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MON MAR 11, 2013 AT 07:47 PM EDT

Working on the “Chain-Gang” was how prisoners were punished for their crimes in days gone by– and people who had been victims of crime were happy.

Then we became “civilized” as a society and changed laws, regulations and opinions that eliminated these hard forms of punishment and degradation.  Instead of harsh working conditions we made sentences longer, believing that to be more humane.  Parole was abolished; possession of a “joint” was enough for a mandatory five years in prison.

Problem was, all this incarceration was costing taxpayers ever more in corrections costs.  Lawmakers sought ways to reduce the ever-increasing expense of incarceration.

An idea was born: create prison industries where prisoners could be put to work to “earn their keep” and reduce the incarceration costs borne by taxpayers.  Soon another idea was floated, let private manufacturers gain access to the prison run factories and further reduce the expense of housing, feeding and providing medical care to prisoners.  Inmates can be taught work ethics, products made by them will cost us less and recidivism will be reduced…and once again the people were happy.

Problem is, this program has created more opportunity for crime and exploitation – of the prisoners themselves. Instead of prison populations shrinking, they grew.  This growth was due to more laws, stiffer sentences, the war on drugs and increasing penalties.  Alongside that population the prison industries grew even faster with more inmates came more job positions.

This labor force exists in a near vacuum; no voice, no representation, disallowed from unionizing (though today an estimated six hundred thousand to one million men and women are working in prison industries nationwide), sentenced to hard labor by courts.  DOC’s assign them to jobs, and if they have existing skills needed, they are put to work in prison industries.  Industry managers seek skilled inmates with long sentences in order to quicken production, maintain shipping schedules and dependability.

Court challenges under the Fair Labor Standards Act (FLSA) about wages and deductions are mostly denied with prejudice – meaning the plaintiff is prohibited from ever filing such claims in the future.

In Florida and Nevada (just two of nearly 40 states involved), percentages of what little wages earned are taken back and given to the prison industry to help expand or create new work programs.  This aspect itself violates one of the key tenets of the federal prison industry program referred to as the “PIE Program” and there are other more critical violations resulting in our jobs being lost to prisoners.

This expose will bring to light the existence of a national network of individuals, corporations, a private association, agencies and branches of state and federal government involved in exploiting inmate labor, profiting off that exploitation and pursuing the transfer of tens of thousands of jobs from communities to prisons across the country.  Nevada ranks high on the list of states involved in violating the trust of their citizen workers, small businesses and exploiting prisoners delivered into their care.

 

In Nevada the prison industries are managed by Director James “Greg” Cox and Deputy Director, Brian Connett.  Previously one individual held both of those positions as prison industry programs were developing back in the last quarter of the 1900’s – Howard Skolnik.  He set the stage for what is occurring today and now, Cox and Connett carry on in his stead.

 
NDOC Director, Greg Cox                                              Deputy Director, Brian Connett
Running an entire state prison system is a daunting task; housing medical care, work programs, staffing, complying with legislation impacting prisons and budgeting.  Today the Director of Nevada’s Department of Corrections is James “Greg” Cox.  He has deputy directors assigned to various important divisions of the DOC and in general Director Cox and his Deputies are doing an admirable job.  The one exception to that observation involves the DOC’s Prison Industrial Program.

One of Cox’s responsibilities is operations of the prison industrial work programs.   Brian Connett serves in the capacity of Deputy Director, Industrial Programs and is in charge of running Silver State Industries (SS), Nevada’s prison industries program.  Mr. Cox and Mr. Connett have responsibility for insuring the prison industries are operated properly under state and federal laws.  Their responsibilities and actions are likewise overseen by a committee created specifically for that purpose: the Nevada Interim Finance Committee’s Committee on Industrial Programs. Nevada determinations as to operations of prison industries involving; approvals for new products, new factories, partnerships with private companies and compliance with all applicable state and federal laws and regulations, are all the responsibility of this oversight committee.

