Crosby admits kickbacks
Ex-Corrections chief, former protégé set to plead guilty
JACKSONVILLE -- Former Florida Department of Corrections Secretary James V. Crosby was charged by a U.S. attorney Wednesday with accepting more than $130,000 in kickbacks from a scheme involving two companies handling the sales of items to inmates.
Also charged was Crosby's protégé and close friend, Allen Clark, who resigned as the director of the agency's Panhandle prisons in August 2005 after Crosby learned Clark faced federal charges.
Gov. Jeb Bush forced Crosby to quit his job in February after being informed of federal and state investigations.
Crosby and Clark signed plea agreements admitting to the charges and are expected to enter guilty pleas within the next week. Eight current and former DOC employees were also arrested Wednesday on unrelated charges involving the illegal use of inmate labor and state property.
It's the biggest blow yet in a nearly three-year state and federal investigation that has resulted in more than 20 arrests related to embezzlement, the use and distribution of steroids, the hiring of employees to play softball and brawls involving Clark and other DOC employees.
But the investigation is continuing, as Crosby and Clark signed plea deals agreeing to cooperate in future prosecutions.
"These charges are disturbing. They are disturbing because they go all the way to the top," said U.S. Attorney Paul Perez.
Nestor Duarte, the special agent in charge of the Jacksonville office of the FBI, said his agents determined both men had violated their oaths of office and the public trust, making the case a top priority.
Florida Department of Law Enforcement Commissioner Gerald Bailey said agents interviewed more than 100 witnesses in 15 Florida counties as part of the investigation, which he stressed has not concluded.
In plea agreements signed by Clark and Crosby, the two men admitted "corruptly accepting" kickbacks from a company that held a subcontract with Keefe Commissary Network, a business that has a DOC contract to provide items for sale to inmates and their families.
While neither the agreement nor federal officials named the "conspirator" in the case that held the subcontract with Keefe, American Institutional Services of Gainesville was a Keefe subcontractor that handled the transactions of money described in the charges. Federal investigators raided AIS last month and DOC has banned the company from any future business with the agency.
Efforts to obtain comments from Keefe, AIS officials and their attorneys were unsuccessful Wednesday.
Crosby did not return requests for comment. His attorney, Steven R. Andrews of Tallahassee, said Crosby "apologizes to his family, to Gov. Bush and to DOC employees. He worked for DOC for 33 years. He's accepted responsibility and is fully cooperating."
Clark's attorney, Stephen Dobson of Tallahassee, said Clark "accepts responsibility for what he's done and regrets if he's hurt anybody in the process."
Crosby, 53, made more than $124,000 a year as the state's prison chief. He was appointed DOC secretary in January 2003. Clark, 40, made $94,000 a year as the DOC's Region I director.
Crosby and Clark each face up to 10 years in prison and $250,000 in fines as well as repayment of the kickbacks they received. Federal guidelines recommend sentences of seven to eight years.
Clark is scheduled to plead guilty today in Jacksonville. Crosby will enter a plea on Tuesday at the federal courthouse in Jacksonville.
Sentencing generally occurs within 90 days of a guilty plea.
As described in the plea agreements, Crosby decided in 2003 to outsource the DOC's canteen operations that sell items ranging from razors to radios to inmates and their families.
Keefe took over the operation in 2003 in a contract that was expected to provide the agency with $20 million annually.
In 2004, according to the plea agreement, Crosby and Clark introduced the unnamed conspirator to representatives of Keefe Commissary.
"Crosby, Clark and the Conspirator had decided that if, based upon the recommendation and support of Crosby and Clark, Keefe Commissary utilized the Conspirator as a sub-contractor then the Conspirator would kickback to Clark and Crosby a portion of the proceeds," the agreement says.
Clark, Crosby, the unnamed conspirator and unnamed representatives of Keefe met in the summer of 2004 in a Suwannee County home to discuss opening more canteens under Keefe's watch as well as the hiring of the subcontractor. The agreement says everyone went into a separate room during the discussion, leaving Crosby "so that it would appear ... that he was not involved in the negotiations."
The subcontractor was expected to make about $1.5 million per year in its job of collecting cash from the Keefe-run canteens, with 40 percent of that given to Clark and Crosby.
After the subcontractor began collecting cash from Keefe-run canteens in late 2004, the money was delivered to the conspirator's Gainesville business which then delivered "cash kickbacks to Clark and/or others on approximately a monthly basis," according to the plea documents.
Clark then delivered a share to Crosby, the plea agreement says.
The kickbacks ranged from about $1,000 a month to about $12,000 a month between November 2004 and August 2005.
As investigations intensified in 2005, Crosby asked the conspirator to hold on to his share of the money until the investigation slowed. Upon Clark's resignation in August 2005, Crosby told Clark to keep all of the kickbacks.
