Brian Connett

More Controversies at Nevada DOC – Director Cox Resigns

More Controversies at Nevada DOC – Director Cox Resigns

In mid-September Nevada Governor, Brian Sandoval asked for the resignation of Gregg Cox, Director of the state Department of Corrections. The action was taken by the Governor because a report about prisoner shootings and abuses by staff in the state’s prisons was late.

The report completed by the Association of State Correctional Administrators was to be presented by Cox at a Tuesday meeting of the Board of Prison Commissioners, which the Governor is a part of.

The governor felt that it was time to move the department in a new direction,” according to a statement from Gov. Brian Sandoval’s office on the departure of Greg Cox. The corrections department is facing several lawsuits due to prison shootings in the past few years.

One incident at High Desert State Prison left inmate Carlos Manuel Perez Jr. dead. Sources say Perez was handcuffed when he was shot and killed, and accuse prison guards of creating a “gladiator-like scenario” by allowing inmate fights to go on before firing into the fray. It wasn’t revealed until four months afterward that Perez died from gunfire.

Earlier in 2013 Cox’s department came under fire for allowing the DOC’s prison industry program to be used by a private company, Alpine Steel and company owner, Randy Bulloch to use inmate labor – without paying them wages.

Alpine Steel owner, Randy Bulloch

Alpine had been able to avoid paying rent, utilities, inmate or staff labor wages for more than a year, running up a tab of nearly $500,000 – while Deputy Director Brian Connett of the NDOC Prison Industry, (Silver State Industries) – turned a blind eye upon the climbing debt, allowing Bulloch’s steel fabrication operation to continue virtually free of overhead, at taxpayer expense. Connett went so far as to approve Alpines new contract with the NDOC, failing to report the back debt owed while reporting Alpine had fulfilled all requirements under the expiring contract.

The facts surrounding the Alpine case began to emerge in late 2012 when steel companies started protesting to NDOC and legislative authorities arguing they were being unfairly forced to compete against a local company using inmate labor. Business owners asserted they had lost bids on projects and thus were unable to expand their businesses or hire more workers due to interference from Nevada’s prison industry operations.

Governor Sandoval eventually stepped in and ordered the closure of the Alpine operation following those complaints. The challenges centered upon unfair competition by a private company using inmate labor to reduce labor costs and thus underbid complainants for lucrative state and private contracts involving fabricated steel materials.

Alpine quickly paid over $78,000 in back wages owed to inmate workers. The NDOC entered into an agreement with Alpine to repay the state the remaining money owed for staff wages, utilities and lease of prison facilities. Surprisingly the agreement had no provision for Mr. Bulloch to be personally responsible for any of the accrued debt owed.

Within months Bulloch defaulted on the terms of the agreement and the state secured a judgment against Alpine for more than $400,000. Alpine also incurred state and federal tax liens for non-payment of income taxes. These totaled more than an additional $680,000.

The taxpayers have been left holding the bag…. As a result of this I think there is going to be a lot more oversight,” Nevada Assemblyman James Ohrenschall said in an interview on Vegas Inc. September 21, 2013. Mr. Ohrenschall is the former chairman of the Legislature’s Interim Finance Committee on Industrial Programs. At the time of that interview, the IFC Committee was meeting to investigate facts related to Alpine Steel that prompted his concerns.

Unfortunately Mr. Ohrenschall was too optimistic in his assessment of oversight, but his claim of “taxpayers have been left holding the bag” is still accurate. To date the state has been unable or unwilling to pursue collection of the nearly half million dollar debt owed to taxpayers by Bulloch and his company.

Though Bulloch voluntarily surrendered his contracting license to the Nevada Contractors Board in October 2013, saying he was closing down his business…Alpine Steel’a website remains open for business while the company owner continues to avoid paying the state any of the money owed taxpayers under the court ordered judgment. Additionally, along with the Alpine website still showing it is an active business, Mr. Bulloch is now selling structural steel and fabricated components as Hunt Steel, also in Las Vegas. Links to fabrication, etc. on the Alpine site, takes visitors to Bulloch’s Hunt Steel site.

Director Cox managed to retain his position after the Legislature enacted new revisions to existing Nevada law to prevent potential or new industry operators from starting up without posting a surety bond to guarantee payment of leases and utilities owed to the state. Known as Senate bill 478, this law also provides that the public be notified of any potential new prison industry proposals, to date there has been no such notice given to the public or possible competitors though there have been new industries proposed to the Interim Finance Committee on Industrial Programs.

Just prior to Cox taking over as Director in 2011 he was a Deputy Director when the prison industries “wrote off” more than $800,000 in outstanding noncollectable debt owed to the Prison Industry Program. With Alpine’s additional $428,000, Nevada taxpayers have lost more than $1.2 million dollars. The now pending lawsuits against the NDOC, it’s staff and officers, could result in another $1 million or more needed to settle inmate abuse and shooting claims and/or court judgments.

It appears Director Cox avoided one serious controversy involving a lack of transparency only to succumb to another controversy involving transparency before the same Board of Prison Commissioners that again, included Governor Sandoval.

Nevada Prison Industry Administrative Rules Now in Place

Nevada Prison Industry Administrative Rules Now in Place

by Bob Sloan

silver state industries

Following a full year of investigating complaints and revising Nevada’s prison industry program statute(s), a new Administrative Rule (AR 854) regulating the operation of that state’s prison industry operation has been submitted to the Board of Prison Commissioners (BPC) by NDOC Director, Greg Cox.  In December this regulation was adopted and became effective.

Sen. Richard Bryan

Sen. Richard Bryan

In October the NDOC submitted a long list of new or amended AR’s to the BPC for approval and implementation.  At that time Cox withheld the proposed AR 854 addressing the operation of the agency’s prison industry operations.  Cox held back on this single AR by advising the Board he wanted to work with former Senator Richard Bryan on the language of that particular regulation.

On December 17th Director Cox submitted the final negotiated regulation to BPC members, Governor Sandoval, AG Masto and Secretary of State, Ross Miller for consideration.  Following approval by the Board, the new prison industry regulations are now in effect.

Cox-listens-to-testimony-crop

NDOC Dir. Cox

Critics and opponents of the prison industry program have now adopted a position of “monitoring” the state’s prison industry program. They’re doing so in an effort of ensuring there are no further infringements upon Nevada’s workers and businesses that compete against prison industries.  Last year it was discovered that the NDOC regulations were not being fully enforced and state statutes controlling prison industry operations were insufficient to protect both Nevada’s private sector workers and competing non-prison partnered businesses.

Alpine SteelAll of this came about after lawmakers, the media and general public learned that the prison industry program was more or less operating without any real oversight.  This allowed the NDOC to “partner” with a local Las Vegas business – Alpine Steel, LLC –  in a manner that provided that business with an unfair advantage over competitors and reduced the number of available private sector jobs.  Not only did this single business enjoy prison labor far below standard wage rates, but it also received low cost taxpayer subsidized utility costs and lease terms for state owned property that was far below the state averages. Additionally the NDOC failed to enforce most of the terms of the contract it had with Alpine, allowing the company to default on paying the salaries of NDOC staffers, prison workers and monthly lease payments or utility costs and making no effort to cure the defaults.

When this partnership was finally terminated by Governor Sandoval and the smoke cleared, the state was left with an owed debt of nearly half a million dollars.  Alpine’s owner entered into a negotiated agreement to repay the state but almost immediately defaulted, leaving taxpayers on the hook for hundreds of thousands of dollars in unpaid leases, staff salaries, utility costs and owed taxes.  This failed partnership resulted in the revamping of the state’s statutes controlling Nevada’s existing prison industries and all proposed new industries.

During the lengthy legislative activities related to the failed Alpine partnership, other issues were discovered that prison labor activists are continuing to pursue at both state and federal levels.  These include the hourly wages paid to inmate workers in the program, deductions taken from prisoner paychecks and working conditions.

