Former Mississippi DOC Commissioner, Co-defendants Sentenced in Massive Bribery Scheme
In January 2017, U.S. District Court Judge Henry T. Wingate sentenced Sam Waggoner, 62, to five years in prison for his role in a bribery scheme involving Mississippi’s former corrections commissioner. The sentence also included two years of supervised release.
Waggoner admitted to giving then-Mississippi DOC Commissioner Christopher B. Epps a portion of the money he earned as a prison telephone contractor. Waggoner told federal agents that before their investigation started, he wrote to Epps saying he wanted to end the payments.
“I don’t want the FBI knocking on my door in the middle of the night,” Waggoner said in the letter.
But Epps ripped the letter into “teeny, tiny pieces,” flushed it down a toilet and told him their arrangement would continue, Waggoner said. “He was basically my boss. He could hurt my business.”
At the time, in addition to serving as Commissioner of the Mississippi DOC, Epps was president of both the American Correctional Association (ACA) and Association of State Correctional Administrators (ASCA). [See: PLN, July 2016, p.1]. In 2011, the ASCA honored Epps with an award for Outstanding Corrections Commissioner.
Judge Wingate saw Waggoner’s attempt to end his involvement in the scheme as the result of a mix between remorse and fear of being investigated. The five-year sentence, recommended by prosecutors, was a compromise.
The FBI charged Waggoner with one count of bribery related to his payments and kickbacks to Epps from sometime in 2012 until at least August 2014. Waggoner worked as a consultant for Global Tel*Link, which provided phone services at Mississippi state prisons; he received 5 percent of the revenue generated from that contract as his fee. He acknowledged he “corruptly gave” kickbacks to Epps twice in 2014. [See: PLN, Oct. 2015, p.42].
Waggoner entered a guilty plea in August 2015 and agreed to forfeit $200,000.
In early February 2017, Judge Wingate handed down a 102-month sentence in the same bribery scheme to Cecil McCrory, a businessman who was a central figure in the Epps corruption case.
McCrory, 66, a former state legislator, and Epps were charged in November 2014 in a 49-count federal indictment that accused Epps of taking at least $1.4 million in bribes and kickbacks over eight years to steer more than $800 million worth of Mississippi prison contracts – mostly to companies owned or associated with McCrory, including American Transition Services.
McCrory’s attorney, Carlos Tanner, said his client received about $3 million in commissions and other revenue from such contracts. The U.S. Attorney’s office claimed he received about $4.6 million.
In sentencing McCrory in February 2017, Judge Wingate said the corruption case had tarnished the reputation of Mississippi and its penal system. McCrory, who had initially tried to withdraw his guilty plea, received 8½ years in prison and was ordered to pay a $150,000 fine (later reduced to $20,000) and forfeit $1.7 million. Wingate said he was sentencing McCrory to a light prison term due to his early cooperation with prosecutors, including meeting with them without an attorney for several months.
“I have extreme remorse,” McCrory said. “I can’t make this right, but whatever I can do to offset the wrong, I will do it.”
He agreed to cooperate in cases pending against other defendants accused in the scandal, and depending on the value of that cooperation his sentence may be reduced.
In March 2017, Judge Wingate sentenced a third defendant in the Epps bribery case, former Mississippi legislator Irb Benjamin, to 70 months in prison plus a $100,000 fine and forfeiture of $261,000. As with McCrory, Benjamin’s sentence could be reduced based on his future cooperation with federal officials.
“I’m so sorry that I destroyed all the history and character that my family stood for,” Benjamin, 70, said when he was sentenced. “I have no one to blame but myself.”
Benjamin, who represented Alcorn County as a state representative and senator, was ordered to report to federal prison in May 2017. He had pleaded guilty to one count of bribery and said Epps threatened to withhold state prisoners from regional jails that Benjamin helped develop in several counties unless he received bribes. Such a move could have made the jails money-losers.
“I should have just walked away,” Benjamin said. “I was pressured.”
Benjamin estimated he paid Epps between $180,000 and $225,000 in cash bribes to secure the MDOC Commissioner’s support for the regional jails, as well as for drug and alcohol rehabilitation programs his company ran at work centers.
He added that Epps also threatened to withhold prisoners from Chickasaw County unless officials signed a prison phone contract with a business affiliated with Waggoner.
Attorney Joe Hollomon argued leniency was justified considering Benjamin’s age, health problems and legislative achievements. More than 40 people submitted letters asking the court to show mercy.
“He has led a life of accomplishment and a life he can be proud of up until the time he met Chris Epps and this situation developed,” Hollomon said.
Judge Wingate rejected that argument but sentenced Benjamin to the minimum prison term under federal sentencing guidelines.
