April 25, 2004
In the past few months there have been numerous articles questioning P.R.I.D.E. of Florida's business dealing and transactions. The articles have mostly questioned P.R.I.D.E.'s "loaning" of more than $10 MILLION to spin-off businesses, owned by P.R.I.D.E. President Pamela Davis or controlled by Davis and other P.R.I.D.E. Board Members - past and present. These loans have no repayment schedule/plan and some have already been forgiven - or written off.
While it would seem the practice of funding "affiliated" corporations or businesses, and thereby co-mingling money/income by and between P.R.I.D.E. (a non profit corporation) is somewhat shady, this author has no genuine knowledge whether such actions are legal or illegal. It appears that once the co-mingling of funds occur, one type of corporation would become an "alter ego" of the other and possibly cause loss of P.R.I.D.E.'s non-profit status purposes. However, this question would be better answered by the I.R.S.
What has not been addressed in the many news and magazine articles is the question "HOW" P.R.I.D.E. is generating as much as $61 MILLION annually in sales. The article "- Legislature Seeks Accountability of PRIDE'S Business Practices (Tampa Bay Business Journal) incorrectly states that P.R.I.D.E.'s $60.9 MILLION was generated by its' inmate work force or "employees", who earn from 30-55¢ per hour and 15¢ of each dollar earned is put toward victim restitution. The fact is; yes, inmates do earn wages - at 20-55¢ an hour and also 15% goes toward victim restitution.
However, what P.R.I.D.E. isn't saying - and the aforementioned article omitted to report - is that for years P.R.I.D.E. has participated in a program titled "Prison Industry Enhancement Certification Program" (PIECP). This program was enacted by Congress in 1979, Justice System Improvement (P.L. 96-157 sec. 827 codified as 18 USC, Section 17 & subsections). This statutory law allows for exemptions to state and local departments of corrections from normal restrictions on the sale of prisoner made goods in interstate commerce, to the US Government and private sector customers. A total of 50 jurisdictions may be certified under PIECP. Florida is one of those jurisdictions.
Under the "PIE" program, certificate holders must comply with the guideline requirements of PIECP. If done correctly, the PIE program allows inmates to earn wages at the prevailing rate of pay earned by non-inmate workers in private industry. This requirement is necessary to: level the playing field" between private and prison industry.
P.R.I.D.E. has been an active member, participating in the PIECP program for years. It pays inmates employees "minimum wage" ($5.15 per hour) when they manufacture goods for sale to private sector customers. Of the base rate of $5.15 per hour, the PIECP requires that the inmate worker receive at least 20% of the gross wages and allows for up to 80% deductions of the gross wages for: taxes, victim programs, room and board, family support, fines and court costs. Of the reported 1,995 P.R.I.D.E. inmate employees, many are earning minimum wages under the PIECP program.
As you read above, the PIECP program requires that certificate holders - or program participants, "must" comply with the "mandatory criteria" required by the program, in order to become certified and participate in this Federal program. Further, the Florida Correction Commission is a "strong advocate" of the PIECP program since 1995 when Florida Department of Corrections applied for and received certification. The Commission noted that it is aware that "each certified program must be determined to meet statutory and guideline requirements."
In 1999 the Florida legislature enacted Chapter 99-260 Laws of Florida, which transferred the administration of Florida's PIECP program from the Department of corrections to P.R.I.D.E. Enterprises. Since then, P.R.I.D.E. has been the administrator of the federal PIECP program.
As the administrator of PIECP, P.R.I.D.E. has deliberately ignored the mandatory guidelines required by the program itself and has done so for monetary gain - at the expense of their inmate work force. As you read the following, you will understand why the term "deliberate" is used - along with "knowing" and "willful".
NON-COMPLIANCE
PIECP requires participants to have;
"1) Legislative authority to pay wages at a rate not less than that paid for similar work in the same locality. The state Department of Economic Security or its' equivalent determines wage rates.