For that committee to perform their duties properly, they have to know and understand the parameters of all controlling regulations such as the federal Pie Program’s mandatory requirements that allow inmate labor to be used by private companies.  They must be able to weigh new projects against the requirements of noticing competing businesses and labor groups prior to implementing any new program to insure fair competition and no displacement of jobs to non-inmate workers.  How can they judge whether a prison operation will unfairly impact local labor or unfairly disadvantage competing businesses, if they do not fully understand the programs and the Legislative provisions put in place to guard against such interference’s?

Unfortunately in an interview with a member of that committee I was told he was not fully aware of the Pie Program’s mandatory requirements, and that concerned him.  He did not know local businesses were required to be contacted prior to operational start-ups or production of new products began.  More importantly, he had not been advised by anyone within NDOC or Silver State Industries that labor groups were also to be consulted.

This committee has a composition of members that include representatives from the legislature, business and labor and charged with the duties described above.  If they are to perform the functions of the state with regard to the operation of prison industries, they must be cognizant of the federal rules, regulations and a law controlling the federal Program Silver State Industries is participating in – and has certified to the federal government they are and will remain, in compliance of.

Below you will find prison industrial boards or committees such as this one in Nevada have been designated responsibility for insuring compliance, but that is difficult to do if you are unaware of what that responsibility entails.  The oversight “authority” for this program at the federal level, encourages such committees or boards operating in the states.  It allows them to claim that with members of business and labor on these boards, both groups are made aware of new projects, products and partnerships.  They argue that in that way, the requirements of consulting competing businesses and labor unions is satisfied.  Again, this style of “consulting” is insufficient as compliance, where members of the board or committee are unaware of actual legal requirements.

This federal program of prisoner training began with the passage of 18 USC 1761 in 1979. This law is known as the Prison Industries Enhancement Certification Program (commonly called PIECP orPie Program).

Under this program Congress allows private companies to have access to inmate labor in order to “train” them and provide skills prisoners could utilize upon release.  Congress put in place nine mandatory requirements that must be complied with.  Failure to comply subjects those in violation to federal imprisonment for up to two years and/or a fine of $50,000.00 and loss of the PIECP certificate.

The Department of Justice outsourced or privatized policy determinations, enforcement, compliance reviews and investigations of non-compliance to a private organization in 1995.  These tasks were taken over by the National Correctional Industries Association (NCIA) which is a trade group representing prison industries, their staff, employees, vendors, suppliers and companies using prison labor.  Since transfer of program oversight, there have been a total of -0- prosecutions for violations.  As you read the following you will find it difficult to understand how such a zero-sum figure is possible…

Once the NCIA assumed a duty of crafting policy for this program, they began to interpret the nine mandatory requirement in the light most favorable to their corporate members, adjusting annual assessment determinations to reflect alterations designed entirely by them.  The NCIA made these alterations and the entire program was changed.

A mandated prevailing wage requirement was changed to minimum wage scale, computed to the 10th percentile and allowing industries to institute a pre-training program where wages could be reduced to as little as $.20 per hour:

   a.       The Training Wage Exception to the 10th Percentile Wage Floor

“BJA determined in 2006 that wages must be set at or above the 10th percentile, as defined by the State Department of Economic Security Agency. BJA takes the position that this is a “generous interpretation of comparable, yet still fair to competitor manufacturers because of the “lack of education, training, and experience typical of the inmate labor force.” The one exception to the 10th percentile requirement is that inmate workers may be paid a training wage that falls below the 10th percentile if “their employment agency provides express written agreement of a wage less than the tenth percentile for a limited training period.”
In December, 2010 the BJA issued a Back Wage Policy that unequivocally reinforces the prevailing wage requirement and refutes the above statement made by the NCIA.  It reads in part:

Background:

“18 USC 1761 (c), the statute authorizing the Prison Industry Enhancement Certification Program (PIECP), states that PIECP inmates must “have, in connection with PIECP work, received wages at a rate which is not less than that paid for work of a similar nature in the locality in which the work was performed. The Bureau of Justice Assistance (BJA) 1999 PIECP Guideline gives the State wage setting agencies authority to make wage determinations for PIECP workers that are comparable to those in effect for similarly situated workers.” (emphasis mine)
The claim that lower wages are fair to “competitor manufacturers” is a false one.  In Nevada a high percentage of inmates working in the industry are serving long sentences or life terms (as reported by CNN), and skills taught will likely never be applied in the private sector.

