Florida Prison Canteen Operator's Offices Raided

by David M. Reutter

Agents from the FBI and Florida Department of Law Enforcement raided the office of American Institutional Services (AIS) on June 7, 2006 and seized the companys business records. AIS ran weekend visiting park canteens within the Florida Department of Corrections (FDOC), and following the raid AIS was banned from further operations at FDOC facilities.

AIS was a subcontractor of St. Louis-based Keefe Commissary Network, which has operated all FDOC prison canteens since winning a no-bid contract in October 2003. [See: PLN, February 2006, p.22]. In 2004, Keefe took over operations of visiting park canteens and subcontracted with AIS to manage that part of its prison operations. Keefe has since taken over full operations of the visiting park canteens. We readily agreed to assume those duties, said Keefe spokesman Pat Farrell. Considering how prisoners and their families are being price-gouged, its understandable why Keefe was so eager to capitalize on that captive market.

A preliminary report indicated that FDOC was losing money on the visiting park canteen operations, but no explanation of how much money was being lost or how that occurred was given.

AIS is owned by Gainesville businessman Edward C. Dugger, who also operates several liquor stores, a pawn shop and an insurance office. AIS has been trying to secure its foothold with Florida's future governor by contributing $500 to each gubernatorial candidate. However, the company favors Dugger's longtime friend, Democrat Rod Smith. The company donated $30,000 to a pro-Smith political committee called Floridians for Responsible Government. Smiths campaign also received $2,500 directly from Dugger and AIS, which Smith has vowed to return.

As a former state attorney, I know that investigations are just that, a process to gather facts, but I also recognize public perception, Smith stated. Its my sincere hope that this investigation is concluded quickly.

It was later learned that the AIS raid was related to an investigation involving former FDOC Commissioner James V. Crosby and former DOC Region I Director Allen Clark [see the cover story for this issue of PLN]. Federal investigators accused Crosby and Clark of helping AIS become a Keefe subcontractor in exchange for kickbacks on profits generated by the visiting park canteens. According to a Department of Justice press release, These kickback payments grew from approximately $1,000.00 a month up to approximately $12,000.00 a month and were made from about November 2004 through early 2006. The total amount of kickbacks paid & to Clark and Crosby during this scheme was approximately $130,000.00. Crosby and Clark both pled guilty to charges related to the kickback scheme in July 2006.

Meanwhile, Keefe continues to run Floridas prison canteens. FDOC Secretary James McDonough signed a new contract with the company on May 8, 2006; AIS has been barred from doing any future business with the state prison system. McDonough also ended Keefes ability to raise canteen costs by 10 percent every six months. The new contract allows such increases only one time a year. There was no reason for semi-annual cost increases except that it was profit, making big money, McDonough stated.

Sources: Associated Press; Miami Herald; St. Petersburg Times