Juvenile
system under fire
Audits of privatized Wayne
County program show overpayments,
conflicts of interest.
By Joel Kurth / The Detroit
News
Five
years after Wayne County became
the first in Michigan to hire
private companies to care
for delinquent youths, its
juvenile justice system is
awash in accusations of financial
mismanagement, cronyism and
fraud.
Taxpayers
have footed the bill for improper
billings and overpayments
to contractors. The relatives
of elected county officials
have benefited from some contracts.
And there are multiple allegations
the county paid for hundreds
of fictitious youths.
Two
former high-ranking county
officials allege in court
papers they lost their jobs
after serving as informants
for the FBI. Both have filed
whistle-blower suits against
the county, alleging retaliation
for speaking out and seeking
unspecified damages.
Chief
Circuit Judge Mary Beth Kelly,
who has oversight of the system,
vows major reforms by year's
end, citing concerns about
the system's effectiveness
and how its finances are managed.
"There
has to be more accountability
within the system," Kelly
said. "We just can't
afford this."
Three
county audits, a probe by
the county inspector general
and a Detroit News investigation
show:
•
County taxpayers have paid
more than $2 million for contracts
that have benefited relatives
of Sheriff Warren Evans and
Detroit Mayor Kwame Kilpatrick.
•
Hackers compromised a $2.5
million computer program that
records personal information
about teens and is used for
billing, prompting an investigation
into whether taxpayers spent
money on fictitious teens.
Separately, there are allegations
the county paid contractors
at least $198,000 for youths
who don't exist.
•
Nonprofits awarded millions
of dollars in delinquent care
contracts by the County Commission
are among the most reliable
campaign donors to its members.
Contractors have given at
least $32,000 since 2002,
campaign records show. The
top recipient was Commission
Chairwoman Jewel Ware, who
received at least $12,500.
A typical commission campaign
costs about $10,000.
•
The county can no longer borrow
money without the state's
permission because of a series
of problems that began with
$12 million in billing irregularities.
•
Taxpayers have footed the
bill for at least $300,000
in overpayments to contractors.
•
The county has issued at least
$20 million in no-bid contracts
to care for youths since 2000.
Many
of the problems started under
the administration of county
Executive Edward McNamara.
Some have been addressed by
his successor, Robert Ficano,
who took office in January
2003. But others are just
now unfolding.
"Has
he cleaned it up? Probably,"
said Robert Wollack, chief
executive officer of Wolverine
Human Services, which owns
youth lockups in Saginaw and
Vassar. "They're working
hard to get whatever's wrong
right, but there's still stuff
that can be straightened out."
Arthur
Carter, director of the county's
Department of Children and
Family Services, acknowledges
problems, but says the $103
million program has improved
care for the county's 3,400
delinquents dramatically.
Seven
years ago, about 60 percent
of teens who committed crimes
and were declared delinquents
by juvenile courts were sent
to lockups. Because of a state
shortage of juvenile facilities,
many were institutionalized
out of state even for lesser
offenses.
Today,
about 60 percent of Wayne
County's delinquents -- who
account for half the state's
delinquent population -- serve
their sentences at home, under
the supervision of contractors.
Only the worst offenders are
sent to youth jails.
The
county maintains it has saved
$10 million under the new
system and cut recidivism
rates. The system's cost is
split evenly between the county
and state.
"This
has been one of the county's
most serious, complex problems.
The problem stems from a lack
of cash and trying to do with
what you have," said
McNamara, declining further
comment.
Former
officials sue
No
one disputes the county is
saving money under the new
system, but Kelly and others
wonder whether it's enough.
Even
with a privatized system that
favors home treatment, Wayne
County spends almost as much
per youth as the national
average for incarcerating
one delinquent in a juvenile
facility for a year. The county
spends an average of $30,000
a year per youth to pay for
drug tests, tethers, counseling,
monitoring and, sometimes,
youth detention.