In Florida a report containing research provided to Governor Scott by his 2010 transition Law and Order team found 28% of the prison workforce was comprised of lifers or prisoners serving sentences with ten or more years remaining until release.

Silver State Industries has set the Pie Program maximum wage for all inmate workers at the 10th percentile of the state/federal minimum wage.  Unless the “prevailing wage” is set by the state OESat minimum wage for all occupations in NV, the NDOC is out of compliance with the mandatory wage requirement.

The NCIA also determined that mandatory notification to local labor groups, unions and competing private businesses about new or existing industry projects or products, could be satisfied by informing local Chambers of Commerce, or advertising in classified sections of newspapers – and compliance review personnel were told these requirements were already on file with the NCIA andhad been verified and would not be a part of the annual compliance review.

These changes resulted in a substantial reduction in wages to inmate workers, creating a huge and low paid labor force used to attract business owners seeking to expand operations or reduce labor costs.  The NCIA produced a video  titled “Cutting Through The Perceptions” to be used in marketing prison labor to private companies.  When it is used in conjunction with lowered wages the changes in notification to and consultation with labor unions, and competing businesses, prison industries began to expand and grow quickly, without labor or competing small business awareness.

As the video shows, this prison program is not for training, it is a way to provide skilled labor to private companies to reduce labor costs, increase production and avoid typical “benefits” they would have to pay to private sector employees.

This brings us to the current situation involving Silver State Industries and Alpine Steel there in Nevada and complaints lodged with the Board of State Prison Commissioners by XL Steel and others who complain about the loss of private sector jobs to inmate labor and possible unfair competition.

The information above educates you as to the program, how it has been manipulated, changed and altered to provide a maximum savings to companies involved in prison labor, and the least wages to a truly captive workforce.  Now let me document the specific violations committed in Nevada involving those regulating the state DOC and Silver State Industries.

_____________

Recent reports from Las Vegas reveal s Alpine has been using prison labor as a means of undercutting all competitors on projects requiring bids.  Labor unions were unaware of the PIECP program.  Union officials had no understanding of the Pie Program or that they were to be consulted prior to the startup of any Pie project or industry.

This is hard to comprehend where SSI was reviewed by the NCIA in 2011 (@pg. 4) and found in full compliance…except for one wrinkle kept from the public and apparently the Nevada legislature and the Board of State Prison Commissioners:  NDOC Deputy Director Brian Connett is alsoPresident of the NCIA with a responsibility for insuring, enforcing and certifying full compliance by all state prison industries to the BJA.

Harder yet to comprehend; how is Mr. Connett able to enforce and certify industry wide compliance, when he and Director Cox claim to not know or understand the regulations and are just now admitting SSI and NDOC are in violation?

The NCIA receives a sizable grant from the BJA out of tax dollars to perform compliance duties – in effect receiving a subsidy for self-oversight of an industry generating annual sales of $2.4 billion dollars.

Under questioning by Governor Sandoval and others at a recent meeting of the State Board of Prison Commissioners, Director Cox admitted that his “agency has not been performing necessary checks to ensure inmate work programs are not taking jobs from private industry workers.”  Mr. Cox went on to say, “The process has not been followed,” it should have been.”

Mr. Cox indicated that he, “will develop regulations to require that prison industry programs be approved by the Prison Commissioners Board, chaired by Gov. Brian Sandoval.”

However, new regulations are not necessary; rather existing Pie Program regulations need enforcement – and true oversight provided by someone other than those participating in the program.  SSI’s inmate workers for Alpine Steel are a prime example of the lack of enforcement.  Alpine pays inmates working as structural steel fabricators the state minimum wage of  $8.25 per hour and no unemployment benefits.  The Nevada OES sets the mean hourly wage for such skills at $17.63:

Even using the NCIA’s 10th percentile rate, these workers should be receiving no less than $11.63 per hour.  Competing companies in the structural steel industry in Las Vegas and elsewhere in Nevada pay workers the median wage of $16.91 per hour plus benefits.  Without factoring benefits, private companies are thus required to pay more than double the rate paid by Alpine.  A serious disadvantage prohibited by the Pie Program wage requirement and congressional intent of a “level playing field.”

