported it and 7 percent who said they were not sure. Women rejected the idea slightly more than men, with a full 75 percent disapproving of out-of-state inmates, compared with 69 percent of men. The telephone poll was conducted Dec. 17 through Dec. 19 by Mason-Dixon Polling & Research Inc., a Washington, D.C., pollster. It has a margin of error of plus or minus 4 percentage points. The statewide results are opposite of those from an informal survey taken of only Toole County residents earlier in December. (Billings Gazette)

December 19, 2002
Poll results show that 78 percent of registered voters in Toole county are pulling for a change in state law that would allow Shelby's private prison to house out-of-state inmates.  The 1999 law forbidding out-of-state inmates in Montana's private prisons was passed because residents living near the state's first and only private prison, in Shelby, were uncomfortable with the notion.  With Crossroads Correctional Center struggling to fill its 512-bed prisons and stay afloat financially some three years later, officials are exploring options that would require a reversal of that law.  "When we first brought the prison into Toole county, it had been stated that we weren't going to have out-of-state prisoners, and the law was changed, "Toole County Commissioner Allan Underdal said Wednesday.  With the residents' approval in hand, local officials will visit with their legislators and work out the language of the proposed bill.  After hearing the results Wednesday, Rep. Edith J. Clark, R-Sweet Grass, who sponsored the 1999 law, vowed to carry the proposed legislation in the upcoming session.  "We should step up to the plate and be a partner with them and help them," Clark said.  CCA, Crossroads' out-of-state owner and operator, is a proven partner to the state and the community and has received national accreditation, she said.  Contracts would require that Montana inmates have priority for bed space, he said.  "The idea is, if there's enough state prisoners and the state needs the prison space, then the out-of-state prisoners would be shipped back," Underdal said.  The 512-bed prison currently holds 340 inmates, compared to its peak of 496 in late-July.  The subsequent loss of revenue forced Crossroads to lay off 22 workers, demote 12 others and cut its $4 million payroll by $500,000.  (Great Falls Tribune)

November 27, 2002
Toole County residents are being asked if they support a proposed change to state law that would allow out-of-state prisoners to be housed in the private prison in Shelby.  The 1999 law forbids private prisons from doing so, mainly because Shelby's residents weren't comfortable with the idea when it was proposed in 1998.  Crossroads Correctional Center is the state's first and only private prison. Owned and operated by Corrections Corp. of America, at its peak there were 490 Montana inmates in the 512-bed prison. Monday, that number was 351.  Officials are looking for other ways to keeping the prison open.  In the first of two public meetings, about 15 prison, state, city and county officials met with about 80 local residents Monday to discuss the prison.  Another public meeting will be held Tuesday, then Toole County registered voters will receive a mail-in poll explaining the proposal and seeking their opinion. The poll must be returned to the courthouse by Dec. 16.  Rep. Edith J. Clark, R-Sweet Grass, sponsored the 1999 law forbidding out-of-state prisoners.  Monday, she told residents she will carry the proposed legislation if the change fits the needs of the DOC, CCA and the community.  Shelby resident Ron Munson thanked the Crossroads staff, and said they've done a good job when it comes to safety. "Nobody's come knocking at my door at three in morning asking for my car keys," he said.  But Munson said he opposes bringing in out-of-state prisoners because it would send the wrong message to potential criminals.  "I don't want to see out-of-staters," Munson said.  "Then we'll have no room. Montana will be well-known for no punishment for the crime."  (Great Falls Tribune)

October 10, 2002
Officials at the Crossroad Correctional Center laid off 22 employees and demoted 12 others Wednesday to make up for lost revenue caused by the private prison's declining state inmate population. The cuts represent about $500,000 of the 500-bed center's $4 million payroll budget, and brings the total number of employees to 119, Warden Jim McDonald said. A $9 million Department of Corrections budget shortfall is prompting the release of up to 400 low-risk state inmates across Montana, as well as the elimination or reduction of prison programs. The Shelby prison, owned and operated by Corrections Corp. of America, is housing 380 inmates, about 40 fewer than last month, McDonald said. Shelby officials said they are working hard to find ways to increase the inmate population so they can bring some of the laid-off workers back. (Great Falls Tribune)

September 28, 2002
The Martz administration is committed to keeping the private prison in Shelby open, but the prison could face tough times in the coming months, including layoffs, Corrections Director Bill Slaughter said Thursday. "That's just the state we find ourselves in," he said, referring to the state's withering budget. "(Shelby) is not going to be immune to that. But we do need that prison available." The Corrections Department plans to cut costs by releasing 400 convicts from prison within the next month, shifting them to community-based programs, including parole. "The only way we cannot (overspend our budget) is to control our contract beds," Slaughter said. Shelby's Crossroads Correctional Center, which is owned and operated by Corrections Corp. of America, has been housing about 420 inmates. It can hold as many as 500. Last week, state corrections officials said they plan to draw down the population at Shelby to save money. They said a "worst-case scenario" could leave as few as 50 inmates at the Shelby prison. That statement prompted CCA officials to say they might shut down the prison if the population fell below a certain level. "We know and they know there are going to be some tough times for them the next 24 to 36 months," he said. However, Slaughter emphasized that the state considers the private prison to be a key segment of the state's prison system. The state will need the beds in the future, when it can afford to pay for them, and the Shelby prison has an excellent record, he said. The state also will be considering other options that could route more prisoners to Crossroads, such as allowing it to have in-state inmates that normally would be held in county jails or out-of-state inmates. (Great Falls Tribune)

September 26, 2002
The Martz administration promised Wednesday that it would do everything in its power to prevent Shelby's privately owned prison from closing, Shelby Mayor Larry Bonderud said. Bonderud and other northcentral Montana officials met for 90 minutes at the Capitol with Gov. Judy Martz and other administration officials to discuss the future of the 500-bed Crossroads Correctional Center, owned by Corrections Corp. of America. State corrections officials said earlier this week that they planned to pull state inmates from the Shelby prison, as part of plans to cut spending. CCA's president reacted by saying Crossroads might be closed if the state reduces the inmate population much more at Shelby. But Wednesday, state officials agreed to consider options to keep the Shelby prison's inmate population at a level that would make it profitable for CCA, Bonderud said. "They want to sit down with CCA and negotiate a bed number that keeps (the prison) viable," Bonderud said. Bonderud said corrections officials also agreed to hold public hearings in Shelby within the next 30 days to discuss the future of the prison and the option of importing out-of-state inmates. State officials had warned CCA that the count could reduced to as low as 50, as the state shuffles inmate populations and releases some prisoners to address a multimillion-dollar budget shortfall. Bonderud said options mentioned at Wednesday's meeting include: Transferring to Shelby state prison inmates who are waiting in county jails for placement in the state prison system. The number of these inmates ranges from 80 to 160 at any given time, Bonderud said. Transferring to Shelby Montana inmates now being held in federal prisons. Allowing the CCA-owned prison to accept prisoners from outside Montana, which would require a change in state law. Bonderud noted that privately owned prisons are the only prison facilities in the state that cannot accept inmates from outside the state. Also at Wednesday's meeting were state Sens. Glenn Roush of Cut Bank and Pete Ekegren of Choteau, state Rep. Edith Clark, R-Sweet Grass, and Toole County Commissioner Allan Underdal. (Great Falls Tribune)

September 25, 2002
The company running the private prison at Shelby has warned it may have to close its doors if too many inmates are removed, but state corrections officials said Tuesday they have little choice in dealing with a money shortage.  "It's not out intent to empty Shelby," said Joe Williams, head of centralized services for the Department of Corrections.  However, he said, the agency must take some of the 416 inmates from the Crossroads Correctional Center as a part of its effort to reduce the number of prisoners behind bars and save money.  Room and board at the Shelby prison is more expensive than the state can afford and inmates will be drawn from there as the department continues with its plan to release about 400 inmates into community programs by the end of October, Williams said.  His comments came a day after John Ferguson, president and chief executive officer for CCA, sounded alarms with Gov. Judy Martz over the loss of more inmates from his company's prison.  The facility night have to close if the population drops below 380 inmates, he told the governor in a meeting at the Capitol.  Although the state has never guaranteed how many inmates would be sent to the 500-bed prison, Ferguson said, the company built it with an understanding the state would make greater use of it than it has.  "We're getting to the point where we have to decide whether to mothball it," he said.  Leslie Hafner, company spokeswoman, said state corrections officials have warned the company that the Shelby prison could end up with as few as 50 inmates.  The population has hovered around 420, although it was as high as 492 at one point, she said.  Martz said she shared Ferguson's concerns about the continued operation of the prison.  "We need to figure out some way to keep you viable," she said.  "We need to keep you here."  Williams agreed and that is why the administration is considering asking the 2003 Legislature for a law change that would allow out-of-state inmates to be housed at Shelby so the prison can operate in the black.  Williams said about $6.7 million of the department's money shortage is caused by having more inmates than was expected when the budget was approved last year.  Mike Mahoney, warden at the Montana State Prison, said Corrections Corp. was told a worst-case scenario would be only 50 inmates left at Crossroads.  He said the state has guaranteed to use half the capacity at the three regional prisons and has to live up to that promise.  But, he said, the state made no such guarantee to CCA.  (Great Falls Tribune)

September 13, 2002
Private prison bait-switch a sign of things to come?  With legislators in Helena for a few hours this afternoon, we'd like to call their attention to the kind of issues they're going to be facing in four short months.  This past week, the head of the agency responsible for the state's prisoners announced that he wants to import inmates form out of state to the private prison in Shelby.  Never mind that the 512-bed Crossroads Correctional Center in Toole County, was allowed to open three years ago on condition that it not house inmates at a private prison in Montana.  Corrections officials say a bill will be proposed in the 2003 legislative session to repeal the ban.  We hope legislators - and voters - remember what was promised at the outset of the state's adventure in private penology.  Now that the north central Montana economy is hooked on having the private facility in operation, the time is ripe for the old bait-and-switch.  It's reality because the state's income is lagging behind its outgo.  That means turning loose about 450 inmates.  We won't even get into the propriety of privatizing basic state functions such as corrections.  That argument was lost about five years ago.  The larger point today is that this is just one problem in one department.  (Great Falls Tribune)

July 10, 2002
Squeezed between a swell of new prisoners and a shrinking budget, the state Department of Corrections estimates it will have to release more than one prisoner a day- or not imprison new inmates- over the next year to stay within its budget.  This spring as the state faced down a multimillion dollar budget shortfall, the department, along with other state agencies, voluntarily cut about 3 percent of its budget.  Those cuts went into effect last week and included shaving $2.63 per prisoner, per day from the fee the department pays to the state's private prison in Shelby.  (Billings Gazette)

June 13, 2002
The state Corrections Department is lowering the daily reimbursement to regional and private prisons for housing state inmates, which will mean fewer rehabilitation and education programs for some inmates. The state also is reducing payments to the privately owned and operated Crossroads Correctional Center in Shelby, which houses nearly 500 inmates.   Jim MacDonald, Crossroads warden, said it will be easier for the Shelby prison to absorb the cuts because it has 500 inmates instead of the 150 housed at a regional jail. The Shelby prison will continue to meet its contractual obligations to provide certain education and treatment programs for inmates, he said. (Billings Gazette)

June 11, 2002
The Corrections Department is cutting payments to regional and private prisons that house state inmates, and that means fewer programs for some inmates, law and correctional officials said Monday.  The state is also reducing payments to the privately owned and operated Crossroads Correctional Center in Shelby.  It houses nearly 500 inmates.  Corrections officials said the payment cuts should save the state about $878,000 over the next year.  Jim MacDonald, Crossroads warden, said it will be easier for his prison to absorb the cut in state payments because it has 500 inmates instead of the 150 housed at the regional jail.  The Shelby prison will continue to meet its contractual obligations to provide certain education and treatment programs for inmates, he said Monday.  It won't offer an education class it had been trying to fill, but otherwise won't reduce programs for inmates, MacDonald said.  (Great Fall Tribune)

March 12, 2002
Sixty-five Montana convicts have sued the state over its prison system, charging that it's illegal to hold them in regional and private prisons and demanding that they be returned to the main state prison in Deer Lodge to serve their time.  The inmates say that at regional prisons and a private facility, they don't get adequate required treatment, training or medical care - programs long established at the Deer Lodge facility.  (Gazette State Bureau)

November 30, 1999
A dispute over prison policies regarding televisions escalated into a riot involving 49 inmates. The incident was brought under control quickly with the use of tear gas. Damages were limited.

Montana Legislature
June 28, 2008 Billings Gazette
State officials will not appeal a recent District Court ruling that paves the way for a disputed Hardin jail to house out-of-state inmates. Bob Anez, a spokesman for the Montana Department of Corrections, said officials decided not to appeal Helena District Judge Jeffrey Sherlock's June 6 decision allowing the never-opened Two Rivers Detention Center to take out-of-state felons. "The state does not intend to impede the efforts by (Two Rivers) to find offenders," he said. Greg Smith, the executive director of the Two Rivers Development Authority, the economic development arm of the city of Hardin, said the decision was welcome news. "We're extremely pleased," he said.

June 7, 2008 Billings Gazette
Lawmakers and officials intentionally outlawed out-of-state prisoners when they wrote the state's private-prison law 11 years ago, but they never imagined that a city would build a lockdown intended to house hundreds of such criminals, sources said Friday. Mary Jo Fox, former Gov. Marc Racicot's corrections adviser, and former Rep. Ernest Bergsagel, who sponsored the 1997 bill allowing the state's private prison, both recalled Friday that Racicot was adamantly against out-of-state inmates and that state law purposefully banned the practice. Their recollections came the day after Helena District Judge Jeff Sherlock ruled that Hardin's city-owned Two Rivers Detention Center may accept out-of-state prisoners. "I can't imagine a scenario in which the administration or the Legislature would have deferred to (a city) something of that magnitude," Fox said. "There was real concern for receiving the worst of the worst from other states." Hardin's 464-bed facility was completed last year as a way of bringing as many as 100 new jobs to the economically depressed southeast Montana town. The lockdown was built with no contracts in place and no involvement from the state. The jail has never opened, and last month it defaulted on the bonds sold to build it. State and federal officials said they had no use for the cells, forcing Two Rivers to look to out-of-state inmates as a source of revenue. Responding to an inquiry from Hardin City Attorney Becky Convery, Attorney General Mike McGrath determined late last year that Two Rivers, which is legally a county jail, could not house out-of-staters. Hardin appealed that decision to Sherlock, who overturned McGrath's opinion, paving the way for Two Rivers to accept out-of-state inmates. When Montana was debating out-of-state inmates, the state had some of its own felons housed in prisons beyond its borders, Fox said. One was killed; gangs and violence were constant concerns. It was against that backdrop that the discussion on out-of-state inmates in Montana began, she said. "Racicot did not want out-of-state inmates," Bergsagel said. The former governor could not be reached for comment. Montana law contains a couple of chapters on inmates and penal institutions. One section deals with county jails, known legally as "detention centers." Another, Title 53, deals with state correctional institutions, including state-owned prisons, boot camps, halfway houses and the state's only private prison, located in Shelby. Bergsagel's bill, which became part of Title 53, called for extensive state involvement in the building of a private prison; it called for licensing and inspection and requires a heavy state role in the prison to guarantee safety. It also specifically outlawed out-of-state inmates. Later, that part of the law was relaxed as Montana began to draw down the number of inmates housed in Shelby. But the overwhelming sentiment at the time was a strict prohibition against developing a private-prison industry in Montana, Fox said. "In the conversations I was party to, they were very carefully trying to make sure (out-of-state) inmates would not happen," Fox said. "There wasn't supposed to be any legal room for that to happen." Back then, she said, Title 53 was imagined as the "final word' on out-of-state inmates. Two Rivers, however, isn't built under the laws that govern private prisons. The center will be run by an out-of-state, for-profit corporation, like the state's private prison in Shelby, and it has room for 464 inmates, just 200 fewer than the Shelby lock-up. But Two Rivers is owned by the economic development arm of the city of Hardin and, consequently, is not a private prison but a government-owned detention center, like a county jail. Sherlock didn't consider any of the Title 53 laws in his decision this week. Bergsagel said he didn't have a problem with the concept of Hardin accepting out-of-state inmates, but he said he was concerned that the facility was built outside the web of laws intending to guarantee public safety. He said someone at the state should inspect the institution to make sure it complies with the federally set prison standards set out in Montana's private prison law. But it's not just Two Rivers that wants to house out-of-staters. Sanders County already houses a small number of Idaho inmates in its jail across the border, according to evidence submitted at the Two Rivers court case. That never should have been allowed, Fox said. It appears that created a loophole for Hardin demand the same treatment.

June 6, 2008 Billings Gazette
A Hardin detention facility can take federal and out-of-state inmates, a Helena District Court judge has ruled. Judge Jeffrey Sherlock's ruling overturns an opinion issued in December by Montana Attorney General Mike McGrath. The decision barred Two Rivers Detention Facility from taking inmates from the federal system or other states. Greg Smith, the executive director of Two Rivers Authority, savored the judge's ruling. "It's very simple: We were right," Smith said. The $27 million detention center was built by Two Rivers Authority, Hardin's economic-development arm, as a way to bring more than 100 jobs to Hardin. The city of Lodge Grass entered an inter-local agreement with Hardin to run the facility. The jail was completed last summer, and Two Rivers expected to open the 646-bed center in the fall. Instead, Montana Department of Corrections and Hardin officials disagreed on whether the facility could accept inmates from other states. That prompted Hardin City Attorney Becky Convery to seek the attorney general's opinion. The opinion was released Dec. 3. Hardin sued the Department of Corrections and McGrath on Dec. 10. Robert Sterup, one of the Billings attorneys who argued the case for Hardin, said the state agreed earlier not to stand in the way of the detention center's operation if McGrath's opinion were overturned. "With the court's ruling in hand, Two Rivers is free to begin accepting inmates," Sterup said. Smith said the ruling allows Two Rivers officials to do more marketing, and they plan to work hard to secure contracts. "Now we can go about our business, we can get to work and do what we need to do," Smith said. Gov. Brian Schweitzer's spokeswoman, Sarah Elliott, said the state is still reviewing the ruling. However, Schweitzer's office has already started to help in the search for contracts. "In anticipation of the possibility of this decision we have taken the initiative and have been contacting governors of neighboring states, including Wyoming, Washington, Oregon and Colorado that may have a need to house prisoners," Elliott said. "Wyoming has already toured the facility and determined that it does not fit their needs. We will continue our efforts." The main point of the lawsuit was whether the multijurisdictional detention facility could contract to confine adult felony and misdemeanor offenders committed by other states and the federal government. "The use of the word 'multi-jurisdictional detention facility' is certainly a mouthful," Sherlock wrote in the seven-page order. "However, it should be noted that such facilities are known to history and the general public as 'county jails.' " Sherlock's order outlined "what this case in not about," which included the state prison in Deer Lodge, regional correction facilities like those in Great Falls and Glendive or private facilities like the one in Shelby. The state argued that three pertinent sections of Montana law define who can be confined in a detention center and limits who can be placed to defendants being held on misdemeanor charges. Hardin argued that general language in one section of the law had to give way to more specific parts of the other sections. "This court agrees," Sherlock wrote. One section of law "clearly provides" that a detention center may contract with a government unit of another state, Sherlock wrote. "This section expresses the legislature's clear and unambiguous determination that detention centers can house out-of-state and misdemeanor inmates," he wrote. Another section of Montana law allows for federal adult prisoners, Sherlock wrote. In the December 2007 attorney general's opinion, McGrath wrote several times about "legislative intent" while building up to his judgment that only the Montana Corrections Department could house out-of-state or adult federal offenders, which "evidences a legislative intent not to allow routine interstate exchange of inmates in and out of Montana." Sherlock disagreed. "The court has before it a clear statute passed by the Legislature," Sherlock wrote. "The court must presume that the Legislature would not pass a meaningless statute. Since this statute is clear, the court need not resort to other means of interpretation to determine the intent of the Legislature." Sherlock wrote that the interpretation is played out in other parts of Montana and referred to an affidavit by Sanders County Sheriff Gene Arnold that the jail he oversees takes people convicted of lower-level felonies in Idaho. Before the legal tussle, Two Rivers officials thought they would be able to contract with Wyoming, but corrections officials in that state wouldn't do so without the Montana Corrections Department's blessing. Wyoming has inmates being held in Oklahoma and West Virginia. In May, Wyoming Corrections officials wrote Two Rivers' operations contractor, CiviGenics, that the agency does not like the dorm-style housing for its medium-security inmates and "it doesn't look like the physical structure of the Hardin facility will meet our needs." Two Rivers officials have worked toward securing contracts but have been stymied for about 10 months as the legal complications were ironed out. Meanwhile, the need for revenue from the project has mounted. Construction of the facility was funded with revenue bonds. As the name implies, those bonds were to be repaid by revenue generated by housing inmates. Without that money, the funding went into default last month. Although payments are being covered by a contingency fund, the project is technically in default, which mars its financial standing. The Corrections Department has said it does not need additional space and doesn't have inmates to send to Hardin. Corrections officials have said that Two Rivers would be welcome to compete for a contract to house sexual offenders and provide them with treatment. The request for proposals for that program is supposed to be out later this year. However, Two Rivers leaders have said that contract would be less than half of the about 250 inmates needed to make opening the jail economically feasible.

February 13, 2008 Billings Gazette
As told by state and Hardin officials Tuesday, the history behind Hardin's empty, 464-bed prison hinges on one enormous - and expensive - misunderstanding. Officials from the south-central Montana town and its economic development arm, Two Rivers Authority, told the state Corrections Advisory Council that they had a gentlemen's agreement with Montana to house state inmates at the privately run prison. But Bill Slaughter, former state corrections director, current agency officials and lawmakers on the council said they never had such an agreement and never envisioned the prison as part of the state's correctional system. "We didn't sign any contracts with this group; there are no e-mails or promises," Slaughter said. "I don't know what to tell you. I was actually surprised they were under construction." The council, headed by Lt. Gov. John Bohlinger and composed of lawmakers and others with interests in Montana's criminal justice system, acts only as an advisory group to the Department of Corrections. The committee does not have the authority to change state law or approve prison contracts with Two Rivers. Hardin city officials worked with a Texas consortium to build and finance the $27 million prison. It was completed this summer and promoted as a way to bring 100 new jobs to the economically depressed town at the edge of the Crow Indian Reservation. The prison needs about 250 inmates to make enough money to open its doors and begin to repay the millions needed to build it, Hardin officials said. Michael Harling, one of the Texas financers of the project, said in an interview after the meeting that the financing package includes enough money for the prison to sit empty until May 2009. After that, the prison would be nearing a financial crisis. But by not repaying its bonds until then, the prison would technically be in default on its debt. State and federal officials have said they don't need any of the prison's 464 beds, and state law forbids the prison from housing out-of-state prisoners, according to a recent opinion by Attorney General Mike McGrath. The Two Rivers Authority and the city of Hardin have since sued the state, asking a Helena judge to throw out McGrath's opinion. The city-owned prison was built without a single contract, Hardin City Attorney Rebecca Convery told the committee, because they were told the state wouldn't enter into contracts with a prison that wasn't yet built. Paul Green, a Hardin businessman who worked at the city's economic development branch several years ago when the prison was in the planning stage, said he met with Slaughter then and walked away feeling that the state would fill the prison if the city built it. "While there is a need, (Slaughter) said they can't sign a contract with a facility that isn't built yet," Green said. But Slaughter and Diane Koch, a Corrections Department lawyer, said the only way the state ever contemplated using the prison was to temporarily house local felons after they'd been convicted and were on their way to other state facilities. The state has contracts with every county jail in Montana to hold felons until the state has room for them elsewhere. "It would be maybe five or 10 inmates," Koch said, "not enough to fill a 464-bed facility." Sen. Trudi Schmidt, D-Great Falls, a member of the advisory council, sits on the eight-member panel that helps draft the Department of Corrections budget. She asked Two Rivers and Hardin officials why they didn't come to the panel's meetings in 2005 when lawmakers were crafting the agency's two-year budget. "I guess I'm wondering why the city of Hardin never knew what was going on in the Legislature," she said. Schmidt and others also questioned just what kind of detention center the Hardin prison is. Montana has one private prison in Shelby that houses mostly state inmates, under a contract with the state. The state also has contracts to house inmates at regional prisons in Glendive and Great Falls. Those prisons were built and owned by the counties and function as county jails. The Hardin prison is not a purely private prison like the Shelby facility, nor is it the Big Horn County jail, said Greg Smith, executive director of the Two Rivers Authority. The county does not support the prison, he said in an interview after the meeting. Convery told the panel that the prison is city-owned but will be privately run by a for-profit company for at least the next two years. That would make it the only entity of its kind in the state. The authority sought out-of-state inmates after state and federal officials said they didn't need the space.

December 4, 2007 Billings Gazette
The attorney general's opinion issued Monday may leave Hardin prison investors empty-handed, but a loss won't happen overnight, the lead investment banker on the project said. The $27 million that paid for the construction and startup costs of the facility was issued in revenue bonds. The bond holders, or owners, are some of the largest institutional bond funds in the U.S. that manage billions of dollars, said Michael Harling, executive vice president of Municipal Capital Markets group Inc., the Texas firm that underwrote the project. The investment firm set up the transaction to secure the private activity bonds. The bonds are tax-free because the issuer is a governmental entity - Two Rivers Authority, the economic development arm of the city of Hardin. And because they are repaid through revenue generated by the project, the bond holders are the ones on the hook if no money comes in. Regardless of whether the prison ever opens, the next interest payment, of $960,012, is due May 1. The first principal payment of $615,000 and an interest payment of $960,012 are due Nov. 1, 2008. Nearly $2 million in interest has already been paid on the bonds. A debt service reserve fund - about $2.6 million - was set aside from the original funding. That money can be used if the facility doesn't have revenue to makes payments. However, using the fund causes difficulties. "The problem is, once that reserve fund is tapped, it becomes an event of default," Harling said. "(A default) casts a sort of pallor over it in the financial world. That isn't great, and we don't want that." The funding includes about $19 million for construction that has been paid to the designer and builder, Hale-Mills Construction of Houston. Harling figures the facility would have to open with about 250 prisoners by around March to have revenue flowing in time for the May 1 payment. Two Rivers Authority has one contract in the works with the Bureau of Indian Affairs, but it is still being completed. The contract isn't for enough prisoners to make opening the facility feasible. In the bond project's official statement, potential owners were warned of the risk of funding the Hardin project without contracts that secured revenue. According to the feasibility study commissioned by the underwriters and released in January 2006, Two Rivers had no assurance that it would get enough contracts, or a guaranteed number of inmates, to make its payments on the bonds. Also, the "primary market focus" was the Montana Department of Corrections and was based on the assumption that Two Rivers would be awarded at least one publicly bid contract, according to the study. Harling said it was a reasonable risk because studies showed that state and federal agencies needed prison space and the Corrections Department "indicated but didn't guarantee it would utilize the facility," he said. That indication apparently changed between 2005 development meetings, which Harling said Corrections officials attended, the April 2006 issuance of bonds, groundbreaking that June and construction completion this summer. He blames the problem on the state of Montana and the Corrections Department. The state's refusal to allow Two Rivers to contract with other states, specifically Wyoming, to take prisoners led to Hardin's asking for an attorney general's opinion. That opinion was issued Monday and affirmed that the facility can't take out-of-state inmates. "We bought into the risk of there's sufficient inmates, because they are out here," Harling said. "But for somebody to, as far as I'm concerned, change the rules once we get open, is just wrong. "Or, somebody should have said in 2005, 'By the way, it's not legal to do what you want to do,' " he said. "You can't just stick your head in the sand after you said, 'We really like the idea and it's a good project,' and then two years later say, 'We say it's not legal any more.' " The two attorneys listed in the bond project's official statement were not available for comment. Investment was a risk, study reported -- Bond holders took a risk by funding the Hardin prison project without contracts that secured revenue, according to a feasibility study commissioned by the underwriters. The study by Howard Geisler, of GSA, Ltd. based in North Carolina was completed in January 2006. Here are some of the project's "potential obstacles to project success," from the study: • No assurances that Two Rivers Authority would enter contracts or that any contract would yield enough money to meet financial obligations; • TRA had no contractual guarantee that any specific number of detainees would be held for any defined period; • TRA had no contractual guarantee that Montana Department of Corrections would not build more space or that other detention facilities would not be built to "service the target market," and that the state of Montana was the primary market focus, based on the assumption that TRA would be awarded one more publicly bid contracts. It further states that future economic conditions, legislative change and government policy could change the numbers of persons for which the state is responsible or has the fiscal resources to house," the study states. "Several federal agencies are viewed as potential users and their use level will be dictated by government policy and budget allocations." "The factors listed above define potentially significant risks to potential purchasers of the bonds, and the vast majority of them are linked to influences over which the Authority (TRA) has no meaningful degree of control," the study states. Here are the "factors mitigating the potential obstacles" listed in the study: • The U.S. Marshals Service uses local detention facilities across the country to house prisoners and the Montana District needed beds. • The DOC had publicly stated that it might need to send prisoners out-of-state because of the space crunch and was looking for non- profit groups to build and operate specialized treatment facilities. The total contracted bed capacity at the time was 376. • The center is located near Billings, where the Marshals Service holds people who are appearing in federal court. "In addition, the population concentration in the Billings area produces a significant impact on the (DOC) with a large number of individuals in its custody being from the area," the study states. Also, the DOC was soliciting offers to build a methamphetamine treatment center. "The Billings area, and particularly the nearby reservations represent a significant source of individuals charged with offenses related to possession of this drug," it states. • There are seven Indian reservations in Montana "Nationally, tribal jails are in general in deplorable conditions and are typically overcrowded," the study states. "Native Americans also represent a significant percentage of the (DOC) population while many Native Americans convicted of federal crimes are housed in Federal facilities throughout the United States. To that end the proposed center offers a resource to relieve pressures on the tribes and (DOC) as well as to return incarcerated individuals nearing completion of their sentences to a location nearer their home where visitations by family are possible."

