Sunday, June 27, 2010

Lawmaker's Ownership In Welfare Call Center Reeks Of Corruption

Rep. Eric Turner (R-Cicero) is the Assistant House Republican Leader. He and his son also own a building in Marion, Indiana that is leased by Affiliated Computer Systems to operate a call center for the state's widely criticized privatized welfare system. He used his legislative clout to fight for the placement of the call center in Marion, and he has defended it from critics in his role as a state legislator. His daughter is the general counsel to FSSA, the agency that privatized welfare services in Indiana. And Turner never disclosed his ownership interest in the call center property on his statement of economic interest. That's what is revealed by a Fort Wayne Journal News-Gazette investigative report by Angela Mapes Turner. Turner says it's a non-issue, and the Daniels administration deflects blame saying it didn't enter into the lease; ACS inked the deal. Here's some of what the reporter learned:

A state representative who fought hard for a controversial call center created in his district as a part of Indiana’s failed welfare privatization effort has a financial stake in the building that houses it.

Rep. P. Eric Turner, R-Cicero, says his investment in the building owned by his son is a non-issue. But critics say the link should have been disclosed during the many public debates about problems with the IBM-led welfare changes . . .

In 2007, Indiana inked a $1.16 billion deal with IBM Corp. to modernize the state’s welfare system by providing more services by computer and telephone.

Central to the plan was the creation of a call center to serve the entire state. Instead of caseworkers assigned to clients who need help getting food stamps, Medicaid or Temporary Assistance for Needy Families, contract employees would handle applications submitted through a website and the Marion call center.

Subcontractor Affiliated Computer Services, tasked with creating the call center, entered into a lease in 2007 to rent the former Jones Middle School when the building was still owned by Marion Community Schools, according to school board minutes.

Nearly from the start, the hub was fraught with controversy. The state heard complaints that the call center workers were ill-trained and clients were not getting their benefits, such as food stamps and Medicaid.

By May 2008, 59 of Indiana’s counties had been brought into IBM’s system. Concerns about clients not being served well by the call center had caused state officials to halt the transition of Indiana’s remaining 33 counties.

That’s when Turner toured the call center in his role as legislator and told the Marion Chronicle-Tribune he was impressed.

Turner told the newspaper there could be legislative committees to look into the issues, but the cost of reverting to the old system would be “astronomical” and call center workers were doing their jobs.

At the same time, his son Paul Ezekiel Turner’s company was in negotiations to buy the former Jones Middle School from Marion Community Schools.

On May 5, 2008, the school board voted to sell the building for $350,000 to Mainstreet Capital Partners LLC, a joint venture between “Zeke” Turner and his father.

According to secretary of state records, Zeke Turner created a limited-liability company, MS Jones LLC, co-owned by Mainstreet, to buy the call center.

That company isn’t listed on Rep. Turner’s statement of economic interests required of all state legislators, but Mainstreet and several other joint ventures with his son are, including Turner Partnership, which is MS Jones’ other co-owner.

Turner considers having listed those companies to be sufficient disclosure, he said, adding that all the transactions related to the sale were carried out in public school board meetings and were common knowledge in Grant County.
Turner tells the reporter that he may have talked to his son about the business opportunity but that he generally performed his own analyses without his help. He insists his daughter, Jessaca Stultz, the general counsel of FSSA, had no part in helping out with the lease. I found the financing details of the building to be interesting. The story reports:

After taking out a $280,000 loan to buy the property in July 2008, it was mortgaged for an additional $200,000 in September of that year. This spring, his company took out a second mortgage on the property for $5 million, according to records from the Grant County recorder’s office.

Mainstreet Asset Management did not respond to a request for comment.

Zeke Turner’s portion was assessed for more than $7.1 million in 2009, according to the Grant County treasurer’s office.

Affiliated Computer Services is leasing about 53,000 square feet in the building, FSSA spokesman Marcus Barlow said. That company – not the state – created the lease and pays the rent of $14,400 a month, or $172,800 a year, he said.

The rent is similar to the cost of less expensive industrial warehouse space, not more expensive commercial real estate, Barlow said.
“They actually got a really good deal,” he said.
Speaker Bauer argues it’s hard to know whether something’s a good deal if it’s brokered privately, behind closed doors.
“We’re having trouble in general getting information out of these private contractors,” he said. “Let the people judge.”

It seems kind of odd that a building that was purchased for $350,000 two years ago from the school corporation would now be assessed at over $7 million and have more than $5 million mortgaged against it.
The privatization aspect also gives the Daniels administration cover for what the contractor, ACS, does under its contract. That's one of the problems I have with these privatization deals. The public doesn't really know who was told to do what after it gets turned over to the private operator. This blog was the first to point up the conflict in awarding the contract to IBM, which had partnered with ACS on the billion-dollar privatization deal. FSSA's Secretary at the time, Mitch Roob, worked for ACS prior to joining the Daniels administration as FSSA Secretary. It was common knowledge around town who was going to get the contract even before the RFP process had been conducted, leading some potential bidders not to even waste their time responding to the RFP. The Daniels administration cancelled the contract last fall with IBM but is continuing to use ACS for some services and is keeping the Marion call center open. IBM and the the state are suing each other in the aftermath of the contract's cancellation.