Multiply this discrepancy by the states participating, inmates employed in the program, and you begin to understand the massive savings in wages provided to companies such as Alpine Steel and those discussed below.  It also helps to understand why so many of our jobs are literally “going to prison”.

Compliance problems are no stranger to Mr. Connett.  In his previous position as the PIECP Program Manager with PRIDE Enterprises, Inc. operating Florida’s entire prison industry, Connett cut corners similarly.  I will introduce and discuss the documented corruption Mr. Connett was a part of in the third and final segment next week. Suffice to say, Brian Connett brought a substantial amount of baggage with him to Nevada.  I would urge Nevada workers to again send him packing as Florida did in 2008.

The controversy involving Alpine Steel is merely the latest in a series of problems with compliance by SSI.  Previously former NDOC Director, Howard Skolnik when he served as Deputy Director of Industrial Programs was involved in a scheme involving inmate wage deductions.

In 1990 he petitioned the BJA for a determination that would allow Nevada to deduct 5% of all inmate wages earned and use those funds to expand prison industrial programs.  He was advised there were four approved deductions and no additional deductions could be imposed by his department.

This denial should have been clear and final, but in 1991 the Nevada legislature amended NRS 209.463 to allow for the 5% deduction Skolnik requested and the BJA had already ruled was impermissible.

“NRS 209.463  Deductions from wages earned by offender during incarceration; priority of deductions.  Except as otherwise provided in NRS 209.2475, the Director may make the following deductions, in the following order of priority, from the wages earned by an offender from any source during the offender’s incarceration:

“1.  If the hourly wage of the offender is equal to or greater than the federal minimum wage:

… (c) An amount determined by the Director, with the approval of the Board, for deposit in the State Treasury for credit to the Fund for New Construction of Facilities for Prison Industries, but only if the offender is employed through a program for prison industries.” (The same deduction is taken from the wages of inmates earning less than minimum wage.  Emphasis mine)

In 2003 Howard Skolnik advisedthe Legislative ASSEMBLY COMMITTEE ON JUDICIARY that there were three deductions taken out of prisoner pay; 24.5% for room and board, 5% for victim restitution fund and a 5% deduction that went to a fund for the expansion of new industry programs.

Obviously the NDOC and Silver State Industries were intent upon creating a fund whether controlling authority over the federal program permitted it or not.  In 2011 the Legislature“swept” $948,000 from this Capital Improvement Fund (pg. 8):

These inmates are underpaid on Pie projects, with a maximum amount taken back as “deductions.”  In effect, the $948 thousand “stolen” from the PCIF by the legislature was first stolen from the inmate workers through an illegal deduction taken from their wages.  Use of the money in this fund was prohibited for anything except expanding prison industries:

“ 1.  There is hereby created in the State Treasury a Fund for New Construction of Facilities for Prison Industries as a capital projects fund. The Director shall deposit in the Fund the deductions made pursuant to paragraph (c) of subsection 1 or paragraph (b) of subsection 2 of NRS 209.463. The money in the Fund must only be expended to house new industries or expand existing industries in the industrial program to provide additional employment of offenders…“
The use of unauthorized and thus illegal deductions taken from inmate PIECP wages and then used in violation of existing state law to cover budget shortfalls, serves as a tax upon the workers or worse, out and out theft amounting to tens of thousands of dollars a year as shown by thechartbelow:

This is all covered up in reports to the BJA through reviews conducted by Mr. Connett and formerly Mr. Skolnik’s NCIA organization, allowing the 5% deduction to stand and certifying to the BJA that Nevada is in full compliance.

Both Connett and Skolnik held positions upon the NCIA board simultaneously in 2006 when Connett was the PIE Program Manager with PRIDE Enterprises in Florida.

Previously, Connett and the CEO of PRIDE also sat side by side on the NCIA board when PRIDE was committing acts later deemed illegal.