Nevada is a participant in a federally run program (Prison Industries Enhancement Certification Program or PIECP) that encourages prison industry/private business partnerships such as the one involving Alpine.   However in order to establish and operate under such partnerships both the state and the private business must agree to abide by stringent mandatory conditions required by the federal government.  Two of the imposed mandatory requirements are that inmates be paid prevailing wages and that the state can only take approved deductions from those wages.  In the case of Alpine, the contract with the state required that inmate workers receive “prevailing wages” (section 8.6) or the same wage paid to private sector workers performing the same duties on the outside.  Instead, the NDOC and Alpine set the inmate wage rate at or below the state minimum wage scale, exploiting the labor of inmate workers and further enriching Alpine.

Subsequently it now appears Nevada is underpaying inmates working in the federal program and taking an unapproved deduction of 5% to fund new prison industry operations.  In effect Nevada’s inmate workforce are being made to fund operating expenses of the prison industry out of their already meager wages.

DD ConnettPrison labor advocates are attempting to work with the NDOC, Nevada authorities and the responsible federal agency to cure any purported violations regarding the PIECP program to ensure Nevada is in full compliance with current state and federal provisions regarding the use of inmate labor.

Currently the Deputy Director of the NDOC’s Prison Industry, Brian Connett has indicated there are no proposed new industries being considered by the agency. However prior to the furor caused by the Alpine situation, Connett was advocating for a new industry in Nevada operated by a California company. The operation would have used inmate labor at minimum wages to sort through collected trash and remove recyclables. The collection of trash and refuse across the state would have been accomplished by the same California company.  This project was moving forward over objections voiced by the labor representative of the Senate’s Interim Finance Committee on Industrial Programs, Mr. Mike Magnani.  This recycling “industry” was tabled once the Legislature began looking into the prison industry operations.

CONWAY ROBERT PDBusinesses and a second labor representative, Rob Conway now sitting upon the legislative Interim Finance Committee will continue to monitor activities of the prison industry to eliminate the possibility of another situation arising that could jeopardize business owners or private workers.  Additionally the amended statute requires the Board of Prison Commissioners to review and approve any new industries or expansion of existing ones.  Hopefully vigilance by the labor representatives will keep the prison industries and expanded partnerships in check and allow more of Nevada’s unemployed to find employment due to the reduction in new prison labor programs that eliminated positions in the past.

Only time will tell if the new regulations prevent another Alpine-styled incident from reoccurring.

Labor and Business Win Prison Industry Battle

Labor and Business Win Prison Industry Battle

By Bob Sloan

Today prison industries are booming with hundreds of thousands of prisoners employed in factories manufacturing a myriad assortment of products and providing services such as call centers, customer service, marketing, reservations and manual labor for municipalities.  Thousands of American workers have been displaced by companies choosing low paid prisoners as a labor force.  Many of these companies realize additional profits from subsidized leases for state manufacturing facilities within prison compounds.  This has been the trend since 1999 but today, as a Burl Ives lyric proclaims, “times, they are a changin’…”

Nevada represents the latest resistance to prison programs taking jobs out of the private sector and allowing unfair competition between private businesses where one company has access to low paid prisoners for their private workforce.

On May 29th legislation reining in control of Nevada’s prison industry program, passed the state Senate and was sent to the desk of Governor Brian Sandoval.  On June 1 the Governor signed the new legislation and it becomes law in Nevada on July1, 2013.  The introduction, passage and signing into law of this necessary legislation is a huge victory for opponents of prison industry programs in the U.S. – and signals to other states the need for similar vigilance of prison industrial programs.

Sen Smith 4-29

Senator Debbie Smith

Known as Senate Bill (SB) 478, the Nevada legislation was introduced and sponsored by the Senate’s Interim Finance Committee as a means of tightening controls over Nevada’s prison industry partnerships. Author of the bill was Senator Debbie Smith, Chair of the Senate Finance and Interim Finance Committees.

Private companies (union and non-union) joined ranks with union leaders in support of changing state laws regarding prison industry operations in Nevada.  

Sen. Richard Bryan

Sen. Richard Bryan

Former Nevada Governor and U.S. Senator, Richard Bryan, met several times with the state Board of Prison Commissioners and appeared before both Senate and Assembly committee meetings where he argued that necessary changes must be made to the existing prison industry regulations.

Senator Bryan was not involved in the actual writing or introduction of this measure (Senate Bill 478), but in interviews he stated he supported the proposed original legislation as it would open the program to needed transparency that would limit unfair competition complained of by workers and businesses in Nevada.  The Senator has not spoken publicly since the legislation was amended and passed, so it is unknown if he continues to fully support the amended language of SB 478.

Danny Thompson

AFLCIO Exec. Sec. Treasurer, Danny Thompson

sb 478 hearing conway

Ironworkers Local 433 Bus. Agent, Robbie Conway

Support also came from the AFLCIO, the local Ironworkers union and several law enforcement unions.  The AFLCIO’s Executive Secretary Treasurer, Danny Thompson and Ironworkers Local 433 Business Agent, Robbie Conway were the most vocal and outspoken union representatives on the prison industry issue.  Both made appearances before the Board of Prison Commissioners, the Nevada Senate and Assembly at hearings and meetings to object to the use of inmate labor to openly compete for the jobs of unemployed Nevada workers.

While both Thompson and Conway objected to prisoners being used by private companies to compete against other private businesses and workers, they were very concerned about the safety of Nevadans from projects built using prisoners in a “training program”.  One such project was the bridge over Interstate 15 in North Las Vegas.  Another is the Wet ‘N Wild water park project being built in Summerlin.  A third is the SkyVue Wheel on the Las Vegas strip.

wet n wild

SkyVue pic

All of these projects were scheduled to be built with structural steel components manufactured by prisoners working in a prison industry training program located at High Desert State Prison.  That was the intent until the public became informed about the use of prisoners manufacturing key structural components for such projects and in response the Governor ordered the closure of the prison industry where the steel was made.

This state action in Nevada follows similar legislative amending in Texas in 2009-2010 after businesses complained of unfair competition from prison industry operations there.  The Texas circumstances are nearly identical with a situation that consequently evolved in Nevada just three years later.

Lufkin Industry’s trailer division was shut down due to an undisclosed operation by a prison company making the same products and selling them competitively in Lufkin’s market.  Following this discovery, the Texas legislature enacted laws to protect workers and competitors from prison operated industries using inmate labor.

This legislative session, Nevada was forced to take similar steps to protect workers and business owners from suffering the same fate as workers in Texas.

Silver State Industries (SSI), operated by the Nevada Department of Corrections (NDOC) enters into contracts with private companies to allow the use of inmates as a labor force for manufacturing goods.  Previously these partnerships were developed quietly with a total lack of transparency or notice to competing companies regarding any possible impact upon private business or Nevada’s unemployed workers competing for business or jobs.

Cox-listens-to-testimony-cropDirector Cox of the Nevada Department of Corrections candidly admitted earlier this year that he and his department had not been following requirements and protocols called for by state law and department regulations.  Besides the undisclosed competition using inmate labor, there is an issue of lost money from possible mismanagement of the NDOC.

One of more of these “industry” operations using prisoners as a labor force for select private companies resulted in substantial dollars lost to the state due to non-payment of leases, wages, utility costs and other expenses advanced to companies in an effort of keeping them operating and prisoners employed.  SSI’s current account receivables are in excess of $600,000 and previously in 2010 $800,000 was sent to collectors to try and recover.

As a result of poor business practices, SSI has lost hundreds of thousands of dollars and nearly exhausted a $1.5 million dollar contingency fund.  The industry closed by order of the Governor was a metal/steel fabrication plant at the High Desert State Prison.  This single operation is at the center of the controversy surrounding prison labor and unfair competition that formed the basis for the new legislation.