In May 2017, another guilty plea was entered in the Epps scandal by a physician with contracts to treat state prisoners. Dr. Carl Reddix pleaded guilty to one count of bribery before U.S. District Judge Daniel Jordan, who has not yet imposed sentence.
Reddix, 58, remains free on $10,000 bail. He faces up to 10 years in prison and $250,000 in fines. Prosecutors also want him to forfeit assets. A July 2016 indictment accused Reddix of six counts of bribery and one count of conspiracy to commit honest services wire fraud.
Starting in 2012, Reddix allegedly paid Epps $2,000 a month for each state prison contract held by his company, Health Assurance. That amount was initially $6,000 a month, then increased to $8,000 a month in 2013 and peaked with a final $9,500 payment in October 2014.
Assistant U.S. Attorney Darren LaMarca said FBI agents watched or recorded at least six monthly meetings where Reddix passed cash to Epps. It’s unclear how much Reddix paid, but it was more than $170,000.
Reddix’s lawyers had suggested in court filings that Health Assurance won contracts honestly, without Epps’ corrupt assistance, but that Reddix later fell prey to the Commissioner’s avarice.
However, LaMarca said wiretapped conversations from 2014 recorded Epps telling Reddix he was steering contracts to Health Assurance. Further, Epps had called Reddix before a bid was due and encouraged him to pad the fee with money for Epps’ bribe, and quoted Reddix as responding, “We always got you. You know that part ain’t never an issue.”
According to LaMarca, Epps called back after bids were collected to tell Reddix that Health Assurance was the low bidder, but that he would not have approved any company that outbid Reddix. Reddix reportedly admitted his misconduct when FBI agents confronted him in October 2014. There have also been questions about payments made by Health Assurance to counties in Mississippi and Alabama.
In April 2017, Alabama health care consultant Michael Goddard pleaded guilty to making a false statement to the FBI by lying about money he received from Health Assurance. Goddard falsely told agents that the funds weren’t related to a contract to provide health care for prisoners in Jefferson County, Alabama. Goddard was sentenced on August 2, 2017 to two years of probation and a $1,000 fine.
In a related prosecution, Alabama businessman Robert Simmons was sentenced in April 2017 to more than seven months in prison after pleading guilty to passing bribes from Health Assurance to a Mississippi Gulf Coast official in exchange for a jail medical contract.
Simmons’ indictment accused him of giving kickbacks on consulting fees – from companies doing business with the MDOC and Harrison County – to Epps and an unnamed Harrison County Supervisor.
Although unnamed, former Harrison County Supervisor William Martin was implicated in the case. He committed suicide in 2015, hours before he was due to appear in federal court to answer to bribery charges.
Reddix became the seventh person to plead guilty in the bribery scheme, after Epps, Waggoner, McCrory, Benjamin, Goddard and Simmons. Mark Longoria, the CEO of the Texas-based Drug Testing Corp., later entered an eighth guilty plea; he had paid almost $230,000 in bribes to McCrory in exchange for securing sales of drug testing supplies to the MDOC. McCrory kicked back $60,000 of the bribes to Epps. Longoria was sentenced in February 2017 to five years in prison, and ordered to forfeit $131,000 and pay $368,000 in restitution.
Finally, in May 2017, Judge Wingate sentenced former MDOC Commissioner Epps, who once called himself “the tallest hog at the trough,” to 235 months – almost 20 years – in prison.
Rejecting prosecutors’ recommendation for a 13-year sentence, Wingate said Epps’ decision to break into his former house to retrieve outdoor lights in October 2016 – after Epps had pleaded guilty, resulting in an additional burglary charge – made him question whether the former MDOC Commissioner truly took responsibility for his crimes. Epps was also ordered to pay a $100,000 fine and forfeit over $1.7 million in assets. See: United States v. Epps, U.S.D.C. (S.D. Miss.), Case No. 3:14-cr-00111-HTW-FKB-1
“This is the largest graft operation that certainly I have seen, and I have seen a lot,” said Wingate, who has served as a federal judge since 1985. “[Epps] has bruised tremendously the image of the state of Mississippi.”
Governor Phil Bryant ordered all the contracts implicated in the criminal cases to be canceled and rebid; he also appointed a task force to review all other MDOC contracts “to ensure they were both legally procured and in the best interest of taxpayers.”
Epps pleaded guilty in 2015 to charges of money laundering and filing false tax returns related to the bribes he extracted from contractors doing business with the state prison system. He had been jailed since his bail was revoked in November 2016 following the house break-in. In shackles and a jail jumpsuit at his sentencing hearing, the former MDOC Commissioner told Judge Wingate that he had been motivated by greed.
“I’ve made some stupid mistakes I will regret for the rest of my life,” Epps said, reading from a statement.
