Tag Archive: CEC

Heated Senate Hearing on Halfway Houses Starts at 2:00 PM

The long-awaited Halfway House drama starts at about 2:00 PM with a hearing of the Senate Legislative Oversight Committee. There were many warnings of problems culminating in the N Y Times series Unlocked. Now the investigation begins.  

Key scheduled witnesses will include:

  • Comptroller Matthew Boxer whose June 2011 audit revealed serious problems and provided 26 recommendations for changes. A key question is what changes have been made?

  • John Clancy, CEO of Community Education Centers, whose firm received last year $71 million of the $105 million our government spent on such facilities.  His operation came under withering criticism in the NY Times articles and is now believed to be in financial distress.

  • Gary Lanigan, Commissioner of the Department of Corrections, who since 2010 was reponsible for monitoring CEC and other halfway houses.

    Members of the Senate committee are: Robert Gordon – Chair, Barbara Buono – Vice-Chair, Thomas Kean, Joseph Kyrillos, Teresa Ruiz, and Paul Sarlo. In firstamend07’s diary, he asks whether the event will be “fight or fluff.” The Democrats have lots of ammunition, but some of the witnesses will be wily and obfuscate, while Republicans will try their best to protect their governor who has praised and enabled CEC.

    For more information see CEC Investigation: Our Leaders Take Action – Part VII.  

    The debate will become heated so make some popcorn and listen to both sides on the legislative website.

    Deciminyan will be live Tweeting up a storm @bluejersey.

    This is open thread…

  • CEC Investigation: Our Legislators Take Action – Part VII

    After years of groups and individuals raising warning signs about problems in halfway houses, the issue was placed in stark relief in a N Y Times devastating series of articles Unlocked by Sam Dolnick. On Thursday the Senate Legislative Oversight Committee chaired by Bob Gordon (D-37) and vice-chaired by Barbara Buono (D-18) will hold a hearing. On Monday the Assembly Law and Public Safety Committee chaired by Charles Mainor (D-31) and vice chaired by Gilbert Wilson (D-5) will hold another hearing. The goals are to understand the problems and bring about solutions.

    The Problems: Past articles in the Blue Jersey CEC Investigation series have highlighted serious improprieties regarding halfway houses – particularly those of Community Education Centers (CEC), which last year received $71 million out of $105 million in government expenses. It is a story of CEC’s Founder John Clancy who used a dubious agreement from a prior Attorney General to set up a shell non-profit company and then through large political contributions, lobbying, PR, a well connected legal VP, and friendship with a U.S. attorney and later governor to create a large corrections corporation. With insufficient monitoring from the Department of Corrections (DOC), this company ran facilities that bred an atmosphere of inmate drugs, escapes, violence, gangs, rapes, and deaths. With unqualified staff, security was compromised, the public at large was placed in danger with unnecessary escapes, and the goal of helping to reduce recidivism was given short shrift.

    Christie confidante and CEC Senior Vice President, William Palatucci aided, abetted and defended CEC. Governor Christie as a lawyer at Dughi and Hewitt, as U.S. Attorney, and later as governor at a minimum praised and enabled the activities of CEC. He failed to implement remedies that other more responsible parties were calling for over the years, and he may have done so willfully and improperly. Now we are at the point where the valid role of halfway houses is being discredited, and the largest company in New Jersey is facing such severe financial problems that the DOC might need to take over at a moment’s notice thousands of inmates lodged annually in CEC facilities. CEC failings are not confined to NJ DOC contracts, but extend to those held by NJ local governments and such states as Texas, Alabama, and Colorado.

    There are numerous solutions. The agreement that allowed CEC to use a non-profit organization as a front, in contravention to established regulations, should be ended for any future contracts and possibly existing contracts. CEC was able to build a monopolistic position, and it is now time to enable legitimate non profits to compete fairly for DOC contracts small and large. The Boxer audit laid out key recommendations for remedies, and it is essential to establish what progress DOC has achieved so far and to assure the recommendations are met. Dangerous inmates should not be lodged in halfway houses. The security and living conditions of inmates need to be improved. Process measures must be established to assure that the goals of reducing recidivism through drug treatment, job readiness, and other skills preparatory to re-entering the general population are being well administered. More qualified staffing is important. Pay-to-play regulations urgently need strengthening. People like Governor Christie should be disabused of the notion that privatization brings huge savings, as previous studies have shown that such savings are scant. Goals should include integrity, safety, and reducing recidivism not an elusive search for savings.

