3 On Your Side Investigates: Following the Money - MSNewsNow.com - Jackson, MS

3 On Your Side Investigates: Following the Money

WILKINSON COUNTY (Mississippi News Now) -

It made headlines in 2013: Management and Training Corporation signed a multi-million dollar deal with the Mississippi Department of Corrections to operate a prison in Wilkinson County.

Everybody covered it, including WLBT, and everybody got it wrong.

Three On Your Side has learned MDOC never had a contract with the private company directly, instead inking a deal with a nonprofit few outside the county know, an organization that’s taken in hundreds of millions of taxpayer dollars since it was created.

“We don’t have a big tax base here at all. Very limited tax base" said Wilkinson County Administrator Bruce Lewis.

Lewis' job with the Wilkinson County Board of Supervisors has several challenges: the biggest of which is maintaining revenue in a county with little more than 9,000 people.

That’s why, when Mississippi lawmakers paved the way for private prisons to come to the Magnolia State in the mid-1990s, Wilkinson County got the second bid and constructed a $31 million facility.

“The county was more or less a conduit to get the prison built because the state wanted private prisons built," said Lewis. "The county was the tool by which they went through the statutory scheme that the legislature developed that allowed that prison to be built here.”

The Wilkinson County Correctional Facility is one of three in Mississippi operated by Management and Training Corporation, the nation’s third largest corrections company. And taxpayers fund that company’s bottom line.

Three On Your Side wanted to see specifics on that, so we asked for the contract between the Mississippi Department of Corrections and MTC.

MDOC communications director Grace Fisher said no contract existed.

Through research, we discovered MDOC actually contracts with a nonprofit organization, the Wilkinson County Industrial Development Authority.

The nonprofit then has a separate contract with MTC to operate the prison.

Documents from the Internal Revenue Service show millions of dollars in taxpayer money going through this 501(c)3 organization, the same amount listed as revenue and expenses. The amounts are even labeled "fees to house inmates."

A 3 On Your Side analysis shows that nonprofit funneled more than $185 million since 2001.

Is that legal?

3 On Your Side reached out to three state agencies: the Secretary of State, since nonprofits are established there; the Attorney General's office, since they are tasked with investigating nonprofits; and the State Auditor's office, since all of this involves taxpayer dollars.

No agency could answer the question. Even the Internal Revenue Service told WLBT it was prohibited from commenting on matters involving tax-exempt organizations.

After multiple attempts to contact the nonprofit’s president, we drove to Wilkinson County to ask him in person.

“It’s funneled through that organization and funneled right out to whomever is the contract work, whether that’s CCA or MTC, and that is handled by the accounting firm up at Silas & Simmons," said WCIDA president Thomas Tolliver Jr. "They are the ones who audit that each year. We sign no checks or anything like that. It just funnels in, funnels back out.”

When we told him some people say that's an unusual process, Tolliver answered right away.

“I don’t know what it is, whether it’s unusual or whether it’s business procedure," said Tolliver. "The attorneys and the CPAs get together on that. It’s called creative financing, I guess." 

"Some might call it legal money laundering," I said.

“I don’t know. I don’t know what that is. I mean, I know what money laundering is, but I don’t know why that method was chosen. It obviously passed all of the legal aspects," added Tolliver.

After Tolliver’s interview, 3 On Your Side contacted the nonprofit’s CPA, Wes Gore, to ask him about that “creative financing.”

Gore said the money from MDOC goes directly to MTC and never actually gets passed through the nonprofit, even though the documents say otherwise.

Gore said he believes they list it that way on the federal documents because of some requirement with the Internal Revenue Service.

When asked what specific law allows him to do that, Gore told us the answer would require more research.

“We’ve been very transparent," said Tolliver. "We’re audited each year by them, by the CPA firm, and we’ve got a track of every penny, where it goes, and for what purpose it goes for." 

As a private organization, the WCIDA is not obligated to show where that money goes.

Those same tax documents 3 On Your Side obtained show that Wilkinson County has also received hundreds of thousands of dollars each year from the private company MTC, and before that, Corrections Corporation of America.

“It started really as $100,000 over the years, and each year has increased as cost with the prison," said Tolliver.

Then I pointed out that, according to those 990 tax forms, WCIDA received $575,000 in FY 2013.

“Not a half a million. Not to us. It’s never exceeded $300,000," added Tolliver quickly.

"I’ve got it right here. This is public support," I said, showing him the documents.

“Public, that’s different," said Tolliver.

"This went from $275,000, then to $575,000," I said.

“No. I wish we had $575,000," Tolliver said. "I dispute that.”

Then I asked Tolliver where the money came from if it wasn’t from MTC.

“I have no idea what they support around here," he said. 

"You’re the president of the development association," I said.

“They didn’t pay it to us. They didn’t pay it to the development authority," said Tolliver.

"This is listed as revenue," I said, reminding him that they had already listed this as coming through the nonprofit.

“It’s not to the development authority. I have no idea where that’s from. Maybe you should research that and find out," added Tolliver.

"So this IRS document, this 990, is incorrect," I said.

“I don’t know what it is, but it doesn’t come to our fund. Check that with our auditors and see," said Tolliver. "I don’t even know that document. I’ve never seen that document.”

But he did authorize that document as president, and we researched what he said.

A breakdown of contributions provided by Gore shows two private prison companies paid the nonprofit in 2013: outgoing CCA and incoming MTC.

Where does that money go?

“There’s a headstart center in Centreville that is owned by the Centreville Development Corporation, which is part of the WCIDA. There’s also fifty acres of land over there that’s being industrialized," said Tolliver. "There’s 100 acres of land north of Woodville that’s paid for.”

On that land, the WCIDA helped establish a park with basketball courts, a lake, and picnic facilities for residents.

Tolliver also reiterated the main reason he wanted the prison here.

“We would fund any industrial development project that we thought would bring jobs or we would have a park where we could maybe get jobs because we weren’t getting any taxes or anything," he said.

County officials say they were also under the impression that the multi-million dollar facility would be owned by the county after the bond is paid, sometime in 2021.

Then they could sell it and bring much-needed revenue to the county.

But then Lewis found out a few years ago, that wasn’t true, either.

“We’re just sort of the paper owner of the facility until the bond issue is paid off. At that time, by contract we’re obligated to convey it to the state of Mississippi, who continues to manage the prison," said Lewis.

Once that transfer’s made, the state will then pay the county a nominal fee, much less than the $31 million it took to build.

That fee, according to the statute: one dollar.

Lewis called the prison a non-contributor, for the most part.

"The county gets no revenue from the prison at all. We don’t receive ad valorem taxes," added Lewis.

It does have to pay expenses, Lewis said, in the form of legal fees every time an inmate is charged at the prison.

Typically that costs them several thousand dollars a year.

Last year, it cost them more than $8,400.

“We had a riot out there a year or two ago, a number of inmates charged, and that expense was probably $20,000 to $30,000 to the county that year," said Lewis.

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