December 3, 2007 AP
The Montana attorney general issued an opinion Monday saying county jails can’t sign contracts to house out-of-state prisoners, dealing a heavy blow to a new $20 million detention facility in Hardin. In an opinion issued Monday, Mike McGrath said the Legislature never envisioned that county detention centers would be used for the long-term confinement of out-of-state or federal felons. McGrath said such a move would transform county jails, feasibly filling them with out-of-state inmates so they are no longer available for placement of Montana offenders, McGrath’s opinion said. The opinion was requested by the city of Hardin, which is operating the 464-bed Two Rivers Detention Center with the city of Lodge Grass. The new detention center, completed this summer, has been unable to open because it does not have contracts for the 250 inmates needed to make opening the jail economically feasible. Studies as late as November 2005 showed that such a detention facility could easily be filled with state and federal prisoners, said James Klessens, director of Two Rivers Authority, which is Hardin’s economic development arm. But since then, state prison overcrowding has subsided because some inmates are being diverted to prerelease centers and addiction treatment and the U.S. Marshal’s Service has contracted with Crossroads Correctional Facility in Shelby to add beds there. It had sought to contract with the Office of Federal Detention Trustee in Washington, D.C., which oversees contracts and funding for all federal prisoners, and the Wyoming Marshal’s Service, Klessens said. McGrath’s opinion has the force of law unless a court overturns it or the Legislature modifies the laws involved. CiviGenics, a private company based in Massachusetts has contracted to operate the jail for two years. Payments on $27 million in revenue bonds sold for the project are to begin next year.

October 13, 2007 Billings Gazette
Forty percent of the money raised this year by Democratic Gov. Brian Schweitzer for his 2008 re-election campaign came from non-Montanans, including slightly more than half of the $175,700 he raised in the past three months, an analysis by the state Republican Party shows. Schweitzer's sizeable chunk of cash from out-of-state donors this year - $281,000 of the approximately $684,000 he has received from all contributors - prompted criticism from the GOP on Friday. "The governor has spent the last three years courting wealthy Democrat elites from all around the country," said Erik Iverson, chairman of the state Republican Party. "We've got a governor who puts self-promotion and campaign fundraising ahead of doing what's right for Montana." A spokesman for the state Democratic Party said the GOP analysis conveniently omitted some key facts: That Schweitzer had 1,333 in-state donors the past three months, or more than in any other quarter this year, and that he has taken no money from political-action committees. "These are small-dollar donors from all across the state who recognize that Montana is on the move," said Harper Lawson. "They want to make sure it stays that way. Their backing is a sign of enormous grass-roots support for Governor Schweitzer." Lawson noted that 84 percent of the donors to the governor's campaign are Montanans. Schweitzer, who's running for a second four-year term as governor next year, has no opponent so far, from any political party. He has been raising money for his re-election campaign since last year. Nonresidents contributing to statewide campaigns in Montana is not unusual, particularly when it involves candidates for Congress. Relatively large amounts of out-of-state money going to gubernatorial candidates, however, is not as common. Schweitzer has traveled out of state many times during his nearly three years as governor, to attend political events, fundraisers, conferences and speaking engagements. He's also the finance chairman of the Democratic Governors Association, a job that has taken him out of state for fundraising and political strategizing events. He went to the Kentucky Derby in Louisville, Ky., this spring for a Democratic Governors Association meeting. Here's a summary of information from the GOP analysis of Schweitzer's fundraising: • Of Schweitzer's $684,000 raised this year, about 59 percent came from Montanans, while the remainder came from nonresidents. • Nonresident donors tended to give larger amounts, averaging $420 per donation. The maximum allowed gift from any one donor is $500 per election cycle. Money from Montana residents averaged $118 per donation. • About one of every six donations, or 16 percent, came from a nonresident. • In the past three months, Schweitzer had donors from 26 states other than Montana. Behind Montana, the states providing the most money for his campaign were California, Washington, Colorado, Tennessee and Texas. The Republican Party also provided a list of the more than 200 nonresident individuals who donated to Schweitzer in the past three months, culled from campaign finance records. They include utility executives, health insurance executives, radio personality Casey Kasem of Los Angeles, college professors, executives from Qwest and Verizon telephone companies, physicians, numerous attorneys and several executives from Corrections Corp. of America, the Tennessee private-prison firm that owns a facility near Shelby.

October 5, 2007 AP
Gov. Brian Schweitzer, so far unopposed for re-election, continues to sock away campaign money in case a challenger steps forward. Schweitzer reported raising $175,000 this quarter, for a total of more than $750,000 this election cycle. The Democrat reported having just over $452,000 in the bank. A Republican who stepped into the race would start in a big campaign fundraising hole. The GOP remains undaunted, however, saying a Republican candidate could catch up. The governor says 84% of the campaign's more than 5,000 contributions came from Montanans. The average donation was just over $140. A number of the largest donations came from out-of-state donors in states ranging from New York to California. Executives with companies such as Corrections Corporation of America, which runs a private prison in Montana, and United Healthcare were among the donors giving the maximum $500 allowed by Montana campaign finance law. Schweitzer, a Democrat, has vowed he will not take money from political action committees.

March 3, 2006 KPAX
Attorney General Mike McGrath says the state does not need to undergo privatization review, before awarding a contract for a privately run methamphetamine treatment prison. The M-E-A--M-F-T, a union representing many state employees, argued the meth facility duplicates drug treatment programs already administered by the state, and is subject to a review for privatizing those services. The Department of Corrections argued the treatment prison is a new program, was not replacing services already offered, and thus was not subject to the review. Today's opinion by the attorney general supports that view. Corrections spokesman Bob Anez says a privatization review would have set back department plans to award a contract for the private treatment prison in mid-March. He says the agency now remains on schedule to have it open next year.

November 17, 2005 Independent Record
A proposal to expand a privately run prison in Shelby to relieve overcrowding was panned Wednesday by a number of lawmakers who said they could not support further privatization of the state's prison system. A similar idea was floated during the 2005 Legislature as one of several options to deal with the state's rapidly rising inmate population, but was passed over by a corrections subcommittee. Nashville-based Corrections Corp. of America, which runs the 512-bed Shelby prison, said it could complete the expansion in about a year, although it would need a license from the state to fill the facility. No cost has yet been calculated, said Tony Grande, vice president of state customer relations. Several council members, who are appointed by the governor, said they could not support such a proposal and advocated for expansion in other areas, such as community corrections and minimum security facilities, to ease overcrowding. ''I think we need to look at other options and where we want to have more people and the fact that we have so many prisoners who are not violent offenders,'' Rep. Gail Gutsche, D-Missoula, said. Sen. Jim Shockley, R-Victor, said ''we need more less-secure facilities at a cheaper price'' and suggested exploring development of a 36,000-acre ranch used by inmates at the prison in Deer Lodge before expanding private operations.

August 5, 2005 Billings Gazette
Democratic Gov. Brian Schweitzer's office ended up with about $96,000 left over after paying bills from the winter ball celebrating his inauguration, according to a report released Friday and promptly criticized by the Montana Republican Party. Corporate donations provided most of the nearly $365,000 available for the Helena ball, held Feb. 12 at a cost of some $268,000. At the next level, $10,000, donors were Fast Enterprises, which sells computer software to revenue departments; Washington Corps, the conglomerate with Missoula industrialist Dennis Washington at the helm; the Missoula law firm of Datsopoulous, MacDonald & Lind; energy companies NorthWestern and Pennsylvania Power & Light; BNSF Railway; prison operator Corrections Corporation of America; Plum Creek Marketing Inc., affiliated with Plum Creek Timber Co.; petroleum company Encore Operating LP; Bresnan Communications; and the Westmoreland and Kennecott coal companies.

April 17, 2003
Political promises never are ironclad - Thursday, April 17, 2003 SUMMARY: No out-of-state inmates? Well, they really meant it at the time.  Now sitting on the governor's desk is a bill that accomplishes two things, one of which is useful.  House Bill 451 will effectively repeal the law barring the private prison in Shelby from filling its cells with inmates imported from other states. That's not the useful part.  Quite unintentionally, this bill also gives Montanans a helpful way to know which promises politicians can be trusted to keep. That part will come in handy.  If you've followed this issue, you know that out-of-state inmates were the make-or-break issue when the Legislature approved construction of the state's first private, for-profit prison. Montanans weren't altogether comfortable with the idea of prison as a business, but it was offered as an economical way to expand prison capacity. Awful experiences at private prisons elsewhere in the country had convinced Montanans that this should not become the last, best dumping ground for other states' riffraff.  So, lawmakers approved the prison, but made a big deal about promising it would be used exclusively for Montana inmates - no out-of-state criminals, ever. This was fine with the company building the prison, Corrections Corp. of America; it said it didn't need or want to import inmates. When questions arose later about the strength of the prohibition written into the law, the Legislature rewrote the inmate-import ban in 1999 to make it ironclad.  Well, not really. In the end, there's no such thing as an ironclad promise from a politician. For one thing, politics is all about expediency. Think situational ethics on a massive scale. For another, future Legislatures and governors aren't legally bound to honor the promises of their predecessors.  Today, it's convenient for the state officials, who also once promised to crack down on crime, to set prison inmates free. It's cheaper than keeping them locked up. Early release frees up cells in Deer Lodge, meaning the state farms out fewer inmates to the private prison in Shelby, cutting the private prison's revenues. Suddenly, the desire to keep the private prison in business outweighs promises made to you. Never mind the fact that the reason we went along with the private prison in the first place is that we needed more cells in which to lock up the kind of criminals we're now setting free.  Of the very best, most honorable politicians, you can trust that they believe what they say when they say it. But don't bank on their promises in the long-run.  HB451 is proof that you can't.  (Missoulian)

September 20, 2002
About 60 convicts have left prison since July as part of a state Department of Corrections plan to cut costs by releasing prisoners, a department official said.  The department hopes to free 150 convicts by the end of this month and up to 400 by the end of October.  (Gazette State Bureau)

September 9, 2002
Corrections officials said Monday they will ask the 2003 Legislature to allow the state's only private prison near Shelby to take prisoners from other states in order to remain profitable. The request would require lawmakers to repeal the state's ban on housing out-of-state inmates at any private prison in Montana. That restriction was a condition demanded by the previous administration when the 1997 Legislature first authorized private prisons in the state. "It's not something I want to see happen, but I think it's a reality," Bill Slaughter, director of the Department of Corrections, told the Legislature's Interim Law and Justice Committee. Corrections officials said the legislation would be brought by either the department or requested on behalf of Corrections Corp. of America, the company that operates the Crossroads Correctional Center in Shelby. Some members of the committee seemed skeptical and surprised the proposition. "I think people in north-central Montana will have a lot to say about it," said Senate Minority Leader Steve Doherty, D-Great Falls. "Did we tell CCA that we were going to ensure they remain profitable?" But Slaughter warned that if Crossroads loses a significant number of state prisoners, it would have trouble making a profit. "Can we afford to let a private entity like CCA go belly-up, and then need them a few months down the road?" Slaughter said. "I'm not doing it for CCA," Slaughter said. "I'm doing it for Montana." Slaughter acknowledged the proposal will be controversial. In 1999, the Legislature passed a bill closing what it said was a loophole that would have allowed Crossroads to house federal prisoners from other states. (AP)  

Montana Corrections Department
October 9, 2009 The Billings Gazette
The Montana Supreme Court has ruled a trial is needed in the case of a former Park County man who sued the state and county after he was hurt in the crash of an inmate transport van. The decision overturned a November 2007 District Court ruling granting summary judgment to the state and county, which would have barred Jaydon Paull from further pursuing his lawsuit. The accident occurred near Dillon in March 2003 as Paull was being transported back to Montana from Florida for a probation revocation hearing. The governments had argued they could not be held liable for the actions of the inmate transport company and its employees. The company, American Extraditions, did not have insurance and folded after the crash, which killed one of the company's drivers. In its ruling issued Sept. 29 but not publicly posted until this week, the Montana Supreme Court ruled 5-2 that prisoner transportation was "inherently dangerous," making it an exception to the general rule that contractors are not liable for actions of their independent contractors. "Here, while the injury to the plaintiff did not occur as a result of the typical unreasonable or unique risks inherent in prisoner transport - such as attempted escape or assault by prisoners - it arguably occurred in this case as a result of the failure of the state or the county to take any precaution whatsoever to provide for the safe and humane transport of prisoners," Chief Justice Mike McGrath wrote for the court. "I look forward to going ahead with this case," said Courtney Lawellen of Livingston, Paull's attorney. "I'm very pleased with the court's ruling in that it found that prisoners being transported interstate have some unique rights." Kevin O'Brien, a spokesman with the attorney general's office, said Friday that state attorneys would not comment on an ongoing case. Steven Milch of Billings, the attorney for Park County, did not immediately return a phone call seeking comment. Paull filed a lawsuit over the way he was treated on the nine-day trip to Montana. His complaint alleges that when the van reached southwestern Montana on March 5, 2003, the prisoners had not been allowed a bathroom break for several hours and that the drivers told them to urinate into plastic cups or water bottles. The lawsuit alleges that as they did so, the American Extraditions driver was watching them and laughing while swerving and trying to cause them to spill urine on themselves. His lawsuit claims that the driver lost control of the van and it rolled several times, killing the other driver and injuring Paull. The high court also ruled the state had a duty to exercise ordinary care in returning Paull from Florida to answer a probation revocation proceeding and that American Extraditions was acting as the state's agent in transporting Paull. "Whether there were acts or omissions of (American Extraditions) that caused injury to Paull for which the state or county may be held liable will have to be determined by further proceedings in the District Court," McGrath wrote. Justice Jim Rice issued a strongly worded dissent, in which he argued that the Supreme Court declared that the transportation of prisoners was an inherently dangerous activity "without citing any precedential authority." He also argued that the "inherently dangerous" exception applies only when the work itself is dangerous, even when skillfully employed. "The court's decision to the contrary - that work can be considered 'dangerous' by assuming it will be negligently performed - is contrary to the purpose of the exception and the reasons underlying the rule." Rice added "...the court's conclusion that the risk of driver misconduct is an inherent danger arising from the enterprise of prisoner transportation for which the employer should have known and taken precautions is simply untenable."

February 5, 2003
The state's only private prison is losing money and needs to bring in out-of-state inmates to make ends meet, Corrections Department and prison officials told the House Judiciary Committee on Tuesday. " Crossroads Correctional Center is a business," said Allan Underdal, a Toole County commissioner. Rep. Edith Clark, R-Sweetgrass, has proposed allowing the Shelby private prison to take out-of-state convicts. Her House Bill 451 would reverse the section of Montana's 1999 private prison law - that Clark helped get on the books - that bars out-of-state prisoners. The 512-bed private prison opened in 1999. At the time, Warden Jim MacDonald said, the company didn't think it would need out-of-state inmates because Montana 's prison system was growing fast. It appeared that the Shelby prison would be full in a matter of months, he said. The prison had its first major problem earlier this month when a 20-year-old inmate serving time for bad checks was beaten to death in the prison gymnasium by another inmate. Although only one person spoke against the bill, a recent poll suggests that the overwhelming majority of Montanans do not support the idea of allowing out-of-state inmates. Betty Whiting, a lobbyist for the Montana Association of Churches, offered the lone voice of dissent. "We're opposed to private prisons," she said. "We the people should be more responsible for our prisoners." (Billings Gazette)

October 18, 2002
Montana's Corrections Department will ask legislators next session for permission to accept out-of-state inmates in private prisons, Director Bill Slaughter said Thursday.  "They didn't want us to draw the numbers down so much we'd lose the facilities," Slaughter said.  Last month, the company running the private prison in Shelby warned state officials that it might have to close down if too many state inmates were pulled out.  Slaughter said legislation could be drafted by Corrections Corp. of America, which runs Shelby's Crossroads Correctional Center.  (Great Falls Tribune)

Nexus Correctional Program
Lewiston, Montana
Community Counseling and Correctional Services
July 15, 2007 Billings Gazette
A man with Billings ties escaped from the Nexus meth treatment center in Lewistown Friday. Christopher Andrew Markham, 22, was last seen around 10 a.m. Friday and is believed to have escaped shortly after that. He is described as Caucasian, 5'6" tall and 140 pounds. He has brown hair which has been shaved. An announcement from Lewistown Police Department states that Markham is wanted by Montana State Prison. People who see Markham are encouraged not to approach him, but should contact local law enforcement. According to Department of Correction records, Markham was convicted of felony theft and probation violation in Yellowstone County last December. Judge Todd Baugh gave Markham a deferred sentence on the theft and a 36-month prison sentence on the probation violation. The Nexus Correctional Program opened in early June and is a nine-month treatment program for male meth addicts convicted of crimes. The $10 million methamphetamine treatment center was built and is operated by Community Counseling and Correctional Services of Butte under a contract with the state. It was expected to be at full-capacity by late July.

Swan Valley Youth Academy
Swan Valley, Montana
Cornerstone Programs Corporation
July 29, 2007 Dallas Morning News
Executives of the Colorado-based Cornerstone Programs Corp., which manages the Garza County Regional Juvenile Center in West Texas, have a history of involvement in troubled juvenile facilities in other states. Cornerstone closed its Swan Valley Youth Academy in 2006 after a Montana State Department of Public Health and Human Services investigation found 19 violations, including neglect and failure to report child abuse and an attempted suicide. "Intake process was particularly harmful to youth, and many have been made to vomit due to excessive exercise and drinking large amounts of water," Montana officials wrote in their findings. According to Montana officials, the state and Cornerstone had developed a corrective plan to keep the facility open. "There was a number of charges of abuse filed against the director of the program and the second in charge," said Cornerstone chief executive Joseph Newman. The bad press hurt business and so it closed, he said. Mr. Newman said state officials later cleared them of all the abuse charges, but Montana officials said they had no record of that. In Texas, Cornerstone's Garza facility has been put under corrective action plans to improve staff training, documenting grievances and group therapy sessions. But the company has hired a new director and added new staff to Garza, which it began managing in 2003. In 2005, a 17-year-old inmate at the facility became paralyzed after falling on his head in an attempt to do a back flip off a table. A lawsuit by his family against the facility, settled in 2006, alleged that a guard not only failed to prevent the stunt, but challenged the youth to attempt it. The officer was fired after the incident. The Garza County facility consistently has received positive reviews by the Texas Youth Commission. "The Garza County Regional Juvenile Center is an exemplary program," a TYC monitor wrote in the facility's 2006 contract renewal evaluation – the same year Swan Valley closed. Cornerstone was founded in October 1998 by Mr. Newman and board chairman Jane O'Shaughnessy, about six months after another company they operated ran into trouble in Colorado. That other company, called Rebound, operated the High Plains Youth Center in Brush, Colo., which housed juvenile offenders from around the country. In December 1995, a University of Illinois at Chicago psychologist hired by the state's Department of Children and Family Services issued a damning report on High Plains, and the agency later began removing its youth from the juvenile prison. "Unit staffing practices appear to be a numbers game where management attempts to balance the competing pressures of safety and profit," wrote Dr. Ronald Davidson, a faculty member in the university's psychiatry department. The facility also had a "consistent and disturbing pattern of violence, sexual abuse, clinical malpractice and administrative incompetence at every level of the program." A Human Rights Watch report later found that High Plains "fell short of reasonable, even minimal, performance." Colorado officials closed High Plains in 1998 after a 13-year-old inmate from Utah committed suicide and a state investigation found widespread problems with physical and sexual abuse. State officials also had uncovered problems at other Rebound facilities in Colorado. Rebound's nonprofit Adventures in Change program did not meet requirements to be licensed for drug and alcohol treatment nor meet "acceptable standards for habitation," according to a 1996 state audit. Auditors said the services, such as education, family counseling, vocational training and employment, "are not routinely provided." In his resignation letter as the facility's clinical coordinator, Paul Schmitz wrote: "This is no longer a professional treatment environment ... and is not supported by the company as such." In 1997, Florida officials severed the state's contract with Rebound to operate the Cypress Creek juvenile detention facility after repeated problems, including reports of disturbances that led to the arrests of several inmates for inciting a riot. Rebound also had operated in Maryland, where it ran the Charles H. Hickey Jr. School briefly in the early 1990s. Mr. Newman was the deputy secretary of Maryland's Department of Juvenile Services from 1992 to 1994, according to the state. He joined Rebound in 1995. The Hickey contract ended in 1993 after dozens of escapes, cases of alleged abuse and other policy violations. Dr. Davidson, the Illinois psychologist, said the past performance of Cornerstone and Rebound should raise concerns. "Anyone who had bothered to check the record of this corporation in Colorado and Florida and Maryland ..... would have easily discovered a troubling history of incompetence and fecklessness," he said.

April 22, 2002
The Denver company that operates the Swan Valley Youth Academy wants to be able to draw clients from any state to stay on solid financial footing.  Cornerstone Programs Corp. was  originally authorized to recruit youths just from Montana.  But just over a year ago, the company's lease with the Department of Natural Resources and Conservation was amended to allow recruitment of troubled youths from a five-state area around Montana.  Now, declining enrollment at the campus-like facility north of Condon has Cornerstone requesting the ability to recruit youths from any state.  (Billings Gazette)

Two Rivers Detention Center
Hardin, Montana
American Police Force, CEC (bought out CiviGenics), Municipal Capital Markets
The Rainmakers Banking on private prisons in the fleecing of small-town America. By Beau Hodai (Click here)
The Strange Fruit of Desperation: How con men and paranoiacs learned to love the Hardin huskow.
By Beau Hodai (Click here)
PCI and Prison Legal News help uncover the background of APF (Click here)
Prison Legal News expose (Click here)
January 11, 2010 KULR 8
A Texas appraiser spent the day at the Hardin Jail in an attempt to determine what the facility is worth. Board members with Two Rivers Authority said the appraisal is required to get insurance on the facility. Ben Boothe, an independent inspector from Texas traveled to Montana to do the appraisal. Boothe has previously worked with Corplan Corrections, the group that brought the jail to Hardin. He was suggested to the TRA board because of his experience with facilities like the Hardin Jail. He will be reimbursed for his travel expenses and paid $5,000 dollars. TRA officials expect the results by the end of February. The $27 million dollar jail was built in 2006 and paid for with private revenue bonds.

November 17, 2009 KULR 8
An apparent disconnect between state and local government could be a leading factor in the ongoing struggle to fill the Hardin Detention Center, along with a misleading feasibility study. The $27-million dollar Two Rivers Detention Center in Hardin was completed in September 2007 to the surprise of many state officials. Two Rivers Authority's website says in June 2004, then-Governor Judy Martz held the first meeting in regard to the Hardin jail at a Las Vegas airport with several people including the jail's architect James Parkey with Corplan Corrections. However, Martz said she barely remembers the meeting and that it was a non-specific business pitch that she was not interested in. "My administration had not one thing to do with this prison," said Martz. "We never okayed anything, that would've been something that would've had to go through the legislature. So, we had nothing to do with it period." Martz's Corrections Director Bill Slaughter said he was surprised to see Hardin moving forward with the detention center without contracts from any federal, state or local agency. "They really started construction without a population identified to go in there," said Slaughter. Montana law gives communities some flexibility for building a detention center. TRA board members chose a route that does not include the state's involvement. It consists of using local government statutes to build a jail. A consortium of out-of-state companies designed and built the jail and provided a private funding plan. The architect, Corplan Corrections, used a design approved by the American Correctional Association. "ACA has their own design requirements and it (the Hardin jail) meets those design requirements," said Paul Green, former executive director of TRA. "so, where's the hiccup?" The attorney for the Montana Department of Corrections said the state has its own requirements that the Hardin jail does not meet. "The department of corrections doesn't house, if any inmates, in a jail. We house our prisoners in prisons and this is not a prison and that's one of the reasons we're reluctant to put our prisoners in there," said Diana Koch, chief legal counsel for the Department of Corrections. When asked if she believed that the jail could rectify that, Koch said, "No there's not because of the way it was built." State Senator Steve Gallus, who co-chairs the state Corrections Advisory Council, said it would have turned out much differently if the people who built the Hardin jail followed the Private Prison Citing Act. "Their facility would be, in my opinion, open and have inmates and employees and it would be a benefit to the people of Hardin," said Gallus. The consortium of companies who built the jail provided a feasibility study for the project. It was paid for by the bond underwriter for the project, Municipal Capital Markets Group. The 40-page document states several times that the Montana Department of Corrections is the primary focus as a potential user for the jail. "There were some things promised to Hardin I think, but those people who promised them are no longer on the scene. So, now what," questioned Bill Joseph, TRA board member. You keep moving forward said Joseph and keep looking to land a contract to fill the jail. "You know when Noah started building the ark, somebody said it isn't going to rain and he said well I'm committed now, and we're committed. We've got the ark, and now we just got to wait for rain," said Joseph. TRA board members said they are currently pursuing several leads to bring prisoners to the jail. The Hardin jail was paid for with $27 million dollars of private investments.