The Alpine SSI partnership is not the only partnership that is being operated questionably in Nevada – and paying minimum wages.  Several other companies also have been given access to inmate labor and possibly involved in displacing local workers and/or unfairly competing in the market place.

Thomson Equipment Company, Inc. (now Silver Line Industries, Inc.).   Silver Line is owned by entrepreneurs out of New Zealand, Malaysia, and Thailand partnered with a company in Oregon to use inmate labor to manufacture or refurbish heavy equipment such as water trucks.

In March of 2006 the serving Deputy Director of Industrial Programs advisedthe Committee on Industrial Programs that Thomson had been acquired by new owners in Australia and New Zealand – and water trucks were shipped from Bangkok for inmates to renovate.

BY 2008 when Mr. Skolnik was serving as Director of the NDOC, he and Mr. Connett advisedthe same committee that Thomson had changed its name to Silver Line Industries.  Skolnik further advised as part of full disclosure that his daughter worked for the parent company in New Zealand.

It is unclear if Skolnik’s daughter secured her job before the 2006 acquisition of Thomson, or if that occurred after Mr. Skolnik was elevated to the Directorship of the DOC.   In either case this should have raised an issue of ethics to the members of the Industrial Programs Committee concerning the relationship between the NDOC Director running the prison industry operation and a family member working for a company operating under his authority.  Silver Line Industries ultimately withdrew from the Pie Program.

Another company, Jacob’s Trading Company (JTC) partnered with SSI for years, but left SSI late last year.  JTC acts as a liquidator for Wal-Mart and other large retailers.  Inmates remove bar codes, labels and other identifiers to the retailer then repackage the items and JTC sells the products through distributors to after market retailers.  Of course Wal-Mart denies that they or any of their vendors or contractors use inmate labor – period. These products are shipped back and forth across state lines, and thus come under PIECP authorization.  JTC’s operation in Nevada is substantial:

“In Nevada, the entire JTC operation is housed inside the Southern Nevada Women’s Correctional Facility in North Las Vegas. Jacobs is the only private employer of female prisoners in Nevada. In 2000, a female prison laborer working 40 hours a week kept just over half of what she earns. After several deductions mandated by the state prison department, she took in about $460 per month. That’s net pay of $2.67 an hour…”
Another company operating under the Pie Program was Shelby American, manufacturer of the Shelby Cobra sports cars.  Dozens of inmates at the facility received an hourly wage of at least the federal minimum to build every part of the car except the engine.  Shelby American has also closed operations with SSI but is still listed as a Pie Program participant under SSI’s certification.

In September 2012 JTC closed operations at SSI’s facilities, and Like Alpine Steel, they left owing the state $115,819.44 in unpaid leases and other expenses.  According to the October figures provided to the Interim Finance Committee, SSI’s project failures have Nevada taxpayers on the hook for more than $600 thousand dollars in unpaid operating expenses or lease payments.

There will be much more on Howard Skolnik and Brian Connett in the third and final article that will detail activities committed by Mr. Connett to avoid complying with PIECP requirements and out and out theft of private companies partnered with PRIDE Enterprises.   In one particular industry, Connett deliberately failed to register the industry as a PIECP operation with the BJA, resulting in prisoners receiving as little as $.20 per hour for their labor for five years…and huge profits for PRIDE and the companies partnered with PRIDE.

I will also further expose the NCIA and explain why they have been so successful in advancing an agenda of using inmate labor to enrich a handful of companies, their organization – and both at the expense of America’s taxpayers and struggling workforce.

Of course, those of us here at DK who have been paying attention to ALEC for the past few years, know that these prison industry operations came about due - at least in part - to ALEC's Prison Industries Act adopted in 1995. 

____________________________ 

January 11, 2013 

Part one of a three part Expose on Prison Labor in Nevada and Beyond
By Bob Sloan – Prison Industry Consultant

 Thousands of tourists, businessmen, CEO’s and executives from all over the world mix with citizens of Nevada in the luxury and splendor of Las Vegas’ many hotels and casinos.  Most come to this beautiful city for the gambling and incredible shows found everywhere one turns.  Inside the cool confines of casinos visitors can trust that every slot machine, roulette table and blackjack shoe is checked and monitored to guarantee fair play – no magnets under the roulette table, no dealer manipulating the cards or slots rigged to never pay out. Those trying to shave the odds are not welcome and at the first hint of cheating, find themselves on the sidewalk, banned or worse.