The plea agreement says Clark continued to receive the kickbacks until early this year after a total of about $130,000 was given to the two men.
Keefe's lobbyist in 2004 was Don Yaeger, a controversial figure in Tallahassee politics. Yaeger, who did not return calls requesting comment Wednesday, is also a Sports Illustrated writer who was sued for libel by former University of Alabama football coach Mike Price.
Crosby admitted to the St. Petersburg Times last year that he was Yaeger's guest at a number of social events, including concerts by Aerosmith and George Strait.
The owner of American Institutional Services, Edward L. Dugger, is an insurance agent whom DOC allowed, while Crosby was secretary, to sell insurance inside prison gates to agency employees.
A number of DOC employees have complained they felt pressured to buy insurance from Dugger by prison supervisors. Current DOC Secretary James McDonough said Wednesday he ended the sales of insurance inside prisons. He said he suspected there was pressure on employees to purchase insurance from particular individuals, and he thought he saw Dugger during a visit to a prison earlier this year.
"I believe he was the guy that triggered me to ask the question, 'Why are these guys inside the wire selling insurance?'" McDonough said.
McDonough said Wednesday's charges should help the agency continue recovering from years of controversy. "I think morale, in fact, surges with this because it brings closure," said McDonough. "The good people of this department knew they were not being represented by this small group."
The charges bring an ignominious end to Crosby's rise from University of Florida journalism graduate to the top of the state's largest agency.
"I am disappointed by this violation of the public's trust and by the abuses committed by those in leadership positions," Bush said in a statement. "Our work requires the highest level of integrity. Anything less is unacceptable and undermines the good work done by many capable and committed state employees."
Eight current or former DOC employees were also arrested Wednesday.
The former employees are Richard Allen Frye, Paul Lamar Miller, Theodore J. Foray Jr., Bryan Kim Griffis and Lamar Edward Griffis.
McDonough said the three DOC employees arrested on Wednesday were immediately fired. They are Florida State Prison Sgt. Christopher Paul Taylor, Lowell Correctional Institution Lt. Bobbie Dewane Ruise and New River CI Officer Stephen Randall Parker.
Lamar Griffis was charged with a misdemeanor count of "acceptance of unauthorized compensation." The other seven were charged with a felony count of grand theft.
The arrests were related to investigations into the use of inmate labor and state property for items of personal use.
These events led up to charges against former prison employees: January 2003 -- James Crosby promoted to DOC secretary by Gov. Jeb Bush. March 2003 -- U.S. Immigration and Customs Enforcement begins intercepting steroid shipments to post office and residential mail boxes in Keystone Heights, Raiford, Macclenny and Starke. October 2003 -- Clay County deputies make a steroid arrest and seize the ledger detailing steroid sales, including sales to prison employees. Crosby signs a contract with Keefe Commissary Network to provide canteen services to inmates at prisons statewide. Summer 2004 -- Crosby and DOC Regional Director Allen Clark allegedly conduct a meeting at a vacation home in Suwannee County where details are worked out to allow a subcontractor to make cash sales at canteens in visitors' parks at prisons on weekends, with Crosby and Clark receiving 40 percent of gross sales. March 2005 -- FBI agents make arrests in scheme by prison employees to steal from inmate recycling program. Aug. 30, 2005 -- Clark submits his resignation from DOC (effective Oct. 14) after a fast-track career under Crosby's tutelage that saw him rise from high school dropout to correctional officer to regional director of a quarter of Florida's prisons. September 2005 -- FBI and Florida Department of Law Enforcement serve search warrants on vehicles and homes of prison employees to look for state property and items built by inmates with state materials. November 2005 -- Crosby announces a crackdown on employee behavior on and off the job. Feb. 6, 2006 -- State lawmakers harshly question Crosby over lax oversight of pharmaceutical contracts. Feb. 10 -- Crosby resigns as DOC secretary at the direction of Gov. Bush. Early March -- Crosby and Clark are notified that the federal government could move to have their retirement benefits forfeited for violations of federal law. March 15 -- Interim DOC Secretary James McDonough fires nine top prison employees with close ties to Crosby. Subsequently, several others are fired, demoted, suspended or directed to resign. June 71 -- FBI and FDLE raid the offices of Gainesville business American Institutional Services, a subcontractor who provided canteen services at prison visiting parks. McDonough bans the company from prison property. June 23 -- Crosby waives his right to an indictment and agrees to a plea deal for taking cash kickbacks of up to $12,000 a month from American Institutional Services. June 29 -- Gov. Bush names McDonough secretary, removing the interim title. July 5 -- Federal plea deals for Crosby and Clark are announced in the kickback case along with the state charges against eight current or former prison employees accused of taking state property or having items made by inmates using state materials. Today -- Clark scheduled to make a first federal court appearance in Jacksonville in the kickback case. July 11 -- Crosby scheduled to make a first court appearance in Jacksonville in the kickback case.