Silver State Industries had a long standing contract with Alpine Steel, LLC that allowed inmates to manufacture structural steel used in public and private projects secured through standard industry bid procedures.  Alpine used the cheap labor they paid to inmate workers as a means to secure numerous competitive contracts utilizing low labor projections/costs.  Other companies protested they were losing work and thus unable to hire more unemployed steel workers due to unfair competition from Alpine using state prisoners as the company’s “private workforce”.

When it was discovered Alpine was not paying the lower wages owed to the inmate workers or salaries of NDOC supervisory staffers, the story elicited strong reactions from taxpayers and lawmakers alike.  In addition to these payroll defaults, Alpine was behind on agreed lease and utility payments and had failed to reimburse the state for worker comp premiums on the inmate workers – for a period of approximately four years.  The state paid the wages of staffers, the work comp premiums and utility costs which mean the “taxpayers” were subsidizing a substantial amount of Alpine’s operation.

Under media and public pressure, the Governor became involved in December of last year.  Almost immediatelyAlpine’s prison industry operation was ordered closed.  Following the closure Alpine and the NDOC negotiated a repayment agreement with the Attorney General’s office that was very favorable to Alpine’s owner.  The agreement allows Randy Bulloch to make monthly payments to the state over a period of another four years until the debt is paid.  Surprisingly, this agreement does not provide for any interest, fine or penalty for the huge debt from the default(s).  Ultimately the state wound up on the hook for $438,000+ owed by Bulloch.

DD Connett

NDOC Deputy Director, Brian Connett

These default(s) were known to NDOC Director Cox and Deputy Director Brian Connett (Deputy Director of the Prison Industry) but neither took any positive steps to recover the money owed and bring Alpine current.

As originally proposed, SB 478, subsection 7 required notices and an opportunity to be consulted about proposed new prison industry projects be provided to private companies and labor organizations.  It further required the NDOC Director and Deputy Director of Prison Industries to provide the Senate Interim Finance Committee (IFC) on Industrial Programs with information on possible impacts upon labor or sales from proposed new prison industries.

Instead of requiring the NDOC to consult directly with businesses that may be affected by new or proposed industries, the amended legislation (subsections #7 in the amended text) calls for other state agencies or departments to conduct studies and submit reports of possible conflicts involving labor or market sales.

Though the legislation as passed does not contain all the provisions hoped for by supporters, necessary key provisions calls for more transparency and oversight over prison industries – and their competition against private companies having to compete against low prison wages.

Two key provisions of SB 478 are the provision that the NDOC must provide documentation to the IFC for approval of new programs and then if approved there, any proposed program must be considered by the Board of Prison Commissioners (composed of the Governor, AG and Secretary of State) for final approval.  Though this provision was already in place, these were circumvented previously.  The second change is the addition of a second union representative added to the IFC Industrial Program Committee.  This will help ensure Nevada workers are protected from unfair prison labor displacing them or taking jobs from a constantly dwindling job market.

Provisions that the NDOC seek approval for new industry projects from the Bureau of Prison Commissioners, provide notice to the private sector, consultation with businesses and labor on proposed new industries and that any industry have an “insignificant” impact upon displacement of workers; were requirements that were not followed.  These actions – or lack of action – were behind the need for this new legislation in the first place.  Ironically this failure to inform or consult directly with competing companies and unions necessitated SB 478…yet as passed, that critical component has been removed from the final language of the bill.

Cox originally took the position of “neutral” on the proposed legislation…then changed that to “opposed” to the bill.  Finally after negotiating out the requirement to provide direct notice to labor or competing companies, Cox and the NDOC came out in “support” of the measure.  This manipulation gives the appearance that the NDOC wants to avoid any direct notice or contact with the very businesses the prison industry program will be competing against.

The default by one company resulted in complaints against the NDOC for using inmate labor to compete unfairly against private companies.  Everyone involved realized the potential for lost jobs in the private sector along with lost sales to competing companies and led to hearings and meetings before the Board of Prison Commissioners and several Senate and Assembly Committee meetings in 2012 and early this year.

Ultimately information that came out in those hearings and through the media revealed that the NDOC’s prison industry program was “off the chain” (to use the vernacular) and being operated without any true oversight – by the NDOC or other government authorities.  In the end Alpine Steel did Nevadans a favor by their defaulting across the board.  The action of this one company is what angered the public and led to a quick response from lawmakers and the Executive branch.

Unexpectedly, the NDOC continued to use Randy Bulloch as a spokesman for continuing prison industry operations as they were.  Bulloch appeared at nearly every Committee hearing; before the Interim Finance Committee on Industrial Programs, the Board of Prison Commissioners, the Senate Judiciary Committee and before the General Assembly – side by side with SSI Deputy Director, Connett – speaking in support of continuing the prisoner “training program” and arguing that using such labor was really not unfair competition.  At one point he argued if he and other companies using inmate labor had to pay prisoners fair or comparable wages, it would result in closing prison industries altogether.  In advancing that argument he failed to realize that while the low wages and cheap lease of state owned industry facilities to his company provided increased profits, such came at the expense of workers displaced by the prisoners and businesses that lost contracts to Alpine due to the use of prison labor.

This was the “unfair competition” businesses, the public and organized labor protested against and the legislature agreed with them on.  That’s why it was unexpected to see Bulloch, Cox and Connett continue to confer and present arguments against reform of the prison industry in the face of widespread calls demanding reform by everyone else.

SB 478 surprised everyone – lawmakers and public alike – by how quickly it advanced through the Senate and then Assembly once introduced.  Historically proposed legislation takes a substantial amount of time being discussed, amended and again discussed before ever getting to the point of a vote.  This bill introduced on March 25th passed in just over 60 days and will become law approximately 90 days after submission.

The NDOC and the department’s head of SSI will remain in charge of the state’s prison industry program.  Even after demonstrating the agency and top administrators violated the state laws and administrative regulations, the NDOC has been able to successfully maintain overall control.

I weighed in on this issue in Nevada as soon as the issue became public.  As the Executive Director of the Voters Legislative Transparency Project (VLTP), I provided research, a “white paper” report with documentation to Governor Sandoval, AG Cortez-Masto, Secretary of State Miller, members of the state Assembly, the IFC on Industrial Programs, the Senate and personally to Director Cox.

VLTP Directors and staff traveled to Nevada to be in attendance at some of those meetings and spoke directly with Mr. Bulloch and others on the issues.  Many of the tough questions posed to Cox and Bulloch in subsequent hearings or meetings originated from the VLTP analysis and report.

VLTP has publicly supported the legislative efforts to bring the prison industry program in Nevada under control and force it to operate in a transparent manner.  I’m gladdened that all the effort put into solving this issue has been successful and will benefit workers and businesses moving forward.

The final version of SB 478 came as a result of compromise between lawmakers, businesses, union leaders, workers and the NDOC.  None of those involved got everything they wanted but that’s how “compromise” works.  It’s a needed step in the right direction and now new SSI industry programs or projects will come under intense scrutiny and vetting prior to implementation.  Such scrutiny was absent previously.

Expecting the same government bodies; the Legislature’s IFC and the Board of Examiners to protect the interests of workers and competing business owners is difficult.  Oversight and transparency will be the key ingredients to keeping the prison industry program from once again getting out of control.  This new legislation appears to provide both.

Nevada Ways and Means Committee Weighs in on Prison Industry Battle

The Result of Bureaucrats’ Operating as Businessmen

By VLTP Executive Director, Bob Sloan

In the continuing saga of Nevada’s Silver State Industries (SSI), the Legislature’s Ways and Means Committee held a hearing this past Friday, March 8th to discuss the budget of the Nevada DOC which includes state prison industry operations.

Critics of the industry program have found traction with the discovery that Alpine Steel, a private company, had access to inmate labor, subsidized facility leases and even with those subsidized benefits owed the state more than $400,000 in accrued debt.  In late 2012 when this story first broke, it was discovered that Alpine also owed inmate workers back wages to the tune of $78,000.  Because inmates are “assigned” to industry jobs by the NDOC, they were prohibited from simply quitting or asking for a reassignment due to not being paid.  They worked for an extended period without receiving any compensation for their labor – or if they were paid the wages did not come from their employer, Alpine Steel.

