A nonprofit designed to train inmates is now a conglomerate, and some state officials are questioning its practices and mission.
By JONI JAMES
Published July 11, 2004
ST. PETERSBURG - It would be an unusual Florida business by anyone's measure.
Boots tough enough for the Arctic, with matching hats and gloves. Fleece pullovers and high-country bibs. Avalanche pants, Thermax socks and hand-warmer muffs. A complete outfit can be had for $989.
But what Northern Outfitters' customers may not realize is that the $400 parkas they pull on before heading out into subzero weather are part of Florida's prison rehabilitation program.
All of the company's goods are stitched by prisoners. The skills they learn are designed to help them find work once they have paid their debt to society.
But none of the prisoners are in Florida.
They are inmates at Utah State Prison, southeast of the Great Salt Lake.
How a nonprofit company founded 23 years ago to train Florida prisoners got involved in providing jobs to prisoners in Utah is just one of the many questions swirling around PRIDE Inc.
Founded by the late drugstore mogul Jack Eckerd in 1981, Prison Rehabilitative Industries and Diversified Enterprises has been transformed into a conglomerate.
PRIDE has invested more than $10-million to establish spinoff companies in the past five years, even as its revenues dropped more than 30 percent and its number of inmate jobs hit a 15-year low.
Meanwhile, the chief executive officer's salary has increased 35 percent since 2000 to $236,000. That's more than double what Corrections Secretary James Crosby is paid to run Florida's entire prison system.
Though PRIDE's board is appointed by Gov. Jeb Bush, PRIDE is not a public agency. Under state law, it receives unique benefits: exclusive access to prison labor and facilities, and favored status supplying goods to state agencies.
In return, the state is entitled to a share of profits. But that provision hasn't been exercised in years, as PRIDE has opted to plow proceeds back into capital improvements and expansion. The state is also the beneficiary if PRIDE ever shuts its doors.
But Bush, a zealous advocate of privatization, questions PRIDE's entrepreneurial zeal.
"You've got the question of, What is the mission of PRIDE?" Bush said. He sees PRIDE's mission as training Florida prisoners "to have a skill so they can live a productive life beyond when they're finished."
Going beyond that "may not be appropriate," Bush said.
Last month, Bush's inspector general began investigating PRIDE's corporate structure and its spinoff companies, just months after Bush's staff tried unsuccessfully to make changes behind the scenes.
PRIDE placed its CEO and president on a 60-day leave, though the departure had little impact. Under the PRIDE structure, CEO Pamela Jo Davis also heads the primary affiliate company and reports to work each day.
At issue are millions of dollars in PRIDE assets and short-term loans and lucrative administrative service contracts that have gone to spinoff companies that are beyond public scrutiny.
What was once a simple string of prison factories making shoes or licenses plates is now a collection of corporations with overlapping interests that sometimes provide no jobs for Florida prisoners:
One PRIDE spinoff paid $2.5-million for Northern Outfitters five years ago, hoping it would expand to Florida. That has yet to happen.
A citrus processing partnership between a PRIDE spinoff and a subsidiary of a South Florida citrus grower owes PRIDE more than $3.5-million. PRIDE also must cover the $2-million mortgage for the factory where it is housed.
A former PRIDE enterprise, turning documents into digital files, was shifted to a spinoff that sometimes wins contracts that can't be fulfilled by prisoners, so it hires nonprisoners.
At least one venture included private investments by members of the PRIDE board and its staff. They would have profited personally, but the business failed.
The north St. Petersburg building where PRIDE and its affiliates share offices was sold, and the spinoff companies reaped the profits.
Davis, a former jail warden in Miami-Dade County and former deputy state corrections secretary, acknowledges that PRIDE can be confusing.
But the charismatic longtime PRIDE chief executive, a member of the Pinellas County Business Women's Hall of Fame, says each project has been designed to create more demand for PRIDE workers.
"We knew looking down the road that PRIDE couldn't continue to do business the way it always had, relying on state agencies as its primary customer," Davis, 60, said. "Had we not done what we've done in the past five years, PRIDE would be in even worse shape because of market forces."
At the core of the debate is PRIDE's mission 23 years after Eckerd struck a deal with then-Gov. Bob Graham and the Florida Legislature. Eckerd contended that private industry could do a better job training inmates and produce goods more efficiently than the state Department of Corrections.
Under a state law that is not always enforced, state agencies are supposed to buy products from PRIDE whenever possible. Traditional PRIDE industries, with state and local government agencies as customers, are the backbone of Florida prison rehabilitation: furniture, license plates, cleaning supplies, road paint, uniforms and shoes.