Each casino has a multitude of surveillance cameras to guarantee play is fair and the odds are understood by all who play the quarter slots or sit down at the high roller poker table.  To ensure such fairness, the Nevada Gaming Commission regulates every aspect of gambling in the entire state.  Strict penalties for violation of gaming regulations by casino operators keep each in line and playing by the rules.

Outside the casinos, locals find the guarantees of fair play and manipulation of odds are not so well regulated. State agencies responsible for overseeing and enforcing specific state laws and regulations have lost their vigilance.  In at least one case a state regulation involving the Nevada Department of Corrections is providing one company an unfair advantage over competitors.  The prize sought isn’t a hundred dollar hit on quarter slots, its millions in profits.  An important aspect of this advantage provided to a single company, is an increase in Nevada’s already high 10.8% unemployment rate.

 

The issue is an ongoing battle being waged over the use of inmate labor by a private company,Alpine Steel operating out of Las Vegas, NV.  

Alpine is competing directly against other Nevada companies in the field of structural steel fabrication.  Alpine’s competitors pay fair wages, benefits, provide unemployment insurance and vacation pay, while Alpine avoids all those costs.

It is not illegal for companies to be allowed to use prison labor under current laws but there are strict state and federal regulations involved that must be met before allowing direct competition with prison made products:

Mandatory Criteria for Program Participation

Corrections departments that apply to participate in PIECP must meet all nine of the following criteria:

1. Eligibility. Authority to involve the private sector in the production and sale of inmate-made goods on the open market.

2. Wages. Authority to pay wages at a rate not less than that paid for work of a similar nature in the locality in which the work is performed.

3. Non-inmate worker displacement. Written assurances that PIECP will not result in the displacement of employed workers; be applied in skills, crafts, or trades in which there is a surplus of available gainful labor in the locality; or significantly impair existing contracts.

4. Benefits. Authority to provide inmate workers with benefits comparable to those made available by the federal or state government to similarly situated private-sector employees, including workers’ compensation and, in some circumstances, Social Security.

5. Deductions. Corrections departments may opt to take deductions from inmate worker wages. Permissible deductions are limited to taxes, room and board, family support, and victims’ compensation. If victims’ compensation deductions are taken, written assurances that the deductions will be not less than 5 percent and not more than 20 percent of gross wages and that all deductions will not total more than 80 percent of gross wages.

6. Voluntary participation. Written assurances that inmate participation is voluntary.

7. Consultation with organized labor. Written proof of consultation with organized labor prior to program startup.

8. Consultation with local private industry. Written proof of consultation with local private industry prior to program startup.

9. National Environmental Policy Act (NEPA). Written proof of compliance with NEPA requirements prior to program startup. (emphasis mine, source BJA PIECP program overview)

In the instant case, most of the above mandatory regulations are being ignored – entirely. Prevailing wages paid by most in the steel fabrication industry in Las Vegas are in excess of $17.00 per hour.  The inmates manufacturing components for Alpine are paid less than half that scale at minimum wage or less.

By having access to and using inmate labor provided by Nevada’s Silver State Industries (SSI), Alpine Steel, is able to underbid competitors for structural steel construction projects.  This company is just one of several businesses in Nevada (and 150 others nationwide) enjoying increased benefits and profits derived from inmate labor.  Other Nevada companies enjoying similar access to inmate labor include; Vinyl Products, Inc., (vinyl waterbeds), Thomson Equipment Company (Silver Line Industries trailer manufacture and re-manufacturing) and Jacobs Trading Company (repackaging).

Alpine Steel is currently manufacturing and installing prison made structural steel components at three locations in Las Vegas; the SkyVue (Ferris Wheel developed by Howard Bulloch), Staluppi Automotive Group’s Planet Mazda and Wet ‘n’ Wild Las Vegas (financed by Andre Agassi; his wife, Steffi Graf; Dr. Steven and Karen Thomas, members of the Thomas family of Thomas & Mack Center fame; and Roger and Scott Bulloch, of SPB Capital Partners).  Companies competing with Alpine Steel for these contracts, were totally unaware they were competing against a company with such a distinct and hidden advantage.