    Below the fold are suggestions for some of the individuals who should testify and what questions legislators might ask the individuals.


    CEC Investigation: The Puppeteer and His Puppets – Part VI

    “The allegations of civil rights and corrupt government and contractor practices [at halfway houses] are very serious and disturbing. There is a political circle of individuals and relationships that basically controls State government and certain local governments. This circle conspires to protect itself and its members from appropriate oversight and accountability. This practice must end.” – Senator Ronald Rice (D-28)

    Key members of this circle are CEC Founder & CEO John Clancy, Governor Christie, and CEC Senior Vice President and Christie confidante William Palatucci. Another member is Essex County Executive Joe DiVincenzo, about whom much has been written regarding Delaney Hall, immigration detention, Essex County Jail, and CEC campaign contributions. But that is an Essex County story which may not feature in the July Senate and Assembly investigations of State Department of Corrections (DOC) ccontracts. Yet another story revealed by Blue Jersey was CEC’s mismanagement at Cheyenne Mountain Re-Entry Center in Colorado. For CEC the malfeasance involves contracts with NJ state, local government, and other states.

    The nexus of Clancy, Christie, and Palatucci

    Puppeteer: Let’s call Founder John Clancy the puppeteer. The origins of CEC go back to 1979 when he was a youth services county employee and decided there was money to be made through drug and alcohol treatment for those incarcerated. He was so successful that in 2007 private equity firms Primus Capital and LLR Partners invested $53 million in Community Education Centers. Primus boasted that CEC was “the nation’s largest provider of offender re-entry services with 97 facilities in 22 states and revenues in excess of $200 million.” Today CEC is even larger thanks to a little help from his puppets.

    Puppets and what they do

    Chris Christie joined the law firm of Dughi & Hewitt in 1987 which represented CEC. “It appears that between 1994 an 1996, CEC made good use of its legal counsel and most likely, its political connections, to strike a deal with the AG’s office to allow CEC to use Education and Health Centers of America (EHCA) as a shell to comply with the state’s legal requirement that only non-profits can hold contracts with the state to operate halfway houses.” Perhaps, it was just coincidental that another member of the law firm at the time was William Palatucci, who had joined in 1992. Fast-forward to 2011 when EHCA’s Form 990 (NJ non profit tax return) indicates that on $71 million in revenue from our state and local governments, $350,000 was spent on John Clancy’s compensation as Chair of EHCA, exclusive of whatever he received from CEC.

    In 2000 and 2001 both Christie and Palatucci were registered lobbyists for CEC. In 2005, after representing CEC for 14 years, Palatucci joined the company as its Senior Vice President and General Counsel. His ongoing close relationship with Christie includes helping run Christie’s gubernatorial campaign, serving as co-chair of the governor’s inaugural committee, sitting on the board of Reform Jersey Now which raised money to promote Christie policies, and being a member of the Legislative Apportionment Commission.

    As US Attorney, Christie attended the ribbon cutting ceremony in 2007 for CEC‟s new corporate headquarters and the ten year anniversary celebration in 2008 of Talbot Hall. By 2008 with lots of cash, a U.S. attorney as a friend, a well-connected legal V.P., a dubious, sweet-heart deal on EHCA, little DOC oversight, and weak competitors, Clancy must have been asking himself, “What’s not to like?”

