Operation Mississippi Hustle was a federal investigation initiated in 2014 by the United States Attorney and prosecuted in the United States District Court for the Southern District of Mississippi. It examined the relationship between officials of the Mississippi Department of Corrections and various for-profit prison contractors and subcontractors, who have provided services to the five private prisons in the state. One, Walnut Grove, closed in September 2016 but has since reopened.
The FBI revealed a long history of corruption and bribery beginning as early as 1997. The investigation resulted in indictments against Chris Epps, long-serving Commissioner of the Department of Corrections on November 6, 2014. Epps resigned from his state office and as president of the American Correctional Association (ACA) the day prior to his indictment. He had received bribes and kickbacks worth at least $1.47 million, based on contracts worth $868 million with private prison operators and related service providers.
By October 2018, sixteen other officials, consultants, contractors, and businessmen, including two former state legislators were indicted, with more expected. Eleven pleaded guilty, one committed suicide, and the identity of another had not yet been made public. The ex-mayor of Walnut Grove, Mississippi, William Grady Sims, finished his sentence. Six other defendants were convicted and are in federal custody. Four Louisiana defendants awaited trial.
Jim Hood, the Mississippi Attorney General, announced in February 2017 that he was filing civil suits against 15 prison contractors and several individuals for damages and punitive damages related to the corruption cases. He said that "state law requires that they must also forfeit and return the entire amount of the contracts paid by the state."
Overview In the late 20th century, Mississippi began to make contracts with private prison management companies to build and operate prisons. It eventually held contracts for six for-profit prisons: Walnut Grove Youth Correctional Facility, for inmates under 18 who had been convicted as adults; East Mississippi Correctional Facility, devoted to the treatment of state prisoners with mental illness; Marshall County Correctional Facility; Tallahatchie County Correctional Facility; Wilkinson County Correctional Facility, which was converted to maximum security after receiving numerous prisoners transferred from Mississippi State Penitentiary following the settlement of a class-action suit there, and Delta Correctional Facility, which closed after an escape. Contracts were also made for related mental and medical health services, education, telecommunications, and food services. In 2002, Christopher Epps was appointed as Commissioner of Mississippi Department of Corrections. He served under three governors.
On November 6, 2014, the acting United States attorney for the Southern District of Mississippi, Harold Brittain, announced indictments he had obtained against the Commissioner Epps and his associate Cecil McCrory. McCrory was a consultant and Republican former state house member. The government charged that beginning as early as 2005, Epps had taken bribes from various contractors and subcontractors for the state. These bribes had been passed through McCrory and another consultant, Robert Simmons, and had been structured to fall beneath the mandated reporting amount so they would not come to the attention of federal banking authorities.COMMISSIONER OF MISSISSIPPI DEPARTMENT OF CORRECTIONS AND LOCAL BUSINESSMAN INDICTED BY FEDERAL GRAND JURY, United States Department of Justice, November 6, 2014. Retrieved November 27, 2020. Epps resigned as commissioner and as the president of the ACA the day before the indictments were announced. Both defendants previously entered into plea bargains and became cooperative informants. Initially, they were to assist the government with the identification of the originators of those bribes, who were also to be prosecuted with the help of both men.
Epps had been appointed to the Commissioner post in 2002 by Democratic governor Ronnie Musgrove and was retained by his successors, Republican governors, Haley Barbour in 2004, and Phil Bryant in 2012. In 2011, Epps told assembled attorneys involved in negotiating lawsuits that had been brought against the Walnut Grove Correctional Facility and the East Mississippi Correctional Facility that he could not end the contracts with the for-profit companies operating Mississippi's prisons "because of all the money they spread around Jackson," the state capital. His remarks were made in the period that the Southern District of Mississippi's U.S. Attorney said Epps was receiving more than $700,000 in bribes, including the purchase of a beachfront condo on his behalf."Lawyers: Epps said prison companies 'spread' money", Clarion Ledger, Jerry Mitchell, November 22, 2014. Retrieved 29 January 2017.
The government's revised estimates of the alleged bribes to Epps increased to an estimated total of at least $1.47 million. Over the next two years, the U.S. Attorney filed many indictments against persons alleged to have paid the bribes and indicated that further indictments would be forthcoming. A year after entering a guilty plea, McCrory requested that he be allowed to change his plea to "not guilty" and go to trial. This request was rejected by the judge. Many other defendants pleaded "guilty" while others pleaded "not guilty". One defendant committed suicide shortly before his arraignment. Numerous corporations were ordered to produce business records by the presiding federal judge Henry Travillion Wingate. Some complied, others ignored the subpoenas, and four requested that the information they were willing to provide be kept under seal, which Wingate took under advisement.