2) Benefits typically made available to non-inmate workers by the state and/or federal governments must be available to inmate workers, including worker's
compensation or its' equivalent, and;
3) Statutory authority to administer correctional industries and to involve the private sector in the production and sale of prisoner-made goods.
before they will be certified by the BJA. The D.O.C. and P.R.I.D.E. assured the BJA that they met all the mandatory requirements and guidelines when they sought PIECP certification. This assurance was false - from the start.
P.R.I.D.E. manufactures many products and sells them in and to the private sector businesses, governmental agencies as well as to customers overseas. It produces a myriad assortment of products under the PIE program, metal and wood furniture, dental prosthesis, license plates, printed goods, eye glasses, shoes and services (data entry and imaging) - but the corporation has not paid the inmate employees the "prevailing wages for similar work" done in the private sector. It pays minimum wage only.
P.R.I.D.E. further dilutes the
individual inmate employee's wages by: estimating the labor costs prior to production and disbursing the total hours estimated among all employees, instead of paying each inmate employee for the actual hours worked on a PIE project; eliminating "PIE" time cards, paying PIE wages only after the products are sold and shipped; refusing to pay PIE wages to janitors, Q.A. or maintenance inmate employees.
Congress, when enacting the
PIECP legislation, was concerned that cheap inmate labor could/would be used to attract business away from the private sector and thus unfairly prejudice private industrial companies, whose profits and pricing are based in part upon the wage rates it must pay to its' work force, as well as expenditures for workers compensation premiums.
In an effort to guarantee this situation would be averted, Congress mandated that the PIECP participants must pay inmate workers at least the "prevailing rate" then being paid in the community. They would have to provide workers compensation or equivalent program benefit(s). The PIECP participant also would be required to certify - by written assurances - that there would be no private sector jobs lost due to PIECP jobs.
The Florida Corrections Commission acknowledged the foregoing mandatory requirements in its' 1999 annual report, and as the certificate holder, the F.D.O.C. is aware of the requirements. As the PIECP "Administrator: P.R.I.D.E. knows the guidelines and willfully chooses to ignore or circumvent them in an effort to increase benefits to the corporation.
Florida law exempts the F.D.O.C. and P.R.I.D.E. from paying for or providing workers compensation benefits for inmate employees, The 1999 Guidelines revisions by Congress and the BJA require that states that are exempted from providing such benefits have a "comparable program" in place before certification. P.R.I.D.E. has no such comparable program - now or in the past. If an inmate employee doing PIE work is injured, D.O.C. provides medical care (at the cost of $4.00 to the inmate per incident), but the inmate receives no compensation for lost wages or disability that resulted from his/her injury.
RESULT OF NON-COMPLIANCE
P.R.I.D.E.'s vast savings by; paying only minimum wages, reducing an inmate employees actual hours worked by as much as 70%, and not providing (or paying for) workers compensation or a comparable program, allows it to exercise an unfair advantage over its' private sector competitors.
Privately run industries pay wages at least comparable to all other private businesses of the same type and provide other programs required by state and federal governments. P.R.I.D.E. is not so limited. As a consequence, it can bid for and produce and sell similar products approximately 10 - 15% below its' competitors and still realize vast profits, because its' payroll and benefits obligations are so much lower than private sector competitors. Thus the "level playing field" Congress and BJA envision, mandate and expect, does not exist where P.R.I.D.E. and its' affiliate corporations operate. While private companies realize a 5-15% profit margin - at best - P.R.I.D.E. is able to amass huge profits from similar sales.
P.R.I.D.E.'s customers are attracted by the low prices offered by the corporation ... and the publicized fact that by buying from P.R.I.D.E., victims funds are contributed to and tax dollars saved because 405 of the inmate workers pay is deducted and provided to F.D.O.C. to help defray room and board expenditures for care and housing.
At Union Correctional Institution (UCI), P.R.I.D.E. operates 3 industries; Union Metal Furniture, a Dental Laboratory and a license tag plant. All of these facilities manufacture and sell their products to private businesses and companies throughout the U.S. (and some customers overseas). Some of the sales are under the PIECP program.
This author was employed by P.R.I.D.E. at its' Metal furniture Factory from Oct. 2003 through March 17, 2004, as a Quality Assurance (Q.A.) Inspector. He observed several anomalies that occurred during the production runs that were done under PIECP - or should have been.