    But it gets even better for Clancy thanks to more help… also warning signs… and let’s not forget CEC donations beyond the fold  

    CEC Investigation: The Rubber Hits The Road – Part V

    “The recent disclosures about security lapses and other failures at the halfway houses contracted by the Department of Corrections (DOC) document a disturbing history of mismanagement and neglect that has jeopardized public safety and cost the lives of innocent individuals.” – Senate Majority Leader Loretta Weinberg (D-37) in a letter of July 10, 2012, to NJ Department of Corrections Commissioner Gary M. Lanigan

    After a lengthy investigation State Comptroller A. Matthew Boxer in June 2011 issued a report documenting “crucial weaknesses in state oversight of inmate halfway houses.” He made 28 recommendations to enhance DOC oversight. The report indicated “DOC’s response notes that it is working to implement the recommendations.” In June of this year (twelve months later) the NY Times published a series of three frightening articles which revealed that halfway houses were still plagued by “escapes, gang activity, sexual attacks, and rampant drug use.” Senator Weinberg’s conclusion: “Obviously, whatever changes were made have failed.”

    In her letter to Commissioner Lanigan Senator Weinberg requested “full accounting by the DOC of its actions since June of last year to correct the problems identified by the comptroller and an explanation of why these actions failed.” Community Education Center (CEC) operates 70% of these facilities for inmates who are finishing their sentences and parolees who are re-entering society. The Times reported at one CEC site an inmate escaped in the process of being transported and murdered his girlfriend hours later. Another individual at the same facility murdered a resident being held on a motor vehicle violation.

    The legislature has moved with speed to launch investigations to address this failure. The Assembly is planning an investigation tentatively in July. The Senate Legislative Oversight Committee chaired by Senator Robert Gordon (D-37) and vice-chaired by Senator Barbara Buono (D-18) has scheduled a hearing for July 26. Senator Gordon said, “Clearly, there is something going wrong. I believe the Legislature has an obligation to determine what the problem is and to develop solutions.”

    More beyond the fold on problems and solutions for the upcoming investigations

    CEC Investigation: The Clamor and Urgency Grow – Part IV

    The Senate and Assembly are each now considering launching an investigation into NJ halfway houses, most of which are operated by Community Education Centers (CEC). Senate President Steve Sweeney (D-3) has approved the Senate Legislative Oversight Committee to launch an investigation if committee Chairman Senator Robert Gordon (D-38) wishes to proceed. Assemblyman Charles Mainor (D-31), chair of the Assembly Law and Public Safety Committee, has said, “We definitely want a hearing and we want to concentrate on finding out why there are so many escapes going on, along with the recidivism, along with the crime that’s being committed by people that are escaping.”

    Prior to the release of the NY Times’ scathing report on CEC and halfway houses, Governor Christie said at CEC’s Delaney Hall in 2010, this is “someplace where the work is purely good.” “Places like this are to be celebrated.” Just months before an inmate was murdered there. After release of the report Christie said his administration “takes its responsibility to properly administer this program very seriously.” Nonetheless, he line-item vetoed two important provisions which Senate Majority Leader Loretta Weinberg (D-37) wrote into the Budget bill. Christie has been aware of these problems since even before becoming governor. His approach has been to sweep them under the rug, use line item vetoes and only grudgingly make minimal changes.

    Christie’s numerous connections to CEC, CEC’s significant donations to his campaign, and Christie’s overriding belief in privatization all serve to create conflicts of interest. As the NY Times series documents, Governor Christie’s championing of CEC started in 2001 when he and law partner William Palatucci became registered lobbyists for CEC. Palatucci went on to become a vice President of CEC and close confidante of the governor. Since Christie took office 1,300 halfway house inmates have escaped, one of whom went on to murder a woman within hours of escaping from a CEC facility. Last summer Christie attended the wedding of the daughter of John Clancy, Founder and Chief Executive of CEC. Christie hired the groom, Samuel Vivattine, to work as an assistant in his office. Paul Krugman in a NY Times piece concludes what we are witnessing is a corrupt nexus of privatization and patronage that is undermining government across much of our nation.

    It is not surprising that a wide variety of media and individuals have raised a hue and cry. See below the fold outraged editorials and commentary, as well as responses from two apologists/defenders.  