October 30, 2009 Montana Standard
The California con man who failed in his bid to take over an empty Montana jail testified Friday that he is out of money, does not have the corporate backing he once claimed and even struggles to pay rent on his apartment. Michael Hilton appeared in Los Angeles Superior Court for a hearing in a 2000 civil judgment against him now estimated at $700,000. Previously, he insisted in multiple interviews that his bid to take over a 464-bed jail in rural Hardin had backing from deep-pocketed security industry investors who wanted to remain anonymous. But Hilton testified Friday that he raised just $100,000 from four investors — and that money has since run dry. With no other job, Hilton said he has dismissed his few employees and is now four months behind on his rent. "I'm out of the game. I'm done," he said in a telephone interview with The Associated Press following his court appearance. "All the expenses — the payroll, the rent, traveling — I paid all these," he added, explaining why he has no money to pay off the 2000 California judgment. Rick Earnhart, the plaintiff in the civil suit that was the subject of Friday's hearing, said he lost $175,000 in two schemes perpetrated by Hilton in the 1990s. "He's just playing poor me, poor me," Earnhart said Friday. "Don't buy into it. He's a total con man." Hilton, a 55-year-old native of Montenegro, spent several years in prison in California on grand theft charges and has at least three civil judgments against him for fraudulent investment schemes. Hardin economic development officials signed a contract with Hilton in early September calling for his company, American Police Force, to operate the city's never-used jail and fill it with inmates. But the deal was never ratified by a bank overseeing the jail, and it collapsed after media revelations about Hilton's criminal background. Board members for Hardin's economic development agency, the Two Rivers Authority, have said they never investigated Hilton's background and didn't know of his criminal history until after they signed a deal with him. But Hilton said Friday that he confessed his past as early as July to the authority's executive director, Greg Smith, and was told it would not be a problem. Smith, who has since resigned, could not be reached immediately for comment. Before the end of the jail deal came, as the expenses mounted and Hilton's operating cash dwindled, he said he borrowed money at one point from his girlfriend, Becky Nguyen. His own bank account is now empty, he said, while that of American Police Force is overdrawn by $2,000. Hilton also acknowledged never having the corporate backing he claimed. Instead, he said he had only four investors — including Nguyen — who put money toward the jail project and a proposed law enforcement and military training center.

October 29, 2009 Montana Standard
An arrest warrant was issued Thursday in California for a convicted felon who recently tried to take over a Montana jail, as jilted investors and a former employee scramble for money they've lost to the long time con artist. Michael Hilton is the lead figure of American Police Force, a California company that tried unsuccessfully to take over a 464-bed jail in Hardin. The warrant for his arrest was issued after he failed to appear in Los Angeles Superior Court on a $700,000 civil judgment he owes in a 2000 civil fraud lawsuit. Hilton — who eluded the plaintiffs in the case for years before surfacing in Hardin last month — owes an additional $760,000 in two other California fraud lawsuits. His foray into Montana left yet another trail of bad checks and unhappy investors who now want their money back. Hilton did not return calls seeking comment Thursday, but was reported to be in southern California.

October 20, 2009 AP
Running out of money and with bills stacking up, officials in Hardin are moving to mothball their empty 464-bed jail after a proposed take over of the facility fizzled. The jail's would-be savior, Santa Ana, Calif.-based American Police Force, dropped its take over bid earlier this month when the company's lead figure was exposed as a California con man. The $27 million jail already had sat empty for more than two years—frustrating Hardin's hopes for an economic revival fueled by contracts with out-of-state inmates. The jail's insurance policy is set to expire Nov. 1 and the city agency that owns it may not have the cash to renew it. The agency also is considering cutting off heat and electric services to save money.

October 20, 2009 KULR 8
American Police Force's bid to run the Hardin Jail is over, but APF leader Michael Hilton recently told a reporter he still plans to open a police training center in Big Horn County, but an investor in a former alleged scam by Hilton says anyone looking to do business with the self-proclaimed captain to beware. Hilton came to Hardin with the promise of filling the vacant detention center and stimulating the Hardin economy. The deal fell through, but Hilton is still looking at building a police training center on a ranch in the county; however one of Hilton's former investors says he can't be trusted. "Total thief, conman, one of the best there is," said Rick Earnhart. Earnhart was introduced to Hilton in the late 90's. "I met him about 10 years ago. He was dating a family member of mine and he came to me asking if I was interested in an investment into a homecare facility," said Earnhart. The California contractor agreed and handed over tens of thousands of dollars. He says at first everything seemed on the up and up. "I trusted him. We had Christmas dinners together," said Earnhart. But months later, after Hilton convinced Earnhart to invest in a second facility, the money vanished along with the alleged conman. "I want to do whatever I can to stop this guy and that's why I came up here," said Earnhart. Earnhart doesn't believe Hilton had any intentions of finding prisoners for the Two River Detention Facility. “He's the type of guy that will stay up all night thinking about who he can scam the next day," said Earnhart. He also has doubts APF is really looking at building a tactical police training center. Earnhart filed a judgment against Hilton for thousands of dollars in losses from his prior business deals in the Los Angeles Superior Court and won. He claims to have never been paid a cent. Hilton has been ordered to appear in a California courtroom at the end of the month and hand over documents detailing all assets pertaining to himself and APF.

October 18, 2009 Billings Gazette
When American Police Force pulled the plug on a deal that could have given it control over Hardin's empty jail, Gov. Brian Schweitzer said Hardin city officials "have been duped by con artists over and over and over and over again." He's not the only person who believes that. The story of Michael Hilton - the shadowy founder of APF whose documented propensity for fraud fed the impression that he was trying to pull a scam on the city of Hardin - has been told by newspapers and other media all over the country in recent weeks. Less talked about is the possibility the governor was referring to - that the original scam may have been perpetrated by the consortium of companies that talked Hardin into building the detention center in the first place. "Hardin was a cookie cutter deal," municipal bond expert Christopher "Kit" Taylor said - the same basic proposal pitched by the same group of companies to dozens of communities, mostly in Texas but in other parts of the country as well, that were looking for economic development. But at least most of the other prisons built on speculation eventually had some inmates and were making money, if not as much as promised by the groups who developed them, Taylor said. "The problems aren't as extensive as they are in Hardin because in Hardin they have no prisoners," he said. Though the Texas consortium behind the Hardin prison still has defenders, there were warning signs that it was promising more than it could deliver. Flaws seen in study -- In November 2007, two months after the jail was completed, a report from the state's Legislative Audit Division called into question the feasibility study that helped convince Hardin officials that there would be a need for the 464-bed facility. "There are a number of assumptions made related to financial viability that appear to be unfounded," the report said, and flaws in the data and methodology made it impossible for local officials to "validate the analysis with any confidence." The feasibility study was conducted by GSA Ltd. of Durham, N.C., a company that had performed similar studies for similar prison projects involving the same group of developers. "When I saw it was the same set of players, I said, 'They're all in bed together.' GSA doesn't get paid unless another prison's built," Taylor said. Taylor was executive director of the Municipal Securities Rulemaking Board from 1978 to 2007. The board was created by Congress in 1975 to write rules regulating the behavior of dealers in the municipal securities market. In Hardin and elsewhere, Taylor said, private-prison consortiums pitch their deals as risk-free economic development projects. They are touted as being risk-free because they are funded by tax-exempt revenue bonds that can be repaid only by money earned on the projects, not by taxing local residents. Project revenue bonds, as they are known, were traditionally used by local governments to fund the construction of things like sewer and water systems, projects for which there was an obvious public need. And the bonds could be paid back by a virtually guaranteed revenue stream - the fees paid by property owners who had to have the services. Kevin Pranis, an analyst for New York-based Justice Strategies, wrote about the use of such bonds to finance correctional facilities in "Prison Profiteers," an anthology of criminal-justice pieces published by Prison Legal News. Pranis said bond investors have to rely on the opinion of bond issuers "who have a stake in making prison bonds looks as safe as possible." While bond documents like the one issued for the Hardin project are full of information about how quickly prison populations have grown in recent years, they "contain little or no information about sentencing and correctional policy reforms, shifts in public opinion or other trends that would weaken the case for new prisons," Pranis wrote. The bonds are sold -- To build the Hardin jail, the Two Rivers Port Authority, an economic development agency created in 2004 by the Hardin City Council, issued $27 million worth of revenue bonds. That was in 2006, several months after the Texas-based consortium that originally pitched the deal submitted the only design and construction bid advertised for by the city of Hardin. The deal was brokered by James Parkey, owner of Corplan Corrections in Argyle, Texas, who specializes in the design and development of prisons as economic development tools. The bonds were sold by Herbert J. Sims and Co. and Municipal Capital Markets Group. For their services, Sims and Municipal Capital collected $1.6 million in underwriters' fees. Dealing in prison-related bonds has been a lucrative business for Municipal Capital. Texas Monthly magazine reported in 2006 that the company had earned $5.4 million by financing $92 million in project revenue bonds to build three jails in a single Texas county, Willacy County. The Hardin construction contract went to Hale-Mills Construction of Houston, which was paid $19.8 million. The facility was to be run by CiviGenics-Texas. Corplan has put together similar deals, many involving Municipal Capital Markets and Hale-Mills Construction, but sometimes with different operators. When Parkey first pitched the idea to Hardin, Emerald Cos., another big player in the corrections industry, was named as the prospective operator. Schweitzer said the common denominator in all the projects is that "rainmakers" go into small towns and counties with high unemployment rates and present complete packages, offering to take care of design work, bond sales, construction and operation. In theory, all the governmental entity has to do is issue the bonds in its name and then sit back and collect the revenues. Taylor said problems arise because the companies make their money regardless of whether the prison ever gets enough inmates or is opened at all. "That's true of the bond lawyers, it's true of the underwriters, it's true of the feasibility study," he said. Taylor said the municipal bond market is even more lightly regulated than the general bond market. Virtually the only rule is that bond issues have to be accompanied by an official statement, and the statement "can't be knowingly false and misleading. Those are the only requirements today," he said. "That is nowhere near what is required in the corporate area." Schweitzer also said Hardin officials should have known that Parkey and his company, Corplan Corrections, "had a shaky reputation." In 2006, a consultant doing work for Corplan was convicted of funneling bribes to two county commissioners in Texas in connection with development of a detention facility there. The two commissioners were also convicted on bribery charges. Parkey, who did not return phone calls seeking comment, has previously said he had nothing to do with the criminal activities. Parkey defended -- One of Parkey's defenders is Paul Green, who was the economic development director for the city of Hardin in 2004, when Parkey first pitched the prison idea. Green said he visited three or four towns in Texas and Arizona that had prisons developed by Parkey and his associates, and in each case local authorities had nothing but praise for Parkey and the prisons he helped build. Parkey was also known for staying involved in projects for years, something he wouldn't have done if short-term gain were his only goal, Green said. As late as last month, two years after the Hardin prison was built, Parkey was still involved in that project. After Greg Smith was suspended as director of Two Rivers Authority, Parkey personally asked Green if he would meet with APF frontman Michael Hilton, which Green did. Green said he came away from the encounter convinced that Hilton didn't have the wherewithal to make good on his grandiose promises to Hardin, but he was still impressed by Parkey's evident concern for Hardin. "That's why I have a high regard for James," he said. Willacy County, Texas, Sheriff Larry Spence has also been generally happy with the way things turned out in his county. He said he was on the "public facility corporation" - similar to Two Rivers Authority, established as the bond-issuing entity - when Corplan helped develop a county jail and detention facility for the U.S. Marshals Service in the county. Both of those facilities are doing well and are paying the revenue bonds off on schedule, he said. Spence said the latest project - a 1,000-bed detention center built with the idea of temporarily detaining illegal immigrants caught along the nearby Mexican border - has been doing less well. It filled up initially and was quickly expanded to 3,000 beds, Spence said, but lately its inmate population has been hovering at around 1,000 and may be in trouble. He said he wasn't involved in that project directly. In Hudspeth County, Texas, County Judge Becky Dean-Walker also expressed satisfaction with the $23.5 million West Texas Detention Facility, built by the same consortium. There was trouble finding enough prisoners at first, she said, but the facility added 500 beds last year. "To me that's just a business," she said. "They've been very good for Hudspeth County." Taylor, the bond expert, said the problem in some areas has not been a lack of prisoners but unanticipated costs associated with the facilities. Some of the Texas prisons have been built in sparsely populated counties with little infrastructure in place, and building a prison requires them to install expensive water and sewer lines, on the taxpayer's dime. In other cases, cities and counties have had to hire more police or sheriff's deputies to handle big increases in traffic, and in counties nearly all the prison workers end up being commuters coming from many miles way. "The upshot was, they barely got any money from the operation of the prisons," he said. It started in Billings -- One thing often overlooked in all the attention focused on Hardin is that the Texas consortium originally had its eye on Billings. On the Two Rivers Authority Web site, a timeline said the project's origins go back to June 2004, when Parkey and one of his associates met with then-Gov. Judy Martz at the airport in Las Vegas, as she was on her way to the Western Governors' Association annual meeting in New Mexico. It isn't clear who arranged that meeting, but Parkey came to Billings the following month at the invitation of the Montana Department of Commerce. Among those present at a gathering hosted by the Big Sky Economic Development Authority were people from Hale-Mills Construction and Emerald Cos., the proposed operator, and Mike Harling, an executive vice president of Municipal Capital Markets Group. The list of other attendees makes it clear how important the proposal was and how seriously it was being taken. All three Yellowstone County commissioners were there, along with the chief of police, the sheriff, the mayor, city officials, three representatives of the Department of Corrections and staff people representing all three members of Montana's congressional delegation. In a packet of information addressed to Martz, Corplan laid out its proposal for a 500-bed adult detention center to be built in Billings. It was described as a "turnkey" operation that would be completed in 12 months and turned over to local officials. Corplan told of having designed and built 33 correctional facilities in five states. Green, the economic developer from Hardin and a former employee of the Big Sky EDA, was also invited to the meeting. He said Billings officials clearly had no interest in a prison. But in Hardin, people were still kicking themselves for having failed to make a bid for the private prison that ended up being built in Shelby. Green and Parkey started talking that day about the possibility of taking the Billings prison concept and moving it 50 miles southeast, to the struggling town of Hardin Parkey and his associates found a much warmer welcome there.

October 18, 2009 Billings Gazette
In the aftermath of what some saw as the last, best hope to fill Hardin's vacant jail, the immediate fate of the project remains uncertain, with few good options for a swift resolution. One industry insider says that project leaders must work to mend fences with state government officials, wait for demand in prison beds to pick up and perhaps even expand the facility to make it more attractive to potential private partners. Another public policy advocate says that, no matter what happens, the decision to link the town's economic development to a private prison will have lingering consequences, including potential difficulty in finding funds for future projects. The $27 million in unrated, uninsured municipal bonds issued by the Two Rivers Authority, Hardin's economic development arm, are backed only by the jail's mortgage and its operating income, which so far has been zero. Hardin, Big Horn County and state taxpayers are not on the hook to cover losses from the project, which is in default and has drawn from a $2.6 million reserve fund to make scheduled payments to bondholders. Bondholders stand to lose their investment, as the empty jail generates no revenue to service the debt. But many investors may be unaware they even have a stake in the jail, due to the sometimes-complex financial structures of municipal bond financing. A combination of wealthy individuals, insurance companies and large investment management firms have traditionally bought municipal bonds, said Philip Mattera, research director for Good Jobs First, a public advocacy group in Washington, D.C., focused on accountability in economic development subsidies. Financial disclosure records from the U.S. Securities and Exchange Commission show that at least three publicly traded bond funds bought substantial positions in the Two Rivers offering. According to SEC filings made last month, the largest of those is a $4.1 million stake in a long-term municipal bond fund managed by BlackRock, one of the world's largest publicly traded investment management funds. The Two Rivers bonds, which promise a tax-free return of slightly more than 7 percent, are included in a $237 million BlackRock fund that also helped finance dozens of other projects, including public universities in Pennsylvania, a hospital in Delaware and a municipal water project in New York. A BlackRock spokeswoman declined to comment on what plan, if any, the company had for handling the Two Rivers bond default. Michael Harling, an executive at Municipal Capital Markets Group, one of two underwriters for the Two Rivers bond issue, did not respond to a message seeking additional information. Little recourse -- Under the offering's prospectus, bondholders have little recourse in the event of default, other than to foreclose on the prison. That can be done only after investors holding at least two-thirds of the $27 million total issue request such a move in writing. Foreclosure is unlikely, at least in the near term, said Charles R. Jones, president of Inland Public Properties Development, a Texas-based company that finds municipal bond funding and other revenue sources for government buildings, including jails. "Bondholders would be in the same position of trying to do exactly what everyone has done, which is get a population in there," said Jones, who said he had considered funding a private prison in Montana before the Hardin deal was announced. Because they would have to hire someone to manage a search for prisoners, bondholders are likely to simply allow Two Rivers, Harling and other players in the deal to continue the search, he said. While Hardin is an extreme example of what can go wrong with a private prison venture, its vacancy and bond default are not unique, said Judith Greene, a criminal justice policy analyst with New York-based Justice Strategies. In a scenario that parallels some of the circumstances in Hardin, a number of speculative, for-profit jails were built in Texas in the early 1990s to house growing inmate populations. They were left empty or unfilled after incoming Gov. Ann Richards instituted sweeping prison reforms, Greene said. Six jails across Texas, including some built by counties as revenue-generating operations, were eventually bought by the state for about 50 cents on the dollar and used for various treatment and detention programs, Greene said, adding that bondholders there sued developers after suffering steep losses. Jones said that a counter-intuitive strategy of expansion might be the answer in Hardin, where the prison has more barracks-style beds geared for immigration detainees and fewer smaller cells favored for housing other kinds of offenders. "It's a tough pill to swallow, but the solution might be to expand the facility so that it can hold a larger population" and offer a different configuration of cells, Jones said. A briefing document prepared for the Montana State Legislature notes that the Two Rivers jail "is designed with the infrastructure to accommodate a future expansion of an additional 440 beds." Doubling the number of beds would "lower the average cost per bed and lower the operations costs because of economies of scale," Jones said, adding that other struggling facilities have improved their fortunes by expanding. Critics of private prisons caution that building more and larger jails creates greater political pressure to fill them in order to protect the jobs and revenue they generate. Improved relations -- Jones said that project leaders in Hardin should work to improve relations with state government leaders and administrators at the Montana Department of Corrections. "There was a sense that the developers on that facility moved forward without the full support of the elected officials, and they've never really gotten the political support they need," he said. Despite a surplus of beds that may have contributed to the halt in construction this year of a 2,000-bed private prison in Tennessee, Jones said that jails are filling, and national trends indicate that demand will eventually outpace supply. Any solution for Hardin is likely to come in partnership with a major industry player that operates other facilities around the country, he said. But those interested in Hardin's jail may be waiting for a bondholder lawsuit or foreclosure to trigger an opportunity to buy or lease the facility at a steep discount, as the bond default puts Two Rivers in a poor bargaining position. "You always have vulture investors willing to buy things for pennies on the dollar if they think there's some remote chance they can recoup their investment," said Mattera, the economic development analyst. "But in the minds of Wall Street and bond investors, that locality is associated with a default, and it can have negative consequences," he said, adding that future Hardin bond issues for unrelated projects could be hindered. Jones said that he was optimistic that the Hardin jail would eventually fill. "I think it's just a matter of staying power, and then market demands will play out, as they usually do. The facility will be needed and put into service," he said. "It's just a matter of staying alive in the meantime."

October 17, 2009 AP
A convicted con artist from California who roiled a southeastern Montana community with his unlikely bid to take over its empty jail said he intends to return to the state and pursue a military training center. Michael Hilton, 55, is the lead figure of Santa Ana, Calif.-based American Police Force. The company struck a deal last month with unwitting officials in rural Hardin to take over its never-used, 464-bed jail. In his first interviews since the jail deal's collapse, an unapologetic Hilton told The Associated Press that his intentions were honest but his "tainted" name and a business partner who turned against him helped sink the deal. "What happened in my past, I admit it. I'm not proud nor ashamed," he said, adding that "there was nothing malicious" in his jail proposal. Hilton's run-ins with authorities stretch back more than two decades, to a 1988 arrest for credit card fraud. He spent three years in prison in California in the 1990s and has outstanding civil judgments against him totaling more than $1.1 million. But he said his intentions in Hardin had been sincere and that he "stood my ground" when his background caught up to him. The Montana jail plans unraveled after media revelations about Hilton's criminal past sparked an investigation by Montana Attorney General Steve Bullock. Hardin had been desperate to fill its jail after it sat empty for two years. Officials with the city's economic development agency signed a deal with Hilton without a thorough background check. The deal was never ratified by US Bank, the trustee on $27 million in bonds used to build the jail. Hilton now claims to have an agreement to lease 1,200 acres in Big Horn County for a tactical military training ground. He says he will be a "consultant" on the project because his investors no longer want him at the forefront. "We're going to build that. It's not an empty promise," he said. The lease agreement for the supposed training center was said to be with a prominent Hardin businessman and rancher. Details offered by Hilton could not be immediately confirmed, but there were strongly expressed doubts. "(Hilton) just goes onto the next plan, then the next plan, then the next," said Maziar Mafi, a Santa Ana, Calif. trial attorney. "He never stops because the minute he stops, nobody's going to believe." Mafi invested $35,000 in the jail plan and helped craft the contract between Hardin and American Police Force before cutting his ties to the project. Hilton says Mafi undermined the jail deal by failing to file the necessary paperwork to incorporate American Police Force in Montana. Mafi said he didn't do so because Hilton had asked that his name be left off the documents, raising suspicion for the attorney. No criminal charges have been filed over the scuttled jail deal, although state and federal authorities are investigating. The executive director of the city agency that owns the jail, Greg Smith with the Two Rivers Authority, resigned last week for undisclosed reasons. "I never asked for any bribes, nor did I bribe anybody," Hilton said. A native of Montenegro with at least 17 aliases, Hilton adopted the title "captain" when he formed American Police Force. He has pegged the cost of the proposed training ground and a related dormitory for more than 200 trainees at $17 million. Yet he's struggled to keep up with far smaller financial obligations, such as $1,000 debt to a Hardin bed and breakfast where he and several associates stayed for several days in September. Hilton said he was "transferring money from one account to another account" to pay off the debt. Such promises appear to be stacking up too quickly for Hilton's Montana spokeswoman, Becky Shay, who is now seeking Smith's former post at the Two Rivers Authority after failing to receive a paycheck from Hilton after three weeks on the job. Shay quit her job as a reporter covering Hardin for the Billings Gazette Sept. 25, when Hilton offered her $60,000 a year and a company car. After the Mercedes SUV she was using courtesy of Hilton was reclaimed this week by Mafi, Hilton's former business partner, Shay was back in her old car — a 1999 Dodge Intrepid with balding tires.

October 15, 2009 KULR 8
Billings could have been the site of a private detention facility just like the one in Hardin. A KULR-8 News investigation found that the city of Billings was the first place where the facility was pitched. In the summer of 2004 Corplan Corrections out of Texas proposed a 500-bed, secure, adult detention facility to Yellowstone County and the city of Billings. In the Statement of Qualifications, or a several-page proposal presented to then-Governor Judy Martz on June 28, 2004, the pre-packaged group of companies laid out its plan. The team behind the project consisted of Corplan Corrections for management, design and engineering, Hale-Mills for construction, Eversole-Williams Architecture, Municipal Capital Markets Group for financing, and Emerald Correctional Management to operate the facility. In another document obtained from the Big Sky Economic Development Authority, the team said the $25-million facility would be financed by revenue bonds purchased by private investors, and that after 22 years the sponsor would own the facility. Yellowstone County Commissioner Jim Reno said they and the city immediately passed on the proposal. "It just didn't make financial sense," said Reno. "It sounded too good to be true, but it just never penciled out for us." Yellowstone County Sheriff Jay Bell, then undersheriff, said he and former Sheriff Chuck Maxwell stated that they would not use such a facility. "We wouldn't have a real interest in it because of the expense that it would cost the tax payer of Yellowstone County," said Bell. "Our theory is that it's always cheaper to stay at home rather than in a motel." The proposal from Corplan Corrections was referred to the city of Hardin. The founder of the city's economic development branch, Two Rivers Authority, remembers being put into contact with James Parkey that same year. "When I talked to them they talked about how people that were working in the facility would get insurance, that they would get an education and they would work around the farmer's and rancher's schedules and I was like that's beautiful, that's fantastic because that's the hardest thing for new, young ag people to do is to find a way to insure their families," said Paul Green. In June of 2006 Two Rivers Authority broke ground on the detention facility paid for through revenue bonds. It promised to create jobs and heavy revenue for the city. However, it has sat empty since completion two years ago. Commissioner Reno said they also passed on the project because of a lack of commitment to use such a facility from the Montana Department of Corrections. Commissioner Reno said it is not unusual for Yellowstone County to receive a couple calls a year from groups wanting to build a private prison in the region. He said they prefer to keep correction institutions county-owned and operated.

October 14, 2009 Billings Gazette
In announcing the suspension of a state investigation into American Police Force on Tuesday, state Attorney General Steve Bullock said he was "unaware of any Montanans who have been harmed financially by this company." Meet Marcianna Smith. She is the owner of the Kendrick House Inn at 206 N. Custer Ave. in Hardin, a bed-and-breakfast where Michael Hilton and several other people associated with American Police Force stayed in late September. Smith said a check Hilton wrote to her for "about $1,000" has bounced. It came back with "account frozen" stamped on it, she said Tuesday. In addition to staying at the B&B, Hilton invited a lot of people to breakfast and put the bill on his tab. Even so, Smith finds it hard to be angry with Hilton. "He was very charming," she said. "I just find it hard to read what I've read and believe it was the same person."

October 14, 2009 AP
Montana Attorney General Steve Bullock dropped his investigation into a California company following its attempted takeover of an empty Montana jail. The company, American Police Force, had missed a Monday deadline to provide documents sought by Bullock's office after revelations that company founder Michael Hilton had a lengthy criminal background. But because American Police Force has pulled out of its bid to take over the 464-bed jail in rural Hardin, Bullock said Tuesday he was ending the investigation. "Because I'm unaware of any Montanans who have been harmed financially by this company, our goal has been achieved and we have suspended our inquiry," he said. Bullock added that Hilton's failure to answer questions about the project "speaks volumes about his company's legitimacy." Assistant Attorney General James Molloy issued a demand Oct. 1 for American Police Force to turn over its tax records; lists of customers; names of company employees, owners and officers; and other information. The information was sought under a Montana law barring unfair or deceptive business practices. Hilton, who spent time in prison in California in the 1990s, has a history of fraudulent dealings and at least $1.1 million in outstanding civil judgments against him. In response, Hilton sent a one-page fax to the Montana attorney general's office late Monday. The fax said the company was no longer pursuing the project and would not be answering the information requested by Molloy, said Becky Shay, spokeswoman for Hilton's Santa Ana, Calif.-company. "It outlines that APF (American Police Force) was only in contract negotiations, did not do business in Hardin and has pulled out of contract negotiations," said Shay. Hilton has never disclosed who backed his Hardin proposal, offering only verbal assurances that he had the financial support needed to operate the jail. Without checking into his background, Hardin officials initially embraced his proposal and signed onto a contract with Hilton. That agreement was never approved by a bank acting as trustee for the construction bonds used to build the $27 million jail. After Hilton's background became known, the city's economic development authority backed away from the deal, and its executive director resigned.

