California County’s 2005 Purchase of Private Prison Still Clouded in Conflict of Interest Questions

by Marvin Mentor

Investigative journalism by the San Bernardino Daily Bulletin has revealed that the April 2005, $31.2 million purchase of a private prison by San Bernardino County remains under a conflict-of-interest cloud because the lobbyist who represented both the buyer and seller allegedly did not fully disclose his dual relationship at the time.

The Victor Valley Modified Community Correctional Facility, located in Adelanto, was owned by Maranatha Corrections, LLC. The company’s consultant, former state Assemblyman and Board of Prisons Terms member Brett Granlund, also served as a lobbyist for the county. Maranatha founder Terry Moreland reportedly failed to disclose this conflict of interest to county officials at the time of the private prison sale.

The conflict question was subsequently assigned to independent attorney Leonard Gumport, who found that Granlund’s involvement in the sale was “minimal” and he had no influence on the purchase negotiations. Although the parties insist there was no wrongdoing regarding the sale of the prison, Gumport’s report has never been made public. [See: PLN, Dec. 2007, p.15; Jan. 2006, p. 20].

The private prison had been built on spec by Moreland, who believed a 500-bed facility for state prisoners in San Bernardino County would be in high demand according to his demographic projections.

After leasing the facility to the California Department of Corrections under an $8.1 million annual contract, Moreland became embroiled in a 2004 lawsuit over entitlement to $1.6 million in prisoner phone revenue. [See: PLN, Feb. 2005, p.39]. As a result of the suit, he found a new lessee in the form of the county, which was looking at either the Maranatha prison or the Adelanto city jail to expand the county’s jail.

San Bernardino County supervisors unanimously approved a lease-purchase for the private prison without a property appraisal. The purchase option was for $28 million plus $3.2 million in improvements; when an appraisal was later completed, it came in at precisely $28 million.

While the Board of Supervisors never approved full disclosure of Gumport’s investigative report, they released a five-page summary that absolved county officials of any wrongdoing. The summary also criticized Granlund for failing to properly disclose his conflict of interest relative to the private prison sale.

County Supervisor Dennis Hansberger stated, “I have thoroughly reviewed the report prepared by Leonard Gumport regarding the Adelanto jail purchase, and after considering the matter at length, I have come to the conclusion that the summary issued to the public ... is a mischaracterization and does not accurately represent the information in the report.”

Despite the non-disclosure of the full report, the Daily Bulletin’s examination of other records that were publicly available revealed some salacious facts. Granlund’s lobbying firm, Platinum Advisors, had given gifts to Board of Supervisors Chairman Bill Postmus, who in turn pushed for acquiring the Maranatha prison.

Two months after the Board of Supervisors increased Platinum Advisor’s monthly lobbying fee from $9,000 to $16,000, the firm and one of its clients treated Postmus to three Major League baseball games and dinner at a fashionable San Francisco restaurant.

It was during this time period that Granlund, who had lobbied for Maranatha regarding the company’s state prison contract, suggested to Postmus that the county buy the facility, calling it a “golden opportunity.” This became the core of the conflict-of-interest issue that has simmered ever since. County officials maintain that Granlund’s involvement was only in supplying the “initial tip” regarding the private prison purchase, and not in negotiations.

In the end there was no complaint that the county had overpaid for the prison; rather, the main concern was how the deal went down. County officials consider the matter closed and plan no further action, including the public release of the full Gumport report.

But Hansberger stated, “It’s the public’s business. They have a right to know what the heck we’re doing. None of the explanations I’ve heard for not releasing the report are satisfactory.” Yet they are, apparently, satisfactory to someone.

Meanwhile, Moreland’s troubles have not subsided in regard to the former Maranatha prison. On January 11, 2008, a state appellate court upheld a ruling against Moreland in a libel and defamation lawsuit he had filed against the California Dept. of Corrections related to his alleged “misappropriation” of prisoner phone revenues. See: Maranatha Corrections, LLC v. CDCR, 158 Cal.App.4th 1075 (Cal.App. 3d Dist. 2008).

On April 11, 2008, he was ordered by a Sacramento Superior Court to pay the state’s legal costs of $71,000. Moreland’s breach-of-contract claim against the state is still pending.

Sources: Daily Bulletin, www.bakersfield.com

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