    CEC Investigation: Blue Jersey Finds The Problems Are Not Just in NJ – Part III

    Governor Christie on Friday curbed an effort by the Legislature to improve oversight of the state’s privately run halfway houses. However, evidence accumulates that the problems reported in the New York Times are not restricted to New Jersey. Community Education Centers (CEC) runs most of the facilities in our state and operates in about twelve other states. One of its sites is Cheyenne Mountain Re-Entry Center (CMRC) in Colorado Springs where press reports and a whistle-blower raise troubling questions.

    What the whistle-blower is reporting – below the fold.

    Governor Christie And The Legislature: “Deal Or No Deal?”


    Update 1:45 pm. In his speech Christie urged the legislature to enact now what is essentially the Senate property tax relief plan, rather than have it be contingent on meeting his own tax revenue forecast. Inspite of earlier speculation he offered no sweeteners in his speech.


    Governor Christie has ordered the Senate and Assembly into session today, and he plans to address the joint legislature at 1:00 PM. Members who do not appear can be brought to the State House by law enforcement, but they can not be forced to vote or take other action.  

    Christie seeks to burnish his national Republican credentials. He would probably like to be the keynote speaker at the Republican convention, and he might still harbor a desire to be the Republican Vice Presidential candidate. However, he is becoming increasingly embattled. He is hampered by recent revelations regarding his ties to Community Education Centers (CEC) and his failure despite numerous warnings to remedy problems at the halfway houses. The strain seems to be showing in his increasingly intemperate comments: calling a reporter an “idiot,” Senator Paul Sarlo “an arrogant SOB,” and OLS Budget Director “the Dr. Kervorkian of numbers.”

    Nowhere was he more angry than in Brick last week when he shouted that lawmakers should, “Get the hell off the beach and back to Trenton and deliver my tax cut, right now.” He desperately wants his tax cut and he wants it now. This afternoon he will probably offer a sweetener to convince legislators to enact the cut immediately, as opposed to waiting until later in the year when we will have a better fix on incoming tax revenues.  

    The reality is that any tax cut would not take effect until January 1, 2013, so waiting a few months makes sense. Also Mark Magyar points out in today’s NJ Spotlight that Christie’s reliance on one-shot, non-recurring revenue in our new budget combined with increased costs for pension, debt service, transportation and business tax cuts will start off the next budget year with $1.9 billion in the hole which will already exceed all of that years’ expected revenue growth. He goes on to say,

    “The addition of a multiyear income tax or property tax cut at the level proposed by Christie would take $183 million out of the current surplus, would cost $575 million in revenue in Fiscal Year 2014, and would most likely create a major budget crisis just 4 1/2 months before the governor and all 120 members of the Legislature are up for reelection in November 2013.

    The legislature is wise in exercising caution. Although we don’t yet know what “deal” the governor might offer, it appears the legislature’s best response would be “No deal.”

    CEC Investigation: Christie And The Watchdogs – Part II

    “The company that runs these halfway houses, Community Education Center, is for-profit, operated by a good friend of Christie, and in fact for a while he was a registered lobbyist for the company. The half way houses are apparently shot through with violence, drug usage, rape, and runways. Christie allies say it is just the liberal agenda of the Times, but it is surely more serious than that. If in fact, Christie has been negligent on this issue, it has enormous implications. Just remember how the Republicans used the Willie Horton parole from Governor Mike Dukakis’ prisons to hit him over the head for being soft on crime.” The Romance Is Over: Michael Riccards, Executive Director of NJ Hall Institute of Public Policy

    In Part I there was an explanation of how Community Education Centers’ (CEC) recent contributions of $600,000 to many political campaigns have created significant conflicts of interest and how the sheer breadth of matters to investigate make it difficult for any one legislative committee to conduct an independent review. Individual legislative committees, however, can develop bills to address particular issues. Such is what just happened with amazing speed when over a few day a bill to require the State Auditor to review Department of Corrections’ halfway house contracts was quickly passed by committees of both houses and is now poised for floor votes.  