October 12, 2009 TPM Muckraker
With the unraveling of the deal for the shadowy American Private Police Force to take over and populate an empty jail in Hardin, Montana, it's pretty clear that the small city got played by an ex-con and his (supposed) private security firm. But an investigation by TPMmuckraker into how Hardin ended up with the 92,000 square foot facility in the first place suggests that, long before "low-level card shark" Michael Hilton ever came to town, Hardin officials had already been taken for a ride by a far more powerful set of players: a well-organized consortium of private companies headquartered around the country, which specializes in pitching speculative and risky prison projects to local governments desperate for jobs. The projects have generated multi-million dollar profits for the companies involved, but often haven't created the anticipated payoff for the communities, and have left a string of failed or failing prisons in their wake. "They look for an impoverished town that's desperate," says Frank Smith of the Private Corrections Institute, a Florida-based group that opposes prison privatization. "They come in looking very impressive, saying, 'We'll make money rain from the skies.' In fact, they don't care whether it works or not." The Pitch -- In June 2004, James Parkey, a Texas-based prison developer and architect, met at the Las Vegas airport with Judy Martz, who at the time was the Republican governor of Montana. Described by the Texas Observer as a "polished salesman" for the booming private prison industry, Parkey presents himself on his Web site as a beneficent savior for local communities hit hard by the decline of the manufacturing sector. Parkey, who runs a company called Corplan Corrections, was seeking to sell Martz on a prison project for her state. His method is to promise a full-service team to handle the entire project from soup to nuts -- what one source described as a "turn-key system." That team includes a construction firm to build the prison, a prison operator to work with local officials to find prisoners, then run the facility, underwriters to sell the bonds, and even a consultant to do an economic feasibility study. "They walk into a municipality and say, you don't have to do a thing, we'll take care of everything," Christopher "Kit" Taylor, a municipal bond expert who has followed Parkey's operation, told TPMmuckraker. State officials eventually referred Parkey to the city of Billlings. From there, he was directed 50 miles east, to rural Hardin -- where he found a receptive audience. Parkey promised the town's brass that his team would take care of everything. The project would generate 150 solid jobs. The prison operator in Parkey's team pledged to pay the town a business license fee and at least $100,000 in annual per-prisoner fees. To officials in a county whose poverty rate is double the national average, that seemed like too good an opportunity to turn down. Big Pay Day -- For Parkey and his crew, the deal soon paid off. The prison's designer and builder, Hale-Mills Construction of Houston, was guaranteed a maximum price of $19.88 million, according to the official bond statement obtained by TPMmuckraker. The exact amount the firm ultimately received isn't known. And Hardin's $27 million municipal bond sale, conducted in 2006, netted the underwriters -- a pair of companies called Herbert J. Sims, of Connecticut, and Municipal Capital Markets Group (MCM), of Dallas -- a total of $1.62 million. Other players recruited by Parkey -- lawyers, surveyors, and the North Carolina-based consultant who conducted the feasibility study -- reaped $169,750. It's not known how big a cut Parkey took, and he didn't respond to calls for comment. Hardin itself didn't make out nearly so well. Not a single inmate has ever slept in the jail, and the town hasn't seen a cent of revenue from the project. The bonds, which were to be paid back through the anticipated -- but non-existent -- revenue, have gone into default. The prison "was built on spec," says Taylor, the muni bond expert, who has looked at the Hardin deal. "[The consortium's] whole premise was hell, we don't care what happens to the bonds." That's left Hardin with an empty jail that it so desperately wanted to fill that it begged first for sex offenders from the state, then for Gitmo inmates from the Feds, and, finally, for some kind of salvation from the American Private Police Force. A Compromised Consultant? -- Central to Hardin official's expectations for the deal was the feasibility study that Parkey's team conducted, which concluded that the project was all but certain to pay off. But that study appears to have been not only deeply flawed, but essentially rigged from the start. A Montana state auditor found in a 2007 memo that the study -- carried out by Howard Geisler, a North Carolina feasibility consultant specializing in prisons -- was racked with problems. It provides "little methodology" regarding its estimates of potential prisoners for the jail. It lacks "historical data to support anticipated prisoner counts." And it makes "a number of assumptions made related to financial viability that appear to be unfounded," including "potential improvements to local aviation facilities." In addition, Geisler's study failed to mention that bringing in out-of-state prisoners is potentially illegal under Montana law -- even though that idea was held up as a key method for recruiting prisoners. The state's attorney general challenged Hardin over the provision, and though a judge ultimately sided with the town, it was only after a year of legal wrangling. Perhaps those flaws aren't surprising. The study was paid for by one of the underwriters, MCM, which had worked frequently with Geisler in the past. A truly independent feasibility study, says Taylor, the muni bond expert, would involve multiple firms making bids to do the job for the city. Geisler was clearly aware while writing the study of the conflict of interest inherent in the set-up. On one page, he notes in bolded text that, "to assure independence," his fee "is not contingent upon the sale of the Bonds." But Taylor calls that "a smokescreen." "[The passage] is trying to give a sense of legitimacy to the deal, when that's not the case at all," he told TPMmuckraker. Indeed, the study was in fact the third such report produced on the subject -- and the second by Geisler -- over a two-year period, according to a Montana source close to the process. The first two studies -- the other of which was done internally by Hardin -- came to ambiguous conclusions as to whether the project would succeed. After the first two reports, says the source, "the MCM people had [Geisler] come back and do another. That's when they decided it made sense to go forward." To this day, some local officials defend the study, arguing that it's easy to criticize with the benefit of hindsight. Dan Kern, Hardin's economic development director in late 2005 and early 2006, told TPMmuckraker he's not sure why support for the project evaporated after the jail was built. "Everybody told me that this was a great project and there was a need for it," he said. But Taylor says if the official bond statement, which includes the feasibility study, was false or misleading, the bond players have legal liability. Beyond Hardin -- It looks like Hardin isn't the only place where the the lavish promises of Parkey's consortium failed to pan out. The Montana state auditor's memo notes that, in three separate jail deals with Texas counties, pushed through by Parkey's team, "current revenues are insufficient to cover operating and debt expenses." And in 2005, three Texas county commissioners were convicted on bribery charges in connection to one of those Parkey-led projects. As in Hardin, MCM acted as the underwriter, and Hale-Mills handled construction. All of the companies in the consortium either declined to comment for this story or did not return calls and e-mails.

October 9, 2009 KULR
In June of 2006 Two Rivers Authority began constructing the 464-bed detention facility in Hardin. James Parkey, who is the president of Corplan Corrections in Argyle, Texas is the jail's architect. KULR-8 spoke with Juan Guerra who is the former district attorney for Willacy County, Texas. Guerra said he investigated Corplan in 2001 and 2002 on possible corruption in connection with a private prison being constructed in that county. Guerra said his investigation resulted in the convictions of four people; the county auditor, two commissioners, and a man Guerra said was a consultant for Corplan who Guerra said plead guilty to giving the commissioners money so that they would award the contract to build the jail to Corplan. Parkey was not charged with any wrongdoing in the case, but Guerra has a strong opinion about his business. "He puts packages together and goes around to different areas across the country. He used to only be in Texas, now they are all over the country, using the same routine. What they do is promise all sorts of things. There are millions of dollars in bonds, revenue bonds and then they go into default. They make their money upfront and within a month they are out of there. They're not there to make sure this thing runs," said Guerra. Parkey was seen touring the Hardin facility last month when Two Rivers Authority was in contract talks to lease the jail to the California-based firm American Private Police Force, or APF. Al Peterson, TRA vice president, said Parkey was in Hardin strictly because of his intimate knowledge of the facility. Parkey was said to be present at a meeting between TRA and APF in early September in California. When KULR-8 called Parkey at his home/business office in Argyle,Texas to find out what if any his current involvement is with the Hardin Jail and to discuss Guerra's claims we were told that he was on a trip for two weeks. Officials with a Corplan constructed jail in Bailey County Texas said it took them a year to get prisoners, but they are happy with the facility. Juan Guerra is now in private practice in Texas with a focus on private prisons. He said it is a multi-billion dollar industry riddled with problems. Two Rivers and CiviGenics contracted to operate the jail in the beginning. Community Education Centers, Inc. aquired CiviGenics in June of 2007. Peter Argeropulos, senior vice president for business development could not be reached for comment on the issue involving the Hardin Jail. KULR-8 was told he was on vacation. However, a spokesperson for CEC said the company currently has no involvement with the facility.

October 9, 2009 TMP Muckraker
The end has come... Controversial private security contractor American Private Police Fore has officially backed out of a deal with Hardin, Montana, to run a local prison, APPF spokeswoman Beck Shay announced this afternoon. (Watch Shay's press conference here.) Shay said that Hardin's economic development agency, which signed the deal with APPF, "deserves a less controversial partner." She added that the jail needed upgrading, and "we just cannot make infrastructure investments at this time." The announcement comes after revelations that APPF's Michael Hilton, who led the negotiations with Hardin, has a history of criminal fraud. And numerous claims made by Hilton about the company's background and experience have been called into question. Shay addressed those concerns, in a manner of speaking, telling the media: We have not given you an opportunity to separate Michael Hilton from APF. For those people who feel there may be fraud, I would say to them: there was finally a contractor who was willing to come in and open that detention facility. She added: "There was never any fraudulent intent in Hardin." Still, Shay showed a hint of the strain that the controversy has taken. "It's been a pretty arduous process," she noted.

October 9, 2009 Billings Gazette
A memorandum of understanding between Hardin's economic development agency and American Police Force, released by the agency on Thursday, laid out a proposal under which APF would provide a police force for the city of Hardin. The memorandum was signed Aug. 18, nearly three weeks before it was announced that a contract had been signed between APF and Two Rivers Authority, the tax-funded economic development group. The memorandum was signed by Greg Smith, the former director of the TRA, and Michael Hilton, the man who founded APF last March. TRA had previously refused to release the memorandum and had released only the first 11 pages of the 13-page contract. Billings attorney Martha Sheehy, representing The Billings Gazette, filed a motion in Big Horn County District Court last Friday, asking Judge W. Blair Jones to order TRA to release the full contract and memorandum of understanding. Gary Arneson, manager of the Hardin Generating Station and president of the Two Rivers board of directors, told Sheehy he decided to release the documents without waiting to hear from the judge. He hand-delivered the documents to The Gazette on Thursday afternoon. APF, which had proposed leasing the empty Hardin jail for 10 years, caused an uproar in mid-September when Hilton and several associates showed up in Hardin in three Mercedes SUVs that bore detachable decals identifying them as belonging the Hardin Police Department. Hardin has not had its own police force since 1976, when a consolidation agreement with Big Horn County resulted in the sheriff's department providing all law enforcement in the city and county. The two governments have just begun the process of deconsolidating, calling for Hardin to have its own police department again by July 1, 2011. It was with those plans in mind that the memorandum of understanding addressed the issue of local police services. The key paragraph read: "American (Police Force) will submit to Two Rivers a written proposal for American to provide a police force and all necessary equipment for the operation of the police force in accordance with Montana Statutes for the City of Hardin. The proposal will be provided to Two Rivers within ten days of the date of this agreement. The parties acknowledge that the City of Hardin will have to agree to any proposal before it can become effective. However, American agrees that it will be ready and able to perform in accordance with any proposal within sixty days of notification of approval by the City of Hardin. The City of Hardin will pay the sum of $250,000 to American for the police force." Becky Convery, Hardin's former city attorney, said last week that it was Smith who first suggested the possibility of APF providing local law enforcement. She said the TRA had "no authority to enter into those discussions," and on Tuesday she and Hardin Mayor Ron Adams assured the Big Horn County Commission that the city had no intention of involving APF in local policing. By the time a formal contract was signed on Sept. 4, during a trip to California by Smith, Convery and TRA Vice President Al Peterson, there was no specific mention of APF providing law enforcement services in Hardin. The contract said only that APF "shall have the option" to "provide additional law enforcement services to the TRA and/or the City of Hardin." That contract was signed by Hilton, Smith and Peterson. The last page of the contract includes a blank space for the signature of Lawrence J. Bell, identified as the trustee for holders of the bonds that were sold to finance construction of the prison. The city issued $27 million in revenue bonds to build the jail, which has sat empty since it was completed in 2007. The bonds went into default last year. Bell is identified in the contract as vice president of U.S. National Bank Association's Corporate Trust Services in Portland, Ore. He could not be reached for comment Thursday. The TRA board was working on a new contract when it decided on Monday to suspend further negotiations until it had hired a new attorney. Convery, who had been working on a contract basis for the agency, resigned last week. Smith resigned as director of the agency on Monday.

October 8, 2009 TMP Muckraker
Just when we thought the American Private Police Force saga might be over, a putative APPF "investor" has come forward -- anonymously. KULR in Montana reports on a "California man" who claims, under condition that his name not be used, that he is one of several private individuals who gave APPF money for the Hardin jail project. There's no mention by the investor of that "major security firm" parent company APPF long claimed to have. Apparently operating under the assumption that APPF is made up of more than just 'Captain' Michael Hilton, the man told KULR that several private individuals (yes, that's plural) who gave APPF money are now looking into opening the Hardin jail without Hilton. And they are trying to verify "the source of prisoners Hilton claims to have." Which also strikes us as an odd claim, given that Hilton himself claimed last month -- to KULR, no less -- that the deal was primarily about a security training center: "We don't really want to get into the prison business." Meanwhile, APPF is spreading a little oppo research on the man Hilton falsely claimed would be the director of operations at the Hardin jail. Michael Cohen, of Ohio-based International Security Associates, served over a year in prison after a 2004 felony conviction for stealing from his then-employer, the Secret Service, the AP reports. Which raises the question: if you're going to all the trouble of fabricating a director of operations and sending his resume to town leaders, why pick the guy who just got out of prison for theft?

October 7, 2009 AP
A former Secret Service agent named as the would-be operator of a Montana jail and law enforcement training center served 14 months in prison for stealing money from the government. Michael Cohen was a supervisor with the Secret Service before his 2004 conviction on charges of stealing $2,800 from the agency. Now a private security industry contractor in Ohio, Cohen was named by Santa Ana, Calif.-based American Police Force as the future overseer of a jail the company hopes to take over in rural Hardin, Mont. Cohen says he spoke with the company's lead figure, Michael Hilton, about the position but was never offered the job. The jail takeover was put on hold by Hardin officials this week following revelations that Hilton has an extensive history of fraud in southern California. That includes convictions in two grand theft cases.

October 6, 2009 Billings Gazette
Michael Hilton, seen as the potential savior of Hardin just two weeks ago, is quickly running out of supporters in the struggling town of 3,500. Hilton is the Serbian-born Californian who has been representing American Police Force as a company interested in leasing Hardin's empty jail and investing millions in a prison and military training operation. On Monday, when Two Rivers Authority, the city's economic development arm that built the jail, met to discuss possible changes in its proposed contract with APF, board president Gary Arneson said APF needs to replace Hilton as a representative to Hardin. "I agree," said Mayor Ron Adams, standing in the audience. "He has no credibility in this community at all." For a while Monday, it looked as though there would be no mention of the controversy churning around Hilton, who was identified last week as an ex-convict with multiple aliases and a long criminal history. He returned to California last week. After a short discussion of the contract, the board was about to move on to another subject when board member Robert Crane asked to speak. He said there were so many unanswered questions about Hilton and APF that he didn't see how the board could consider a contract with the company. "It just seems like it's one thing after another, and there's too many red flags coming up," Crane said. Crane said Hilton has been lying to him and other board members, most notably about the identity of the man Hilton said he had hired to be director of operations at the Hardin jail and training center. The board had not previously released the man's name, and TRA Vice President Al Peterson said last week that "people will be shocked" when they learn what a high-caliber person Hilton was bringing to town. Crane identified the so-called director on Monday as Mike Cohen, vice president of International Security Associates in Dublin, Ohio. Crane said he spoke with Cohen last week and was told he had no association with Hilton or APF. Reached by phone later Monday, Cohen said he does have extensive experience in overseas security training and had recently returned from Iraq when he came across the APF Web site early in September. Interested in various opportunities listed there, he sent in his resume and an application. He said Hilton called him soon after that and talked about various jobs, but refused to divulge any details unless they met in person in California or Montana. "I just didn't feel right about the conversation," Cohen said, so he e-mailed Hilton the next day and said he needed answers to specific questions before pursuing the job any further. Hilton didn't write or call back until about two weeks later, when he told Cohen that he still was interested in hiring him. Cohen said Hilton still refused to answer any questions, however, so Cohen stopped talking to him. That was the last Cohen heard of APF until last Friday, when Crane called Cohen and told him that Hilton had identified him as his new director of operations in Hardin. Crane also told him that Hilton presented the TRA board with Cohen's resume, touting his new director. "Friday afternoon was the first I heard about it," Cohen said. "I told him (Crane) flat out, I have no idea who this joker is." TRA board members faced other tough questions at their meeting on Monday. Rich Solberg, host of a show on KHDN radio in Hardin, asked board members if they had drawn up a contract with APF based solely on the representations of Hilton. Arneson responded that he didn't personally know the names of anyone else connected with APF, but would try to make those names available at some future date. Solberg also asked the board about the parent company that supposedly was working with APF behind the scenes to lease the Hardin jail. At an earlier TRA meeting, Solberg said, Peterson "was speaking in praise and glory of that unnamed company." Asked by Solberg on Monday if he knew the identity of the parent company, Peterson referred him to Becky Shay, the APF spokeswoman. Pressed again by Solberg to say whether he knew the name of the company, Peterson turned away and said, "I'm not going to answer that question at this point." Arneson said after the meeting that he will have to speak with the Hardin people who met with Hilton in California last month to find out who else they spoke with there. The four people who flew to California were Peterson; TRA attorney Becky Convery; Greg Smith, the former director of the TRA; and Smith's wife, Hardin mayoral candidate Kerri Smith. Peterson said after the meeting Monday that one gathering in California involved at least 15 people, several of whom worked for APF, "as far as I know." Convery, who wasn't at the meeting Monday, said afterward that she remembers meeting Hilton, one other person who may have been associated with APF but seems to have specialized in wind power, and a man named David Gilberts, whose business card identified him as APF's communications director. A call to the California number on Gilberts' business card was answered by a man who identified himself only as Sgt. Martin, who said he was with APF. At first he said no one named David Gilberts worked there, but, when told about Gilberts' purported position with the company, Sgt. Martin said, "He's not here," and then referred all further questions to Shay. Convery, who used to be the Hardin city attorney, had been working for the TRA before resigning last week over a conflict of interest. She has also been working under contract with the city on deconsolidating law enforcement in Big Horn County, which is now provided solely by the sheriff's department. APF had talked briefly of helping establish a police department in Hardin, and Hilton and several associates showed up 10 days ago in three Mercedes SUVs bearing decals that read "City of Hardin Police Department." Convery said the commotion caused by APF's involvement in law enforcement issues forced her to resign as the TRA's attorney. Board members said Monday they would have to find a new attorney before considering changes to the contract with APF. They had said before that the contract was approved by the APF and Two Rivers but still needed the signatures of people with U.S. Bank, representing bondholders. The city of Hardin backed the sale of $27 million in bonds to finance construction of the jail, known as Two Rivers Detention Facility. Cohen, the man wrongly identified as the director of operations for APF's planned enterprise in Hardin, said he was still shaking his head Monday. "I feel sorry for everyone up there in Montana," he said. "He's (Hilton) scamming everyone up there."

October 5, 2009 Billings Gazette
The director of Two Rivers Authority, who was placed on paid leave last month two days after announcing that the agency had signed a contract to fill the empty Hardin jail, formally resigned Monday. Greg Smith presented a letter of resignation to the TRA Board of Directors in a public meeting, after the board met for nearly an hour in a closed session to discussion Smith's suspension. Neither the board nor Smith has ever said why Smith was placed on leave, and board President Gary Arneson said Monday that he still couldn't give any details. Smith was placed on paid administrative leave two days after announcing on Sept. 10 that the TRA, a tax-funded economic development agency, had signed a 10-year contract with American Police Force, also known as American Private Police Force Organization. The company said it hoped to start filling the jail with prisoners early in 2010 and then invest millions to create a training center for military and law enforcement personnel. At an earlier meeting of the TRA board, before the closed session, a member of the audience asked if Smith had been suspended because his wife, Hardin mayoral candidate Kerri Smith, used TRA funds to fly with her husband to California to meet with an APF representative in September. Arneson said that Kerri Smith did join the group of TRA representatives on the trip, but that her ticket was paid for by her husband. He said that had nothing to do with Smith's suspension.

October 5, 2009 AP
Plans for a California company to take over the city's empty jail were put on hold Monday, following last week's revelations that the company's lead figure has a criminal history. The decision came as Hardin's leaders announced the resignation of Becky Convery, an attorney who helped craft the jail deal for the small city. Hardin officials had tried in vain for two years to fill the 464-bed jail before striking an agreement last month with convicted felon Mike Hilton and his Santa Ana, Calif.-company, American Police Force. But following last week's news that Hilton has a history of fraud — including several years in jail and three civil judgments against him for more than $1.1 million — Hardin's economic development authority said it was stepping back from the deal. "We won't move forward. I don't think any of us want to be on the chopping block," said Gary Arneson, president of Hardin's Two Rivers Authority, which owns the jail. Meanwhile, the man whose name was offered up as the jail's future director said Monday he was never offered the job — and would not have taken it regardless. Hilton had told Hardin officials that he was hiring Mike Cohen, an executive with International Security Associates in Dublin, Ohio, for the post. "Excuse my French, but he's talking with forked tongue there," Cohen said Monday, adding that he had only cursory discussions with Hilton and was led to believe the post involved military and law enforcement training. "He kept saying, come to Montana, come to California and meet me. He wouldn't give me any information" about the job, Cohen said. Hilton's office referred questions Monday to Becky Shay, the company spokeswoman. Shay said she continues to operate under the assumption that the jail project is moving forward.

October 5, 2009 AP
A California judge has ordered American Police Force figure Michael Hilton — a felon with a history of fraud seeking to operate an empty Montana jail — to appear in court on Oct. 27 over an outstanding judgment in a fraud lawsuit. The Oct. 2 order follows a proposal by American Police Force, Hilton's newly minted California company, to take over and run a 464-bed jail in Hardin, Mont. The judgment in the case is among several against Hilton totaling more than $1.1 million. In that case, Hilton lured investors to sink money into an assisted living complex in Southern California that was never built. Hilton also spent several years in state prison in California in the 1990s. Hardin built its jail in 2007 as an economic development project, but has been unable to fill it.

October 5, 2009 KULR 8
On Sunday morning, there were some visible changes to California-based security company American Police Force's website. What previously read "American Police Force" now uses the company's formal name "American Private Police Force." Another notable change is the company's crest. The previous crest was a near copy of the Serbian Coat of Arms. On Friday, KULR-8 news first reported the Serbian government was looking into possible legal action against APF for using the crest. The group's leader, Capt. Michael Hilton said the crest was a family emblem and he used it to honor his grandfather. APF Spokeswoman Becky Shay said she is not aware of any lawsuit from the consulate and Hilton made the change as, "the quickest thing he could to diffuse tension" with the old logo. She would not elaborate on exactly what those tensions were. Along with changes to the company's image come changes to the potential contract with Hardin's economic development group Two Rivers Authority. Spokesman Al Peterson said board members will meet Monday afternoon to discuss the contract, which was recently looked over by an independent tax expert. Peterson said some of the language has been changed to ensure the bond, held by U.S. Bank, remains tax exempt. If TRA board members approve the contract, it will still need to be approved by APF and U.S. Bank. Peterson added that the bond is a revenue bond; meaning residents of Hardin will never be responsible for paying it back. It can only be paid for by income from the Hardin Jail itself.

October 2, 2009 AP
A California company’s bid to take over an empty jail in rural Montana appears to be unraveling, with an attorney involved in the project cutting ties Friday and a second company, once named as a subcontractor, denying any involvement. Those moves followed revelations earlier in the week that Michael Hilton — the lead figure of the company, American Police Force — is a convicted felon with a history of fraud and failed business dealings in California. “We met with him and he asked us if we can support him,” said Edward Angelino with Allied Defense Systems, an Irvine, Calif.-based defense contractor. “We checked his background, we checked his company. He’s not an adequate person to do business with.” Hilton had said he had a contract with Allied Defense Systems to provide uniforms. Santa Ana attorney Maziar Mafi had served as the legal affairs director for American Police Force. Mafi said he wanted to see the project begin to move forward before he could continue his involvement. “For the time I’m pulling out,” Mafi said Friday. “I need to see more concrete action before I can be involved.” American Police Force reached a deal last month with officials in Hardin, Mont., to operate the city’s jail, which never has held an inmate since its 2007 completion. Hilton has said he would bring more than 200 new jobs to the struggling community, through the jail and a military and law-enforcement training center he pledged to build. A spokeswoman for the company, Becky Shay, indicated the project remained on track. She said a job fair for prospective jail employees still will be held during the week of Oct. 12. Shay said she was unaware of the move by Allied Defense Systems. As for Mafi, she said she hadn’t spoken with him directly but was told he felt there was a conflict of interest. Shay, who quit her job with the Billings Gazette to work for Hilton, said she remained confident in American Police Force. She said Hilton told her when she was hired about his criminal record and several civil judgments against him totaling more than $1.1 million. Those judgments remain outstanding. “A lot of people that know me, know about me have asked me if I’ve been duped,” she said. “No.” Hilton, who returned to California after spending several days in Hardin, intends to return for the job fair, Shay said. The contract on the jail agreed to by some city officials and the company, but never ratified by US Bank, which has a stake as trustee for $27 million in construction bonds used to pay for the 464-bed facility. No money has changed hands between Hardin and American Police Force. Hardin Mayor Ron Adams said Friday that despite his reservations about the project, he would still like to see it go forward so the city can fill its jail. Mafi’s involvement began last month, when Hilton brought him on about the same time he reached an agreement with Hardin’s Two Rivers Authority, which owns the jail. Alex Friedmann with the Private Corrections Institute — a group that long has been critical of Hardin for building a jail that would be privately run — suggested Mafi’s departure was a sign the project is doomed to failure. “He sees the ship is going down and he wants to not be on that ship when it sinks,” Friedmann said. Hilton, who claims an extensive military background and calls himself “captain,” initially described Mafi as a “major” in American Police Force. He later said Mafi was the company’s president — although Mafi denied the role and said he had no military or security background.

October 2, 2009 AP
A California attorney who worked with a fledgeling security company to take over an empty jail in rural Montana has cut his ties to the project. Santa Ana attorney Maziar Mafi had served as the legal affairs director for American Police Force. His departure follows revelations that the company's lead figure—Michael Hilton—is a convicted felon with a history of fraud and failed business dealings. Hilton's company reached a deal last month with officials in Hardin, Mont. to operate the city's jail, which has never been used. The contract has yet to be ratified by a bank involved in the project and no money has changed hands. Mafi said he wanted to see more concrete action on the project before he could continue his involvement.

October 2, 2009 KULR 8
Now that Hilton's criminal past is revealed, concerned Montana citizens show up at the Hardin jail demanding answers. Both APF and Two Rivers Authority officials tell us they were aware of Hilton's checkered past but still believe in his promise to bring prisoners to Hardin. Toni Myers drove from Columbus, Montana, in search of answers in the ongoing story between the Hardin Jail and American Police Force. "I want to know who they are, where they're coming from, and who they're bringing with them," said Myers. "My job is not to give you the answers you want my job is to give the information I've been employed to release or not release," said APF spokesperson Shay. Shay spent all day answering questions from media members and the public after an AP story linked the security firm's leader Michael Hilton to multiple bankruptcies and convictions for more than a dozen felonies. "Michael disclosed this information to me before I agreed to come work for him," said Shay. Along with Shay, TRA Vice President Al Peterson said he knew about the convictions long before the report came out but is still confident in APF. "I firmly believe APF is legitimate and a solid corporation," said Shay. Peterson declined an on camera interview but released this statement saying quote "I believe that the TRA has a better chance of getting the detention facility open with APF than with any Montana officials. What do we have to lose if it doesn't work out," said Peterson. APF also continues to stand firm on its stance to not releasing the parent company. "That information won't be disclosed," said Shay. But Myers and others like her pledge to continue their research and to try to get to the bottom of the mystery behind the Hardin Jail. Calls to Michael Hilton were not returned. Becky Shay says Hilton is currently in California on business and is expected back in Hardin in the next couple weeks.