Connett and Cox pix

On Friday morning Committee members had an opportunity to question two top NDOC officials, Director Cox and his Deputy Director in charge of prison industries, Brian Connett.  Those in attendance described the meeting as tense between lawmakers and corrections officials.

Once this story broke in the media, Alpine made the necessary back wage payments to the inmate workers – but continues to owe the state for delinquent lease payments and NDOC staff salaries.  One Assemblyman asked the Deputy Director if the state had paid those salaries, and if so had Alpine repaid the outstanding wages.  The response was a half-truth, with Connett responding, “The back wages have all been paid.”  In fact those wages are part of the total $415,000 owed by Alpine.  The wages already paid are those owed to inmate workers – not NDOC staffers, which remain outstanding.

At times lawmakers displayed exasperation as they attempted to extract factual answers from Cox and Connett, who had difficulty answering direct questions related to prison industry operations; failing industry programs, financial losses and low cost leases of public facilities to private companies.

Cox and Connett were even less open about the situation involving Alpine Steel’s use of inmate labor to compete against other businesses in Southern Nevada, or the huge sum owed by Alpine to the NDOC for back lease and DOC staff payments.

Though lawmakers voiced concerns of the impact upon workers in the private sector and competing businesses, Cox and Connett did not seem to share those concerns, instead advocating that inmates need training while incarcerated to help reduce recidivism.  The irony of turning prisoner training over to a company with a history of questionable business practices – IRS tax liens ($668,000+), $415,000 in back lease and DOC staff salary obligations, unpaid state taxes (new Nevada Dept. of Taxation lien for $37,000 filed within the past month against Alpine’s owner, Randy Bulloch), lawsuits for money owed to creditors (F&M Steel and Pierce Aluminum) and is in litigation over unpaid worker’s compensation claims ($84,716 owed to Explorer Insurance Co.) – was apparently lost on Director Cox.

After all the controversy, debt owed to the state and concerns of both Nevada’s organized labor, workers and private businesses, Cox appeared openly insensitive to both issues by advising Committee members if Alpine’s business picked up, he would reopen the metal fabrication shop at High Desert State Prison to the company! This is indicative of a bureaucrat who genuinely believes he can make such decisions without consulting higher government or legislative authorities.

The general attitude of both was that inmate training was more important than the possible loss of jobs to Nevada’s unemployed steel workers, the potential for lost tax dollars or the impact upon businesses competing with Alpine Steel – or any of the half dozen other companies operating under joint venture contracts with Silver State Industries.

At one point Connett indicated that some of those complaining had been offered a chance to “partner” with the prison industry and had declined, seeming to suggest those businesses shared responsibility for any damage resulting from competition from prison industry operations…because they didn’t take him up on the offer.

Some answers provided to the Committee were enlightening, if incomplete.  Director Cox stated,”the cold hard facts are now that we have to aggressively look at what industries are not turning a profit.”

In addition to losses sustained by prison industry operations, the administrative office is operating in the red ($165,000+ over past two years), the industries’ furniture and metal, auto, upholstery and drapery shops have lost hundreds of thousands of dollars during the past few years.  Collectively Silver State Industries lost $81,597 in 2011 and $237,793 last year overall.

In 2010 the prison industries turned over more than $800,000 in accounts receivable to a collection agency and currently SSI’s past due AR account is in excess of $600,000.  In the budget discussion it was disclosed that the prison industry arm of the NDOC had a reserve fund of $1.5 million which due to continuous losses has been reduced to half a million.  If forced to absorb Alpine’s debt, the reserve fund will be exhausted.

David Bobzien, D-RenoIn response to the dwindling reserve, Assemblyman David Bobzien, D-Reno voiced concern that when that reserve is exhausted, the prison industry would begin to dip into the general revenue fund, saying, “This is a clear track into the dirt, and without substantial retooling, it’ll be in the hole”

 

 

Catherine Cortez Masto, Michael Sprinkle, John Hambrick

Bobzien and Assemblyman Michael Sprinkle, D-Sparks, questioned Cox about whether industry programs would be cut and what the department would do to get its industry program on a sustainable track.

Cox said he’s “very pessimistic” about future revenues and that “when resources go, of course programs will go.”  They were unable to get Cox to provide them with definitive responses or propose solutions to cure the industry’s financial woes.

Assembly Speaker Marilyn Kirkpatrick

“It appears that at some point the reserves are going to run out, but in the meantime, it’s a loss-loss across the state,” Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas, said, weighing in.  Kirkpatrick also had difficulty getting straight answers to some of her questions on business management issues and as to whether the prison industry program is really about training or rather a work program, putting inmates to work for privately owned companies at the expense of non-inmate workers.

Big House ChoppersIn supporting the prison industry operations, Connett pointed to the “Big House Chopper” program.  An industry created by Howard Skolnik when he was in Connett’s position.  While using that program as an indicator of the work inmates were capable of and alluding that this industry was successful, he failed to advise the Committee that he closed that program two years previously:

 

“Mr. Magnani said some time ago the motorcycle production was shut down, there was some motorcycles that Prison Industries was attempting to sell online. Mr. Magnani requested an update to the status of the built motorcycles. Mr. Connett informed the Committee that three motorcycles were for sale. Prison Industries was looking at reducing the price based on the current market. The motorcycle operation has been discontinued.”

Prison Industries manufactured a total of five motorcycles.  Two of those were sold in a “sweetheart deal” to one of Connett’s other prison industry companies, Thomson Equipment.  Despite vigorous advertising on eBay and other outlets, the remaining three have now sat for several years without any interest shown by potential buyers.  Another example of funds wasted to advance a prison project that has eaten away at the profits generated by other industries – both in dollars spent for materials as well as advertising.

Clearly referring to the motorcycle industry, the Deputy Director exhibited these half-truths to the Ways and Means Committee in an attempt to justify the need and usefulness of continued “training” of prisoners – whether the industry providing the training is viable or not.  In the case of Big House Choppers, it is long gone.

Examinations of the financial statement(s) for SSI for 2011-12 reflect that traditional prison industries such as farming, ranching, license plates, prison garment(s) and printing were all profitable.  It is the industries operating in partnership with private companies that are failing; metal shop (Alpine), drapery, automotive and upholstery for example.

Not only are these failing industries losing money, they are the ones negatively impacting upon private workers, potential workers and suppressing expansion of competing Nevada businesses.  These are also the industries that have been receiving substantial tax and lease benefits that are denied to competing businesses, resulting in an unfair advantage.  Companies using inmate labor do not appear to be paying Nevada’s Modified Business Tax, which further depletes the tax base while increasing potential corporate profits and disadvantaging their competitors.

Another issue of contention was the lease agreement between SSI and Alpine.  In 2011 Alpine was in arrears yet Connett authorized a lease contract that provided 19,000 square feet of manufacturing space at the unbelievable rate of $.26 cents per square foot ($5,000 per month).  The Nevada average for such space has been depressed due to the recession, but is currently at $.68 cents per square foot.  For the same square footage a private company would pay $12,990 per month in the “free world.”  This saved Alpine as much as $95,000 a year in operating expenses.  Assemblyman Bobzien called the Alpine lease an “unfair subsidy”.  There was no question as to how many of the other companies partnered with SSI were receiving similar low cost leases.

All of the losses described above, lead to more than an “appearance” of total mismanagement.  It is assumed that Greg Cox was chosen as the Director of the NDOC based upon an ongoing career in corrections.  He wasn’t chosen for his business acumen.  Putting him in charge of overseeing contracts, leasing arrangements and other commercial business decisions appears to be well outside his expertise.  Between them, Cox and Connett have made decisions that have negatively impacted taxpayers, private businesses and Nevada’s workers – yet when called before a legislative body to explain those decisions, they exhibited their lack of actual knowledge and experience in business practices.  Making matters worse they demonstrated they were willing to blunder through and by making statements claiming they would reopen the prison metal industry to Alpine Steel…and claiming Alpine Steel deserved a lower lease rate because of the difficulties of getting materials in and out of the prison and transportation logistics.