While the Staluppi and water park projects are actively being constructed, the Sky Vue job appears to be abandoned, though developer Howard Bulloch assures the absence of activity is due to plan revisions – and not a lack of funding.

   
    
Typically owners, investors and general contractors of projects such as the Mazda dealership and Wet ‘n’ Wild are not informed of manufacturers of materials used by sub-contractors working on such large jobs.  It is thus highly unlikely that Agassi, Graf, the Thomas’, John R.Staluppi, Jr. or GC’s such as Johnson Carlier are aware that through Alpine Steel, their facilities are being built using products made by state prisoners earning minimum wage or less – and much of that taken back to pay for the cost of their incarceration.

This cannot be said of the family Bulloch.  Apparently none of the Bulloch brothers have any objections to making or saving huge sums of money by using construction materials manufactured by prisoners.  No it appears jobs involving structural steel components involving the Bulloch’s as investors or developers are steered to brother Randy and his company (which has been using inmate labor since 2005). Some might think there was some manipulation of bids going on when the brother of project developers seemed to be awarded bids on each of those projects.

However, no need to rig bids when: your labor costs are 30-50% below the costs of your competitors and the state advances you a credit line exceeding $400,000; you are allowed to default on even the meager wages owed to the inmates ($78,000); you fail to pay $668,000+ owed in payroll taxes to the IRS, and; you refuse to pay your workers compensation insurance premiums to Explorer Insurance ($84,000+) or your suppliers (F&M Steel, Utah – $15,000 and Pierce Aluminum Co, $12,500) for raw materials used in construction projects.

The end result is more work for inmates, fewer jobs for workers in Nevada with similar skills, reduced sales to competing private companies and depressed wages for the industry as a whole – with increased profits for Alpine Steel’s owner.  Mr. Cox, Director of NDOC and the Deputy Director of Silver State Industries are of the belief that if 20 or so Nevada workers are denied employment due to inmate labor, that’s an “insignificant” impact upon local employment.  Maybe they and members of the Nevada Legislature’s Interim Finance Committee on Industrial Programs should ask potential workers if losing a job to prison labor is insignificant.

Unfortunately this is not an isolated incident. The transfer of jobs to prisoners is something that has been happening all across the country for more than a decade: private companies folding operations due to competition from prison industry operations that are making the same or similar products or services. Union and non-union workers laid off or terminated due to lost sales or unfavorable market swings caused by prison industry operations:

Lufkin Industries, Trailer Division
Cañon City, Co
Pensacola Naval Air Station in Pensacola, FL
American Apparel and Tennier Industries in AL. and MS
South Carolina
 In mid 2004 while involved on a prison reform project, I received letters from inmates working in the PRIDE industry where I had briefly been years before. They were posing questions about PRIDE’s PIE program. Prisoners were manufacturing goods for the private sector under this program and wanted to know what the rules were. They also wanted to know if their work was legal and if it affected jobs on the outside.

These were good questions and I began to research this PIE program and an entire story of unseen and until then, unknown exploitation was exposed.  It all began with the discovery of 18 USC 1761(c), the Prison Industries Enhancement Certification Program (PIECP).

I documented how: PIECP was being used to allow prison industries to partner with private companies, providing access to inmate labor; how private sector companies were urged to close operations and re-open them behind prison fences, using inmates in place of American workers; the huge sums of money being made off prison labor; laws written by corporationsand passed by lawmakers they contribute to allowing the exploitation of prisoners; government regulations ignored in the pursuit of profits; entire companies partnered with prison industries under PIECP were “seized” by prison operators along with their proprietary technologies and all equipment taken and used to increase profits to state prison operations and; how taxpayers were paying for much of this without even knowing it.