Nationally,
the average cost to incarcerate
a delinquent in a juvenile
jail for a year is $35,000,
according to the U.S. Department
of Justice.
"The
amount of money thrown at
the system and layers and
layers of administration is
astronomical," Brendan
Dunleavy, the county's former
auditor general, said in an
interview with The News.
Dunleavy,
who was auditor general for
seven years, is suing the
county in state and federal
courts, alleging his $152,000
contract wasn't renewed because
he cooperated with the FBI
on numerous investigations,
including one about the juvenile
justice system.
Marlene
"Willow" Hagans,
the former deputy director
of Children and Family Services,
is also suing, alleging she
was demoted after talking
to the FBI and angering Ficano's
campaign contributors by advocating
reforms.
Both
lawsuits are in the discovery
phase, in which lawyers gather
evidence and take testimony
from witnesses in depositions.
On Friday, county attorneys
filed a motion to dismiss
Dunleavy's case.
Hagans
refused to comment, but The
Detroit News obtained the
depositions taken in both
lawsuits. (Below is an excerpt
of Dunleavy's deposition.)
In
their 2,500-plus pages, numerous
allegations are made of millions
of dollars in overspending;
altered bills that charged
taxpayers multiple times for
individual youths; and retribution
for officials who attempted
changes.
In
a Jan. 13 deposition, Hagans
alleges contractors went so
far as to move youths from
one school in a youth lockup
to another during state audits
that determined funding. She
alleges she was hired to clean
up the system, then demoted
when she found numerous examples
of billing for fictitious
youths and overpayments to
contractors.
Ficano
"knew something was wrong,
but every time he sent someone
over to determine exactly
what was wrong, they were
mysteriously removed,"
Hagans alleges in an April
4 deposition.
Dunleavy
had completed one audit of
the system, was halfway through
another and planned at least
five more when his contract
wasn't renewed last fall.
At the time, commissioners
said he talked too much to
the media.
In
court papers, county attorneys
claim Dunleavy alienated commissioners
by politicking too hard for
contract renewal and threatening
to sue them.
Dunleavy
says commissioners were afraid
of what he'd find. He alleges
that one audit he started
before he left office found
$198,000 in billings for fictitious
youths on July 31, 2004, one
day before the county cut
the budgets of providers.
"They
knew the information would
be made available to appropriate
individuals, including law
enforcement," Dunleavy
said.
While
the county declined comment
on both lawsuits, Ficano's
spokeswoman, Sharon Banks,
said allegations of political
favors to donors are "unequivocally
a lie." So are accusations
of fictitious youths, said
Michael D. O'Connell, director
of finance for Children and
Family Services.
"The
(audits) are looking for something
that isn't there" he
said.
Other
findings in the audits --
such as no-bid contracts --
happened before Ficano took
office, said Sue Hamilton-Smith,
deputy director of children
and family services.
The
Ficano administration was
surprised by some of the costs
when it took office, cut the
budgets to providers, ended
no-bid contracts and increased
oversight, Carter said. The
county is about to embark
on yet another audit of the
system this summer.
Next
year, the administration is
reducing payments to nonprofits
by $900,000 to eliminate redundant
services. A November audit
found the county paid more
than $100,000 in unnecessary
drug and alcohol tests, including
some for one teen who was
screened 43 times in 16 months
even though he never tested
positive.
"We
didn't just bill for anything
that we weren't directed to
do," said Cynthia Smith,
director of the Juvenile Assessment
System, a Detroit nonprofit
paid $5.2 million to assess
the needs of teens after judges
declare them delinquents.
"Sometimes,
there may have been misdirections,
but it was always done with
the best interests of the
community and children."
Accusations
plague system
From
the start, the system has
been dogged with conflict-of-interest
accusations.
Some
providers had been in business
with each other or served
on the boards of directors
of subcontractors, according
to a 2003 report by Inspector
General David Esper, Ficano's
internal watchdog.
The
report also found multiple
no-bid contracts. Like most
counties, Wayne usually requires
competitive bids on services
to get the best deal for taxpayers.