In October/November 2003 the furniture factory processed a "PIE" order
of products for a company that was outfitting a ship. At the time, inmate employees were provided with 2 time cards - 1 for "PIE" work and 1 for regular wage P.R.I.D.E. work. All inmates who worked on the "PIE" orders were paid at the minimum $5.15 per hour wage (this included R & D, engineering, welding and machine operators). Inmate Q. & A. employees checked the products, but were told they could not receive "PIE" wages, as the company had not budgeted for Q. & A.'s.
In November, the furniture factory began receiving orders - under a contract - to manufacture thousand of real estate type yard signs (the total count is far in excess of 60,000 signs). Inmate employees were told the signs would be "PIE" and they would receive minimum wages for their work. Shortly after production began, supervisors began telling workers that they had underbid the contract and would lose money if PIE wages were paid. Then the explanation changed to: Century is a Florida company and as such is exempt from the PIECP wage requirement.
On March 16, 2004 the author's wife contacted P.R.I.D.E. via e-mail, questioning the manufacture and sales of P.R.I.D.E. products to Century Graphics and the Salvation Army in Georgia (copy attached). P.R.I.D.E. responded on March 19, denying that they were not in compliance with all the state and federal laws, under PIECP.
After the March 16 complaint/query by Mrs. Sloan, P.R.I.D.E. furniture factory supervisors began telling workers they would get paid PIE wages for approximately 10% of the contract. Not all of it. P.R.I.D.E. then began saying "you can weld 50 signs per hour, so that's how you'll be paid" not by the actual time worked. This applied to all departments; shear, punch, notch, fold, grinding, paint and shipping. Supervisors did away with all PIECP time cards and said the company would pay them based upon labor estimates figured in the contract.
The author heard in February 2004 about a new substantial contract with "Offshore Inland Marine and Oilfield Services", located in Mobile, Al. The P.R.I.D.E. supervisors began telling the workers that the same procedure would apply to this order; no time cards and PIE wages would be $5.15 per hour and P.R.I.D.E. would pay workers based upon the labor estimates predicted in the contract. There would be no overtime. Anything over 80 hours in a 14-day pay period would be deferred (carried over) to the next pay period. No PIE wages would be paid to anyone until the products were shipped.
Hearing these P.R.I.D.E. product and wage stipulations, this author voiced the opinion that all the foregoing would not be allowed by Florida Wage and Hour or PIECP program administrators, and would violate several state and federal laws. Not wanting to be a part of what he knew would be improper civil or criminal acts, this author asked prison officials for a change in his job assignment. His request was granted and he left the P.R.I.D.E. furniture factory on March 17, 2004.
Since then, P.R.I.D.E. corporate advised furniture factory manager, Mr. Peteprin, that he was to delete all PIE wages for the inmate employees for the pay period March 26 - April 8, 2004 as there were too many PIE hours and they would go over the contract (Offshore Inland) budget. The workers were paid P.R.I.D.E. hourly instead (20-55¢ per hour). P.R.I.D.E. supervisors stated that after the products were complete and shipped, they would see if any more money was left to pay part of their lost wages.
On the "Offshore" contract inmate workers are keeping their hours as a
record. They turn in 10 hours (PIE) and get paid for only 2 hours. Turn in 3 and get ¾. Recently P.R.I.D.E. says they intend to take all the labor proceeds from the PIECP contracts and divide it up among all the workers equally. The workers complain that this would again further dilute their hourly wage far below even the $5.15 per hour rate, but P.R.I.D.E. points out that the dental laboratory has been doing PIECP work for months and labor income from the contract has been divided among the entire work force and those workers have no complaints.
Whether the workers accept this latest wage and hour manipulation by P.R.I.D.E. or not, the fact is the PIECP mandatory "prevailing wage" requirements is being circumvented by the P.R.I.D.E. program participant. Not only are they avoiding paying the prevailing wages to inmate workers, they're cutting their actual hours worked in an effort to further reduce legitimate labor costs and increase profit(s) by this corporate action. In effect P.R.I.D.E. is; stealing wages from its' inmate employees, shaving hours, denying overtime pay and in general practicing corporate theft upon its' inmate work force at the UCI P.R.I.D.E. Furniture factory. By paying all inmate workers equal shares of the labor income or dental lab contacts and sales, they are again committing theft of wages from the workers who actually do the work.