October 1, 2009 Montana Standard
Montana Attorney General Steve Bullock launched an investigation Thursday into American Police Force, the California company founded by a Serbian immigrant with a lengthy criminal history that is seeking to run an empty, 464-bed jail in Hardin. Bullock sent a nine-page demand letter late Thursday afternoon to Becky Shay, the spokeswoman for APF and the company's only Montana employee. Shay did not immediately respond to phone calls Thursday. According to the document, Bullock is launching the civil investigation into APF over concerns that the company might be violating the Montana Unfair Trade Practices and Consumer Protection Act. Among other things, Bullock demanded that the company provide proof for many statements about the company included on APF's Web site. The site says that the company frequently has contracts with the U.S. government and has operations in all 50 states. Research into the company has turned up no record of APF contracting with the federal government. Bullock has requested that the company provide proof of its federal contracts and operations in other states. Bullock also requested a copy of the contract between APF and Two Rivers Authority, the economic development arm of the city of Hardin, which built the jail two years ago. The contract is reportedly a 10-year, multimillion-dollar deal with APF to run the jail. Although Michael Hilton, the man behind APF, and local officials say the deal is as good as done, US Bank, the trustee for the bonds sold to build the jail, has never signed off on it. Bullock further requested that the company disclose any lawsuits filed against the com-pany or Hilton and provide the state with any correspondence between APF and any government agency that has accused the company of being deceptive. Bullock also sent a letter Thursday to Gary Arneson and Al Peterson, leaders of Two Riv-ers Authority. Peterson could not be reached for comment Thursday. Both letters were sent the day after The Billings Gazette and Associated Press reported that Hilton has an extensive criminal past with $1.1 million in outstanding civil judgments against him. Hilton, who has a long list of aliases, left his native Serbia in the 1970s and has served time in U.S. prisons. Hilton uses the military title "captain," but said this week it does not refer to an actual military rank. Hilton has claimed he has military experience, but no record of such experience has been found. Also on Thursday, Montana's three-man congressional delegation all said they have questions about APF, even as they support Hardin's efforts to drum up jobs for its people. "Like many Montanans, Max is keeping an eye on the situation in Hardin," said Ty Matsdorf, a spokesman for Sen. Max Baucus, D-Mont. Aaron Murphy, a spokesman for Sen. Jon Tester, also a Democrat, said Tester has "a lot of questions" about APF. "Hardin and all of Montana need to benefit from whatever's in store for the Two Rivers jail." A spokesman for Rep. Denny Rehberg, a Republican, said "important questions need to be answered," and added "any deal that creates jobs and economic prosperity without putting Montanans at risk is something Denny would support in any way he can." Rehberg in May wrote a letter to state officials urging Montana to consider placing its own inmates at the jail if the state needed more prison cells.

October 1, 2009 Billings Gazette
Plans to deconsolidate law enforcement in Hardin and Big Horn County have been seriously jeopardized by the uproar over the company hoping to lease Hardin's vacant jail, the former city attorney said Thursday. Becky Convery said she and Hardin Mayor Ron Adams were still hoping to keep deconsolidation efforts on track despite the "huge amount of controversy" surrounding American Police Force, the shadowy company that has been negotiating to lease the 464-bed jail. After years of discussion and negotiation, the city and county were close to working out an agreement that would allow Hardin to create its own police department, ending a decades-long arrangement under which the Big Horn County sheriff provided all law enforcement in Hardin and the county. Fears that APF was going to establish a private police agency in Hardin have stirred up "severe opposition" to the proposal, Convery said. On Sept. 23, a week after the city's economic development arm, Two Rivers Authority, announced that it had signed a 10-year contract with APF to run the jail, APF representatives showed up in Hardin driving three Mercedes Benz SUVs bearing magnetic decals that said "City of Hardin Police Department." That was alarming enough to some people, and it helped spawn rumors - soon spread across the country on the Internet - that Hardin was being occupied by a private police force. Then, on Thursday, The Billings Gazette and Associated Press identified APF representative Michael Hilton as an ex-convict with a long history of criminal activity. "Residents of Hardin and Bighorn County have come unglued," Convery said, and they were flooding the county commission's office with phone calls expressing opposition to deconsolidation. Convery also said she resigned Thursday as a contract attorney for Two Rivers Authority. She said she was hired several weeks ago to help TRA negotiate its contract with APF but resigned because those duties now conflict with the work she was doing for the city on deconsolidation. Convery said she worked on the deconsolidation issue when she was city attorney, a job from which she resigned last February. In June, she said, she contracted with the city to continue working on deconsolidation through a Billings law firm. TRA, also known as Two Rivers Port Authority, and specifically its now-suspended director, Greg Smith, exceeded its authority by suggesting to Hilton that American Police Force might want to take over policing for the city of Hardin, Convery said. "Unfortunately, the port authority, quite frankly, had no authority to enter into those discussions," she said. She said Smith, who was placed on paid leave two days after announcing the deal with APF, told her previously "that he initiated that conversation" with APF. "I personally was furious because I spent three years of my life working for the city of Hardin on deconsolidation," she said. Smith, who has not spoken publicly since being suspended, could not be reached for comment Thursday. In addition to working on contract language for the TRA, Convery accompanied Smith and board vice president Al Peterson to California early last month, where they met with Hilton and APF attorney Mazair Mafi to complete contract negotiations. Convery said the arrival of the Mercedes SUVs decked out as Hardin police vehicles was especially ill-timed because it happened the night before the County Commission held a public hearing on the proposal. The Hardin City Council has already voted in favor of consolidation and the commission was to have voted on the issue by Oct. 1. That deadline has been extended to next week. County Commissioner John Doyle said the commission expects to vote on the question next Tuesday, but the date isn't certain yet. Doyle said a stipulation worked out between the city and county is being reviewed by attorneys and will be made public before the commission takes it vote. Meanwhile, a member of the TRA board said Thursday that revelations about Hilton's criminal history had no bearing on efforts to lease the jail to American Police Force. "It's really irrelevant," said Tim Murphy, a Hardin dentist. "I feel like you guys want to slam this whole deal any way you can. I'm sure there's somebody with a criminal history working for The Billings Gazette." Murphy was the only member of the seven-person TRA board to return phone calls Thursday. Murphy said the only important question was whether APF makes its first lease payment in February, as planned. Its contract with TRA calls for the company to make annual payments of $2.6 million beginning Feb. 1. The contract, however, has not yet been signed by the bondholders who bought $27 million in city-issued bonds that were used to build the jail. Murphy said he was not concerned about Hilton's past because Hilton is only an employee of APF. He said he hadn't personally met anyone else involved in the company, but that other members of the TRA had. Repeating complaints that TRA board members and others in Hardin have been making for years, Murphy said Gov. Brian Schweitzer bears most of the blame for the troubles surrounding the vacant jail. He accused Schweitzer of snubbing the city by refusing to house state prisoners in Hardin, and then vetoing plans to open a sex-offender treatment center in the jail. "If the governor was doing everything in his power to stop you, what would you do?" Murphy asked. He added later, "There are a lot of people that would prefer Hardin remain stagnant." Becky Shay, APF's spokeswoman in Hardin, did not return phone calls Thursday, but she said Wednesday that Hilton had returned to California earlier in the week. She said he and his associates drove to California in two of the three Mercedes SUVs. She is still driving the third.

October 1, 2009 AP
Montana's attorney general has launched an investigation into a California company's plan to take over the city of Hardin's $27 million jail, following revelations that the company's lead figure is a convicted felon with a history of fraud. Michael Hilton, who formed Santa Ana, Calif.-based American Police Force in March, came to Hardin last month promising to fill the city's never-used jail and build an adjacent military and law enforcement training center. Hilton has a decades-long track record of fraudulent activities and spent several years in a California prison on grand theft charges. The native of Montenegro uses at least 17 aliases. Attorney General Steve Bullock said Thursday he is asking Hardin officials for all documents related to their dealings with Hilton and American Police Force.

September 30, 2009 AP
Michael Hilton pitched himself to officials in Hardin, Mont. as a military veteran turned private sector entrepreneur, a California defense contractor with extensive government contracts who promised to turn the rural city's empty jail into a cash cow. Hardin's leaders were desperate to fill the $27 million jail, which has sat empty since its 2007 completion. So when Hilton came to town last week — wearing a military-style uniform and offering three Mercedes SUVs for use by local law enforcement — he was greeted with hugs by some grateful residents. The promise of more than 200 new jobs for a community struggling long before the recession hit had won them over. But public documents and interviews with Hilton's associates and legal adversaries offer a different picture, that of a convicted felon with a number of aliases, a string of legal judgments against him, two bankruptcies and a decades-long reputation for deals gone bad. American Police Force is the company Hilton formed in March to take over the Hardin jail. "Such schemes you cannot believe," said Joseph Carella, an Orange County, Calif. doctor and co-defendant with Hilton in a real estate fraud case that resulted in a civil judgment against Hilton and several others. "The guy's brilliant. If he had been able to do honest work, he probably would have been a gazillionaire," Carella said. Court documents show Hilton has outstanding judgments against him in three civil cases totaling more than $1.1 million. As for Hilton's military expertise, including his claim to have advised forces in Iraq and Afghanistan, those interviewed knew of no such feats. Instead, Hilton was described alternately by those who know him as an arts dealer, cook, restaurant owner, land developer, loan broker and car salesman — always with a moneymaking scheme in the works. Hilton did not return several calls seeking comment. American Police Force attorney Maziar Mafi referred questions to company spokeswoman Becky Shay. When asked about court records detailing Hilton's past, Shay replied, "The documents speak for themselves. If anyone has found public documents, the documents are what they are." Shay declined comment on Hilton's military experience. Al Peterson, vice president of Hardin's Two Rivers Authority, which built the jail, declined to comment on Hilton's legal troubles. He refused to say if he knew about Hilton's past when the authority reached a 10-year agreement with American Police Force last month. The deal is worth more than $2.6 million a year, according to city leaders. Hilton has also pledged to build a $17 million military and law enforcement training center. And he's promised to dispatch security to patrol Hardin's streets, build an animal shelter and a homeless shelter and offer free health care to city resident's out of the jail's clinic. Those additional promises were not included in the jail agreement, which remains in limbo because US Bank has so far declined to sign off on the contract. The bank is the trustee for the bonds used to fund the jail. A US Bank spokeswoman declined to comment, but Peterson was adamant the deal would be approved. "It's a solid deal. That's all I'll say," he said. But a representative of a corrections advocacy group that has been critical of Hardin's jail and has investigated Hilton's past said city leaders dropped the ball. "I'm amazed that city officials didn't do basic research that would have raised significant questions about American Private Police Force and Mr. Hilton's background," said Alex Friedmann, vice president of the Private Corrections Institute. Hilton, 55, uses the title "captain" when introducing himself and on his business cards. But he acknowledged it was not a military rank. He said he is naturalized U.S. citizen and native of Montenegro. Aliases for Hilton that appear in court documents include Miodrag Dokovich, Michael Hamilton, Hristian Djokich and Michael Djokovich. One attorney who dealt with Hilton in a fraud lawsuit referred to him as a "chameleon" and he has a reputation for winning people over with his charm. His criminal record goes back to at least 1988, when Hilton was arrested in Santa Ana, Calif. for writing bad checks. Beginning in 1993, Hilton spent six years in prison in California on a dozen counts of grand theft and other charges including illegal diversion of construction funds. The charges included stealing $20,000 in a real estate swindle in which Hilton convinced an associate to give him a deed on property in Long Beach, Calif., ostensibly as collateral on a loan. Hilton turned around and sold the property to another party but was caught when the buyer contacted the original owner. After his release, he got entangled in at least three civil lawsuits alleging fraud or misrepresentation. Those included luring investors to sink money into gold and silver collectible coins; posing as a fine arts dealer in Utah in order to convince a couple to give him a $100,000 silver statue; and, in the case involving co-defendant Carella, seeking investors for an assisted living complex in Southern California that was never built. Carella said he was duped into becoming a partner in the development project and that Hilton used Carella's status as a physician to lure others into the scheme. He was described in court testimony as a "pawn" used by Hilton to lure investors. Those involved with Hilton say he is an accomplished cook with a flair for the extravagant — wining and dining potential partners, showing up at the Utah couple's house to negotiate for the silver statue in a chauffeur-driven Mercedes. "This is the way we got taken," said Carolyn Call of Provo, Utah, who said she gave Hilton her family's silver statue to sell on the open market. According to court documents, Hilton turned around and gave the statue to an attorney to pay for his services. Two California attorneys said Wednesday that after learning of Hilton's latest activities they planned to follow him to Montana to seek payment on the outstanding judgments against him. "Once I know that there is an asset or some sort of funds to go after, we'll go after it," said Call's attorney, Roger Naghash.

September 28, 2009 KULR 8
Confusion and secrecy about American Police Force has grown during the last few weeks. "APF has been here for 10 months but it has never been stealth," said APF spokesperson Becky Shay at a press conference on Saturday morning. The group announced its plans to fill the $27 million dollar detention facility and build a police training center next to the jail. While they gave details for the site, other questions went unanswered. Where will the prisoners come from? What experience does APF have in prisoners and training police officers? Why was Two Rivers Authority Executive Director Greg Smith placed on administrative leave? During the press conference APF also refused to release any information on its funding or organization "The decision is the name of the parent company will not be released," said Shay. When questioned about the decision to show up in Hardin last week in vehicles with "Hardin Police" templates, members were brief in their explanation. "They are to show are intentions are good," said APF leader Captain Michael Hilton. "Why not put an APF logo on it," said Shay. "You know we're getting there." All of the decals were removed from the vehicles two days later. APF has consistently stated the community has nothing to fear and says its plans will help stimulate the Hardin economy. "This corporation's intention is to buy local and stay local and do local business as much as we can," said Shay. Residents appear split in their feelings over the company. Some want more information, but others believe it will be a tremendous boost to the area. The company plans to hold a job fair in Hardin the third week of October. Another development this weekend was the naming of Shay as APF's new public relations director. Shay was a reporter with the Billings Gazette who had covered the detention facility story for last few years. She announced on Friday she was leaving the paper and hosted the APF press conference Saturday morning. American Police Force spokesperson, Becky Shay, said the private police group would not house terror suspects from Guantanamo Bay, Cuba.

September 26, 2009 AP
After arriving in this rural city with three Mercedes SUVs marked with the logo of a nonexistent police department, representatives of an obscure California security company said preparations were under way to take over Hardin's never-used, $27 million jail. Significant obstacles remain—including a lack of any prisoner contracts on the part of the company that wants to run the jail, American Police Force. And on Friday came the revelation the company's operating agreement for the facility has yet to be validated—two weeks after city leaders first unveiled what they said was a signed agreement. Still, some Hardin leaders said the deal to turn over the 464-bed jail remained on track. The agreement with American Police Force has been heavily promoted by members of the city's economic development branch, the Two Rivers Authority. Authority Vice President Albert Peterson on Friday repeated his claim to be "100 percent" confident in the company. The lead public figure for American Police Force, Michael Hilton, said more than 200 employees would be sought for the jail and a proposed military and law enforcement training center. That would be a significant boost to Hardin, a struggling town of 3,500 located about 45 miles east of Billings. An earlier announcement that a job fair would be held during the last week never came to fruition. The bonds used to pay for the jail have been in default since May, 2008. Hilton also said he planned a helicopter tour of the region in coming days to look at real estate for a planned tactical military training ground. He said 5,000 to 10,000 acres were needed to complement the training center, a $17 million project. But the company's flashy arrival this week stirred new questions. The logo on the black Mercedes SUVs said "City of Hardin Police Department." Yet the city has not had a police force of its own for 30 years. "Pretty looking police car, ain't it?" Hardin resident Leroy Frickle, 67, said as he eyed one of the vehicles parked in front of a bed and breakfast where Hilton and other company representatives were staying. "The things you hear about this American Police, I don't know what to think." Hilton said the vehicles would be handed over to the city if it forms a police force of its own. The city is now under the jurisdiction of the Big Horn County Sheriff's Office. After meeting briefly with Hilton on Friday, Mayor Ron Adams said he wanted the police logos removed. "This helps, but it doesn't answer everything until the contract is signed," Adams said. "Talk is cheap." Hilton said the company's arrival in Hardin would help allay such concerns. And he promised that on Feb. 1, 2010, Hardin would receive its first check under a deal said to be worth more than $2.6 million annually. Little has been revealed to date about American Police Force. The company was incorporated in California in March, soon after Hardin's empty jail gained notoriety after city leaders suggested it could be used for the Guantanamo Bay terrorism detainees. Members of Montana's congressional delegation say they have been closely monitoring the events in Hardin, but the city has largely been going it alone. In the two years since the jail was built, city leaders have clashed repeatedly with the administration of Gov. Brian Schweitzer, who opposed efforts to bring in out-of-state prisoners. After then-Attorney General Mike McGrath issued a 2007 opinion saying prisoners from other states were prohibited, Hardin successfully sued the state. Despite the city's contention that the state has continued to foil its efforts to find prisoners, Montana Department of Corrections spokesman Bob Anez said his agency is no longer involved. "That's water under the bridge," Anez said. On Friday, American Police Force announced its first local hire: a reporter for the Billings Gazette, Becky Shay, who has covered events surrounding the jail since its construction. She will be the company's spokeswoman for $60,000 a year. Shay said she intended to bring new transparency to the process, but declined to directly answer the first question posed to her: Where is American Police Force getting the money to operate the jail and build the training center? "I know enough about where the money is coming from to be confident signing on with them," she said. Gazette Editor Steve Prosinski said he was first informed about Shay's decision to leave the paper on Friday. "We weren't aware that she was talking with them about employment," he said. Hilton said he also had a job discussion with Kerri Smith, wife of Two Rivers Authority Executive Director Greg Smith, who helped craft the deal to bring American Police Force to Hardin. Greg Smith was placed on unpaid leave two weeks ago for reasons that have not been explained. Kerri Smith is one of two finalists in the city's mayoral race. Hilton said he asked her to call him about possible employment if she did not win the race. Kerri Smith could not be reached immediately for comment. A message was left by The Associated Press at a theater owned by the Smith family. Her home number is unlisted.

September 25, 2009 Billings Gazette
American Police Force, the company contracting with Two Rivers Authority to run its new-but-empty jail in Hardin, announced Friday its new public relations person. Becky Shay, a former Billings Gazette reporter whose beat included the Hardin facility, accepted the position Friday. Shay was announced as APF's spokesperson by Michael Hilton, leader of the company. Gazette Editor Steve Prosinski said he found out about Shay's new job on Friday when she resigned from the newspaper. "We weren't aware that she was talking with them about this position until she resigned," he said.

September 24, 2009 KULR 8
American Police Force officials showed up in Mercedes SUV's that had "Hardin Police" stenciled on the vehicles. The twist, the city of Hardin doesn't have a police department. Two Rivers Authority officials say having APF patrol the streets was never part of their agenda. "I have no idea. I really don't because that's not been a part of any of the discussions we've had with any of them," said Two Rivers Authority's Al Peterson. As it stands now the Big Horn County Sheriff's Department is contracted to patrol the city and APF has no jurisdiction. If that was changed Peterson says it would have to go through the city council. As for the jail contract with APF, both sides are yet to agree to a deal as bondholders rejected it again on Thursday morning. "It's a complicated issue there are a lot of tax laws to work through we were hoping to get it by Tuesday night now we're hoping to get it by Friday night," said Peterson. Officials say the contract only deals with the detention facility and a police training center. There's no mention of a homeless shelter, animal shelter, or any services for the area. "That was never in the contract to begin with. I think it was on a wish list of what Captain Michael wanted to do here," said Peterson. American Police Force officials plan to stay in the area for the next month.

September 22, 2009 KULR 8
Less than two weeks after Hardin officials announced an agreement with American Police Force to house prisoners and stimulate the Hardin economy the questions and controversy continue. APF officials want to build an animal shelter and police training center, but private prison expert Frank Smith, who's spent the last 13 years researching private jails, says the plan doesn't seem legitimate. "It doesn't make any sense at all. They come on like Mother Theresa in camo," said Smith about the APF. The jail expert claims the first problem American Police Force will have in trying to meet its end of the bargain is filling the jail. "APF doesn't have any juice in this fight. It's a fight for contracts where they'd be up against mammoth corporations," said Smith who claims there are thousands of beds already available in the private jail sector. The Hardin facility only adds to that problem. "They're talking about closing a prison in Oklahoma because there's no prison they've closed one in Michigan," said Smith. The private jail experts also fear that the 10 year agreement will force the city of Hardin into a financial meltdown, something he's seen happen first hand at private jails in Coke County, Texas and Tallulah, Louisiana. "They go bad often," said Smith. "They don't virtually ever produce the economic benefits they are touted to produce." A lot of mystery still surrounds the facility and Hardin officials hope to clear that up when they release the contract to the public. Officials claim to have done their homework and believe APF is a justifiable group that has every intention to fill the jail and help the residents of Hardin for the next decade.

September 16, 2009 Billings Gazette
The executive director of Two Rivers Authority has been placed on paid leave just days after the economic development agency announced a new contract that could fill its empty jail. Greg Smith was placed on leave last Friday, according to TRA board member Al Peterson. Smith has been executive director of Two Rivers since late 2007, shortly after the authority opened the detention center it built as a potential employer and economic boost for the community. Peterson declined to comment about the removal, calling it a personnel issue. Peterson, vice president of the Two Rivers board, is serving as spokesman for the authority. Two Rivers board president Gary Arneson delivered the letter informing Smith he was on leave, Peterson said. It wasn't clear this week if Two Rivers and Smith would try to come to terms or if his employment will end. As recently as last Thursday, Smith was giving news media interviews and joined a conference call with jail bond holders as they haggled over details in a contract with a California company to operate the jail. Smith, who does not have a listed home telephone number, has not returned messages left at the Centre Cinema, which his family has owned for about 25 years. Smith's wife, Kerri, advanced in a primary race Tuesday for Hardin mayor. Smith was hired to replace James Klessens, who was director for about a year but left to take a job in Cody, Wyo. Smith has a degree in business management and experience in marketing and sales. He retired from the Air National Guard in 2008. Smith has been the public face of Two Rivers as the board tried to find contractors for the empty $27 million jail. This spring, the agency and the Hardin city council tried to obtain a contract to hold detainees from the closing Guantanamo Bay prison. Smith was thrown into a swirl of media that included nationally known radio and television personalities and international print media that wanted to know why Hardin would consider taking the terrorism suspects. Two Rivers has signed a 10-year contract with a California company called American Private Police Force Organization, or APF. Michael Hilton from APF said Smith was pivotal in contract negotiations to obtain from the company a $5-per-day fee for each inmate in the jail. Negotiations on the daily fee began at $2, he said. "Without Mr. Smith that would not have happened," Hilton said. "He did his best and he succeeded." Hilton also said that Smith, Peterson and city attorney Becky Convery were the reason his company decided to contract with Hardin to operate the jail. The company's larger goal is to build a training center on the land adjacent to the facility. Little is known about the company, which says it specializes in international security. However, Peterson said board members individually and as a group have seen enough documentation - although he wouldn't elaborate on what type of documents - and have met personally with representatives of the company and believe it is both solvent and trustworthy. Two Rivers board members include: Arneson, plant manager at the Hardin Generating Station; Peterson, Hardin's superintendent of schools; Larry Vandersloot, superintendent of the city of Hardin's public-works department; Bill Joseph, owner of Joseph Construction; Dr. Tim Murphy, owner of Hardin Dental Clinic, the board secretary; and Robert Crane, owner/agent of the State Farm Insurance agency in Hardin, treasurer.

September 13, 2009 AP
The Two Rivers Detention Center was promoted as the largest economic development project in decades in the small town of Hardin when the jail was built two years ago. But it has been vacant ever since. City officials have searched from Vermont to Alaska for inmate contracts to fill the jail, only to be turned down at every turn and see the bonds that financed its construction fall into default. They even floated the idea of housing prisoners from Guantanamo Bay at the jail. So when Hardin officials announced last week that they had signed a deal with a California company to fill the empty jail, it was naturally a cause for celebration. Town officials talked about throwing a party to mark the occasion, their dreams of economic salvation a step closer to being realized. But questions are emerging over the legitimacy of the company, American Police Force. Government contract databases show no record of the company. Security industry representatives and federal officials said they had never heard of it. On its Web site, the company lists as its headquarters a building in Washington near the White House that holds "virtual offices." A spokeswoman for the building said American Police Force never completed its application to use the address. And it's unclear where the company will get the inmates for the jail. Montana says it's not sending inmates to the jail, and neither are federal officials in the state. An attorney for American Police Force, Maziar Mafi, describes the Santa Ana, Calif., company as a fledgling spin-off of a major security firm founded in 1984. But Mafi declined to name the parent firm or provide details on how the company will finance its jail operations. "It will gradually be more clear as things go along," said Mafi, a personal injury and medical malpractice lawyer in Santa Ana who was hired by American Police Force only a month ago. "The nature of this entity is private security and for security purposes, as well as for the interest of their clientele, that's why they prefer not to be upfront." On its elaborate Web site and in interviews with company representatives, American Police Force claims to sell assault rifles and other weapons in Afghanistan on behalf of the U.S. military while providing security, investigative work and other services to clients "in all 50 states and most countries." The company also boasts to have "rapid response units awaiting our orders worldwide" and that it can field a battalion-sized team of special forces soldiers "within 72 hours." Representatives of American Police Force said the company presently employs at least 16 and as many as 28 people in the United States and 1,600 contractors worldwide. "APF plays a critical role in helping the U.S. government meet vital homeland security and national defense needs," the company says on its Web site. "Within the last five years the United States has been far and away our" No. 1 client. However, an Associated Press search of two comprehensive federal government contractor databases turned up no record of American Police Force. Representatives of security trade groups said they had never heard of American Police Force, although they added that secrecy was prevalent in the industry and it was possible the company had avoided the public limelight. "They're really invisible," said Alan Chvotkin, executive vice president and counsel for the Professional Services Council. The group's members include major security contractors Triple Canopy, DynCorp and Xe Services, formerly known as Blackwater Worldwide. "Even a single unclassified contract in the last couple of years should show up" in the federal database, Chvotkin said. Spokesmen for the State Department and Defense Department said they could not immediately find any records of contracts with the company. The city has not released a copy of its agreement with American Police Force. But the deal as announced would be a sweet one for Hardin, a depressed rural town of 3,500 about 45 miles east of Billings. The company is pledging to fill the 464-bed facility by early next year. Hardin officials say the first payment on the contract is due Feb. 1 - regardless of whether any prisoners are in place. The city's economic development authority would get enough money to pay off the bondholders and receive $5 per prisoner a day. American Police Force also is promising to invest $30 million in new projects for the city, including a military and law enforcement training center with a 250-bed dormitory and an expansion of the jail to 2,000 beds. The company says it will build a homeless shelter, offer free health care for city residents and even deliver meals to the needy. Where the prisoners would come from is unclear. City officials said California was the most likely possibility, but a spokesman for that state's corrections system said there was no truth to the claim. Federal prisoners also were mentioned by both American Police Force and the city. U.S. Marshal Dwight MacKay in Billings said he would have been notified if such a plan was pending. "There's skepticism over whether this is a real thing," MacKay said. Hardin officials said they were approached by American Police Force about six months ago, soon after the city made international news in its quest to become "America's Gitmo." American Police Force incorporated around the same time. Albert Peterson, the city's school superintendent and vice president of the authority that built the jail, said the city was "guaranteed" the contract would be upheld. "There's never a question in my mind after I've done my homework. It's legit," Peterson said of American Police Force. "We believe in each other." The contract was still being reviewed by the city attorney, he said. Peterson refused to answer when asked if he knew the name of American Police Force's parent firm. He said news coverage of the city's political tussles with the administration of Gov. Brian Schweitzer had left him suspicious of the press. The administration brought a court challenge over whether Hardin could take out-of-state inmates at the jail. "If you're looking for the source of the money, you're not going to find it from me," Peterson said. A member of the Texas consortium that developed the jail, Mike Harling, said he had "every reason to believe they'll be successful." Mafi, the American Police Force attorney, said his company intends to reverse Hardin's recent problems with the jail and give the town an economic boost. In Santa Ana, American Police Force occupies a single suite on the second floor of a two-story office building. During a visit to the location Thursday, a reporter for The Associated Press encountered a uniformed man behind a desk who would identify himself only as "Captain Michael." The man declined to discuss basic details about the company and referred the reporter to the company's Web site. In a subsequent phone interview, he provided his surname but insisted it not be used because of security concerns. The man said he was a naturalized U.S. citizen born in Montenegro with decades of experience in military and law enforcement operations. The man said his boss is a retired U.S. Army colonel named Richard Culver who is currently overseas. Culver's role with the company could not be immediately verified. The company claim of a headquarters address is just up the street from the White House. The K Street building houses "virtual offices," where clients pay to use the prestigious Pennsylvania Avenue address and gain access to onsite conference rooms but have no permanent presence. "It lets small businesses get started up and have a professional front and not have a lot of a cash to do it," said Ashley Korner with Preferred Offices, which leases the location. She said American Police Force's application to use the address was pending but incomplete.