Esper's
report criticized a $2.5 million
contract awarded to a company
co-owned by Evans and his
brother, Blair, to manage
the Blanche Kelso Bruce Academy,
a charter school within the
Calumet Center, a youth lockup
in Highland Park. The company,
Evans Solutions, also had
a $54,000 contract for juvenile
justice consulting in 2001.
At
the time, Evans had retired
as the county's undersheriff
and former director of the
Department of Community Justice,
the precursor to Children
and Family Services. His successor,
Jeriel Heard, was a longtime
colleague at the Sheriff's
Department.
Esper's
report concluded Heard "steered
a no-bid (contract) to a business
entity partly owned by his
longtime professional associate
and ally." The report
quoted Heard as saying he
had no involvement in the
deal. He now works for Evans,
making $117,000 as head of
county jails and court security.
Evans
has denied involvement in
either deal. He put his company
stock in a blind trust in
December 2000 and sold his
share of the company a few
weeks before taking office
as sheriff in 2003.
His
spokesman, John Roach, wouldn't
comment. Heard could not immediately
be reached.
Also
in 2001, taxpayers paid a
$16,000 bill for Kwame Kilpatrick's
wife, Carlita, to conduct
10 conflict resolution seminars
at Inkster High School. At
the time, Kwame Kilpatrick
was still in the state House
and readying a campaign for
mayor. His father, Bernard
Kilpatrick, was chief of staff
for Ficano's predecessor.
In
depositions for his lawsuit,
Dunleavy alleges his former
staffers couldn't document
that the conflict resolution
sessions occurred. Also in
depositions for Dunleavy's
suit, former Department of
Children and Family Services
Director Ralph Kinney said
he worried Carlita Kilpatrick
was paid for doing nothing.
Inkster
school officials did not return
calls for comment. Smith said
"the work was performed."
Her agency subcontracted the
sessions to another nonprofit,
which hired Kilpatrick.
Smith
supplied The News with a canceled
check and work invoices showing
Kilpatrick was paid $250 an
hour for the sessions. Laws
protecting the confidentiality
of delinquents, however, prohibit
the county from making public
sign-in sheets of the sessions,
Smith said.
The
mayor's spokesman, James Canning,
declined comment.
In
court depositions, Hagans
and Kinney allege their days
were numbered as soon as they
began questioning the contracts
to Evans' company and others.
"I
was told I was not making
any friends on the commission,"
Kinney said in an April 28
deposition for Dunleavy's
suit.
Kinney
refused comment for this story.
A
longtime aide who served as
Ficano's chief of staff when
he was sheriff, Kinney oversaw
the Department of Children
and Family Services in 2003.
He lost his job when he was
charged in August 2003 with
a felony count of using public
funds to pay for Ficano campaign
materials.
District
Judge James Kandrevas dismissed
the charges for lack of evidence
before the case went to trial.
Kinney returned to the county,
kept his $125,000 salary and
now works finding grants or
other revenue for the county.
Hagans
was demoted to her old job
in economic development. She
instead went on medical leave
and retired last fall.
Negative
impact persists
Some
of the problems have eased
under Ficano. But taxpayers
continue to be affected.
Extensive
sewer repairs planned this
summer Downriver were delayed
after the state in April barred
the county from issuing bonds
because of problems that began
with contracts for delinquent
care.
A
yearlong, $2 million audit
concluded the county delayed
$12 million in payments to
five nonprofit providers of
delinquent services to make
its 2003 budget appear balanced.
The audit concluded the move
was a deliberate attempt to
deceive.
Negotiations
to change the system are ongoing
between Kelly, the county
and the state Department of
Human Services. Kelly said
she's also concerned the system
doesn't provide adequate mental
health care for delinquents.
"It's
not Wayne County's responsibility
to keep these contractors
in business," she said.
"We have young people
that need help."
You
can reach Joel Kurth at (313)
222-2610 or
jkurth@detnews.com.