Again it needs to be said that those are matters for someone higher along the government chain to consider and make the final decision on.  It is unrealistic to allow a Deputy Director or Director to enter into binding contracts and leases that reduce the revenue streams from leasing state owned property or facilities.  It is also unrealistic to give Cox or Connett the authority to waive payments owed for leases, salaries or materials owed to the state.  By assuming these duties, these bureaucrats were gambling with taxpayer money, betting on Alpine Steel and similar companies to ultimately become viable and repay debts owed – debts they allowed to accrue and are now having difficulty justifying.  All can now see they lost that wager, with Alpine Steel and other companies owing NDOC more than $600,000 collectively.

 

Danny ThompsonIn the public discussion period following the questioning of Cox and Connett, Danny Thompson, executive secretary treasurer of the Nevada AFL-CIO discussed the impact upon non-inmate workers on the outside from contracts such as that between SSI and Alpine.  He brought up the issue of safety to Nevada citizens that travel over or under a bridge spanning Interstate 15 that was constructed using prisoners in a “training program”. He said Alpine Steel produced steel girders for the construction project at the North Fifth Street Bridge in North Las Vegas and he questioned whether strict certification requirements for such projects were complied with in the training of inmate workers.

Thompson also called into question whether the materials used in the project met strict industry, state and federal specifications as to stress, weight and other factors involving materials used in the project – and wanted to know if inspections were conducted properly.  He also expressed concerns over the Wet ‘N’ Wild theme park project where Alpine was the structural steel contractor, saying he worried about the safety of children and families who would be visiting the park where inmates in training made many of the steel components.

CONWAY ROBERT PDA member of the Iron Workers Union, Local 433, Robert Conway also spoke, stating he had three hundred and fifty qualified iron workers without jobs, while the state was helping provide inmate welders for Alpine at wages far below the prevailing wage.  He also voiced concerns over the safety issues raised by allowing inmate steel workers to fabricate steel components used in public projects.

In response to criticism from Committee members and the public, Alpine owner, Randy Bulloch appeared via teleconference from Las Vegas and issued a statement in response to Thompson’s concerns, claiming that inmate workers were in fact certified as required.  He denied the use of structural steel components manufactured by Alpine in the bridge project and added that he had copies of material inspections and specs.  Bulloch spoke about his company in general terms but made no effort to defend the use of prison labor in the manufacture of structural steel used in his business.  It should be noted that Alpine Steel makes no mention on their website of the use of prison labor in manufacturing steel components, or that the company is involved in helping train prisoners.  That factoid is noticeably absent – as it is with TJ Wholesale and Jacob’s Trading, two other companies partnered with SSI and leasing facilities from the NDOC.

What wasn’t posed to Connett and Cox in the questioning by the Assembly Committee was the issue of a potential conflict of interest involving Nevada’s prison industry and compliance oversight.

The trade group, National Correctional Industries Association (NCIA) provides oversight over all prison industries in the U.S. and of late, internationally.  The NCIA does this under a grant from the Bureau of Justice Assistance.

This trade group advocates and lobbies on behalf of companies, corporations and organizations involved in prison industry operations, supplying those operations or benefiting from the labor of inmates.  Connett is currently serving as the  Chairman of the NCIA and thus able to make determinations as to whether his actions and thus SSI are in compliance with prevailing laws.

Many of the questions posed to Cox and Connett by the Committee members arose due to a comprehensive study I conducted for the non-profit Voters Legislative Transparency Project (VLTP) organization. As Executive Director with an interest in prison industries, I have been involved in researching and investigating prison industry programs for more than a decade.  In January VLTP submitted the study of Nevada’s prison industries to members of the Nevada legislature, Governor Sandoval, AG Masto and Secretary of State, Ross Miller.

In that report many of the deficiencies and issues discussed Friday were presented along with documentation supporting the conclusions and recommendations made.  The questions posed by Committee members indicates they had all read the study and wanted answers to the questions raised by the research.

One observation made during the research phase of compiling the study, is that it appears that Cox, Connett and the NDOC are attempting to run the state department of corrections as a “business” rather than a state agency.  Partnering with businessmen and women who deal daily in matters of profit/loss and market share, the NDOC is woefully unprepared, as the accounts receivable and low-cost lease to Alpine demonstrate.  Director Cox, Connett and the NDOC seem not to understand that any losses arising from these partnerships between SSI and private companies are ultimately borne by Nevada’s taxpayers.  This already happened in 2010 when Cox’s predecessor, Howard Skolnik applied for a Supplemental appropriation from the Legislature due to losses incurred from recession and reductions in prison industry income.

With more than a million in uncollected debt since 2010 and lost streams of revenue due to sub-par leases, industries losing hundreds of thousands of dollars annually, the NDOC is being critically mismanaged.  As a state agency, it is the taxpayer who will be left making up the lost revenue from this lack of management.

One recommendation made directly to the Governor was that Nevada adopts the in-place mandatory guidelines of the Prison Industries Enhancement Certification Program (Pie Program).  This program allows joint ventures between private companies and state prison industries.  It provides a way for private enterprise to have access to inmate labor and to distribute products across state lines, sell to the U.S. government in amounts exceeding $10,000 and to sell those goods in consumer markets.

The Pie Program has nine mandatory requirements and four of those developed by Congress for this program include:

  • Wages. Authority to pay wages at a rate not less than that paid for work of a similar nature in the locality in which the work is performed.
  • Non-inmate worker displacement. Written assurances that PIECP will not result in the displacement of employed workers; be applied in skills, crafts, or trades in which there is a surplus of available gainful labor in the locality; or significantly impair existing contracts.
  • Consultation with organized labor. Written proof of consultation with organized labor prior to program startup.
  • Consultation with local private industry. Written proof of consultation with local private industry prior to program startup.

Nevada is already participating in this program and has Pie Program operations running in the prison industry.  Those businesses appear to be operating without financial losses to the state or SSI, in compliance with the mandatory requirements and thus, not exhibiting any of the problems the non-Pie Program involving Alpine is.

Adopting these regulations would ensure consultation with competing businesses, labor groups, and unions ensuring inmates are paid the required prevailing wage.  Since the NDOC deducts 24.5% of the gross wages paid to inmate workers, the amount taken through this deduction would increase and those funds would be used to offset the costs of incarceration. Combine adopting these guidelines with genuine oversight provided by the Nevada Board of Prison Commissioners, chaired by Governor Sandoval and I believe this is a solution to the existing problems experienced by the NDOC.

Continuing to allow a private non-profit trade association to oversee the state’s prison industries in the face of the controversy that has erupted while they had such oversight duties, is asking for more trouble.  As the head of the NCIA Connett has demonstrated he lacks the desire to enforce compliance and he is willing to put the interests of that organization above his responsibilities to the state.

NDOC & Silver State Industries – Meet the Exploiters – Expose on Prison Labor in Nevada Pt. II

Second in a Three Part Expose on Prison Labor in Nevada Displacing Workers

(Reposted from January 11th)

By Bob Sloan – Prison Industry Consultant

SSI GarmentWorking on the “Chain-Gang” was how prisoners were punished for their crimes in days gone by – and people who had been victims of crime were happy.

Then we became “civilized” as a society and changed laws, regulations and opinions that eliminated these hard forms of punishment and degradation.  Instead of harsh working conditions we made sentences longer, believing that to be more humane.  Parole was abolished; possession of a “joint” was enough for a mandatory five years in prison.

Problem was, all this incarceration was costing taxpayers ever more in corrections costs.  Lawmakers sought ways to reduce the ever-increasing expense of incarceration.