    Christie has, indeed, “been negligent on this issue.” When Chris Christie assumed the governorship in 2010 the State Commission on Investigations (SCI) had already issued a 2009 report highlighting gang presence in prisons (how, why, & what to do about it), and the State Comptroller was in the midst of preparing a report to be published in 2011 that “exposed crucial weaknesses in state oversight of halfway houses.” Christie’s own press spokesman Michael Drewniak, as a former Star Ledger Department of Corrections reporter, was already aware of the problems in 1997. He wrote an article about how CEC set up a separate “non-profit” agency to obtain Department of Corrections grants and funnel money to CEC. The Comptrollers’ report questions the legality of this arrangement. DOC over the years has authorized and “supervised” many CEC contracts. In effect, through State watchdog reports, interaction from DOC, Christie’s own spokesperson, and many press articles there was ample information available to Christie about the numerous, serious shortcomings of CEC.

    What did Governor Christie then do? As the Star Ledger reported in 2010 he wanted to reduce the budgets and “consolidate the state’s watchdog agencies by placing the offices of the comptroller, inspector general, Medicaid inspector general and the State Commission of Investigation under one roof – Christie’s.” This from a governor who had fiercely prosecuted government-related crime and exposed a broad web of state-wide payola? Fortunately, Christie’s efforts at taking control of these agencies failed, and they remain now as they were.

    In Part III there will be more information about the key role these agencies can provide in further investigative actions.  In addition, more responsiveness is needed from the Attorney General’s office.

    In the meanwhile on the list of both the Senate and Assembly for voting today is S927 which requires the State Auditor to review DOC privatization contracts. The review is supposed to determine any malfeasance on the part of DOC and whether the privatization cost is less than in-service operation would be. Although the State Auditor has audited different State prisons and DOC administration, this would represent the first time they have audited any halfway houses. As a result, in addition to the past efforts of the SCI and the Comptroller, we would now have the involvement of the State Auditor as a third watchdog. It will be interesting to see if any Republicans support the bill or any Democrats oppose it.  

    CEC Investigation: There’s A Lot Of Dirt In Them Thar Hills

    Eleven months after an inmate was killed at CEC’s Delaney Hall, Governor Christie served as keynote speaker for its 2010 10th-anniversary celebration. He said, “This is where I need to be, because even as governor, you treasure the times when you can come and be someplace where the work is purely good.”

    Following the New York Times three-part series, countless other newspaper articles over the years, NJ Comptroller Boxer’s report, an SCI report Gangs in Prisons, information from prisoner advocacy groups, and many Blue Jersey diaries, the need for a full independent investigation of Community Education Centers (CEC) is apparent. Its facilities are not places where “the work is purely good.”

    The problem as Charles Stile points out is that founder William Clancy, his family, and CEC since the early 1990’s have donated over $600,000 to elected officials at the state and local level. That’s a lot of dirt and many enriched hills. Essex County has proven particularly fertile ground for CEC, but Clancy’s largesse has included governors of both parties and officials in counties where CEC operates or would like to operate. Particularly troubling has been Governor Christie’s past participation as registered lobbyist for CEC, his frequent visits to the centers where he spews praises, his acceptance of donations, failure to address publicized problems, and his close relationship with CEC Senior Vice President William Palatucci.

    In addition to the largesse, which constitutes conflicts of interest for those who might investigate CEC, the problem for any investigatory group is the sheer number of issues to be examined: “pay-to-play,” public safety when inmates “walk away” from a facility, violence, rape, and drugs within the institutions, lack of quality counseling and education, lack of financial accountability and collusion with local authorities to obtain business.  

    With so many pockets of enriched hills and so many varieties of dirt, what group is independent enough with sufficient staff and skills to attack the problem?

    Charles Mainor (D-Hudson), Chair of the Assembly Law and Public Safety Committee, is one of two individuals who has called for legislative hearings. How independent can he be, however, as his county houses and receives monies for CEC’s Talbot Hall in Kearny. In Part I of the NY Times series he was quoted as being asked for his estimate of how many people escaped from halfway houses in 2011. “I have heard of no more than three,” he responded. According to state records, the number was 452. Another member of the committee Sean Kean (R-30) in the NY Times article appeared dismissive, saying about the escapes, “It’s not really a problem. It’s a cheaper way of doing business, so that’s why it behooves us to use that option.” In summary, this committee is not a promising group to investigate the matter.