September 11, 2009 AP
An empty jail where promoters tried unsuccessfully to bring Guantanamo Bay terrorism detainees has landed a 10-year operating contract with a private security firm that says it wants to sharply expand the lockup. The deal to house hundreds of low- and medium-security inmates in the Hardin jail involves American Police Force, a Santa Ana, Calif., company that was incorporated six months ago. City leaders trumpeted the agreement as a potential savior for a $27 million economic development project that has become a civic embarrassment after sitting idle for more than two years. But outside Hardin, skepticism lingered. A California corrections system spokesman, Gordon Hinkle, said there was "no truth" to assertions by city officials that prisoners from California would likely be housed in the jail. And U.S. Marshal Dwight MacKay in Billings rebutted claims that federal prisoners could be involved. "I don't know where in the heck they're getting them from," MacKay said. The firm's spokesman, Maziar Mafi, said American Police was spending "serious money" to get the jail running and expected to fill it to capacity by March. He said there were no inmate contracts in place, but that negotiations were ongoing with federal and state corrections agencies. "What we'd like to do is have that information revealed once contracts are entered into and they are done deals," Mafi said. "It's very real." Mafi said the firm has extensive law enforcement and military security contracts and runs detention centers in other countries. But he said he could not go into details, citing confidentiality issues. He also declined to say who was in charge of the firm, saying it had "multiple layers" and had been founded more than a century ago in Washington, D.C. Mafi is a Santa Ana trial attorney specializing in personal injury, medical malpractice and criminal law. He said he was hired a month ago as American Police Force's legal director. The firm occupies a suite in a Santa Ana office building. Full terms of the Hardin contract were not provided. But Albert Peterson, vice president of Hardin's Two Rivers Authority, the city's quasi-public economic development agency, said the agency would receive $5 per prisoner a day and enough additional money to pay off the $27 million in bonds still owed on the jail. Those bonds went into default last year. Peterson is also superintendent of Hardin's public schools. Under the plan offered by American Police Force, the existing 464-bed jail would be expanded to include a 102,000 square-foot military and law enforcement training center, a homeless shelter, animal shelter and possibly enough beds for as many as 2,000 prisoners. Mafi said the firm planned to invest $30 million in new construction at the jail site at the edge of Hardin, a town of 3,500 located about 45 miles east of Billings. That includes at least $17 million for the training center, which is envisioned to offer everything from sniper training to DNA analysis for domestic and international law enforcement and military personnel. But the operating contract, signed Sept. 4, is limited to the existing jail, said Two Rivers' Executive Director Greg Smith. "All this stuff kind of takes time," he said. "The focus here to me is on the detention center — get the thing open and run it." Smith said he had been told by American Police Force representatives that the firm had been in the detention business years ago, but said did not have any details. He added that "all sorts of vetting is going on" to make sure American Police Force can deliver on its end of the contract. American Police Force claims to have 28 employees in the United States and 1,600 contractors worldwide. On its Web site, it lists services ranging from convoy security in war zones such as Iraq to assault weapons sales and investigations into cheating spouses. Members of the authority and Hardin officials have spent much of the last two years searching for inmate contracts to no avail. Asked about the likelihood of American Police Force succeeding, Smith said he was confident the first batch of 150 to 200 prisoners would be in place by mid-January.

September 10, 2009 AP
An empty jail where promoters tried unsuccessfully to bring Guantanamo Bay terrorism detainees has landed a 10-year contract with a private security firm that wants to sharply expand the lockup. The deal to house hundreds of low- and medium-security inmates in the Hardin jail involves American Police Force, a company with international security operations that has offices in Washington, D.C., and Santa Ana, Calif. Full terms of the contract were not provided. Albert Peterson, vice president of Hardin's Two Rivers Authority, the city's quasi-public economic development agency, said the agency would receive $5 per prisoner a day and enough additional money to pay off $27 million in bonds still owed on the jail. Those bonds went into default last year. The first batch of prisoners most likely would come from California's state prison system, said Peterson, who also serves as superintendent of Hardin's public schools. He said federal prisoners also were a possibility. A captain with American Police Force who asked to remain anonymous because of security concerns said the existing 464-bed jail would be expanded to include a 102,000 square-foot military and law enforcement training center, homeless shelter, animal shelter and possibly enough beds for as many as 2,000 prisoners. He said the firm did not yet have contracts for inmates but expected to get at least 1,000 now that it has a place to house prisoners. He said the firm plans to invest $30 million in new construction at the jail site at the edge of Hardin, a town of about 3,500 located about 45 miles southeast of Billings. The prison was built by the authority as an economic development project in cooperation a consortium of Texas developers. Its backers had hoped to land contracts to house state and federal inmates. But it has remained empty after the administration of Gov. Brian Schweitzer said it had no need for the facility and other contracts never materialized. "Thank you, governor, for turning Hardin down, because now we've got something that's 10 times better," Peterson said. U.S. Marshal Dwight MacKay in Billings said he had no further details on the contract. "I read they're going to get federal prisoners. I don't know where in the heck they're getting them from," MacKay said. Montana Department of Corrections spokesman Bob Anez said his agency was not involved in the deal between Two Rivers and American Police Force.

May 26, 2009 CNN
The tiny town of Hardin, Montana, is offering an answer to a very thorny question: Where should the nation put terror detainees if the prison at Guantanamo Bay, Cuba, is shut down by the end of the year as President Obama has pledged? Hardin, population 3,400, sits in the southeast corner of Montana, in the state's poorest county. Its small downtown is almost deserted at midday. The Dollar Store is going out of business. The Hardin Mini Mall is already shut. The town needs jobs -- and fast. Hardin borrowed $27 million through bonds to build the Two Rivers Regional Correctional Facility in hopes of creating new employment opportunities. The jail was ready for prisoners two years ago, but has yet to house a single prisoner. People here say politics in the capital of Helena has kept it empty. But the city council last month voted 5-0 to back a proposal to bring Gitmo detainees -- some of the most hardened terrorists in the world -- to the facility. "It would bring jobs. Believe it or not, it would even bring hope and opportunity," Greg Smith, Hardin's economic development director, told CNN. But a decision on whether it becomes a reality is a long way off. The state's congressional leaders have lined up against the plan. "Housing potential terrorists in Montana is not good for our state," Max Baucus, the state's senior Democratic senator, wrote to Smith. "These people stop at nothing. Their primary goal in life, and death, is to destroy America." Adds Sen. Jon Tester, "I just don't think it's appropriate, that's all. I don't think they know what they're asking for." On North Central Avenue in downtown Hardin, opinion is mixed. Darlene McMillen says if the detainees move in, she is moving out. A part-time waitress at a Hardin restaurant, McMillen says her opinion is based on her son's experiences serving in the military in Afghanistan. "He said the people have no respect for any human life, even their own." Manicurist Donovan Lindsay says bringing the detainees to Hardin would bring more law enforcement, and that would make the town safer. She also believes it would generate jobs . "We are the poorest county in the state of Montana and we need all the help we can get," she says. The 464-bed facility is state of the the art. Yet scores of surveillance cameras aren't powered up. A magnetometer near the front door isn't even plugged in. It's simply waiting for its intended use. Bright orange prison jump suits emblazoned with the words "Two Rivers" are stacked in a storage room along with shoes, towels, blankets, even razors and underwear, for prisoners. Another room contains riot helmets, gas masks, batons, shields, and guns for guards. Greg Smith says, "We got rooms full of this stuff. It just sits there ready to go." The prison has single, double, and dorm-style cells, but Smith says it could be modified to keep detainees separated from one another. He says because only terror detainees would be housed here, it would eliminate any risk that they would radicalize others. He also says the facility could accommodate special dietary and religious needs. Inside the facility, he motions around a large dormitory-style room filled with empty bunk beds. "It's big enough you probably could build a mosque in one of these," Smith says. Although the facility was intended to be used as a medium-security prison, Smith says it meets maximum-security criteria. Smith, a military veteran, doesn't have corrections experience, but challenges anyone who doubts the security at Two Rivers. He says he'd be glad to lock the doubters up to test it. "We will give them three days and I'll buy the coffee in the coffee shop if they can get out. I'd be happy." Glyn Perkins agrees on that score. He worked for eight years in maximum security prisons in Texas and says Two Rivers is the most secure facility he has ever been in. Perkins and his wife, Rae, moved to Hardin to take jobs at Two Rivers, but they got laid off earlier this year because there still were no prisoners. Although holding Gitmo detainees here might mean they would get their jobs back, they don't want to see it happen. Despite their confidence in the security of the prison, they worry about the community and their three children. "I don't agree with it because it is five blocks from city hall," says Glyn Perkins. His wife chimes in, "Yeah, and 11 blocks from the school, and to me that is just a little scary." "Bottom line," she said, "I really don't want Gitmo in my backyard." If the federal government were to move detainees here, it would decide who would run the prison and how it would be staffed. The Perkinses are skeptical that the federal government would offer many jobs to the people of Hardin. Rae Perkins doesn't think very many of the city's unemployed would be qualified. "I haven't met anyone in Hardin that speaks Arabic," she said. But Greg Smith thinks the prison would generate business for gas stations, restaurants, and other local enterprises, giving the entire region an economic boost. And, he says, it would benefit the country.

May 3, 2009 Anchorage Daily News
To some shoppers, the recession means cheap cars, undervalued homes and discount vacations. But bargain prisons? The Alaska Department of Corrections thinks so. The department currently sends 868, or 20 percent, of its inmates to a private prison in Arizona because it doesn't have enough prison beds here. The contract with that rented prison is almost up, so Corrections is shopping around for a better deal. "This is driven by our own want, our own need, to be responsible with public money," said Corrections Commissioner Joe Schmidt. He said he's looking for "what the market might offer us right now." The opportunity to grab the $20 million-a-year deal from the current contractor, Corrections Corp. of America, is attracting both private and state-run prisons. Alaska officials have already visited potential sites in Colorado and Minnesota and expect to visit more as the bids come in, Schmidt said. States like Nevada, in fiscal trouble and considering releasing some of their own prisoners, are taking an interest. Administrators of a new 464-bed prison in Hardin, Mont., say they plan to bid for some of Alaska's business. Hardin made the national news recently when it offered to house detainees from Guantanamo Bay. Greg Smith, head of an economic development agency in Hardin, thinks the Alaska contract could create jobs in his small town. He said he's been calling Alaska prison officials "as often as I can without bugging them." "We would love to be able to take care of your inmates," Smith said. Schmidt, whose department so far hasn't had to make painful recession cuts, said the contract will go to whoever offers the best deal for good security and treatment programs. "You see, we want to do more, but we don't want to pay more," the commissioner said. Schmidt has been pushing the department in a new direction since he was appointed by Gov. Sarah Palin in 2006, advocating for more inmate education, treatment programs and vocational training. His goal, he says, is to reduce the state's high recidivism rate -- three out of five prisoners are re-arrested for a new offense after leaving prison. The number of inmates in the United States boomed in the 1980s and 1990s, in part because of high crime rates and stiffened sentencing laws, particularly for drug offenders, according to the Pew Center on the States. Alaska's prison population also swelled during that time. In the mid-1990s, Alaska started sending prisoners out of state to one of the many private prisons that cropped up in response to the growth industry. The Red Rock prison in Eloy, Ariz., currently holds medium-security inmates from Alaska sentenced to at least two years, said corrections spokesman Richard Schmitz. The state pays Corrections Corp. of America $61.63 per day, per prisoner. Additional costs, such as travel and medical expenses make the real price higher, he said. It's still cheaper than what the state pays for the maximum-security Spring Creek Correctional Center in Seward. That works out to about $140 per day, per prisoner, Schmitz said. The state doesn't like housing its prisoners Outside. Families can't afford to visit, so prisoners don't get the support and rehabilitative benefits of family connection, according to rehab experts. Guards tend to be low-paid, and the state can't keep a good eye on how inmates are treated day to day. Plus, the prisons are subject to the policies and laws of the other state. Frank Smith, a vocal opponent of private prisons, thinks there's more to Alaska's decision to switch contracts. The Arizona prison "is a mess. It's always been a mess. Alaska has never been good at monitoring it," said Smith, a former Alaskan who works for Private Corrections Institute, an anti-private prison group based in Florida. The people in the prison-for-profit business "don't provide anything they don't have to absolutely provide," he said. Commissioner Schmidt denies that, as do the people who run Red Rock. They've had a good relationship with Alaska since 1995, they say. The company expects to rebid for the contract.

April 24, 2009 Earth Times
A remote town in Montana has come up with a new proposal for its empty jail - turning it into a replacement for the US government's notorious facility in Guantanamo, Cuba. But the proposal has met skepticism at the federal level. According to the Billings Gazette Friday, officials in Hardin, Montana proposed the site as a Guantanamo replacement since they have been unable to secure contracts for inmates since the 27-million- dollar facility was completed in July 2007. The 460-bed private jail was constructed by the town's development authority, which hoped to make money by contracting it out to overcrowded prison systems in other states. So far it has sent details of the facility to all 50 states, but has not received any offers in return. US President Barak Obama has ordered the Guantanamo facility to be closed, but officials have still not located any suitable alternative site for housing the approximately 240 Guantanamo inmates. Initial reactions to the Montana plan do not appear encouraging. Montana Senator Max Baucus came out quickly against the plan, saying "bringing terrorists into our state is a clear and present dangers to everyone who lives here." US Marshal Dwight MacKay is also opposed to the plan saying that the local law enforcement and justice system is not designed to deal with such dangerous inmates. "These are not the normal Joe Six-Pack meth users," MacKay told the paper. "This is a different league of people that can be considered a national threat. We have to take the proper steps to ensure the safety of our community, the safety of our courts."

November 19, 2008 Billings Gazette
A public meeting is set for today in Hardin to discuss a proposal to provide sex-offender treatment at the empty Two Rivers Regional Detention Center. Two Rivers Authority will host the 7 p.m. meeting at the Hardin Middle School. Two Rivers has submitted a proposal to provide the program for the Montana Department of Corrections. The 2007 Montana Legislature created a residential sexual-offender treatment program. Offenders in the program are secure in the facility and are taken back to the jurisdiction where they were convicted before release. "We want to explain what this program is and what it isn't," Two Rivers Executive Director Greg Smith said. The Department of Justice's online database lists 74 violent and sex offenders in Big Horn County, 35 of whom are registered as sexual offenders. Two Rivers has contracted with a national company to operate the jail. The operator was called CiviGenics before it was purchased by the Community Education Center, which operates a variety of programs in jails and prisons. The CEC plans to contract with Sharper Future, a branch of Pacific Forensic Psychology Associates Inc., to provide the sex-offender treatment programs. Both organizations will have representatives at the meeting to make presentations and answer questions, Smith said. The state will score Two Rivers' proposal soon. Two Rivers is the only applicant, said Montana Department of Corrections Spokesman Bob Anez. Following scoring, the state may ask Two Rivers to provide more information, and then negotiations for the contract would start, he said. It is likely a decision on the contract would not occur until after the new year, he said. The 450-bed Hardin jail was completed last year but has remained empty pending a lawsuit over its ability to hold prisoners from out of state. A judge determined the facility could take those prisoners, but Two Rivers has yet to secure a contract with another state.

November 11, 2008 Billings Gazette
A much-questioned Hardin jail is no longer in the running for a $2.7 million state correctional contract, a committee decided Monday. The empty 450-bed lockdown has never opened for business since it was completed late last year and has since defaulted on the revenue bonds sold to finance its construction. Members of the Department of Corrections committee that evaluated the jail said at a meeting that Two Rivers Authority, the economic development arm of the city of Hardin that built the jail, failed to answer several key questions about the facility, despite being given a second chance to do so. "Right now, we'd be contracting with a company in default," said Gary Willems, chief of Corrections' Contracts and Facility Management Bureau. "I think that might be a first, for the Department of Corrections, anyway." The panel concluded that Two Rivers failed to show how it would staff the jail with qualified workers, how it arrived at the per-day costs previously quoted to the state and failed to show that the jail is financially sound. The panel was particularly concerned that Two Rivers reported it would still be in default, even if it won the contract. The agency said it would need two state contracts to make its revenue bond payments. The decision means that the Butte-based Community, Counseling and Correctional Services Inc., or CCCS, will be awarded the contract for the 88-bed facility.

September 26, 2008 Billings Gazette
A much-debated Hardin jail narrowly prevailed Thursday in the first step toward placing inmates in the lockdown. The facility has sat empty since it opened late last year and has since landed in default on revenue bonds that were sold to finance its construction. However, members of the Department of Corrections committee that evaluated the jail as a site for a new correctional program cautioned that many questions hang over the facility and that their score is hardly a guarantee that the jail will end up with a state contract. Hardin's Two Rivers Detention Center put in for an 88-bed contract to run Montana's unique Sanction, Treatment, Assessment and Revocation Transition program, or START. The jail competed against Butte-based Community, Counseling and Correctional Services Inc., or CCCS, which runs a host of correctional programs in Montana, including the 3-year-old START pilot project in Warm Springs. A four-member panel evaluated proposals from both facilities, giving each a numerical score. Those numbers will then go Department of Corrections Director Mike Ferriter and other managers, who are expected to make a final decision in mid-October, said Gary Willems, chief of the agency's Contracts and Facilities Management Bureau. The START program is for probationers who violate the terms of their release. It is intended to be a second chance, prisonlike setting to give felons a taste of prison life while offering various therapies to help them succeed in society. The panel generally gave CCCS higher marks and complained that the Two Rivers proposal was incomplete and confusing. Specifically, several members were uncertain about who was ultimately responsible for Two Rivers: the economic development arm of the city of Hardin, which built the 450-bed jail as a way to bring jobs to the town, or Community Education Centers (CEC), the New Jersey-based, for-profit company the town hired to run the facility. Some of the criteria the panel looked at dealt with the financial stability of the would-be contractor. CEC clearly has a firm financial footing, members said, but Two Rivers is already in default. "Its scary territory," said Kerry Pribnow, a panel member. The decision came down to the cost each said it would charge the state to run the facility. CCCS reported that it would charge the state $117 per inmate, per day, although the committee later increased that amount because it disagreed with the way CCCS explained that cost in its proposal. Two Rivers came in at $75 a day, although its proposal contained little of the required information explaining that figure. The panel gave Two Rivers a score of 1,837; CCCS earned 1,743. Mike Thatcher, president of CCCS, said the panel was wrong to give Two Rivers maximum points for its bid cost when Two Rivers offered no justification for it. "I could have put $42 in there," Thatcher told the panel. He said he was appealing the entire process. Several panel members expressed similar concerns. The group decided to award Two Rivers the maximum points but made note that Two Rivers representatives gave no explanation for their figure. Willems said the numeric score is only the first step in the awarding of a state contract. The 450-bed Two Rivers detention center has sat empty since it was built at the end of last year. Owned by the economic development arm of the city of Hardin, a city that has no police force, the jail has been mired in controversy for months. City and economic leaders say they were led to believe by the past Corrections director that if they built the jail, the state would occupy it, although no contracts were ever in place and no written agreements have been produced. The state has no use for the space, agency officials say. In an effort to open the jail's doors, its backers looked to other states for inmates but first had to prove to a Helena judge that it could legally accept out-of-state inmates. Although the judge ruled in Two Rivers' favor earlier this year, the facility has yet to attract any inmates.

June 28, 2008 Billings Gazette
State officials will not appeal a recent District Court ruling that paves the way for a disputed Hardin jail to house out-of-state inmates. Bob Anez, a spokesman for the Montana Department of Corrections, said officials decided not to appeal Helena District Judge Jeffrey Sherlock's June 6 decision allowing the never-opened Two Rivers Detention Center to take out-of-state felons. "The state does not intend to impede the efforts by (Two Rivers) to find offenders," he said. Greg Smith, the executive director of the Two Rivers Development Authority, the economic development arm of the city of Hardin, said the decision was welcome news. "We're extremely pleased," he said.

June 18, 2008 Billings Gazette
The Gallatin County sheriff, who is renting space in other jails because his is overcrowded, said he would not put inmates in Hardin's Two Rivers Detention Center because it is "basically a warehouse." Greg Smith, the executive director of the Hardin economic authority, which built the unopened jail, called the sheriff's assessment "unprofessional and unfair." The comments came in a June 9 letter from Sheriff Jim Cashell to Gov. Brian Schweitzer. Schweitzer invited Cashell and other Montana law enforcement officials to consider contracting with Two Rivers, which has never opened due to a legal battle and last month defaulted on the $27 million in bonds sold to build it. Cashell, who had earlier toured the jail, said he found several things about the lock-down objectionable. First, he wrote, most of the jail consists of large, 24-inmate rooms. The rooms are guarded from the hallways, not from inside. Cashell said he asked the Two Rivers warden how the center would deal with problems in the unguarded rooms and the warden responded: "We'll gas 'em." "Each one of those rooms is like a classroom without a teacher in it," Cashell said in an interview Monday. But he said his most pressing concern was confusion about who is responsible for the jail. The facility was built by the Two Rivers Development Authority, the economic development arm of the city of Hardin. It was to be run by an out-of-state, for-profit corporation. Cashell said he was earlier provided with a Two Rivers contract. That document referred to involvement by the "chief of police." But Hardin has no police force, Cashell wrote in his letter. Cashell said Monday that he had problems both with the fact that the contract referenced a nonexistent police chief and with the idea that no law enforcement agency was ultimately responsible for Two Rivers. "That concerns me a lot," he said. But Two Rivers officials and representatives of the private company that will run the jail said this week that Cashell's concerns are unfounded. Peter Argeropulos, a senior vice president of CEC, the company now contracted to run the jail, said large inmate rooms like the kind at Two Rivers are used safely in jails and prisons around the country. He said the rooms are designed to be easily monitored from hallways and the guards assigned to those rooms walk past them every 10 minutes or more, so inmates wouldn't have much unsupervised time to cause problems. Guards can also go inside the rooms, he said. "This model is very prevalent across the country. This isn't something that is unusual in Montana," he said. Larry Johns, the jail's would-be warden who has not yet moved to Montana but will when the jail opens, said that he "didn't remember saying" exactly: "We'll gas 'em." But he did say that sometimes tear gas or pepper spray can quell a riot and is used as a last resort in the correctional industry. "You use those to save staff or to prevent serious property damage to your facility," said Johns, who worked as a warden in Texas state prisons before taking jobs in the private correctional industry. In Texas, Johns said, "We didn't gas them every day. Only during riot situations." Smith said the contract Cashell had was a "boilerplate" document that had obviously not been adapted to the realities of Hardin, where there is no police force. As for Cashell's concerns that the entity responsible for Two Rivers has no law enforcement agency behind it, Smith said he intended to talk with Yellowstone County and Sheridan, Wyo., officials to see if they would agree to come to Two Rivers' aid if there were a riot. "I'm not even worried about it," Smith said, adding that the economic development authority might also put together a reserve force of local men and women to come to the jail in an emergency. Smith said Cashell should have called him to talk about his concerns, not written them in a letter to the governor. Cashell said he wrote the letter to the governor because it was Schweitzer, not Smith, who asked him to consider housing inmates at Two Rivers. The 464-bed was built with no contracts in place, but Smith and other jail backers have said they believed the state and federal agencies would contract with them once the jail was completed. That never happened, and Two Rivers began looking to out-of-state inmates to fill the lockdown. Attorney General Mike McGrath determined that was illegal, which prompted a lawsuit. A Helena judge ruled earlier this month that Two Rivers can take out-of-state inmates. The state of Wyoming has already said it would not house inmates in Two Rivers because of the design of the building. Wyoming has inmates housed in out-of-state prisons as it builds its own new prison. Gallatin County sends up to 32 inmates a day to other Montana jails because its own 45-person lockdown can't manage the more than 80 inmates the county is typically responsible for, Cashell said.

June 7, 2008 Billings Gazette
Lawmakers and officials intentionally outlawed out-of-state prisoners when they wrote the state's private-prison law 11 years ago, but they never imagined that a city would build a lockdown intended to house hundreds of such criminals, sources said Friday. Mary Jo Fox, former Gov. Marc Racicot's corrections adviser, and former Rep. Ernest Bergsagel, who sponsored the 1997 bill allowing the state's private prison, both recalled Friday that Racicot was adamantly against out-of-state inmates and that state law purposefully banned the practice. Their recollections came the day after Helena District Judge Jeff Sherlock ruled that Hardin's city-owned Two Rivers Detention Center may accept out-of-state prisoners. "I can't imagine a scenario in which the administration or the Legislature would have deferred to (a city) something of that magnitude," Fox said. "There was real concern for receiving the worst of the worst from other states." Hardin's 464-bed facility was completed last year as a way of bringing as many as 100 new jobs to the economically depressed southeast Montana town. The lockdown was built with no contracts in place and no involvement from the state. The jail has never opened, and last month it defaulted on the bonds sold to build it. State and federal officials said they had no use for the cells, forcing Two Rivers to look to out-of-state inmates as a source of revenue. Responding to an inquiry from Hardin City Attorney Becky Convery, Attorney General Mike McGrath determined late last year that Two Rivers, which is legally a county jail, could not house out-of-staters. Hardin appealed that decision to Sherlock, who overturned McGrath's opinion, paving the way for Two Rivers to accept out-of-state inmates. When Montana was debating out-of-state inmates, the state had some of its own felons housed in prisons beyond its borders, Fox said. One was killed; gangs and violence were constant concerns. It was against that backdrop that the discussion on out-of-state inmates in Montana began, she said. "Racicot did not want out-of-state inmates," Bergsagel said. The former governor could not be reached for comment. Montana law contains a couple of chapters on inmates and penal institutions. One section deals with county jails, known legally as "detention centers." Another, Title 53, deals with state correctional institutions, including state-owned prisons, boot camps, halfway houses and the state's only private prison, located in Shelby. Bergsagel's bill, which became part of Title 53, called for extensive state involvement in the building of a private prison; it called for licensing and inspection and requires a heavy state role in the prison to guarantee safety. It also specifically outlawed out-of-state inmates. Later, that part of the law was relaxed as Montana began to draw down the number of inmates housed in Shelby. But the overwhelming sentiment at the time was a strict prohibition against developing a private-prison industry in Montana, Fox said. "In the conversations I was party to, they were very carefully trying to make sure (out-of-state) inmates would not happen," Fox said. "There wasn't supposed to be any legal room for that to happen." Back then, she said, Title 53 was imagined as the "final word' on out-of-state inmates. Two Rivers, however, isn't built under the laws that govern private prisons. The center will be run by an out-of-state, for-profit corporation, like the state's private prison in Shelby, and it has room for 464 inmates, just 200 fewer than the Shelby lock-up. But Two Rivers is owned by the economic development arm of the city of Hardin and, consequently, is not a private prison but a government-owned detention center, like a county jail. Sherlock didn't consider any of the Title 53 laws in his decision this week. Bergsagel said he didn't have a problem with the concept of Hardin accepting out-of-state inmates, but he said he was concerned that the facility was built outside the web of laws intending to guarantee public safety. He said someone at the state should inspect the institution to make sure it complies with the federally set prison standards set out in Montana's private prison law. But it's not just Two Rivers that wants to house out-of-staters. Sanders County already houses a small number of Idaho inmates in its jail across the border, according to evidence submitted at the Two Rivers court case. That never should have been allowed, Fox said. It appears that created a loophole for Hardin demand the same treatment.