An idea was born: create prison industries where prisoners could be put to work to “earn their keep” and reduce the incarceration costs borne by taxpayers.  Soon another idea was floated, let private manufacturers gain access to the prison run factories and further reduce the expense of housing, feeding and providing medical care to prisoners.  Inmates can be taught work ethics, products made by them will cost us less and recidivism will be reduced…and once again the people were happy.

Problem is, this program has created more opportunity for crime and exploitation – of the prisoners themselves. Instead of prison populations shrinking, they grew.  This growth was due to more laws, stiffer sentences, the war on drugs and increasing penalties.  Alongside that population the prison industries grew even faster with more inmates came more job positions.

This labor force exists in a near vacuum; no voice, no representation, disallowed from unionizing (though today an estimated six hundred thousand to one million men and women are working in prison industries nationwide), sentenced to hard labor by courts.  DOC’s assign them to jobs, and if they have existing skills needed, they are put to work in prison industries.  Industry managers seek skilled inmates with long sentences in order to quicken production, maintain shipping schedules and dependability.

Court challenges under the Fair Labor Standards Act (FLSA) about wages and deductions are mostly denied with prejudice – meaning the plaintiff is prohibited from ever filing such claims in the future.

In Florida and Nevada (just two of nearly 40 states involved), percentages of what little wages earned are taken back and given to the prison industry to help expand or create new work programs.  This aspect itself violates one of the key tenets of the federal prison industry program referred to as the “PIE Program” and there are other more critical violations resulting in our jobs being lost to prisoners.

This expose will bring to light the existence of a national network of individuals, corporations, a private association, agencies and branches of state and federal government involved in exploiting inmate labor, profiting off that exploitation and pursuing the transfer of tens of thousands of jobs from communities to prisons across the country.  Nevada ranks high on the list of states involved in violating the trust of their citizen workers, small businesses and exploiting prisoners delivered into their care.

In Nevada the prison industries are managed by Director James “Greg” Cox and Deputy Director, Brian Connett.  Previously one individual held both of those positions as prison industry programs were developing back in the last quarter of the 1900’s – Howard Skolnik.  He set the stage for what is occurring today and now, Cox and Connett carry on in his stead.
Howard Skolnik

Harold Skolnik

Running an entire state prison system is a daunting task.  Housing, medical care, work programs, staffing, budgeting, and regulatory and Legislative compliance impacting prisons.  The Director of Nevada’s Department of Corrections is James “Greg” Cox.  He has deputy directors assigned to the various divisions of the DOC, and in general I believe that Director Cox and his Deputies are doing an admirable job.  The one exception to my observation involves the DOC’s Prison Industrial Program.

One of Cox’s responsibilities is the operations of the prison industrial work programs.   His Deputy Director for Industrial Programs is Brian Connett, in charge of running Silver State Industries (SSI) Nevada’s prison industries program.  Messrs. Cox and Connett are responsible for insuring that the prison industries are operated properly under state and   federal laws.

Cox and Connett

            NDOC Director, Greg Cox  |                        Deputy Director, Brian Connett

Supervising and operating Nevada’s prison industries involves approving new products, new factories, partnerships with private companies, and compliance with all applicable state and federal laws and regulations.   These are the responsibility of the Nevada Interim Finance Committee’s Committee on Industrial Programs.

For that committee to perform its duties properly, they obviously have to know and understand the parameters of the federal PIE Program’s mandatory requirements (1) that govern the use of inmate labor used by private companies.  Before they can implement any new projects, they must, among other responsibilities, notify existing competitive businesses as well as involved labor groups—after all, how can they judge whether a new prison industry will unfairly impact local labor or unfairly disadvantage competing businesses if they do not fully understand the provisions put in place by Congress to guard against such interference to free-market forces?

Unfortunately in an interview with a member of that committee, I was told he was not fully aware of the PIE Program’s mandatory requirements, and that concerned him.  He did not know that local businesses were required to be contacted prior to operational start-ups or production of new products.  More importantly, he had not been advised by anyone within NDOC or Silver State Industries that labor groups were also to be consulted.  How then can he serve on this committee without this knowledge?  How can the committee control the federal program in which Silver State Industries is participating – and how can it possibly certify to the federal government that it is, and will remain, in compliance with rules of which the members are unaware, as is required by law? This style of “consulting” is quite obviously insufficient to ensure compliance.

The federal program of prisoner training began with the passage of 18 USC 1761 in 1979. This law is known as the Prison Industries Enhancement Certification Program (commonly called PIECP or PIE Program).  (2)

Under this program Congress allowed private companies to gain access to inmate labor in order to “train” the inmates and provide skills which they could later utilize upon release.  Congress put in place nine mandatory requirements.  Failure to comply is supposed to subject violators to federal imprisonment for up to two years and/or a fine of $50,000.00 and loss of PIECP certification.

The Department of Justice outsourced policy determinations, enforcement, compliance reviews and investigations of non-compliance to a private organization in 1995–the National Correctional Industries Association.  The NCIA, (3) which is a trade group representing prison industries, their staff, employees, vendors, suppliers and companies using prison labor.  Since this transfer of program oversight, there have been a total of -0- prosecutions for violations.  As you read the following you will be appalled at how such a zero-sum figure is possible…
Once the NCIA assumed a duty of crafting policy for this program, they began to interpret the nine mandatory requirement in the light most favorable to their corporate members, (4) adjusting annual assessment determinations to reflect alterations designed entirely by them.  The NCIA made these alterations and the entire program was changed.

The mandated prevailing wage requirement was changed to minimum wage scale computed to the 10th percentile, and allowed these prison industries to institute a pre-training program where wages could be reduced to as little as $.20 per hour. (5)

In December, 2010 the BJA (Bureau of Justice Assistance) issued a Back Wage Policy (6) that unequivocally reinforced the prevailing wage requirement and refuted the wage assumptions made by the NCIA. (7)

The claim that lower wages are fair to “competitor manufacturers” is false.  Furthermore, in Nevada a high percentage of inmates working in the industry are serving long sentences or life terms (as reported by CNN) (8), meaning that the skills they are taught will likely never be applied in the private sector.

A Florida report containing research provided to Governor Scott by his 2010 transition Law and Order team found that 28% (9) of the prison workforce was comprised of lifers or prisoners serving sentences with ten or more years remaining until release.  So what transferable skills are they learning?

Silver State Industries has set the PIE Program maximum wage for all inmate workers at the 10th percentile of the state/federal minimum wage.  Unless the “prevailing wage” is set by the state OES (10) at minimum wage for all occupations in NV, the NDOC is out of compliance with the mandatory wage requirement.

The NCIA also determined that mandatory notification to local labor groups, unions and competing private businesses about new or existing industry projects or products, could be satisfied by informing local Chambers of Commerce, or advertising in classified sections of newspapers.  Compliance review personnel were told these requirements were already on file with the NCIA and had been verified (11) and would not be a part of the annual compliance review.

These changes resulted in a substantial reduction in wages to inmate workers, creating a huge and low paid labor force used to attract business owners seeking to expand operations or reduce labor costs.  The NCIA produced a video entitled “Cutting Through The Perceptions” (12) to be used in marketing prison labor to private companies.  By neglecting to pay proper wages and neglecting to notify labor and free enterprise, prison industries began to expand and grow quickly as one would expect.

As the video shows, this prison program is not for training, it is a way to provide skilled labor to private companies to reduce labor costs, increase production and avoid typical “benefits” they would have to pay to private sector employees.

This brings us to the current situation involving Silver State Industries and Alpine Steel in Nevada, and complaints lodged with the Board of State Prison Commissioners by XL Steel and others who have also complained about unfair competition and the loss of private sector jobs to inmate labor.

This all serves to show you how the PIE program has been manipulated, changed and altered to provide the maximum savings to companies involved in prison labor, while paying the least possible wages to a truly captive workforce.

Now that you readers understand the laws which are involved, I will document the specific violations committed in Nevada involving those regulating the state DOC and Silver State Industries.