But as the 1990s came to a close, Davis said, she and the PRIDE board saw the inevitable: Offshore manufacturing, combined with Bush's own push to privatize government operations, would make it harder for PRIDE to get customers.
One of the biggest blows to PRIDE came in 2001 when the Department of Corrections outsourced its cafeteria services to Aramark, a national company. PRIDE's revenue dropped $30-million the next year.
So PRIDE began creating new entities free of the legal and financial constraints that state and federal law set for nonprofits and prison industries. The spinoffs would be organized under a nonprofit umbrella, Industries Training Corp. Its mission: to support prison industries nationwide. In the event of its collapse, all assets would return to PRIDE.
PRIDE's board hired ITC through a no-bid multimillion-dollar annual contract to run its administration, from payroll to human resources. Eventually Davis and nearly a dozen other PRIDE staffers would become ITC employees. Davis carries the title CEO of ITC-PRIDE Enterprises.
Lesser ITC spinoffs focused on finding new business opportunities for PRIDE, whether forming new companies or finding private vendors to partner with. But the spinoffs would also engage in complementary businesses, such as expanding PRIDE's traditional job placement service for its inmate workers to other hard-to-place individuals such as welfare mothers.
To date, Davis counts 320 PRIDE jobs connected to ITC, though at least 94 of those stem from an old PRIDE operation now under ITC's purview. All told, PRIDE has 2,049 inmate jobs, or about three jobs for every 100 inmates. Ten years ago, when Florida's prison population was one-third less, that ratio was more than twice as high.
"I truly believe when they look at it from the situation of a private sector point of view, they'll see why we needed to take these avenues," said PRIDE board chairwoman Maria Camila Leiva, a Miami businesswoman. "ITC exists for the sole purpose of helping PRIDE."
But Bush and Corrections Secretary Crosby, who sits on the PRIDE board, aren't convinced.
PRIDE's interconnected companies have flummoxed state auditors. They have complained that it's impossible to determine whether PRIDE has received any real return for its investment.
"The problem I've had as a board member is not understanding the relationships between PRIDE as clearly defined in statute and the various companies that have spun off using PRIDE money primarily," Crosby complained last month.
The Florida Corrections Commission, a governor-appointed advisory group, raised concerns in 2002 about what would happen when the interests of ITC and PRIDE conflicted, such as setting a price for ITC's administrative services to PRIDE.
Last December, legislative auditors followed suit, noting there was no written repayment schedule for $8.7-million that PRIDE spent helping launch ITC. In 2002, PRIDE wrote off $5.2-million of the debt.
Even before Bush called in his inspector general, his staff tried to shake up PRIDE. Minutes of the PRIDE board meeting in April show that Bush's senior staff wanted PRIDE's board to voluntarily resign and apply for reappointment. Bush's staff also suggested that PRIDE's bylaws be changed so that the governor, not the board, picks the chairman.
The 14-member board balked. Though most are appointed by the governor, each had also been vetted by Davis and other board members before his or her name was forwarded to Bush.
One of the entities that has raised eyebrows is Diversified Supply Management, a purchasing firm ITC created with three partners who contributed $2,000 each: Davis, former PRIDE board member and former president of Florida A&M University Frederick Humphries and the husband of board member Leiva. (Davis signed over her shares to ITC if she ever left the company.)
The idea was to cut PRIDE's purchasing costs by pooling orders from it and other customers. But it failed, and ITC shut it down.
"The fact you can make a profit, people immediately assume that is a conflict of interest," Leiva said. "But PRIDE wasn't going to buy something it can get somewhere else at lower price. We weren't forcing PRIDE to buy from us."
Critics also point to Florida Citrus Partners, ITC's ill-fated deal with a subsidiary of South Florida citrus grower Bernard Egan. ITC said the private partner believed it had two inventions that could revolutionize the citrus market.
The first would allow the easy sectioning of citrus fruit to compete with cut melons. The second was a way to kill bacteria in orange juice at far lower temperatures than pasteurization, keeping that fresh-juice taste far longer.
Under the deal, ITC would use PRIDE money to build a factory at Okeechobee Correctional Institute. The private partner would market the product. The partnership never worked.
PRIDE is now owed more than $3.5-million in operating costs, which ITC has pledged to repay from future operating revenue. The factory employs about 150 PRIDE prisoners making orange juice and cutting fruit. While it has yet to break even, ITC hopes it will by the end of the year, Davis said.
"We've done a lot of businesses that failed, but we've done a lot of businesses well," Davis said. "When we lose it, we eat and move on. That's what private business does."
- Times researcher Catherine Wos contributed to this report. Joni James can be reached at jjames@sptimes.com or 850 224-7263.