    Senator Barbara Buono is the other individual who has expressed concern, stating, “They should be held accountable for their failures.” One of her key staffers said that with the current budget issues on the front burner, she has not yet developed a strategy on how to move forward. She is Vice Chair of the Senate Oversight Committee. Although she has received a combined $2,600 in donations in 2010 and 2011, she has shown the independence and fervor necessary to undertake such an investigation. She has not discussed the matter yet with Chair Robert Gordon (D-38), nor Paul Sarlo (D-36), neither of whom reside in a county where CEC operates. However, another committee member Teresa Ruiz (D-29) is a part of the Essex County Democratic machine which is probably the largest recipient of CEC largesse. With a small committee and an even smaller staff it would be difficult for this group to undertake such a far-ranging investigation.

    Because of conflicts of interest and the broad scope necessary, a legislative investigation does not seem the best course. Individual committees, however,  can review matters within their purview and promote legislation. There is currently a Senate bill (S927) sponsored by Jeff Van Drew (D-3) and Steven Sweeney (D-3) which would require the State Auditor to review Department of Corrections privatization contracts to determine whether privatization yields a reduction in costs and whether there was any malfeasance on the part of DOC with the contract. It has been reviewed by two committees, however, the identical Assembly bill (A1880) has seen no committee action. If the bill were to gain passage it would represent a step forward, with some dirt removed, but large mounds still remaining.

    There are other more promising venues for investigation which will be discussed in Part II of this diary.  There is a lot of dirt, a lot of hills and we need heavy duty equipment to level the land.  

    O’Donnell: Halfway house scandal knocks Christie off Romney’s short list (video)

    Last night, Lawrence O’Donnell drew a big red “X” over Chris Christie’s picture on his Veepstakes wall, and pronounced him the first on Romney’s short list to be effectively – if not officially – dropped from consideration. The reason? Chris Christie’s own Willie Horton moment, a damning scandal of the worst kind for a a governor who traded heavily on his law-and-order swagger to get elected as Governor, and whose governorship has been characterized by considerable efforts to privatize the work of government. The growing scandal of the halfway houses stains both parties, for failures of oversight and for allowing CEC, the Christie-tied company running these for-profit facilities, to get away with tricky pay-to-play (not to mention a questionable record on immigrant detention).

    But our governor is the big man with the big GOP future. He’s short list material, if you believe media and his out-of-state schedule. But that may all be tumbling down if the man who made him ends up breaking him. Bill Palatucci is Christie’s close friend, former partner, and the engine behind the GOP string-pulling and fundraising that launched the Christie brand. And the profiteer behind CEC. But for the governor, this isn’t just a matter of guilt by association. Christie is tied to CEC not only through friendship with Palatucci; Christie used to be CEC’s lobbyist. And as governor, he’s the one who has to stand for questions about why there are no new safeguards in place two years after David Goodell walked out of a halfway house and killed a woman who turned him down. Why is Christie not out front calling for an  independent investigation of CEC?

    Chris Christie once held Assemblywoman Bonnie Watson Coleman responsible for the murder of a young man by another recently paroled because she was the sponsor of early-release legislation. Live by the sword …

    New York Times’ 10-month investigation is worth reading, so I’ll post the links again. Lawrence O’Donnell’s discussion with Jersey homeboy Steve Kornacki is below the fold, and an eye-opener.

    Unlocked: Inside New Jersey’s Halfway Houses by Sam Dolnick

    As Escapees Stream Out, a Penal Business Thrives

    At a Halfway House, Bedlam Reigns

    A Volatile Mix Fuels a Murder

    (Dolnick also covered the fox’s report on the state of the henhouse: Christie Orders Stepped-Up Inspections by State of Halfway Houses).

    Lawrence O’Donnell talked Christie with Steve Kornacki last night on The Last Word. Video below the fold: