The strange case of the $100 million-plus purchase

Alleged collusion, bid rigging, fraud



It ain't over 'til it's over. - Yogi Berra

Houston – We have a problem.

Amid all the whispers, innuendo and veiled references, the lawyers quietly went about the business of settling a case of alleged fraud and breach of fiduciary trust involving an official of a heating, ventilation and air conditioning subcontractor that performs work for Hale-Mills Construction, a subsidiary construction company affiliated with CEC, Inc., which company built the Jack Harwell Detention Center.

The New Jersey-based corporation contracts with McLennan County to operate the Jack Harwell Detention Center, located on Highway 6 in Waco next door to the County Jail.

The same corporation pays McLennan County a high dollar figure to not house prisoners in the lockup that is located adjacent to the Courthouse because the taxpayers are facing a $100-million-plus debt service on revenue bonds issued by a Public Service Corporation formed by the McLennan County Commissioners Court.

Without prisoners in the for-profit detention center financed through public assistance – or, that is, corporate welfare – the corporation hasn't got a Chinaman's chance of helping the taxpayers to pay off this obligation, the $100-plus-million debt on the $50-million jail designed to house some 800 paying local, state and federal prisoners.

Hence, they transferred the prisoners from the downtown Courthouse lockup to the Highway 6 location while the Sheriff's Office sent about 250 of its prisoners across the alley to the new jail, which is still only about half full.

Complicated, huh? It gets better.

Here is how County Judge Jim Lewis, Precinct 3 County Commissioner Joe Mashek, and McLennan County Sheriff's Office Captain Johnny Mynar wound up giving their depositions in the case of the air conditioning man who learned how to use his position with one company while he went about the business of getting the inside scoop on the specifications of the new building – a year before a request for qualifications went out to other potential bidders in the same business.

Settlement day – December 7, 2011 – dawned, and then the sun set on the curious case of Accurate Air Systems, L.P., vs. Thomas Beaty and Integrity Air Systems, L.L.C. They are the parties who had been duking it out with dueling word processors in the 129th State District Court for two years.

The affair ended, not with a whimper, nor with a bang, but with a cryptic notation in the records of the Harris County District Clerk, “Dismissed for want of prosecution, TRCP 165a – passed.”

That means the lawyers for Accurate Air Systems found a way to get money damages for their client by collecting them privately from Thomas Beaty and his newly-formed corporation, Integrity Air Systems, L.L.C.

The Court entered a take nothing judgment and the parties settled out of court.

It was the allegations of complaint that led to a semi-public flare-up in this murky world of private jail contracting, offering a rare glimpse of what it's like to finance a private and speculative enterprise on the taxpayers' dime by issuing tax-free municipal revenue bonds, the payment of which the long-suffering, God-fearing work-a-daddies and mommies will ultimately be held responsible to pay.

There ought to be a law – and there is.

It says that public officials are not obligated to take the lowest bid when they get ready to make a major purchase or build a structure.

They are obligated to award the contract to the best bidder.

So the murky details of the air conditioning contract and the story of the resulting lawsuit hold the details of just how those kind of decisions are made, and by whom.

Mr. Beaty was a project manager for Accurate Air Systems when he learned of a private prison project called the Kingman Project. While he was working on that deal, he also learned that Hale-Mills Construction was up for a contract to build the Jack Harwell Detention Center at McLennan County.

According to Accurate Air, Mr. Beaty kept all that information secret from his employers, and “By failing to disclose these facts, Beaty intended to bid on the Kingman Project so he could take the project himself. Accurate relied on Beaty's non-disclosure and was injured as a result.”

The company alleged fraud.
Mr. Beaty also perpetrated “material and false representation” to his employers, Accurate Air Systems, an alleged “breach of fiduciary trust,” because “By failing to disclose these facts, Beaty intended for Accurate not to bid on the Kingman Project so he could take the project himself. Accurate relied on Beaty's non-disclosure and was injured as a result...”

Though Hale-Mills' attorneys intervened and entered a motion before Judge Gomez in objection to a subpoena which included the McLennan County officials “to the extent that it is overly broad, unduly burdensome and requests irrelevant documentation” about the bidding to construct the Jack Harwell Detention Center, the depositions were taken, anyway.

Captain Johnny Mynar told the attorneys that, yes, Mr. Beaty came up to Waco and he gave him an opportunity to make a walk-through inspection of the existing Highway 6 jail, to survey the proposed building site next door, and to obtain a set of plans and specifications for the proposed project.

According to Mr. Mashek's testimony, all that took place a year before the Court allowed other potential bidders to know that there was a request for qualifications in the project; furthermore, the Court only allowed those who met the Court's qualifications one month to prepare their bids.

Many declined to participate, saying they had no chance to make a fair stab at the project.

Meanwhile, Mr. Beaty formed his own corporation, which got the air conditioning contract, and turned over his findings to Hale-Mills Construction.

Judge Jim Lewis testified that he could not remember the dates and the other details of the time line that led to the decision to let the contract to Hale-Mills Construction to build the new, privately operated jail.

How did The Legendary come by this information? Quite simply, it was through the assistance of a very personable and knowledgeable Deputy District Clerk in Houston named Becky Ramirez. She instructed The Legendary in exactly how to obtain all the records involving this or any other criminal or civil lawsuit through a simple – and free - on-line inquiry. The only charges incurred are for certified copies. Non-certified copies may be obtained for free through a careful check of the public record, which belongs to the People of the State of Texas.

What that means is if you were born here, you're one of us. If you are a transplant, then you have the distinction of having arrived as quickly as you could on hallowed ground.

Unlike McLennan County District Clerk Karen Matkin, who often charges people the sum of $6 to obtain the all-important cause number of a civil or criminal action, Harris County District Clerk Chris Daniel believes in customer service. He has placed all the records that are public on-line and at the disposal of the people of the State of Texas, the true owners of the information, according to the Texas Local Government Code.

In fact, if one has not the cause number of a civil or criminal lawsuit, it may still be found if one only knows the names of the parties to the lawsuit and the date upon which it was filed.

The people, and not the public officials who are designated by the Texas Constitution as custodians of the records, are the true owners of public information, which The Legendary finds so tightly controlled in McLennan County as to invite public ridicule.

God bless Texas!

I have spoken.

I am sincere.

So mote it be.

- The Legendary