June 6, 2008 Billings Gazette
A Hardin detention facility can take federal and out-of-state inmates, a Helena District Court judge has ruled. Judge Jeffrey Sherlock's ruling overturns an opinion issued in December by Montana Attorney General Mike McGrath. The decision barred Two Rivers Detention Facility from taking inmates from the federal system or other states. Greg Smith, the executive director of Two Rivers Authority, savored the judge's ruling. "It's very simple: We were right," Smith said. The $27 million detention center was built by Two Rivers Authority, Hardin's economic-development arm, as a way to bring more than 100 jobs to Hardin. The city of Lodge Grass entered an inter-local agreement with Hardin to run the facility. The jail was completed last summer, and Two Rivers expected to open the 646-bed center in the fall. Instead, Montana Department of Corrections and Hardin officials disagreed on whether the facility could accept inmates from other states. That prompted Hardin City Attorney Becky Convery to seek the attorney general's opinion. The opinion was released Dec. 3. Hardin sued the Department of Corrections and McGrath on Dec. 10. Robert Sterup, one of the Billings attorneys who argued the case for Hardin, said the state agreed earlier not to stand in the way of the detention center's operation if McGrath's opinion were overturned. "With the court's ruling in hand, Two Rivers is free to begin accepting inmates," Sterup said. Smith said the ruling allows Two Rivers officials to do more marketing, and they plan to work hard to secure contracts. "Now we can go about our business, we can get to work and do what we need to do," Smith said. Gov. Brian Schweitzer's spokeswoman, Sarah Elliott, said the state is still reviewing the ruling. However, Schweitzer's office has already started to help in the search for contracts. "In anticipation of the possibility of this decision we have taken the initiative and have been contacting governors of neighboring states, including Wyoming, Washington, Oregon and Colorado that may have a need to house prisoners," Elliott said. "Wyoming has already toured the facility and determined that it does not fit their needs. We will continue our efforts." The main point of the lawsuit was whether the multijurisdictional detention facility could contract to confine adult felony and misdemeanor offenders committed by other states and the federal government. "The use of the word 'multi-jurisdictional detention facility' is certainly a mouthful," Sherlock wrote in the seven-page order. "However, it should be noted that such facilities are known to history and the general public as 'county jails.' " Sherlock's order outlined "what this case in not about," which included the state prison in Deer Lodge, regional correction facilities like those in Great Falls and Glendive or private facilities like the one in Shelby. The state argued that three pertinent sections of Montana law define who can be confined in a detention center and limits who can be placed to defendants being held on misdemeanor charges. Hardin argued that general language in one section of the law had to give way to more specific parts of the other sections. "This court agrees," Sherlock wrote. One section of law "clearly provides" that a detention center may contract with a government unit of another state, Sherlock wrote. "This section expresses the legislature's clear and unambiguous determination that detention centers can house out-of-state and misdemeanor inmates," he wrote. Another section of Montana law allows for federal adult prisoners, Sherlock wrote. In the December 2007 attorney general's opinion, McGrath wrote several times about "legislative intent" while building up to his judgment that only the Montana Corrections Department could house out-of-state or adult federal offenders, which "evidences a legislative intent not to allow routine interstate exchange of inmates in and out of Montana." Sherlock disagreed. "The court has before it a clear statute passed by the Legislature," Sherlock wrote. "The court must presume that the Legislature would not pass a meaningless statute. Since this statute is clear, the court need not resort to other means of interpretation to determine the intent of the Legislature." Sherlock wrote that the interpretation is played out in other parts of Montana and referred to an affidavit by Sanders County Sheriff Gene Arnold that the jail he oversees takes people convicted of lower-level felonies in Idaho. Before the legal tussle, Two Rivers officials thought they would be able to contract with Wyoming, but corrections officials in that state wouldn't do so without the Montana Corrections Department's blessing. Wyoming has inmates being held in Oklahoma and West Virginia. In May, Wyoming Corrections officials wrote Two Rivers' operations contractor, CiviGenics, that the agency does not like the dorm-style housing for its medium-security inmates and "it doesn't look like the physical structure of the Hardin facility will meet our needs." Two Rivers officials have worked toward securing contracts but have been stymied for about 10 months as the legal complications were ironed out. Meanwhile, the need for revenue from the project has mounted. Construction of the facility was funded with revenue bonds. As the name implies, those bonds were to be repaid by revenue generated by housing inmates. Without that money, the funding went into default last month. Although payments are being covered by a contingency fund, the project is technically in default, which mars its financial standing. The Corrections Department has said it does not need additional space and doesn't have inmates to send to Hardin. Corrections officials have said that Two Rivers would be welcome to compete for a contract to house sexual offenders and provide them with treatment. The request for proposals for that program is supposed to be out later this year. However, Two Rivers leaders have said that contract would be less than half of the about 250 inmates needed to make opening the jail economically feasible.

May 29, 2008 Casper Star-Journal A disputed, privately run jail near Hardin, Mont., was dealt another blow this month: Wyoming officials have decided not to house felons at the facility, saying parts of the lockdown aren't set up to safely hold their inmates. The decision came in a May 20 letter from Steve Lindly, deputy director of the Wyoming Department of Corrections, to Peter Argeropulos, vice president of marketing for Community Education Centers, the for-profit New Jersey company contracted to run Hardin's Two Rivers Detention Center. Lindly wrote that Wyoming prefers "non-dorm cell housing" for its medium-security inmates. Dorm housing is where many inmates are housed in a single room with multiple beds. Most of the 464 beds at the Two Rivers jail are "dorm style." The jail, which was built between 2006 and 2007 by the economic development arm of the city of Hardin, envisions some 288 inmates housed in 12 large cells, each containing 24 beds, according to information from Two Rivers. Lindly wrote that he had other concerns about whether inmates could use electronics like television sets in the Two Rivers cells. Plus, he said, "we found recreation opportunities to be limited." "It doesn't look like the physical structure of the Hardin facility will meet our needs," he wrote. The decision is the latest setback for the jail, which was built with no state or local contracts in place as a way of bringing up to 100 guard and other prison-type jobs to Hardin. Hardin issued $27 million in revenue bonds to build the jail. The city missed its May 1 bond payment, and the facility is now in default. The center was completed last year, but has never opened for want of inmates. Montana's Department of Corrections, along with the U.S. Marshals Service, said last fall they didn't need the jail space. Hardin has no police force of its own, and anyone arrested in the town is housed in the Big Horn (Mont.) County Jail, which has expressed no interest in Two Rivers. Jail backers then turned to out-of-state inmates, potentially a few hundred from Wyoming. Responding to an inquiry from the Hardin city attorney, Montana's attorney general concluded late last year that jails like Two Rivers cannot take out-of-state inmates. The city appealed that decision, which is now in the hands of a Helena judge. Greg Smith, executive director of the Two Rivers Authority, Hardin's economic development agency that built the jail, said he wasn't too concerned with Wyoming's decision. So far, Smith said, that's just one state out of 48 that has found problem with the jail's design. "We've been on a long road, and this is just a little pebble in it," he said. Melinda Brazzale, a Wyoming Department of Corrections spokeswoman, said the legal dispute surrounding Two Rivers played only a bit part in the state's decision not to pursue a contract with the jail. Wyoming has kept some inmates out of state since 1997, she said. The state is now housing inmates in Oklahoma and Virginia while crews build a new 700-bed prison in Torrington intended to eliminate the need for out-of-state prisons. That prison is expected to open in 2010, she said. Last fall, Brazzale said, several people from Two Rivers contacted the state about housing some Wyoming felons at Hardin. Wyoming officials contacted Montana's correctional leaders, who told them about the jail's legal problems. At that point, Brazzale said, Wyoming quit pursuing Two Rivers. Wyoming never sent a team of inspectors to view the jail, she said, which is a necessary first step before the state would consider sending inmates to any facility. About a month ago, Gov. Brian Schweitzer contacted Wyoming's Gov. Dave Freudenthal, and invited him to view the Hardin jail, Brazzale said. Only then did Wyoming correctional officials see the facility and conclude it wouldn't work to house their felons. Schweitzer said he has contacted the governors of all Montana's neighboring states to tell them about Two Rivers. "I do my level best to help everybody in Montana," he said. Schweitzer said the jail is in a difficult spot. Regardless of the legal issues surrounding it, the facility is built more like a jail than a prison. Agencies needing prison space, which is designed to safely house felons for longer periods, might not want the big, open dorms Two Rivers has to offer, he said. "The people who designed this thing in Texas, they sold this concept to people who are no longer even in Hardin," Schweitzer said, referring to the questions about why officials decided to build a jail of this type. Bob Anez, a spokesman for the Montana Department of Corrections, said no one from his agency has inspected Two Rivers to see if the issues Wyoming cited might pose similar problems for Montana -- should the state ever consider housing inmates at Hardin. "We're aware of what Wyoming's conclusions are," he said, adding that Montana correctional officials are not yet ready to draw any conclusions of their own.

May 10, 2008 Helena Independent Record
The debate over a 464-bed lockdown sitting empty outside Hardin boiled down to a legal dissection here Friday over who ends up in county jails, why and for how long. Lawyers on both sides of the months-long dispute made their arguments in a hearing before Helena District Judge Jeffrey Sherlock, who promised to make his decision in the next month. At issue is the Two Rivers Detention Center, a privately run, for-profit jail built by the economic development arm of the city of Hardin as a way of bringing in up to 100 jobs to the economically depressed town. Hardin has no police force of its own and all criminals arrested in the city are housed in the Big Horn County Jail, which has expressed no interest in the jail. The city tried to house Wyoming felons at the clink, leading to a formal attorney general’s opinion concluding that such a thing is illegal. The city appealed that decision to Sherlock. Hardin officials argue that they built the facility under the laws governing county jails known in legalese as “detention centers” not the laws that govern the state’s only private prison in Shelby. They maintain that county jails can, and do, house all kinds of inmates, including federal and out-of-state inmates. At least one Montana jail, the one in Sanders County, is housing a handful of out-of-state felons right now, said Robert Sterup at Friday’s hearing. Sterup is a lawyer with the Holland and Hart law firm in Billings hired by Hardin for the case. County jails have historically housed out-of-state or federal inmates, said Kyle Gray, another Holland and Hart attorney working on the case, who cited a lawsuit from the 1920s dealing with how Lewis and Clark County got paid to hold an average of 11 federal inmates over two years. If those jails can house such inmates, why can’t Two Rivers, asked Becky Convery, the Hardin city attorney in an interview after the hearing. The attorney general’s opinion concluded that Two Rivers couldn’t house any out-of-state inmates, whether their crimes are misdemeanors or felonies. Convery said later the fact that the opinion ruled out even misdemeanors prompted the lawsuit. At the hearing, Jennifer Anders, an assistant attorney general, said Montana law envisions two kinds of inmates. Folks convicted of misdemeanors serve their sentences in county jails, she said. Those inmates are the responsibility of the county. But people convicted of felonies are the state’s responsibility and they go to the state prison. Such inmates don’t now and have never served their sentences in jails. The Hardin jail is seeking felons and that is against the law, Anders said. Hardin is free to contract for out-of-state inmates who committed misdemeanors, she said, but there is no money in misdemeanors and Two Rivers needs money. Anders agreed that there are felons and federal prisoners housed in Montana’s county jails. But most of those are either people awaiting trial or people sentenced and staying in the jail only for a short time while a cell in federal penitentiary opens up. “The bottom line is, the plaintiffs built a jail, and they want to operate it like a prison,” she said at the hearing. She also hinted that at least part of the problem with Two Rivers is its size and the precedent it would set if the facility was allowed to open as backer want. The Sanders County jail has room for just 29 people, and some of those are county inmates, she said. The Two Rivers jail, in contrast, has room for 464. Additionally, Anders said, Sanders County has a contract with another county a use for county jails already allowed under the law. Two Rivers, in contrast, seeks to sign contracts with other states. In Montana, Anders said, only the state can make those kinds of contracts. Allowing the jail to take that many out-of-state felons would be re-writing Montana law, she argued, and opening up an industry lawmakers have never addressed.

March 2, 2008 Helena Independent Record
A new, empty jail built to bring jobs and prisoners to Hardin might not be able to open and pay its bills on time, even if it wins the only state corrections contract now under consideration. Backers for the jail, however, said this week they’re still very interested in the contract and plan to pursue it, along with other prisoner pools, to get the jail up and running. The Two Rivers Detention Center, a 464-bed jail built by the economic development arm of the city of Hardin and a consortium of private out-of-state companies, needs about 250 inmates to make enough money to open its doors and begin to repay the $27 million in bonds sold to build it. The first payment on the debt is due on May 10, said Michael Harling, the Texas investment banker behind the project. If the jail, which was completed late last summer but has never opened and has no contracts to house inmates, misses that payment, it will be in default on its bonds. The jail’s financing package includes a fund to cover bills while investors deal with default, he said. That money is expected to run out in May 2009. But representatives of the state Department of Corrections said last week that the only state corrections contract currently considered is for 116 sex offenders not 250 inmates. What’s more, they said, the agency hopes to have the contract filled by April 1, 2009, but it could be as late as July 1 — two months after the Hardin jail would need to be generating revenue to stave off financial crisis. July, Harling said, “is too late.” The jail must have some revenue stream before then in order to remain a going concern. The fact that the sex offender contract is for 134 fewer inmates than the center anticipated it needed to open doesn’t mean the facility can’t make ends meet with the contract, should it win the bid, said Greg Smith, executive director of the Two Rivers Authority. “It would probably be feasible to do it with less,” he said, because the sex offender contract would likely include treatment and other more expensive services than the mostly custodial care of ordinary inmates. “We’re extremely interested,” Smith said. However, he said the authority is cautious because the contract has not yet been issued and has been pushed back several times. Additionally, Smith said he worries the contract might be written to favor the three nonprofit correctional contracting companies in the state that typically win state correctional contracts. Backers for the jail say the lockdown was built on the expectation that the state would house inmates there. But state officials say they never had such an understanding and don’t need the jail space. The jail was built with no state contract in place. Bob Anez, a spokesman for the Department of Corrections, said that Two Rivers has never invited Corrections officials to the facility and no one from the agency has ever been inside. The Hardin jail then turned to out-of-state inmates as a source of money, but Attorney General Mike McGrath ruled last year that such a thing is against Montana law. The jail, which is now at the center of a lawsuit, occupies a unique place in Montana correctional law. Legally, the facility is like a county jail, not a private prison, although its 464-bed capacity puts it more in line with the 512-bed private prison in Shelby than with even Montana’s largest county jails. The jail was built by the Two Rivers Port Authority, the economic development arm of the city of Hardin, along with a group of mainly Texas companies that have helped build private prisons in other states. As a city-owned jail, the facility is one-of-a-kind, said Diana Koch, the Department of Corrections’ top lawyer. No other Montana city has its own jail. It doesn’t make sense for Montana cities to build their own jails, said Dan Schwarz, Yellowstone County’s chief deputy attorney, because Montana law requires counties to incarcerate all city inmates for free. Even more curious: The city of Hardin doesn’t have a police force. All suspects arrested in Hardin are done so by Big Horn County authorities and housed in the 36-bed Big Horn County jail. The city of Hardin doesn’t have any of its own inmates and has no use for the jail. Big Horn County is not part of the jail project and is not interested in housing inmates there, said Greg Smith, executive director of the Two Rivers Authority. That the facility is a “jail,” not a “prison,” is an important distinction, Koch said. By law, only certain kinds of inmates can be held in jails, including people awaiting trial and witnesses in a trial confined to be certain they testify. Generally speaking, convicted felons remanded to the Department of Corrections to serve out their sentences are not held in county jails. The law does not forbid such a thing, Koch said, but it has only happened once in the last 12 years and involved a single inmate. That lone case was before a new section of law was passed in the 1990s that created regional prisons and the state’s only private prison. Regional prisons are joint projects of counties and the Department of Corrections in which the county jail shares space with space dedicated for state inmates. The state section of the lockdown is designed to state specifications and the state is a partner in the project from the very beginning, Koch said. Montana has regional prisons in Great Falls and Glendive. Montana also has one privately owned prison in Shelby built after lawmakers in 1997 wrote a new section of law allowing such a prison. That law spells out an exhaustive process entities must follow to become a private prison, including obtaining a license from the Department of Corrections. Such a license cannot be issued unless the department deems the prison necessary to house state inmates and has money from the Legislature to house inmates there. The Hardin prison didn’t follow those laws and is not a licensed private prison. Under certain circumstances, out-of-state inmates like the kind Two Rivers is courting can be housed in Montana’s private prison. The state’s regional and private prisons didn’t solidly replace the rare possibility of housing state inmates in jails like the Hardin lockdown, Koch said. “We just don’t foresee that there would be a reason to do that since we have the regionals and the private prison,” she said. “Now that we have that option, I really doubt we would (house state inmates in a jail) again.” Smith said the jail never wanted to house state inmates long-term. Instead, he said, the authority hoped to house only a select subset of state inmates: recently sentenced prisoners waiting in county jails until a cell comes open at Deer Lodge or another state correctional facility. “Those are the ones we’ve always wanted,” he said. Those inmates can be housed in jails and, in fact, state contracts with every county jail in Montana to house those prisoners. Such inmates might stay in the jail from only a few days to a few months. Last year, such inmates waited in county jails for an average of 33 days before moving into a Corrections’ facility, Anez said. The department has never identified a special contracted jail to house such inmates as a need and has never appealed to the Legislature for money for such a project. No one from Two Rivers has ever contacted the department about using the Hardin jail for that purpose, Anez said, adding that consolidating such temporary inmates in one location would create a transportation problem. Say a convict was sentenced in Butte, Anez said. Why move the man to Hardin for a few weeks only to drive him to Deer Lodge when a cell becomes available? Additionally, the state doesn’t have enough of those inmates to begin to fill a 464-bed jail. Currently, the state had 59 men and 14 women felons waiting in county jails.

February 13, 2008 Billings Gazette
As told by state and Hardin officials Tuesday, the history behind Hardin's empty, 464-bed prison hinges on one enormous - and expensive - misunderstanding. Officials from the south-central Montana town and its economic development arm, Two Rivers Authority, told the state Corrections Advisory Council that they had a gentlemen's agreement with Montana to house state inmates at the privately run prison. But Bill Slaughter, former state corrections director, current agency officials and lawmakers on the council said they never had such an agreement and never envisioned the prison as part of the state's correctional system. "We didn't sign any contracts with this group; there are no e-mails or promises," Slaughter said. "I don't know what to tell you. I was actually surprised they were under construction." The council, headed by Lt. Gov. John Bohlinger and composed of lawmakers and others with interests in Montana's criminal justice system, acts only as an advisory group to the Department of Corrections. The committee does not have the authority to change state law or approve prison contracts with Two Rivers. Hardin city officials worked with a Texas consortium to build and finance the $27 million prison. It was completed this summer and promoted as a way to bring 100 new jobs to the economically depressed town at the edge of the Crow Indian Reservation. The prison needs about 250 inmates to make enough money to open its doors and begin to repay the millions needed to build it, Hardin officials said. Michael Harling, one of the Texas financers of the project, said in an interview after the meeting that the financing package includes enough money for the prison to sit empty until May 2009. After that, the prison would be nearing a financial crisis. But by not repaying its bonds until then, the prison would technically be in default on its debt. State and federal officials have said they don't need any of the prison's 464 beds, and state law forbids the prison from housing out-of-state prisoners, according to a recent opinion by Attorney General Mike McGrath. The Two Rivers Authority and the city of Hardin have since sued the state, asking a Helena judge to throw out McGrath's opinion. The city-owned prison was built without a single contract, Hardin City Attorney Rebecca Convery told the committee, because they were told the state wouldn't enter into contracts with a prison that wasn't yet built. Paul Green, a Hardin businessman who worked at the city's economic development branch several years ago when the prison was in the planning stage, said he met with Slaughter then and walked away feeling that the state would fill the prison if the city built it. "While there is a need, (Slaughter) said they can't sign a contract with a facility that isn't built yet," Green said. But Slaughter and Diane Koch, a Corrections Department lawyer, said the only way the state ever contemplated using the prison was to temporarily house local felons after they'd been convicted and were on their way to other state facilities. The state has contracts with every county jail in Montana to hold felons until the state has room for them elsewhere. "It would be maybe five or 10 inmates," Koch said, "not enough to fill a 464-bed facility." Sen. Trudi Schmidt, D-Great Falls, a member of the advisory council, sits on the eight-member panel that helps draft the Department of Corrections budget. She asked Two Rivers and Hardin officials why they didn't come to the panel's meetings in 2005 when lawmakers were crafting the agency's two-year budget. "I guess I'm wondering why the city of Hardin never knew what was going on in the Legislature," she said. Schmidt and others also questioned just what kind of detention center the Hardin prison is. Montana has one private prison in Shelby that houses mostly state inmates, under a contract with the state. The state also has contracts to house inmates at regional prisons in Glendive and Great Falls. Those prisons were built and owned by the counties and function as county jails. The Hardin prison is not a purely private prison like the Shelby facility, nor is it the Big Horn County jail, said Greg Smith, executive director of the Two Rivers Authority. The county does not support the prison, he said in an interview after the meeting. Convery told the panel that the prison is city-owned but will be privately run by a for-profit company for at least the next two years. That would make it the only entity of its kind in the state. The authority sought out-of-state inmates after state and federal officials said they didn't need the space.

February 7, 2008 Billings Gazette
A state lawmaker from Butte has asked corrections officials and representatives of Hardin to explain why a $27 million jail was built in the southern Montana city but now sits empty. Sen. Steve Gallus, a Democrat, wants the officials to appear Tuesday in Helena before the state Corrections Advisory Council, which he co-chairs. Inmates sought -- Hardin officials working with a Texas prison-building consortium last year sought to house out-of-state inmates at the newly built Two Rivers Detention Center. They were blocked by state Attorney General Mike McGrath, who said state law prohibits county jails from signing contracts for out-of-state prisoners. Hardin and Two Rivers Authority, the city's economic development agency, have since filed a lawsuit seeking to overturn McGrath's opinion. When it was proposed, the jail was touted as Hardin's largest economic development project since a sugar factory was built there in the 1930s. The city of 3,500 sits on the edge of the Crow Indian reservation in Big Horn County, a community where nearly 1 in 3 people lives in poverty - one of the highest rates in the state. "I feel bad for the people of Hardin and understand that they want jobs," Gallus said. "But I don't feel that this was handled appropriately, nor do I think we should base economic development on prison beds." Alternative uses -- Gallus said he also wants to look into other possible uses for the jail. For example, he wants to know if it would be feasible to convert it into a special facility for in-state sex offenders. "It might require some kind of retrofit, or more capital put into the facility to change it," he said. A failure to bring in revenues from the 464-bed jail could leave private investors on the hook for the project if the bonds used to build it can't be paid off. The jail needs at least 250 inmates to make its opening economically feasible. The state Department of Corrections has said it does not need any more beds for Montana inmates.

January 23, 2008 The Gazette
The Two Rivers Detention Center was built as an investment in Hardin. But a legal tangle with the state has left the jail unused and the security of the investment threatened - for the people offered jobs at the jail, for Hardin's economy and for investors who bought mutual funds that financed the $27 million project. That means no income and no cash flow to make a $960,000 interest payment that is due May 1. Two Rivers Authority holds $27 million in tax-exempt revenue bonds for the detention center, some $20 million of which went into building the facility. The bonds are not general-obligation bonds, so the landowners of Hardin and Big Horn County won't be held responsible for repayment. In December, the developers said that if the detention facility had about 250 inmates by March it might be able to get money flowing and avoid default. Lacking a court order allowing it to take out-of-state inmates and without contracts for any inmates, it's unlikely that the facility will open in time to stay out of financial trouble. Two Rivers Authority leaders maintain that the Department of Corrections and a former director, Bill Slaughter, supported the idea of the facility. However, they say, state policy has changed, threatening the detention center's future because the state won't contract to send Montana prisoners there. Two Rivers Authority Executive Director Greg Smith said the state must remain consistent in its policies to maintain a good investment culture. He said he also is concerned about the effects on out-of- state investors - whether they are individuals whose savings is threatened by a financial loss on bonds or a large corporate investor. "It is important that the state really care about people who are investing in this state," he said. "We're not the wealthiest state in this union, and we need people who want to invest in us. "To me, somebody who is investing in Hardin is investing in the state of Montana." Smith said the $27 million is not a huge amount of money when spread across investors around the United States, but on the individual level the investment could be important to those people who put their retirement or savings into a mutual fund. "Who knows, there could be people in Montana," Smith said. Michael Harling, executive vice president of Municipal Capital Markets Group, an underwriter of the bonds, said the $27 million in bonds was purchased within a few weeks of becoming available in late April 2006. If bonds go bad, the mutual fund that is holding them is going to lose some market value, Harling said. The effect of the loss is that every participant in the pool of investors also loses a little. That scenario plays out only in relation to Two Rivers Detention Center if a person is invested in a mutual fund that holds some of the Hardin bonds, Harling said. "It's a small ripple, but it is fair to say that people in Montana who have their savings invested in tax-exempt mutual funds stand a chance to lose part of their asset value," he said.