The story also notes a previous call by House Speaker Pat Bauer for federal Health and Human Services, the agency that doles out money that FSSA administers, to investigate a couple of leases for the state's welfare-to-work offices that are located in buildings owned by John Bales, the real estate developer the Daniels administration hired to broker leases for state agencies who is close to Marion Co. Prosecutor Carl Brizzi. Brizzi is a part owner of a building in Elkhart, Indiana that is leased by the Department of Children Services, and the lease was brokered by Bales' firm.

I'm telling you that Daniels has some big-time scandals brewing in his administration. The Obama Justice Department can bury any presidential ambitions he may have if they so desire to investigate these various scandals. I thought Mitch was smart enough to avoid this kind of corruption in his administration when he first got elected, but my once favorable impression of him is fading with the passage of every day. I'm not surprised by Turner's obvious self-dealing, and I doubt many others who've watched him over at the State House over the years are either. The ACS connections run deeper than Roob. Barnes & Thornburg's Bob Grand and Joe Loftus have lobbied the state and the City of Indianapolis for the firm. Their firm has also lobbied the state for Bales' Venture Real Estate. CIB President Ann Lathrop, who replaced Grand in that role, used to work at ACS with Roob and former Mayor Steve Goldsmith, who employed both of them in his administration. Lathrop now works for Crowe Horwath, which has several contracts with the City of Indianapolis. Lathrop personally inked a contract with the Ballard administration's budget office, which Lathrop ran during the Goldsmith administration. And I could go on but you get the point. It's just one incestuous cesspool.


I know said...

RFP's issued and decisions made on who would get the contract long before the public had a chance is the NORM in Indiana Government and the Daniel's administration.

Mitch has a whopper on his hands at the Indiana Gaming Commission where the emails are in hand of State Appointed Officials discussing their not wanting to announce their new company being a respondent to the upcoming RFP for a 20 year contract until the Gaming Commission opened up the NEW RFP. How did the State Appointed Official on the Committee know there was going to be a new RFP and the Gaming Commission not take the back up applicant when the first one failed if he did not have inside information.

Low and behold the RFP is opened back up, the State Appointed Official on a Gaming Commission Committee resigns and becomes the APPLICANT four days later and three months later is awarded a contract that the applicant then changes to a self written 40 year contract and the Indiana Gaming Commission then writes a letter, a public record document, asking ALL STATE ADMINISTRATORS to over look the NON BOILER PLATE CONTRACT and NOT AMENABLE TO STANDARDS and quickly approve the contract.

The contract was awarded and the APPLICANT, former STATE APPOINTED OFFICIAL, did not meet the initial bond requirement for the letter of credit and got a tiny $10,000.00 fine and then DEFAULTED on $370,000,000.00 BONDS TWICE IN TWO YEARS AND STILL HAS THE CONTRACT.

The State of Indiana had to hire local Indianapolis counsel to negotiate with the New York Bond Holders quietly to avoid the scrutiny of their mess.

How can a State Appointed Official who has caused far greater liability to the taxpayers of Indiana stay hidden in all the incest?

Is it power, money and greed? You betcha! It is totally corrupt...RICO to say the least.

Gary R. Welsh said...

I Know, You've told about that before but I would like more information on it. You know the Chairman of the Gaming Commission is a former FBI Agent. His bio on the Commission's website: "Tim Murphy (Chairman) of Carmel, Indiana is the retired Chief Financial Officer of the Irwin Mortgage Corporation, formerly a subsidiary of the Irwin Financial Corporation. Prior to joining the Irwin Financial he was a Special Agent with the FBI, serving in the Indianapolis and Chicago field offices. Mr. Murphy is a 1973 graduate of Indiana University with a degree in accounting and is a Certified Public Accountant in the State of Indiana."

I know said...

Advance Indiana,
Check your email.

Diana Vice said...

Can't wait to read the results of the email from I Know. He's an insider with a lot of information.

Gary R. Welsh said...

I Know is talking about the process under which the license for the French Lick casino got awarded. The referred to state appointed person was not a member of the gaming commission; rather, he was a member of the Historic Hotel Preservation Commission. Was it a shady process? Yeah. Was it as bad as what occurred in the awarding of the other gaming licenses under Evan Bayh? Probably not. I noticed that Scott Newman, the prosecutor who was all fired up about going after that corrupt gaming license process down in Lawrenceburg, and who later dropped that investigation and became a partner at the law firm that represented one of the gaming applicants he was investigating, wound up as one of Daniels appointees on the gaming commission. Scott Newman gets a pass by so many people because he suffers from Parkinson's disease, but I'll tell you he is one sleazy operator. If everything gets pealed back on some of these John Bales and Carl Brizzi shenanigans, you'll find him involved in the middle of that corrupt mess. But nothing will happen to him because everyone feels so sorry for him because of his disease.

I know said...

Advance Indiana,
You are ABSOLUTELY correct on the same cast of characters in the mess after mess after mess. That is what I have been trying to get people including the FBI and several sources to see.

The dots connect very easily and it all has the same mode of operation every time.

When does the group find their match and have to understand even Bernie Madoff had to give up at some point? The RICO, the under the table deals, the contracts across all agencies and the gag these people have on the mainstream media should wake someone up.

It would really be interesting to see the Justice Department just peel back the carpet and look at what is under the rug. It would not take a huge task force to clean up the fertile dirt!

Gary R. Welsh said...

Obama is almost half way through his first term and he still hasn't appointed a U.S. Attorney for the Southern District of Indiana, and the person whose name has been floated as the likely appointee will most assuredly protect the racket.

Marycatherine Barton said...

Obama and the/his FBI do not care about protecting Hoosiers from corrupt government practices here. Now President, and federal police, prove me wrong.

dcrutch said...

Fox radio interviewed Mike Huckabee today and discussed the merits of Romney, Palin, Daniels, and Jeb Bush as Presidential candidates running against President Obama.

I'd vote for any of them, including my least choice, Palin, as a dramatic step-up from a President that believes in government as the answer to all our problems. His belief seems unshakeable, despite the magnitude of our Federal government being contingent upon a thriving, not stagnant, capitalistic Democratic Republic. Unfortunately, I think it's clear our President and some of Congress are not concerned about preserving a "capitalistic Democratic Republic".

Combining nearly half of America with a hand extended for a check with a biased mainstream media, Daniels and any Republican Presidential candidate need to get all the skeletons our of their closet NOW.

Unless enough people make it clear that "Change We Can Believe In" is NOT the change we want, our President's closet will again open nary a peep.

Bradley said...

I think "incestuous cesspool" regarding ACS/FSSA/IBM/Mitch Daniels/Mitch Roob/et al is one of the funniest terms I've ever seen tagged to them!

And I Know's information about the Gaming Commission is fantastic -- keep that info coming and start pressing it with others as well. I know I will with Workforce Development's little problems.

artfuggins said...

There are already over 100 federal judgeships being filibustered by the GOP and dozens of dozens of U.S. Attorney positions. While it would have been nice to have an appointment made, it would have just sat on some GOP senators desk drawing dust. My understanding is that once you are nominated that you begin to shut your practice down...people need money and cannot go over a year without an income..........

I know said...

The tip of the iceberg about the contract mess in the Gaming Commission is all that is showing. Another one of the State Appointed Committee Members was appointed to a Board of Directors position on one of the Contractors Company Boards after the fellow State Committeeman got the contract. This all happened after the contract was awarded to their fellow Appointed State Official who resigned to get the contract.

Isn't there a ONE YEAR PERIOD under Indiana law to keep this thing from happening with State and Local Officials?

Another State Appointed Official on the SAME Committee may have sold his land and mansion to the fellow State Appointed Official now a State Contractor so the new golf course could be built.

If a fellow State Appointed Official received a Board position for their vote and another State Appointed Official actually sold their land and mansion to the former State Appointed Official who got the contract isn't that smack of pay to play, quid pro quo, RICO, conflict of interest and fraud?

This is not a Casino License. It is a CONTRACT to operate a Casino for the Indiana Gaming Commission and the TAXPAYERS of INDIANA!

When does the greed, self indulgence and power begin to shift to the PEOPLE?

Anonymous said...

In addition to the fraud, the conflict of interest with this Affliated Computer Services. Affiliated Computer Services, a for $profit$ company has created many of the core issues. They lack ethical standards of responsibility and accountability which derives from the top corporate management and oozes down to middle and lower management. Their management staff are deficient and uncommitted in identifying the fundamental problems. Politics is dominant in upper and middle management, and middle managers make arbitrary decisions and usually do not suffer the consequences. Nor are they held responsible for the mess. In other words, the exploitation and castigation of the those working any position other some form of management will continue. The operative assumption should be that someone, somewhere, has a better idea; and the operative compulsion is to find out who has that better idea, learn it, and put it into action to find initiatives to improve client services, total claim results, operational efficiency, and staff retention. An effective organizational structure that would facilitate working relationships between the various entities and have a set order and control that would enable monitoring of all processes. Using a "Divisional Structure" indisputably isn't working. A "Matrix" type program would be evidently a more considerable approach. Indubitably GROSS NEGLIGENCE.

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