The bribes allowed Epps, Mississippi’s longest-serving corrections commissioner, to pay off the mortgage on his more than $300,000 house in a gated suburban subdivision, buy a beachfront condo on the Gulf Coast, acquire two Mercedes and accumulate hundreds of thousands of dollars in investments and cash – all of which was forfeited to the federal government as part of Epps’ plea agreement. His wife, Catherlean Epps, who did not face criminal charges, was allowed to keep $200,000.
Evidence showed that Epps had accepted monthly cash payments, then tried to deposit cash in banks in amounts small enough to escape scrutiny. At one point, he even had McCrory take a bag containing $40,000 in dirty money, label it as proceeds from a tractor sale and wire it to Epps’ investment account.
Unbeknownst to Epps, however, Leake County Sheriff Greg Waggoner had reported concerns about the MDOC Commissioner to investigators in 2009, after Epps allegedly tried to cover up a sex scandal involving a warden and a female prisoner at the Walnut Grove Transition Center. [See: PLN, July 2013, p.54; Aug. 2012, p.45].
By June 2014, when FBI agents asked Epps to come to their office on the pretext that someone had threatened his life, they had been collecting evidence for years – including tapping his phone. Once confronted, Epps agreed to help prosecutors, secretly recording conversations and enticing corrupt contractors to pay higher bribes.
FBI Agent Ty Breedlove told Judge Wingate that Epps was the best source he had had in 15 years as an agent.
Defense attorney John Colette denied that Epps had extorted bribes from contractors, despite testimony from the other defendants. Wingate questioned how much leniency he should show Epps for turning in others involved in the bribery scandal.
“You’re asking he get credit for revealing the involvement of conspirators who he may have brought into the conspiracy,” the judge said. “In this instance, we have an elaborate scheme which allowed your client to lead an extravagant lifestyle while his criminal conduct made a mockery of his position as head of the Department of Corrections.”
Two other co-defendants still face charges of bribing Epps: insurance broker Guy E. “Butch” Evans and Teresa Malone, the wife of former House Corrections Commission Chairman Bennett Malone and a consultant for AdminPros, LLC, a medical contractor. Teresa Malone entered a guilty plea in July 2017 and awaits sentencing. Discussions during Epps’ sentencing indicated that investigations remain active against six or seven other people in Mississippi and Louisiana, including one who has already been indicted under seal.
On February 8, 2017, Mississippi Attorney General Jim Hood filed RICO lawsuits seeking damages against all of the defendants charged in connection with the Epps bribery scandal, as well as Michael Reddix and Andrew Jenkins, who were not indicted, and the following companies: Management & Training Corp. (MTC); The GEO Group, Inc.; Cornell Companies, Inc.; Wexford Health Sources, Inc.; The Bantry Group Corporation; AdminPros, LLC; CGL Facility Management, LLC; Mississippi Correctional Management, Inc.; Branan Medical Corp.; Drug Testing Corporation; Global Tel*Link Corporation; Health Assurance, LLC; Keefe Commissary Network, LLC; Sentinel Offender Services, LLC and AJA Management & Technical Services, Inc.
Hood claims in the civil actions that the companies violated Mississippi’s public ethics, racketeering and antitrust laws, along with several other claims. In addition to compensatory and punitive damages he is seeking forfeiture of all funds the defendants received that were involved in the alleged conspiracies.
“The state of Mississippi has been defrauded through a pattern of bribery, kickbacks, misrepresentations, fraud, concealment, money laundering and other wrongful conduct,” Hood stated. “These individuals and corporations that benefited by stealing from taxpayers must not only pay the state’s losses, but state law requires that they must also forfeit and return the entire amount of the contracts paid by the state.”
Two of the firms – MTC and The GEO Group – are among the largest private prison contractors in the country; both denied wrongdoing. Hood took note that only three of the companies named in the lawsuits are based in Mississippi.
“Out-of-state corporations were eager to take advantage of Mississippi taxpayers and secure MDOC contracts through bribery and fraud. It is critical for the state to use the remedies at its disposal to recover damages and get back the money exchanged in these schemes,” he said. “I have a duty to protect the integrity of the public contracting process, as well as to vindicate the rights of the state when it is a victim of public corruption and other wrongful conduct.”
In August 2017, Global Tel*Link, the largest prison phone provider in the nation, agreed to settle the RICO lawsuit for $2.5 million while admitting no wrongdoing. PLN will report the settlement in that case in greater detail in a future issue. Previously, in May 2017, Alere, Inc., which had purchased Branan Medical Corp., settled the suit filed by the Attorney General’s office for $2 million.
Sources: WJTV, The Clarion-Ledger, Meridian Star, www.msnewsnow.com, Associated Press, www.usnews.com