In addition to the foregoing, illegal wage/hour acts's behavior creates a ripple effect. The inmate employee's Medicare and retirement (Social Security) account is unfairly increased by only a portion of his entitled wages being withheld and deposited. Matching fund requirements by P.R.I.D.E. are reduced and the F.D.O.C. - who receives 40% of the inmate workers gross wages for room and board - is similarly denied the funds to which they're entitled under PIECP and Florida law.
The bottom line? By the actions complained of herein, P.R.I.D.E. of Florida is enabling itself to generate sales to the private sector by unfairly disadvantaging its' private sector competitors. If private manufacturing businesses were to treat their work force as P.R.I.D.E. does, avoid workers compensation premiums, then the playing field would be level and competitive. Of course in the private industry arena, the employer who paid its' entire work force of skilled employees the $5.15 minimum wage - and then steal part of it back - would go out of business and into court - civil and criminal.
Are P.R.I.D.E.'s actions willful? Knowing? And deliberate? The answer lies herein; doing away with inmate PIECP time cards is a deliberate and intentional act designed to eliminate a "paper trail" as evidence of their illegal manipulations and wage theft.
Deferring wage payment until after production and shipment - and then paying what the company determines its' willing to pay - is again indicative of a further deliberate and illegal act.
Not paying for actual overtime worked - but carrying the hours over to next pay period, was a conscious decision and violates the PIECP guidelines, wage and hour requirements as well as state and federal labor laws.
Certifying to PIECP overseer (BJA) that they are in compliance with the workers compensation benefit or comparable program - and not having such a program, shows knowledge that its' required and willfulness in not providing it.
Now, as of April 24, P.R.I.D.E.'s tag plant is manufacturing 39,000+ license tags for Liberia (order #8). Shipment is due on May 14, 2004. An order for several hundred thousand more plates for Malta is in the works. P.R.I.D.E. tells its' inmate workers that they don't have to pay them PIECP wages on these international orders because a private Florida corporation is purchasing the tags and selling then to those countries - for a profit. As it's a Florida business, P.R.I.D.E. claims its' exempt from the PIECP requirements.
A final question presents itself. What happened to the business that was making sign frames for Century Graphics? And the other companies who lost sales and productions because of P.R.I.D.E.'s unfair business practices? Were any non-inmate workers laid off or adversely affected? I guess that's why Congress wrote the PIECP program laws they way they did.
Now that you - the reader - have more knowledge of P.R.I.D.E. of Florida's business practices and how they amass millions of dollars, you can better understand why they have such a vast amount of funds they can afford to "loan" themselves (spin-off corporations) without any expectation of repayment.
The P.R.I.D.E. Board and President Davis with their affiliated and controlled corporations: Inmate Training Corp, Labor Line Services, Labor Line, Inc, Global Outsourcing, Florida Citrus Partners, Diversified supply Management and Northern Outfitters, are siphoning off vast sums of money from P.R.I.D.E. of Florida. Once these funds are out of P.R.I.D.E.'s coffers - and in the hands of P.R.I.D.E. 6 alter ego companies (headed or owned by Davis and past and present P.R.I.D.E. board members) the money trail becomes muddied. How much of the "loaned millions" found its' way into the pockets of President Davis and her cohorts?
Is it any wonder P.R.I.D.E. flatly refuses to open its' books and records to the Florida Corrections Committee - the same committee the ironically passed the PIECP administrative baton to Davis and V in 1999 - or to any one else? We should all remember that board members and executive officers of ENRON and Adelphia systems also fought mightily to keep the accounting records private ... before indictments, arrests, plea bargains and trials resulted.