Huge complex corporations had been formed to take advantage of cheap prison labor. One – and possibly more – of these corporations, U.S. Technologies, Inc., bought up other companies through their wholly owned subsidiary, Labor-to-Industry, Inc., closing private sector operations and moving production operations into prison industries nationwide. Below are excerpts from the SEC filings of UST:

“U.S. Technologies Inc. (the “Company”), is engaged directly and indirectly through its wholly owned subsidiary, Labor-to-Industry Inc. (“LTI”), in the operation of industrial facilities located within both private and state prisons, which are staffed principally with inmate labor. These prison-based operations are conducted under the guidelines of the 1979 Prison Industry Enhancement (PIE) program.

“The Company is an “outsourcing company” soliciting manufacturing, assembly, repair, kitting and fulfillment services from Fortune 1000 and other select businesses. The Company performs its services utilizing prison labor under the Prison Industry Enhancement Program (“PIE”). Congress created the PIE program in 1979 to encourage states and local units of government to establish employment opportunities for prisoners that approximate private sector work opportunities. The program is designed to place inmates in a realistic working environment, pay them the local prevailing wage for similar work, and enable them to acquire marketable skills to increase their potential for successful rehabilitation and meaningful employment upon release…”

Today more than a dozen years after UST began to exploit prison labor for corporate profit, Nevada finds itself in the grip of a controversy involving the use of prisoners as a cheap labor force made available to “select businesses.” As shown above, Nevada’s private manufacturers are simply the latest victims in this ongoing – and relatively hidden – program taking jobs from neighborhoods and putting them behind bars.

This private organization representing all prison industries and the vendors, suppliers and corporate partners using inmate labor, now has responsibility for ensuring compliance with all applicable laws pertaining to prison industry programs. In effect this is the proverbial “fox guarding the henhouse” scenario where program operators are allowed to determine if they are in compliance with government regulations – and their assurances of compliance are accepted without further review by the BJA.

This oversight organization has an influential “inside man” in Silver State Industries in a position of power, influence and the ability to allow Randy Bulloch’s company to operate freely.  He is also personally responsible for the unauthorized half-million dollar “line of credit” advanced by the state to Bulloch – and for falsely assuring the federal government that Silver State Industries is in full compliance with federal regulations.  At the core of the current prison labor issues in Nevada this same individual, previously involved in a PRIDE prison industry corruption scandal is once more embroiled in the controversy involving the use of inmate labor.

In the following segment we’ll introduce this individual, the organization he belongs to and explain the prison industry PIE Program and how it is being used to remove jobs from American workers. 

December 2012 -  Investigative report from Russia Today on prison privatization and prison industries.  Very informative and names several of the companies involved in exploiting prisoners for cheap labor and high profits: http://www.youtube.com/watch?v=CySzoJFkTA8

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June 20, 2011 - Please follow my Daily Kos blogging at: http://www.dailykos.com/blog/Bob%20Sloan/ to follow issues involving prison industries, privatization of prison facilities and legislation impacting upon both. 

June 8, 2011 -  The Department of Justice just released a request for applications to oversee the PIECP program!  It appears they are finally trying to sever the ties with the NCIA who has been in charge of oversight of the program since 1995.  As I've provided elsewhere on this site - the NCIA is made up entirely of those prison industries, their administrators and the corporations taking part in the program.  Thus, the DOJ has allowed them to oversee themselves for more than 15 years now.

December 15, 2010 - The Bureau of Justice Assistance (BJA) announced a new policy this week in reference to the complaints PIECP Violations has made about state prison industry programs participating in PIECP not paying "prevailing wages". It is titled "Back Wage Policy for Inmate Workers Under the Prison Industry Enhancement Certification Program (PIECP)" and can be found here: http://www.ojp.usdoj.gov/BJA/grant/PIECPBackWagePolicy.pdf at the BJA PIECP page site. I have posted it below for those who want to read it now:

 March 12, 2010: Visit the following site (Alternet.org at the link below) and read for yourself the path we are all following to deliver profits to the prison industry investors and corporations. Great article that connects the dots. Posted on March 11th.

 

http://blogs.alternet.org/theprisonwatchproject/2010/03/11/prison-for-profit-private-prisons-and-us-laws/ written by Rebcca McFarland.