January 23, 2008 Billings Gazette
The state has asked a Helena District Court judge to dismiss a lawsuit filed in December by the city of Hardin and its economic development arm, Two Rivers Authority. The lawsuit asked that the judge throw out Attorney General Mike McGrath's Dec. 3 opinion that state law doesn't allow a new detention facility in Hardin to hold inmates convicted out of state. Two Rivers needs to house inmates to repay the $27 million in revenue bonds that funded the jail. The state's response was released Tuesday. "Not only is the proposed use of the facility unauthorized, but it conflicts with Montana's overall correctional scheme to provide for Montana offenders - not to benefit economically from the interstate exchange of inmates," Assistant Attorney General Jennifer Anders wrote in the state's motion. Hardin's attorney Rob Sterup of Holland and Hart in Billings declined to comment on the state's response. The state claims that the District Court has no authority to withdraw McGrath's opinion - one of the main requests in the Hardin suit. A court may overrule an attorney general's opinion but it can't order him to retract a lawfully issued opinion, according to the state. Hardin has asked the judge to stop the state and the Department of Corrections, which is also named in the suit, from barring Two Rivers Authority from contracting for inmates. Two Rivers and CiviGenics, which contracted to operate the facility, have tried to get contracts with the state of Wyoming and the Bureau of Indian Affairs detention division. Wyoming won't sign an agreement without approval from the Department of Corrections, and the BIA can't contract for enough inmates to open the facility, TRA officials have said. In its response, the state acknowledges that the BIA could house adults in Hardin who have been arrested and are awaiting trial because those would probably be short-term and thus "consistent with the nature and function of a county jail or local detention facility," Anders wrote. "However, plaintiffs are not entitled to contract with the BIA or other states for felony offenders who are serving sentences and/or awaiting release from custody, or offenders convicted of tribal violations ... because these uses are not allowed" by state law, she wrote. Much of the 13-page motion focuses on interpretation of state law and the legislative intent that went into crafting Montana code. In a separate document, the state asked the court for a protective order so it doesn't have to produce information Hardin requested through the discovery process of the lawsuit. The case "involves purely a question of law," and not disputed facts that could lead to evidence for the court to consider, Anders wrote. The information the Hardin attorneys have requested is from the attorney general, the Corrections Department and the governor's office. It includes "all documents that refer, relate, or pertain to placement of inmates by the Department of Corrections with any detention center within the state of Montana." It also asks for the state to list, by month, the number of Montana prisoners held out of state and the number of out-of-state prisoners held in Montana back to Jan. 1, 2000. There is also a request for any records from the governor's office that relate to McGrath's opinion and any records of meetings attended by staff from the attorney general's office. The state has provided Two Rivers with the attorney general's file on the opinion request, according to the document. At a minimum, Anders argued, the court should first consider the state's request to dismiss the suit, which could make sharing documents in preparation for a hearing moot. The state's documents were mailed on Friday, according to attorney general's spokeswoman Lynn Solomon. On Tuesday afternoon, Lewis and Clark District Court records did not show that the documents had been filed. According to the clerk in Judge Jeffrey Sherlock's court, once the paperwork is filed, Hardin will have about two weeks to respond to the motions and the state is then given about two weeks to reply.

December 12, 2007 Billings Gazette
The city of Hardin has sued the state, hoping to overturn an attorney general's opinion and allow a new prison here to open with out-of-state inmates. Hardin and Two Rivers Authority, the city's economic development arm, filed suit Monday in District Court in Helena. The lawsuit asks Judge Jeffrey Sherlock to overturn Attorney General Mike McGrath's recent opinion on state law applicable to the Two Rivers Detention Center. The prison is under the gun to begin repaying $27 million in revenue bonds sold, including $20 million to build the 464-bed facility and to cover payments during a few months before opening. That transitional money runs out this month. An official with the bond underwriter said the facility needs inmates to get a revenue stream flowing by the time the next payment is due, May 1. Failure to do so would start the default process. The attorney general's Dec. 3 opinion states that the authority to take out-of-state prisoners is limited by state law to the Montana Department of Corrections. Two Rivers officials originally hoped to have contracts with the state and Montana counties to hold prisoners. When the state announced last year that it would not have prisoners to send to Hardin, Two Rivers began to focus on contracts to take out-of-state and federal prisoners. But the agencies involved, including the state of Wyoming, wouldn't complete those contracts without the state of Montana signing off, so Hardin asked for the formal opinion. The city has hired Billings attorneys Robert Sterup, Kyle Gray and Jason Ritchie, of Holland and Hart, to work with Hardin City Attorney Rebecca Convery on the lawsuit. "We believe our clients' claims have substantial merit, and we are confident in our position," Sterup said. "We look forward to the opportunity to present our claims in District Court." McGrath stood by his office's opinion. "We believe the opinion is a sound interpretation of Montana law and legislative policy," McGrath said Tuesday. An attorney general's opinion carries the weight of law unless it is overturned by a court or the Legislature changes the law. Department of Corrections spokesman Bob Anez said Tuesday that the agency does not comment on pending litigation. He previously had stated that Corrections supports the legal opinion. Two Rivers officials said in a prepared statement that a favorable court ruling would "directly benefit the public by alleviating prison overcrowding and providing employment opportunities in Big Horn County." "While it remains open to negotiate an agreement with the state, absent such agreement, Two Rivers Authority is confident of its position on the disputed issues and is committed to seeking judicial relief," the statement said. The suit asks Sherlock to determine if state law allows the facility to hold prisoners who are committed by an out-of-state jurisdictions or the federal government. The state and Hardin have "genuine and opposing positions on this issue," the complaint states. "Based on the state of Montana's representations, agencies of the federal government and other states have refused to contract with (Two Rivers)," it states. Two Rivers is working with the Bureau of Indian Affairs to contract for about 70 prisoners, far short of the 250 officials say are required to make opening the prison economically feasible. According to the complaint, those 70 prisoners would come from the Crow, Northern Cheyenne and Blackfeet reservations in Montana, the Spokane Reservation in Washington and the Wind River Reservation in Wyoming. The suit also asks Sherlock to grant an injunction allowing Two Rivers to form contracts and take offenders immediately. There are a number of losses because the facility, although ready, can't open, including losing the work force that Two Rivers and its contractor, CiviGenics, has lined up, it states. There is also a financial risk, according to the complaint. "Deprived of its essential function by state action, the detention center will face potentially catastrophic loss, including possible default on financing commitments," the court document states. "These threatened injuries and others outweigh whatever damage the proposed injunction may cause to the defendants."

December 4, 2007 Billings Gazette
The attorney general's opinion issued Monday may leave Hardin prison investors empty-handed, but a loss won't happen overnight, the lead investment banker on the project said. The $27 million that paid for the construction and startup costs of the facility was issued in revenue bonds. The bond holders, or owners, are some of the largest institutional bond funds in the U.S. that manage billions of dollars, said Michael Harling, executive vice president of Municipal Capital Markets group Inc., the Texas firm that underwrote the project. The investment firm set up the transaction to secure the private activity bonds. The bonds are tax-free because the issuer is a governmental entity - Two Rivers Authority, the economic development arm of the city of Hardin. And because they are repaid through revenue generated by the project, the bond holders are the ones on the hook if no money comes in. Regardless of whether the prison ever opens, the next interest payment, of $960,012, is due May 1. The first principal payment of $615,000 and an interest payment of $960,012 are due Nov. 1, 2008. Nearly $2 million in interest has already been paid on the bonds. A debt service reserve fund - about $2.6 million - was set aside from the original funding. That money can be used if the facility doesn't have revenue to makes payments. However, using the fund causes difficulties. "The problem is, once that reserve fund is tapped, it becomes an event of default," Harling said. "(A default) casts a sort of pallor over it in the financial world. That isn't great, and we don't want that." The funding includes about $19 million for construction that has been paid to the designer and builder, Hale-Mills Construction of Houston. Harling figures the facility would have to open with about 250 prisoners by around March to have revenue flowing in time for the May 1 payment. Two Rivers Authority has one contract in the works with the Bureau of Indian Affairs, but it is still being completed. The contract isn't for enough prisoners to make opening the facility feasible. In the bond project's official statement, potential owners were warned of the risk of funding the Hardin project without contracts that secured revenue. According to the feasibility study commissioned by the underwriters and released in January 2006, Two Rivers had no assurance that it would get enough contracts, or a guaranteed number of inmates, to make its payments on the bonds. Also, the "primary market focus" was the Montana Department of Corrections and was based on the assumption that Two Rivers would be awarded at least one publicly bid contract, according to the study. Harling said it was a reasonable risk because studies showed that state and federal agencies needed prison space and the Corrections Department "indicated but didn't guarantee it would utilize the facility," he said. That indication apparently changed between 2005 development meetings, which Harling said Corrections officials attended, the April 2006 issuance of bonds, groundbreaking that June and construction completion this summer. He blames the problem on the state of Montana and the Corrections Department. The state's refusal to allow Two Rivers to contract with other states, specifically Wyoming, to take prisoners led to Hardin's asking for an attorney general's opinion. That opinion was issued Monday and affirmed that the facility can't take out-of-state inmates. "We bought into the risk of there's sufficient inmates, because they are out here," Harling said. "But for somebody to, as far as I'm concerned, change the rules once we get open, is just wrong. "Or, somebody should have said in 2005, 'By the way, it's not legal to do what you want to do,' " he said. "You can't just stick your head in the sand after you said, 'We really like the idea and it's a good project,' and then two years later say, 'We say it's not legal any more.' " The two attorneys listed in the bond project's official statement were not available for comment. Investment was a risk, study reported -- Bond holders took a risk by funding the Hardin prison project without contracts that secured revenue, according to a feasibility study commissioned by the underwriters. The study by Howard Geisler, of GSA, Ltd. based in North Carolina was completed in January 2006. Here are some of the project's "potential obstacles to project success," from the study: • No assurances that Two Rivers Authority would enter contracts or that any contract would yield enough money to meet financial obligations; • TRA had no contractual guarantee that any specific number of detainees would be held for any defined period; • TRA had no contractual guarantee that Montana Department of Corrections would not build more space or that other detention facilities would not be built to "service the target market," and that the state of Montana was the primary market focus, based on the assumption that TRA would be awarded one more publicly bid contracts. It further states that future economic conditions, legislative change and government policy could change the numbers of persons for which the state is responsible or has the fiscal resources to house," the study states. "Several federal agencies are viewed as potential users and their use level will be dictated by government policy and budget allocations." "The factors listed above define potentially significant risks to potential purchasers of the bonds, and the vast majority of them are linked to influences over which the Authority (TRA) has no meaningful degree of control," the study states. Here are the "factors mitigating the potential obstacles" listed in the study: • The U.S. Marshals Service uses local detention facilities across the country to house prisoners and the Montana District needed beds. • The DOC had publicly stated that it might need to send prisoners out-of-state because of the space crunch and was looking for non- profit groups to build and operate specialized treatment facilities. The total contracted bed capacity at the time was 376. • The center is located near Billings, where the Marshals Service holds people who are appearing in federal court. "In addition, the population concentration in the Billings area produces a significant impact on the (DOC) with a large number of individuals in its custody being from the area," the study states. Also, the DOC was soliciting offers to build a methamphetamine treatment center. "The Billings area, and particularly the nearby reservations represent a significant source of individuals charged with offenses related to possession of this drug," it states. • There are seven Indian reservations in Montana "Nationally, tribal jails are in general in deplorable conditions and are typically overcrowded," the study states. "Native Americans also represent a significant percentage of the (DOC) population while many Native Americans convicted of federal crimes are housed in Federal facilities throughout the United States. To that end the proposed center offers a resource to relieve pressures on the tribes and (DOC) as well as to return incarcerated individuals nearing completion of their sentences to a location nearer their home where visitations by family are possible."

December 3, 2007 AP
The Montana attorney general issued an opinion Monday saying county jails can’t sign contracts to house out-of-state prisoners, dealing a heavy blow to a new $20 million detention facility in Hardin. In an opinion issued Monday, Mike McGrath said the Legislature never envisioned that county detention centers would be used for the long-term confinement of out-of-state or federal felons. McGrath said such a move would transform county jails, feasibly filling them with out-of-state inmates so they are no longer available for placement of Montana offenders, McGrath’s opinion said. The opinion was requested by the city of Hardin, which is operating the 464-bed Two Rivers Detention Center with the city of Lodge Grass. The new detention center, completed this summer, has been unable to open because it does not have contracts for the 250 inmates needed to make opening the jail economically feasible. Studies as late as November 2005 showed that such a detention facility could easily be filled with state and federal prisoners, said James Klessens, director of Two Rivers Authority, which is Hardin’s economic development arm. But since then, state prison overcrowding has subsided because some inmates are being diverted to prerelease centers and addiction treatment and the U.S. Marshal’s Service has contracted with Crossroads Correctional Facility in Shelby to add beds there. It had sought to contract with the Office of Federal Detention Trustee in Washington, D.C., which oversees contracts and funding for all federal prisoners, and the Wyoming Marshal’s Service, Klessens said. McGrath’s opinion has the force of law unless a court overturns it or the Legislature modifies the laws involved. CiviGenics, a private company based in Massachusetts has contracted to operate the jail for two years. Payments on $27 million in revenue bonds sold for the project are to begin next year.

November 16, 2007 Helena Independent Record
Backers of a brand new but empty $20 million detention center in Hardin tried Thursday to convince two lawyers on Attorney General Mike McGrath’s staff to change a draft opinion so the jail can house out-of-state inmates. Chris Tweeten, McGrath’s chief civil counsel, and Jennifer Anders, an assistant attorney general who wrote the draft opinion, were noncommittal after lawyers and an investment banker for the Hardin jail made pitches to alter the conclusion. Attorneys for the city of Hardin and Municipal Capital Markets Group Inc., a Dallas, Texas, investment banking firm that issued the $27 million in revenue bonds to finance the Two Rivers Regional Detention Facility in Hardin, will respond in writing to the draft legal opinion next week. Tweeten said the opinion is only a draft at this point, and the attorneys haven’t made any final recommendation to McGrath, who reviews and often makes revisions in the final version. But, Tweeten said, “There have been relatively rare instances where we have changed the opinion 180 degrees from where the draft is.” At issue was a draft attorney general’s opinion requested by Rebecca A. Convery, city attorney for Hardin. She asked whether the state Corrections Department has the authority to decide whether convicts from out-of-state law-enforcement and correctional agencies may be housed in a multi-jurisdictional jail like the one in Hardin. She also inquired whether a multi-jurisdictional detention center may contract for the confinement of prisoners committed to an out-of-state correctional facility. The draft opinion concluded that a multi-jurisdictional jail may not contract to house out-of-state inmates because that authority has been reserved for the state Corrections Department under “very narrow circumstances.” There is evidence of “a legislative intent not to allow the interstate exchange of inmates to and from Montana,” the draft said. Convery said the Hardin facility is not seeking permission to house convicted felons from out-of-state prisons or the federal correctional system for the long term. Instead, she said, the Hardin jail would be used to house post-conviction felons on a short-term basis of no more than two years. Tom McKerlick of the Two Rivers Authority, Hardin’s economic development arm that owns the facility, said officials believed the project had the support of former state Corrections Director Bill Slaughter, But he said it lacks the support of Director Mike Ferriter, who took over the state agency in July 2006. In addition, U.S. Marshal Dwight Mackay of Montana had told them the U.S. Marshals Service was interested in space at the Hardin facility, but, as it turned out, the private prison in Shelby got the contract instead. “Quite honestly, we were told by the Marshals Service and the state, you build it and we will come,” Convery said. She said the jail has lined up some short-term contracts from out of state, but the Montana Corrections Department won’t allow them. Michael W. Harling of Dallas, executive vice president of Municipal Capital Markets Group Inc., said the facility has $27 million at risk. That was the amount of the revenue bond issue, including $20 million for the construction, and to cover payments during a few months of transition before opening. Every day the jail isn’t occupied it owes $7,000, he said. The jail, designed to hold 464 prisoners, would employ 105 people with an annual payroll of $2.5 million if filled to capacity. Tweeten asked if the jail supporters had tried to make any changes to state law at the Legislature that might allow the facility to hold out-of-state prisoners. The jail backers said they had no indication that they lacked the support of the Corrections Department. D. Hull Youngblood, an Austin, Texas, attorney representing Municipal Capital Markets Group, took issue with the draft opinion suggesting that one section of the law involving state prison facilities “trumps” another involving community corrections programs. “Statutes can co-exist without overturning each other,” he said. The draft opinion said: “The Legislature clearly intended to limit the authority of any correctional facility or governmental agency, other than the state through the Department of Corrections, to contract for the placement of Montana inmates out-of-state or to receive offenders from other jurisdictions.” It adds: “While the interstate exchange of convicted felons may be an acceptable practice in other states or facilities, it is not one that our Legislature has freely sanctioned.” Youngblood said the Hardin prison “was not developed, planned and built in a vacuum.” He said much discussion took place. Tweeten suggested the Hardin jail backers could seek clarification from the Legislature when it meets again in January 2009.

November 10, 2007 Billings Gazette
If a draft opinion from the state Attorney General's office stands, it may mean disaster for the Two Rivers Regional Detention Facility in Hardin. The state has no need for additional prison beds and contends that Two Rivers is not allowed to house out-of-state inmates. Without contracts for inmates, the jail can't open and may not be able to begin repaying loans taken out to build the facility. The state Department of Corrections last week sent a letter to the attorney general's office officially agreeing with the draft opinion, said its chief legal counsel, Diana Koch. But James Klessens, director of Two Rivers Authority, Hardin's economic development arm and the owner of the facility, is hoping for a solution. A meeting with an assistant attorney general is set for Monday to discuss the draft opinion. The draft addresses long-term contracts, and Two Rivers Authority is interested in short-term contracts, Klessens said. "We don't believe the question they answered was really relative," Klessens said. The deadline to comment on the draft was last week, and those comments must be considered before a formal opinion is issued on whether Two Rivers can contract with Wyoming to bring prisoners to Hardin and open the jail. "The Legislature clearly intended to limit the authority of any correctional facility or governmental entity, other than the State through the Department of Corrections, to contract for the placement of Montana inmates out-of-state, or to receive offenders from other jurisdictions," according to the draft opinion. At capacity, the jail could employ about 105 people with a $2.5 million annual payroll. Would-be employees wait -- Heather Edwards, a 24-year-old Hardin native, is among those on a waiting list for a job at Two Rivers Regional Detention Facility. "I've got everything done, I'm just waiting on a job," Edwards said. "They can't say for sure you have a job because it's not open yet." Edwards graduated from Dickinson State University in North Dakota with a major in political science and a minor in psychology. While going to DSU, she worked as a detention officer at the jail in Dickinson. She returned to her hometown thinking Two Rivers would provide a great career opportunity. She is commuting to Billings to work at the New Day Ranch but hoping for a job at Two Rivers. "I still believe in their administration, so I'm kind of holding on," Edwards said. Obligations coming due -- The facility is under the gun to begin repaying $27 million in revenue bonds sold for its design, $20 million to build the 464-bed facility and to cover payments during a few months of transitional time before opening. That transitional money will run out at the end of the year. CiviGenics, a private company, has contracted to operate the jail for two years. The facility was completed this summer, and leaders hoped it would be housing inmates by September. The company, based in Massachusetts, operates 19 jails, jail management and corrections programs and more than 100 treatment programs in 14 states. When CiviGenics did feasibility studies as late as November 2005, it appeared that such a detention facility could easily be filled with state and federal prisoners, Klessens said. However, in-state inmates are not available now because prison crowding has abated. The state has developed programs that divert some prisoners, and the U.S. Marshal's Service has contracted with Cross Roads Correctional Facility in Shelby to add beds there. Getting inmates in the door --  Two Rivers Authority has a small contract with the Bureau of Indian Affairs, but it won't fill the 250 beds needed to make the jail economically feasible to open, which includes hiring 60 to 70 people to get started. The development group is working on an agreement to take prisoners through the Office of Federal Detention Trustee in Washington, D.C., which oversees contracts and funding for all federal prisoners, and with the Wyoming Marshal's Service, Klessens said. Both would be predicated on an AG's opinion that Two Rivers is eligible for out-of- state prisoners. The draft opinion contradicts that. "While the interstate exchange of convicted felons may be an acceptable practice in other states or facilities, it is not one that our Legislature has freely sanctioned," the draft opinion states. "For this reason, your proposal to bring out-of-state felons into Montana without restriction or oversight is inconsistent with the Legislature's prerogative to keep Montana inmates in this state unless overcrowding is the issue, and to limit the use of Montana facilities for housing out-of-state convicts." Two sections of Montana law address correctional facilities and detention facilities. Two Rivers leaders have maintained that they fall under the latter, while the Corrections Department - and the draft attorney general's opinion - maintains that it fits into the former. The draft opinion says that under the correctional facilities law, Corrections "retains ultimate control over the interstate movement of inmates." Further, it says that Corrections is the only entity that state law allows to send prisoners out of state or bring them into the state. The draft maintains that while state law authorizes a local government entity, Two Rivers Authority, to contract to hold inmates, the more detailed statutes that address paying for those services don't mention long-term confinement. Two Rivers leaders believe the facility can hold other state's prisoners, but only for the short-term, Klessens said. The draft opinion considers long-term contracts, he said, while the facility was designed and intended for short-term contracts not exceeding two years. Part of the problem is language, Klessens said. The draft opinion refers to a 1989 change in state law that replaced the term "county jail" with "detention center." The confusion arises, Klessens said, because Two Rivers is the largest and first facility in the state that would operate like a county jail without fitting neatly into the law that guides those centers. DOC puts state prisoners, either awaiting trial or transport to the state system, in local facilities all the time, he said.

October 20, 2007 Billings Gazette
 Construction of Hardin's new $20 million, 464-bed detention facility is complete, but no inmates are housed there. The jail will sit empty at least until December, as Hardin waits for an attorney general's opinion on whether it can take out-of-state prisoners. The wait may be longer, as Two Rivers Authority, Hardin's economic development arm, struggles to obtain contracts for inmates. TRA, which developed the detention facility because it would bring more than 100 jobs to the economically depressed area, took control of the building in July. Staff said then that the facility could be opened by September. But the clock is already ticking on $27 million in revenue bonds that need to be repaid. So far, a reserve fund from the sale of the bonds has covered debt service, but that money will run out at the end of the year. "About January we need to be operational," TRA Director James Klessens said. "Our concern is we have a big empty facility right now and we need to fill beds. We're tremendously disappointed we don't have 300 to 400 people in this facility." TRA's only arrangement to house prisoners is a small contract with the Bureau of Indian Affairs that won't begin to fill the 250 beds that TRA needs to make opening the doors economically viable, Klessens said. Two Rivers plans to charge $59.60 a day to house a detainee. TRA hopes that by early November, the Attorney General's Office will release an opinion that will allow it to take prisoners from Wyoming. If the decision allows TRA to contract with Wyoming, Klessens said, the jail could open as early as mid-December or January. It will take at least a month to train employees, he said. Some employees were hired this summer, and more than 50 others had been offered commitments for employment. At capacity, the detention facility will have a staff of 105 and a $2.5 million payroll, TRA has said. During the wait for opening, some of the people offered jobs have taken other employment. It would require 60 to 70 employees to operate the facility with 250 inmates, Klessens said. "It's hard to take on that kind of payroll load without definitively knowing you have (income)," he said. Klessens wouldn't speculate on an opening date if the attorney general's decision goes against TRA. TRA contracted with a private company, CiviGenics, to operate the jail for two years. Since construction was substantially completed in July, CiviGenics has paid the expenses for the jail, which is part of its contract, including paying the six people now working in the facility. Of the $27 million bond sale, $19.6 million went to build the facility. The rest paid for the bond sale and engineering work, as well as a reserve to pay bond service to Municipal Capital Markets Group, a group of Texas investors that bought the bonds. Room in jails -- The facility is designed to hold detainees - those convicted of misdemeanors or felons waiting for sentencing or placement in a prison - for up to two years, Klessens said. The problem is that prisoners aren't available. "We don't need the space right now," said Bob Anez, spokesman for the state Department of Corrections. This week 40 men and seven women were being held in county jails statewide before they are sent to state prisons or Crossroads Correctional Facility in Shelby. A year and a half ago, 150 such state prisoners were being held in county jails, Anez said. The number has been reduced, in part, because of state programs that send eligible prisoners to treatment programs, Anez said. "The Department of Corrections has nothing against these folks down there and their effort to develop an economic development project," Anez said. "We recognize they see this as an asset to that part of the state. The DOC wishes them all the luck in the world in that regard. In terms of our participation in the facility, it's going to be minimal." Diana Koch, the DOC's chief legal counsel, said the state would probably be willing to contract with the Hardin facility to hold prisoners before they are moved into the state system, as it does with counties around Montana. "It's not a significant number," Koch said. "We don't have a significant number in Yellowstone County or Missoula County, and we wouldn't have a significant number in Hardin. It would be a handful at most." Space for 52 prisoners opened up in Shelby this summer when federal prisoners there were moved into an expansion that operator Correctional Corp. of America opened under contract with the U.S. Marshals Service. People from CiviGenics met with Montana U.S. Marshal Dwight MacKay while studying feasibility of the Hardin project, MacKay said. At the time, the Marshals Service was shipping prisoners out of state. "Two years ago we were hurting for beds," MacKay said. "We put out the call if somebody built beds that would pass the Marshal's muster, we were interested in talking with them about a contract." But CCA stepped up to the plate first, MacKay said. The company worked with the state to develop a waiver to build a 92-bed expansion to its facility and also with officials in Washington, D.C., to write a contract for the project. The government is bound by that contract, MacKay said. "I know the people in Hardin want us to use their facility, but we'd have to break the contract we already have," MacKay said. "That would not be beneficial for the taxpayers. We'd be paying for beds we're not using." MacKay said that even if there were a need for more jail space in the Billings area, he would prefer to expand the contract with Yellowstone County so the inmates would be held closer to the federal courthouse in Billings. MacKay acknowledged that the jail could be a problem for Hardin. "I don't want to be a part of any political firestorms down there," MacKay said. "All I want to do is make sure my prisoners are safe in a secure area and we fulfill a contract we're obligated to." AG's opinion -- Hardin City Attorney Rebecca Convery asked for the attorney general's opinion in late August, after Montana corrections officials said the state had no need for space at Two Rivers, Klessens said. The attorney general's office has 90 days to reply. TRA has looked farther afield for contracts, including Wyoming corrections and the U.S. Marshals Service there. Wyoming authorities won't contract with Two Rivers without approval from the Montana Department of Corrections, Klessens said. Koch and Klessens said the state and TRA disagree about what state laws govern the Hardin facility. At issue is whether the facility can hold people charged with or convicted of felonies in other states. Klessens believes that short-term holds are allowable. Koch does not. "The department did not discuss this, approve it in any way, shape or form before they decided to build it," Koch said. "We have no vested interest in seeing this fail. We would really like to see them be successful, but what we're doing is seeing what we can do, legitimately, with the statutes that are in place right now. We don't want to violate any statutes." TRA is an autonomous arm of the city of Hardin and the facility is local-government-owned, just like any other county-owned jail in Montana, Klessens said. It is guided by statutes that allow taking short-term holds from other government agencies, he said. TRA has a private operator, but it is not a private facility, which falls under a different set of laws, he said. The facility can bring in Montana felons who are waiting to be sentenced or to be placed in a prison, Klessens said. "Our question is, if Wyoming has needs for the same, why can't we do that? We think it's a simple question," Klessens said. Seeking contracts -- TRA also is working with the Office of Detention Trustee in Washington, D.C., which oversees contracts and funding for all federal prisoners, to talk about taking U.S. Marshal's prisoners out of Wyoming. The Montana U.S. Marshal's office contracts with a private jail in Shelby. TRA has been working with Montana counties to set up intergovernmental agreements so if those governments have an inmate housing need they could send people to Hardin, Klessens said. Why did Two Rivers Authority build a regional detention facility before it had contracts for inmates? That's how the industry works, Klessens said. Agencies want to see a facility before they sign up to send inmates there. Two feasibility studies before groundbreaking showed the jail would be viable, including a November 2005 study that said the state wanted to contract for about 365 beds. "Nobody built this thing on a wish and a prayer," Klessens said. Klessens said that during those studies, indications from the U.S. Marshals Service were that the agency planned to use the Hardin facility when it was built. He pointed to a January 2006 news article that quoted MacKay saying, "Build something, we'll probably use it." "What that tells me, is he was saying, 'Hey, this is a good thing, this is going to solve big issues going on in the world of how do we deal with jail overcrowding,' " Klessens said. He said the Montana Board of Crime Control commissioned a study in 2006 of jail overcrowding that never mentioned the Hardin facility, which broke ground that June.