Yesterday I introduced PRIDE, possibly the most corrupt prison industry operator in America. I also mentioned ATL Industries that was tied up in litigation over theft of the entire company by PRIDE.
In addition to ATL, PRIDE partnered with four other companies prior to the ATL contract. All five of these corporations (1 llc) were forcefully taken over by PRIDE in a hostile manner. These companies were Fresh Nectars, Inc., Man-Trans, llc, Custom Converter Sales, Inc., and Value Line Converters, Inc.
In each case the companies were forced into bankruptcy by PRIDE falsely claiming that each owed PRIDE or one of their nine spin-off corporations, money. They ejected company personnel from prison property, seized all equipment, materials, finished and unfinished products and the proprietary technology used in the manufacture or refurbishing processes. PRIDE would then instruct their General Counsel, Wilbur Brewton or another counsel, to file suit against the companies alleging money owed.
PRIDE then continued to operate all of the businesses without informing customers that the ex-partners were no longer providing the products. Labeling wasn't changed and business went on as before, with all profits going to PRIDE through their spin-offs.
In 2001 Mr. Laurence Stone, owner of ATL Industries, Inc. was approached by PRIDE Marketing personnel and advised that they had a vacant facility in Florida for processing food and they wanted him to partner with them under PIECP and use inmate labor to process his products. He was advised it was legal and would increase his profits by as much as 20-30%. In 2002 the partnership was struck and ATL moved all of their equipment to PRIDE's facility at Union C.I. at Raiford, Florida.
As required by PRIDE a contract was entered into and along with the equipment ATL provided proprietary recipes, ingredients, additives, TVP, soy, seasonings and packaging and shipping materials. In addition he was required to provide a supervisor to instruct the inmates in the processing and he assigned Jay Javetz to that position.
In 2004 PRIDE initiated their takeover. Financial ledgers were altered with a second set of books and ATL was informed that they owed as much as $300,000.00 to PRIDE for products processed over the term of the contract, that PRIDE had not billed for. They threw ATL off the premises, hired Mr. Javetz, seized all equipment and materials belonging to ATL and issued a demand letter for the amount claimed was owed them.
PRIDE made monetary demands upon ATL for the amounts shown on the false ledger sheets by faxing false invoices to ATL (wire fraud). PRIDE received $39,284.94 by return wire (successful completion of the wire fraud).
When ATL proffered a surety bond of $300,000 to guarantee payment if the money claimed by PRIDE was actually owed, PRIDE declined the offer. Their legal representative, Greenberg Traurig was consulted prior to the refusal to accept this offer.
Without his equipment and supplies, ATL's owner was unable to fulfill his state, federal and private sector contractual obligations. The two corporations funded by PRIDE President's son-in-law, Devon Westbrook to take ATL's place in the food processing operation, applied for and received those contracts previously held by ATL, successfully putting ATL out of business. With sales in excess of $20 million, the ATL owner had funds available to pursue PRIDE in the Florida courts, through a counter claim. Greenberg Traurig kept ATL in court for several years (2005-to present) and waged a war of attrition upon ATL's owner - as they had done in the four other takeover cases.
In an effort to limit the legal funds available to ATL's owner, Greenberg Traurig was in a unique position and used it unethically. They not only represented PRIDE's interests in the litigation, they also represented the interests of ATL and it's owners bank in Georgia, BB&T.
Because of ATL's complete loss of income, they were unable to make the payment demands on operational and equipment loans to BB&T that held the notes on both. In addition BB&T held the mortgage note on the home of the ATL owner. When ATL offered the surety bond to PRIDE while an audit could be completed, it was noted by Greenberg Traurig that the bond funds were provided by BB&T bank. When ATL's owner requested BB&T allow him to sell his home to satisfy the outstanding loans, Greenberg Stepped in and told the bank to refuse his request and to move forward on foreclosing on his home and property. In this manner they removed any assets left to ATL's owner to use to pursue the litigation against PRIDE in Florida. Unethical? I think so, though I'm not up on banking law and Bar ethics in Georgia.
During the litigation ATL received a Court order to inspect all of their property being held by PRIDE at the food processing facility. During the inspection visit, ATL was accompanied by a representative of the firm of Holland & McKnight. The associate attorney was Tysen Duva. During the inspection it was determined that most of ATL's equipment had been vandalized, wires pulled out and cut off and some left outside to rust in the weather. In addition the dry ingredients used to process the food products; TVP, soy, spices and other additives and packaging materials for the products were discovered in a warehouse adjacent to the food processing facility. The warehouse was disheveled with rat nests, feces and urine on, in and around the materials. ATL took pictures of the contamination and asked the USDA inspector present to inspect the warehouse. The Inspector refused, stating that she was ordered to stay in the area of processing and was prohibited from leaving that area.
Attorney Duva was a witness to all of the foregoing. When the contamination was reported by ATL to the USDA offices, requesting they formally investigate, an investigation was immediately initiated. When the USDA arrived at the food processing facility, they found contamination in a trailer adjacent to the processing facility and ordered the materials destroyed. PRIDE denied the existence of an additional warehouse facility and it was not found by the USDA.
When ATL was informed of this, they turned over the pictures and advised the USDA specifically where the materials were stored and exact location of the warehouse owned by PRIDE. Before the USDA could return PRIDE's counsel wrote letters accusing ATL of making up the "warehouse" claiming the USDA had inspected and noted no such facility. The attorney also advised that the pictures that had been taken by ATL were of another facility altogether and suggested to the USDA that they question him about the location of such an infested warehouse, to protect the public from consumption of products made using the materials.