Recent reports (13) from Las Vegas reveal it recently came to the attention of companies competing with Alpine Steel in the structural steel fabrication industry, that Alpine had been using prison labor as a means of undercutting all competitors on projects requiring bids.  Labor unions were unaware of the PIECP program.  Union officials had no understanding of the PIE Program or that they were to be consulted prior to the startup of any PIE project or industry.

It defies belief that SSI could have been reviewed by the NCIA in 2011 (14) and found in full compliance…except for one little conflict-of-interest kept from the public and apparently also from the Nevada legislature and the Board of State Prison Commissioners:  NDOC Deputy Director Brian Connett is also President of the NCIA (15) with a responsibility for ensuring, enforcing and certifying full compliance of all state prison industries to the BJA.

Harder yet to comprehend is how Mr. Connett has been able to enforce and certify industry-wide compliance, when he and Director Cox claim to have not known or understood the regulations while just now admitting SSI and NDOC are in violation?

The NCIA receives a sizable grant from the BJA (out of tax dollars) to perform compliance duties, essentially receiving a subsidy for self-oversight of an industry generating annual sales of $2.4 billion dollars. (16)

Under questioning by Governor Sandoval and others at a recent meeting of the State Board of Prison Commissioners, Director Cox admitted (17)that his “agency has not been performing necessary checks to ensure inmate work programs are not taking jobs from private industry workers.”  Mr. Cox went on to say, “The process has not been followed, it should have been.”

Mr. Cox indicated that, “he will develop regulations to require that prison industry programs be approved by the Prison Commissioners Board, chaired by Gov. Brian Sandoval.”

However, new regulations are not necessary.  Existing Pie Program regulations need enforcement and true oversight provided by someone other than those participating in the program.  SSI’s inmate workers for Alpine Steel are a prime example of the lack of enforcement.  Alpine pays inmates working as structural steel fabricators the state minimum wage of $8.25 per hour (18) and no benefits.  The Nevada OES sets the mean hourly wage for such skills at $17.63. (19)

Even using the NCIA’s 10th percentile rate, these workers should be receiving no less than $11.63 per hour.  Competing companies in the structural steel industry in Las Vegas and elsewhere in Nevada pay workers the median wage of $16.91 per hour plus benefits.  Without factoring benefits, private companies are thus required to pay more than double the rate paid by Alpine.  A serious disadvantage prohibited by the PIE Program wage requirement, and contrary to congressional intent.

When you multiply this discrepancy times the number of participating states, and times the number of inmates employed in the program, you can see and understand the massive wage savings provided to companies such as Alpine Steel and those discussed below.  It also helps to understand why so many of our jobs are “going to prison” literally.

Compliance problems are no stranger to Mr. Connett.  In his previous position as the PIECP Program Manager with PRIDE Enterprises, Inc. operating Florida’s entire prison industry, Connett cut corners similarly.  In the third and final segment of this expose to be published next week, I will introduce and discuss the documented corruption to which Mr. Connett was a participant. Suffice to say, Brian Connett brought a substantial amount of baggage with him to Nevada.

The controversy involving Alpine Steel is merely the latest in a series of problems with compliance by SSI.  Former NDOC Director Howard Skolnik was involved in a scheme involving inmate wage deductions when he served as Deputy Director of Industrial Programs.

In 1990 Skolnik petitioned the BJA  (20) for a determination that would allow Nevada to deduct 5% of all inmate wages earned and use those funds to expand prison industrial programs.  He was advised there were four approved deductions and no additional deductions could be imposed by his department.

This denial should have been clear and final, but in 1991 the Nevada legislature amended NRS 209.463 to allow for the 5% deduction Skolnik requested and the BJA ruled was impermissible. (21)
In 2003 Howard Skolnik advised (22) the Legislative ASSEMBLY COMMITTEE ON JUDICIARY that there were three deductions taken out of prisoner pay – 24.5% for room and board, 5% for victim restitution fund and a 5% deduction that went to a fund for the expansion of new industry programs.

Obviously the NDOC and Silver State Industries were intent upon creating a fund whether or not the controlling authority over this federal program permitted it.  In 2011 the Legislature “swept” $948,000 from this Capital Improvement Fund. (23)

Just as obviously inmates are being misused as slave labor, underpaid on PIE projects, with a maximum amount taken back as “deductions.”  The ongoing use of unauthorized and thus illegal deductions taken from inmate PIECP wages and then used as a slush fund by the Nevada Legislature, serves as out and out theft amounting to tens of thousands of dollars  (24)

This was all covered up in reports to the BJA through reviews conducted by Mr. Connett’s – formerly Mr. Skolnik’s – NCIA organization, allowing the 5% deduction to stand and certifying to the BJA that Nevada was in full compliance.

2008 NCIA Board

Both Connett and Skolnik held positions upon the NCIA board simultaneously in 2006 when Connett was the PIE Program Manager with PRIDE Enterprises in Florida.

Previously, Connett and the CEO of PRIDE also sat side by side on the NCIA board when PRIDE was committing acts later deemed illegal.

The Alpine/SSI partnership is not the only partnership that is being operated questionably in Nevada – and paying minimum wages.  Several other companies also have been given access to inmate labor and are possibly involved in displacing local workers and/or unfairly competing in the marketplace.

Thomson Equipment Company, Inc. (now Silver Line Industries, Inc.). Silver Line is owned by entrepreneurs out of New Zealand, Malaysia, and Thailand, partnered with a company in Oregon, to use inmate labor to manufacture or refurbish heavy equipment such as water trucks.

In March of 2006 the serving Deputy Director of Industrial Programs advised (25) the NEVADA LEGISLATURE’S INTERIM FINANCE COMMITTEE’S COMMITTEE ON INDUSTRIAL PROGRAMS that Thomson had been acquired by new owners in Australia and New Zealand – and water trucks were shipped from Bangkok for inmates to renovate.  (It was cheaper to use American inmate labor plus ocean freight costs than to use Thai labor!)

By 2008 when Mr. Skolnik was serving as Director of the NDOC, he and Mr. Connett advised (26) the same committee that Thomson had changed its name to Silver Line Industries.  Skolnik further advised as part of full disclosure that his daughter worked for the parent company in New Zealand.

It is unclear if Skolnik’s daughter secured her job before the 2006 acquisition of Thomson, or if that occurred after Mr. Skolnik was elevated to the Directorship of the DOC.   In either case this should have raised an issue of ethics to the members of the Industrial Programs Committee, had they been interested, a conflict-of-interest in the relationship between the NDOC Director and a family member working for a company operating under his authority.  Silver Line Industries ultimately withdrew from the PIE Program.

Another company, Jacob’s Trading Company (27) (JTC) partnered with SSI for years, but left SSI late last year.  JTC is an inventory liquidator for Wal-Mart and other large retailers.  Inmates remove bar codes, labels and other identifiers to the retailer then repackage the items and JTC sells the products through distributors to after market retailers.  Of course Wal-Mart denies (28) that they or any of their vendors or contractors uses inmate labor – period. These products are shipped back and forth across state lines, and thus come under PIECP authorization.  JTC’s operation in Nevada (29) is substantial:

“In Nevada, the entire JTC operation is housed inside the Southern Nevada Women’s Correctional Facility (30) in North Las Vegas. Jacobs is the only private employer of female prisoners in Nevada. In 2000, a female prison laborer working 40 hours a week kept just over half of what she earns. After several deductions mandated by the state prison department, she took in about $460 per month. That’s net pay of $2.67 an hour…”

Another company operating under the PIE Program was Shelby American, manufacturer of the Shelby Cobra sports cars.  Dozens of inmates at the facility received an hourly wage of at least the federal minimum to build every part of the car except the engine.  Shelby American has also closed operations with SSI but is still listed as a PIE Program participant under SSI’s certification.

