Show me the money

County trying to collect on terms of mystery contract

KINGMAN - A question raised by Board of Supervisors Chairman Pete Byers during the March 19 meeting has stirred up a swarm of other questions. Those questions may lead to the termination of a contract with Mohave Correctional Services during the Board's 10:30 a.m. Monday meeting in the County Administrative Building on Beale Street in Kingman.

During the last Board meeting, Management and Training Corporation proposed a partnership with the county to build a new federal facility in the county. MTC currently operates the state prison in Golden Valley.

A the end of MTC's proposal, Byers asked the company's representative if the county didn't already have a contract with them to house 50 overflow inmates in the prison.

MTC's representative Mike Myers said no, they only had a contract with the state.

The answer and the proposal raised more questions in the mind of County Manager Ron Walker. Walker said in an interview Thursday that he thought he remembered seeing a contract between the county and the Golden Valley prison. He had staff look back through county records.

Staff found a contract between the county and Mohave Correctional Services, LLC signed September 20, 1999. The contract states that Mohave Correctional Services was to build, maintain and operate the facility in Golden Valley.

According to county tax records, the prison was sold to a Tucson company, Mohave Prison LLC, in 2004.

Walker said the county never received notification of the change in ownership. He said the contract states that the county must be notified of any change in ownership of the prison, and that any new owner or successor of Mohave Correctional Services must follow the contract.

The contract also states that Mohave Correctional Services was to provide 50 beds to house county inmates if the need arose.

Walker said the county asked MTC, the current operator of the prison, to take some county inmates during a space crunch at the county jail. He said MTC told the county that it did not have a deal to provide 50 beds to the county.

MTC spokesman Carl Stuart confirmed that the company did not have a contract with the county. MTC only has a contract with the state, he said.

The contract also states that Mohave Correctional Services was to pay the county $3,000 a month for administrative costs. The contract does not define "administrative costs." Walker said he did not know what the "costs" were supposed to be either. The payments were supposed to start on the first day of the month subsequent to either an agreement to house inmates in the prison or the date the first inmate arrived at the prison, which ever came first. According to the contract, the payments were supposed to increase in line with the Consumer Price Index.

"They've never given us a penny," Walker said.

"I'm thinking, 'Is that the kind of partnership that we like? Where we sign away and give exclusive rights to somebody and they've reneged on everything?' And now we have the existing operator that says, 'wait a minute, I don't have a deal with you,'" he said. "My thought would be this is like a shell game. Where's the pea? We don't know who owns what."

"There's a lot being made out of little," said Jim Hunter of Dominion Properties in Oklahoma in a voice message Friday. Dominion Properties was the parent company of Mohave Correctional Services. Hunter signed the contract with the county as the vice president of Mohave Correctional Services.

"This contract was never really activated," he said. Mohave Correctional Services was incorporated in Delaware and was never activated and never did any business, he said. The contract was never assigned to MTC.

"It's just kind of a non-starter. The county is doing the exact right thing by terminating it because there is no value to it. There's no binding obligations on anybody's part. It seems ... like it's just some housekeeping that needs to be done. I don't understand the hoopla, because it's really just something that needs to be canceled so that it can recognize the reality of the situation," he said.

Walker agreed that the contract served no purpose and should be voided. However, he still thinks there are some obligations to be met.

If the Board agrees to negate the contract, Walker said the county would notify Mohave Correctional Services and ask them to pay the $3,000 a month plus the Consumer Price Index increase promised the county. The company would then have 30 days to pay the money. That bill could total more than $288,000 depending on how much the CPI has increased since the prison opened.

"I will ask these guys [Mohave Correctional Services] first to pay up, and if they either don't or say we've assigned that contract to somebody else, then we're going to go to the guys that got it. Pay up," he said.

According to the contract, if Mohave Correctional Services assigned the contract to MTC, then the county could sue MTC for payment of the funds.

Hunter said Mohave Correctional Services never assigned the contract to MTC.

Walker said it wasn't unusual for someone to start a bunch of little holding companies that have no assets and fold when they are sued.

"Any agreement you sign with somebody like this isn't really worth very much," he said.

Walker said any corporation that wants to do business in the state of Arizona must register with the Arizona Corporation Commission. He could not find any record of Mohave Correctional Services registering with the ACC. There is a certificate on record for both MTC and Mohave Prison.

"So the question that could be raised is, 'was this a contract that was fraudulent from the beginning,' with the total intent to get the county to sign to something?" he said. "This looks like a shell game to me, and I think the county needs to terminate [the contract]. We don't have any relationship with them, let's just get our money that they owe us and have a lesson well learned here."