The following day the USDA returned to the food processing plant and discovered the warehouse and contamination. PRIDE and their counsel had committed obstruction of justice by lying and deliberately mis-informing investigators in a formal USDA investigation. The materials were ordered destroyed and the USDA reported the contamination and condition of the warehouse to the Florida Department of Health.
When the lying was exposed, PRIDE's counsel was fired and Greenberg Traurig hired to take over. Immediately the USDA investigation findings faltered. ATL made trips to DC to provide testimony and the pictures and ask the USDA to allow him to recall all of the meat products that had been processed with the materials discovered, and produced bills of lading and production run sheets to show the materials had been used for months before the USDA investigated. The USDA refused to allow a recall of approximately 19 million pounds of the probable contaminated food products.
Greenberg immediately subpoenaed all documents then in the possession of the Government Accountability Project, in Washington, DC. There was no court case that would allow the issuance of that subpoena, and the judge in the Florida case had refused to issue a subpoena in the only case on the issues - PRIDE v. ATL Industries. Regardless of this and GAP's claim of client attorney client confidentiality, Greenberg's DC office was able to secure the subpoena from a local judge and GAP surrendered the file.
ATL had been working with GAP on the contaminated food, still trying to get the products off the shelves before public purchase and consumption caused widespread illnesses and Greenberg knew it.
In October 2008, a former Holland and Knight attorney, A. Brian ALbritton was appointed to the post of US Attorney General, Middle District of Florida. Another Holland and Knight attorney joined him as Assistant U.S. Attorney General - Mr. Tysen Duva.
Discovery in the ATL case produced a memo between a PRIDE Sales Manager, Rod Horne and PRIDE President, Jack Edgemon. The memo was dated December 14, 2004 and described in detail how they intended to force ATL out and replace them with the two new corporations they had created. The meeting included one of ATL's former customers, Colorado Box Beef (CBB). The memo discussed moving ATL's equipment and supplies so they could not gain access to them and the agreement whereby CBB would buy as much of the ATL product as possible and would provide cold storage where PRIDE could store the remainder of the product. It went on to state that Mr. Javetz ("President" of the two new corporations and former ATL supervisor) would apply for all the federal contracts then held by ATL.
The memo predates the actual action taken by PRIDE to eliminate ATL, and was sent during the same approximate time frame as the doctored ledger entries were created and sent to ATL demanding money based on the false entries.
As of this writing, ATL owner, Laurence Stone has lost his equipment, business and personal residence because of his partnership with PRIDE - at their urging. Additionally, he is now without counsel to pursue his litigation in the Florida courts. Greenberg and PRIDE's practice of winning litigation by attrition has worked - once again. CBB was named in the counter-suit initiated by ATL, and in 2008 they agreed to a settlement, paying a substantial sum to be removed from the suit. All of the money paid by CBB went to the firm representing ATL - and to proceed further they have demanded thousands more - while advising ATL they will prevail, it will just take time.
Mr. Stone had never heard of PRIDE nor the PIECP program prior to initial contact by PRIDE and their description of the program that allowed for the training of prison inmates. The concept was attractive to Stone as a social need and he agreed to help train them. He is now bankrupt as a reward for his efforts.
In July 2009 two of the corporations that were taken over by PRIDE's spin-off, Global Outsourcing were awarded a judgment against Global, PRIDE former CEO Pam Davis, former PRIDE CFO, Robert Smith, former PRIDE employees, Michael N. Harrell, Robert Whitaker and William Michau (all of these PRIDE personnel were involved in the Global spin-off corporation). The amount of the Judgment entered against the individuals and Global was $31,192,380.60 (click on Global Judgment). In pursuing the judgement CCS' attorney dropped PRIDE from the suit, eliminating any possibility of collecting on the judgment as all named individuals are no longer involved with either company and Global is defunct.
PIECP authorizes four types of deductions from inmate wages. One of those is a deduction for room and board. The guideline states that a prison industry maychoose to take deductions from the inmate's wages for room and board. If that choice is made, the funds are to be turned over to the Chief Correctional Officer of the state and he will determine what the funds are used for. In 1999 PRIDE was able to lobby for new legislation involving PIECP - as required by the PIECP statute. Florida enacted 946.523. This law was not in compliance with the federal statute when enacted as it provides the inmates may be paid "prevailing or minimum wage". Federal statute requires prevailing wages. The statute also provides at (1)(a)"Increase the benefits to the general public by reimbursing the state for a portion of the costs of incarceration."
However at the same time another law was created: 946.522 Prison Industries Trust Fund.— This law specifically diverts those funds deducted from inmate wages to a Prison Industries Trust Fund. Once the money is deducted from the inmate's wages (40% of gross pay) it is deposited into this Fund. The established fund is for PRIDE's use and is withdrawn and used to fund their operations. In essence, the little wages paid to the inmates is further reduced by 40% under PIECP, and taken back by PRIDE to offset their operating costs. To date this amount withheld and not turned over to FDOC to offset incarceration costs paid for by taxpayers is approximately $4 million dollars. None of this money shows up on PRIDE's annual reports as unearned income, and as a non-profit they are not taxed on this money.
In the next segment I'll discuss how PRIDE's business practices included the formation of nine corporate spin-offs (can anyone say "Enron"?) that they used to increase personal income of the Board members, CEO, President, CFO and others. How they loaned millions to themselves with no requirement of repayment. I'll also discuss PRIDE's business practices involving prison labor and how it has been disseminated across the U.S. to other prison industry operations.