In September 2012JTC closed operations at SSI’s facilities, and Like Alpine Steel, they left owing the state $115,819.44 in unpaid leases and other expenses.  According to the October figures provided to the Interim Finance Committee, SSI’s project failures have Nevada taxpayers on the hook for more than $600 thousand dollars in unpaid operating expenses or lease payments.

 There will be much more on Howard Skolnik and Brian Connett in the third and final article that will expose Mr. Connett’s efforts to avoid complying with PIECP requirements, as well as out-and-out theft of private companies while partnered with PRIDE Enterprises.   In one particular industry, Connett deliberately failed to register the industry as a PIECP operation with the BJA, resulting in prisoners receiving as little as $.20 per hour for their labor for five years…and huge profits for PRIDE and the companies partnered with PRIDE.

Last, I will further expose the NCIA and explain why they have been so successful in advancing an agenda of using inmate labor to enrich a handful of companies, their organization – at the expense of America’s taxpayers and struggling workforce.

FOOTNOTES AND EXHIBITS:

(1)https://www.ncjrs.gov/html/bja/piecp/bja-prison-industr.html

(2) http://www.nationalcia.org/piecp-2/piecp-final-guideline

(3) http://www.nationalcia.org/

(4) http://www.nationalcia.org/wp-content/uploads/Final-PIE-2011-Assessment-Summary-Report-Nov.-2011.pdf

(5)  The Training Wage Exception to the 10th Percentile Wage Floor

“BJA determined in 2006 that wages must be set at or above the 10th percentile, as defined by the State Department of Economic Security Agency. BJA takes the position that this is a “generous interpretation of comparable, yet still fair to competitor manufacturers because of the “lack of education, training, and experience typical of the inmate labor force.” The one exception to the 10th percentile requirement is that inmate workers may be paid a training wage that falls below the 10th percentile if “their employment agency provides express written agreement of a wage less than the tenth percentile for a limited training period.”

(6)  https://www.bja.gov/Funding/PIECPBackWagePolicy.pdf

(7)  It reads in part:    Background:
“18 USC 1761 (c), the statute authorizing the Prison Industry Enhancement Certification Program (PIECP), states that PIECP inmates must “have, in connection with PIECP work, received wages at a rate which is not less than that paid for work of a similar nature in the locality in which the work was performed. The Bureau of Justice Assistance (BJA) 1999 PIECP Guideline gives the State wage setting agencies authority to make wage determinations for PIECP workers that are comparable to those in effect for similarly situated workers.” (Emphasis mine)

(8) http://archives.cnn.com/2000/LOCAL/pacific/06/27/rjo.prison.work/index.html

(9)  http://www.scribd.com/doc/46041590/FL-Governor-Elect-Team-Report-on-DOC-and-PRIDE-2010

(10) http://www.bls.gov/oes/current/oes_nv.htm#00-0000

(11)  http://www.nationalcia.org/wp-content/uploads/09-10-PIE-Assessment-Report.pdf

(12)  http://www.youtube.com/watch?v=cUJHaELZQrc

(13)  http://www.lvrj.com/news/company-complains-prison-program-prevented-private-industry-jobs-183857541.html?login=y

(14)  http://www.nationalcia.org/wp-content/uploads/Final-PIE-2011-Assessment-Summary-Report-Nov.-2011.pdf   (@pg. 4)

(15) http://www.nationalcia.org/about/board-of-directors

(16)  http://www.phewacommunity.org/images/Presentation_to_the_Congressional_Black_Congress.pdf

(17) ibid. 13

(18)  http://www.dol.gov/whd/minwage/america.htm#content

(19)  http://www.bls.gov/oes/current/oes512041.htm
BLS - occupational wages(20) https://www.ncjrs.gov/pdffiles1/Digitization/132363NCJRS.pdf

(21)   NRS 209.463  Deductions from wages earned by offender during incarceration; priority of deductions.  Except as otherwise provided in NRS 209.2475, the Director may make the following deductions, in the following order of priority, from the wages earned by an offender from any source during the offender’s incarceration:

1.  If the hourly wage of the offender is equal to or greater than the federal minimum wage:

(a) An amount the Director deems reasonable for deposit with the State Treasurer for credit to the Fund for the Compensation of Victims of Crime.

(b) An amount the Director considers reasonable to meet an existing obligation of the offender for the support of his or her family.
(c) An amount determined by the Director, with the approval of the Board, for deposit in the State Treasury for credit to the Fund for New Construction of Facilities for Prison Industries, but only if the offender is employed through a program for prison industries.

(The same deduction is taken from the wages of inmates earning less than minimum wage.  Emphasis mine)

(22) http://www.leg.state.nv.us/Session/72nd2003/Minutes/Assembly/JUD/Final/1738.html

(23)  http://www.leg.state.nv.us/Interim/76th2011/Exhibits/Industrial/E062512A.pdf

(24)  http://www.leg.state.nv.us/Interim/76th2011/Exhibits/Industrial/E092111E.pdf
NV Dept of Corrections - Prison Industries Payroll Assessment(25  http://www.leg.state.nv.us/73rd/Interim/StatCom/Industrial/Minutes/IM-Industrial-20060313-1152.html

(26)  http://www.leg.state.nv.us/74th/Interim_Agendas_Minutes_Exhibits/Minutes/Industrial/IM-Industrial-042408-10093.pdf

(27)  http://www.jacobstrading.com/index.html

(28)  http://walmartfacts.com/reports/2006/ethical_standards/documents/Wal-MartStandardsforSuppliers.pdf

(29)  http://www.huffingtonpost.com/al-norman/walmart-prison-labor_b_2224743.html

(30)  http://archives.cnn.com/2000/LOCAL/pacific/06/27/rjo.prison.work/index.html

 

Rape of America’s Workers: Crime Victims – Now Prisoners Given Their Jobs

Today Nevada Workers Lose Jobs to Inmates – Next it Could be your Turn

Third and final segment of the series on Nevada’s situation involving unfair competition by use of prisoner labor

by Bob Sloan, Executive Director, VLTP.net

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“Insourcing”..: there is no current definition for this word in our Urban Dictionary or Websters. I plan to change that by defining in detail the concept of insourcing and who is responsible for the practice of it. First we must compare the word to its cousin, Outsourcing.

Society today is familiar the term “Outsourcing.”  When used in connection with manufacturing it means a company sending work outside the business and having it performed utilizing the labor or expertise of others.  Since the mid ‘80’s most realize to American workers, it really meant sending millions of our jobs overseas where foreign labor was cheap and plentiful

Not so well understood is the term “Insourcing” – Insourcing is is widely used in production to reduce costs of taxes, labor and More →

NDOC & Silver State Industries – Meet the Exploiters – Expose on Prison Labor in Nevada Pt. II

Second in a Three Part Expose on Prison Labor in Nevada Displacing Workers

By Bob Sloan – Prison Industry Consultant

SSI GarmentWorking on the “Chain-Gang” was how prisoners were punished for their crimes in days gone by – and people who had been victims of crime were happy.

Then we became “civilized” as a society and changed laws, regulations and opinions that eliminated these hard forms of punishment and degradation.  Instead of harsh working conditions we made sentences longer, believing that to be more humane.  Parole was abolished; possession of a “joint” was enough for a mandatory five years in prison.

Problem was, all this incarceration was costing taxpayers ever more in corrections costs.  Lawmakers sought ways to reduce the ever-increasing expense of incarceration.

An idea was born: create prison industries where prisoners could be put to work to “earn their keep” and reduce the incarceration costs borne by taxpayers.  Soon another idea was floated, let private manufacturers gain access to the prison run factories and further reduce the expense of housing, feeding and providing medical care to prisoners.  Inmates can be taught work ethics, products made by them will cost us less and recidivism will be reduced…and once again the people were happy.

Problem is, this program has created more opportunity for crime and exploitation – of the prisoners themselves. Instead of prison populations shrinking, they grew.  This growth was due to more laws, stiffer sentences, the war on drugs and increasing penalties.  Alongside that population the prison industries grew even faster with more inmates came more job positions. More →