On November 1, 2016, while still awaiting sentencing, Epps was arrested for breaking and entering the home he had forfeited to the federal government as a part of his plea bargain. He removed light fixtures and other items which he moved to his nearby previous domicile that he was occupying.Jimmy E. Gates, "Epps may have violated bond terms with burglary charge", Clarion Ledger, 2 November 2016. Retrieved 3 November 2016. His bail was revoked and in December 2016, Wingate ruled that he would be held in jail until sentencing. On May 24, 2017, Epps received a sentence of approximately 20 years.
Background Mississippi was among the many states that began to depend on private contractors to build and operate prisons to house its growing number of inmates in the late 20th century and early 21st century. These inmates had been convicted and sentenced under increased criminalisation of drug possession and a variety of mandatory sentencing laws. The private prisons and management included contracts with the GEO Group, which purchased Cornell Corrections, the Texas firm that built and operated the Walnut Grove Correctional Facility in Walnut Grove, Mississippi. The prison opened in 2001 in an unincorporated area of Leake County, but the town annexed the prison property to increase its population and tax base; it derived 15% of its revenues from the prison corporation's payment in lieu of taxes. The East Mississippi Correctional Facility was another private prison operated by Florida's GEO Group, then by Utah's Management and Training Corporation. Numerous contractors served other public and for-profit facilities, providing related telecommunications, food services, health, and other services.
Leake County Sheriff Greg Waggoner said that he started the federal investigation into the Mississippi Department of Corrections (MDOC) activities. In 2009, he said Epps' MDOC leased buildings were owned by McCrory in Walnut Grove, Mississippi, which later became the Walnut Grove Transition Center. MDOC also contracted with McCrory to operate the male and female facilities. Although Walnut Grove's longtime mayor, Sims, had no correctional experience, McCrory appointed him as the warden of the Transition Center. In addition, Sims had a separate contract for revenues from 19 vending machines at the Walnut Grove Youth Correctional Facility.
Walnut Grove was to be a model transition center to support newly released inmates in adjusting to life outside prison as part of a state effort. The center charged newly released inmates $20 a day for room and board in dormitories and was paid a supplement of $6 daily, per bed, by the MDOC. Nearby Walnut Grove residents complained that the center residents were poorly supervised and appeared to roam in town without structured activities.
According to Waggoner, "It looked like everything new that happened with MDOC, Cecil [McCrory] was involved in ... They [residents of the center] were not supposed to be out at all." He said, "If I ran my facility like that, Epps would have shut me down, but it seemed like there was no problem when McCrory did it." After Sims was reported to have taken a female inmate to a motel in nearby Carthage for sex in November 2009, Waggoner became involved. He reported the allegation to MDOC, which assigned an internal investigator to assist the sheriff in an investigation.
Investigators from both Leake County and the state jointly talked to the female inmate, gathering evidence to refer the case to the county district attorney. In the spring of 2010, before they could do so, the MDOC investigator came to Waggoner and told him it was over. "We're closing the case down," he told Waggoner, who was "shocked" and asked why. Waggoner told a reporter, "You could tell he wasn't happy about it but that he was given orders." Waggoner said firing a man who committed a felony does not end an investigation; it ends when the man is indicted and brought to justice; "If you have knowledge of a felony and chose not to pursue it, you're negligent in your duty." Waggoner called U.S. Attorney John Dowdy for advice who answered that he contacted the FBI afterward to report the situation. The FBI launched an investigation against Sims and eventually Epps which was named the "Mississippi Hustle."Epps probe, "Mississippi Hustle" started sex scandal, Clarion Ledger, Emily LeCoz, November 22, 2014. Retrieved 12 September 2016.
Indictments and suicide On November 6, 2014, the Federal Government of the United States announced that it had indicted Epps on corruption charges;Epps’ star falls in Miss. after federal indictment", Washington Times, Emily Wagster Pettus, November 8, 2014. Retrieved on 12 September 2016. these charges were based on his dealings with the for-profit prison industry.Blinder, Alan. "2 Former Mississippi Officials Plead Guilty in a Graft Case Involving Private Prisons." The New York Times. 25 February 2015. Retrieved on February 27, 2015. The federal indictment stated that McCrory, a Republican and former Mississippi State House member, was a businessman who served as the chairperson of the Rankin County School District's board of education. He had paid Epps with kickbacks and bribes totaling more than $1 million. Those transactions included a $200,000 payment as part of the mortgage of Epps' primary residence in the Jackson area. Epps leveraged the resulting increased equity with another bribe payment to buy a condominium; he later traded up the latter for a larger, more expensive condominium. In exchange, Epps directed contracts to McCrory-owned companies for prison services contracts, as well as to related companies that hired McCrory as a paid consultant. Per the indictment, contract promotion started in 2007 and ended on March 12, 2014. Epps entered an initial plea of not guilty and received a bond of $25,000.Epps pleads not guilty to federal bribery charges, WAPT, Tammy Estwick, November 7, 2014. Retrieved 12 September 2016.