This author asserts that if a private sector corporation - for profit or non profit - behaved in the manner as described herein, it and its' executives and responsible board members who willingly participated, would be scrutinized under civil and criminal RICO statutes. A company that deliberately commits the acts as described, upon prison inmates - their own work force - has lost sight of the fact that prisons exist to punish those who deliberately harm others. And executives of that company have also lost the fear that they can be similarly punished for their individual and collective behavior - if such behavior is deemed criminal by their peers.
Possibly its' come time for those agencies - state and federal - which have the authority to pry open P.R.I.D.E. and its' affiliate corporations books to do so, before more corporations, business, employers, employees and inmate workers are cheated out of more sales and wages.
On April 20m 2004 a P.R.I.D.E. inmate employee was caught in possession of a copy f the PICP Guidelines (under which P.R.I.D.E. does some its' business). He was advised that possession that business related document - and./or copying of same - was a serious violation of P.R.I.D.E. "rules". The PIECP Guidelines were confiscated and the inmate given a 5 day suspension. Other inmate workers were searched by P.R.I.D.E. supervisors and two outspoken supporters of P.R.I.D.E.'s adherence to PIECP requirements were fired (ostensively for other reasons). It appears that P.R.I.D.E. and its' free world staff and board not only fear governmental review of their records, they fear their work force becoming aware of the very program parameters under which they work. This doesn't seem to be behavior by a company - or individuals - who are operating within the laws that govern them. Rather it lends the appearance of those who know their actions are wrong, and fear being discovered.
CONCLUSION
In the 1980's P.R.I.D.E. was flourishing under the watchful eye of its Chairman, Jack Eckerd (founder) and president, Floyd Glisson (ex-Fortune 500 CEO). Business was brisk and done well within the statutes, which empowered the corporation. Inmate employees were glad to have income from their work efforts - frugal as it was.
With the '90's and in the absence of both Eckerd and Glisson (who had both resigned), P.R.I.D.E.'s work force began to dwindle and sales decreased under new president Pamela Jo Davis' tutelage. Now in the new millennium, the work force continues to decline along with sales.
The advent of the federal PIECP program in the mid '90's opened up the way for businesses like P.R.I.D.E. to break into the private sector markets and produce and sell their products to private companies both within and without Florida. This program was a bolster to P.R.I.D.E.'s failing sales, just when such was needed. To become a program participant P.R.I.D.E. and the F.D.O.C. had only to abide by a few mandatory requirements. They certified - to BJA - that the requirements were in place and duly received federal certification in 1995.
Over the past 9 years P.R.I.D.E.'s finances recovered appreciably due to no interstate commerce restriction, inter alia. During the same 9 years P.R.I.D.E.'s corporate behavior subtly changed, until it's hardly recognizable as the same entity, which began in 1981. No longer is the emphasis on doing what's right by the prisoner employee - or P.R.I.D.E.'s legislative partner, F.D.O.C. and the Florida Corrections Commission.
Instead the emphasis is on accumulating cash reserves and manipulating same to the benefit of the corporate board and executive officers. The fact is, as a non-profit corporation P.R.I.D.E. enjoys many tax and accounting advantages. One obvious draw back to being non-profit, however, are salary caps and a legal way to utilize the funds acquired.
P.R.I.D.E. had found that one way to overcome the salary restrictions is to diversify by creating new corporations, which in reality are "alter egos" of the original corporation. As corporate executives or board members of these "spin-offs", P.R.I.D.E. personnel can now double dip - receive compensation for their participation in 2 or more corporate entities. Since some spin-offs are "for profit", they also qualify for dividends, profit sharing or other benefits. The only thing these new corporations lack is immediate customers and income.
P.R.I.D.E. management and board approve multi-million dollar loans to the new corporations. Take their positions at these affiliates, receive the P.R.I.D.E. cash - use it as they see fir - then return to the P.R.I.D.E. Boardroom, put on their P.R.I.D.E. hats and write off huge loans as investment losses. When they go back to the sub corporations the money has been successfully siphoned off and freshly laundered and ready to be used or disbursed as they see fit.
This is not a new concept. Con men have used this practice for years. They know - as does P.R.I.D.E. - that the money loaned to an affiliate corporation remains on the original corporations books as accounts receivable (an asset) and as long as the debt remains unpaid, the parent corporation is the first lien holder. If anything goes amiss with the corporations created by the parent corporation, as they first lien holder it can claim assets held by its' affiliates before creditors can acquire them.
This procedure is unethical and most attorneys won't prepare the documents and such necessary to operate this kind of scheme.
Now you have more of the P.R.I.D.E. story ... you know how it makes at least part of its' income by violating federal PIECP Guidelines and cheating its' inmate workers. You now know what is does with millions it's made in that manner. Any questions? Should you have any - or doubt the facts about what's happening at P.R.I.D.E.'s UCI furniture factory, this author invites you to come by and interview several inmate workers at ransom and ask them about their pay, pick who you talk to - don't let P.R.I.D.E. march out some workers to tell you what they want you to hear.
Finally, P.R.I.D.E. has over 50 prison industries operating in Florida. If it operates the others - as it does the 3 here at UCI - in the same manner, the financial loss in wages to all P.R.I.D.E. inmate workers must be staggering. More than that, the room and board loss to P.R.I.D.E.'s F.D.O.C. partner is possibly in the millions over the 9 year span.
There is much more that could be written here about: out of state sales which P.R.I.D.E. claims is exempt from PIECP; products being shipped without documents, making products at P.R.I.D.E. standard wage and putting them in stock then assembling and shipping them on PIECP orders - from stock, to avoid paying PIECP wages.
More details on the PIECP program and P.R.I.D.E. are really not needed.
The bottom line is simply this - the federal PIECP program and BJA state
there are mandatory requirements that must be in place before certification can be sought or given. P.R.I.D.E. and program certificate holder D.O.C. certified to BJA that the requirements were in place and would be utilized as BJA expected. It didn't happen and hasn't happened to date.
P.R.I.D.E.'s noncompliance is obviously deliberate - as they know what is necessary to comply and refuse to take those steps. P.R.I.D.E.'s adamant refusal to allow D.O.C. - as PIECP certificate holder and recipient of 40% of PIE wages - or the Corrections Committee to audit or review its' financial records is indication enough that something is amiss. P.R.I.D.E. is also aware that under wage and hour laws, time cards must be kept for several years. That's why it uses then for regular P.R.I.D.E. work but has done away with them fro PIECP work. Removal of the time cards was deliberate.
The picture is now better drawn and thus more recognizable to you and your agency, bureau, firm or department. Won't you please investigate this enterprise and its' board to either substantiate all the allegations made to date - or exonerate P.R.I.D.E.? In either case something must be done...
About the Author
Robert Sloan is an inmate at
Union CI who is about to released. He is 56 years old, has a college education, which includes a degree in Architectural and Mechanical Design and is a certified draftsman.
In 1984 he began working for P.R.I.D.E.'s Polk Metal Furniture Factory as an industry draftsman. During his tenure with the factory, he became the plant's "Tiger Team" (prototype) inmate supervisor. He designed many of the chair, table and other product lines still being manufactured by P.R.I.D.E.
In 1987 he designed P.R.I.D.E.'s Modular Office Systems (M.O.S.T.) plant at Polk and transferred to that facility where he ran an taught P.R.I.D.E.'s CAD program. He designed M.O.S.T.'s icon library fro CAD use and drew and detailed all installations necessary to install the M.O.S.T. system in dozens of state facilities.
Until his expiration of sentence in 1990 he worked with P.R.I.D.E. and was a strong advocate of the companies goals and operations. During his employ he managed an office, was the inmate liaison for the Polk Group, handled inmate payroll and was an assistant to Jerry Vaverek, P.R.I.D.E.'s Furniture Group Director (Polk, Sumter and Avon Park).
Mr. Sloan is married to a wonderful woman who is an activist with the
Florida LOLITS (Little Old Ladies in Tennis
Shoes),
MTWT (Making the Walls Transparent) and other prisoner support
groups. His home and residence is in Indiana.
Jean Sloan
Activist for MTWT
LOLITS member
3923 Barnor Dr.
Indianapolis, In. 46226
317-514-3430
