Lawmaker's Ownership In Welfare Call Center Reeks Of Corruption

Rep. Eric Turner (R-Cicero) is the Assistant House Republican Leader. He and his son also own a building in Marion, Indiana that is leased by Affiliated Computer Systems to operate a call center for the state's widely criticized privatized welfare system. He used his legislative clout to fight for the placement of the call center in Marion, and he has defended it from critics in his role as a state legislator. His daughter is the general counsel to FSSA, the agency that privatized welfare services in Indiana. And Turner never disclosed his ownership interest in the call center property on his statement of economic interest. That's what is revealed by a Fort Wayne Journal News-Gazette investigative report by Angela Mapes Turner. Turner says it's a non-issue, and the Daniels administration deflects blame saying it didn't enter into the lease; ACS inked the deal. Here's some of what the reporter learned:

A state representative who fought hard for a controversial call center created in his district as a part of Indiana’s failed welfare privatization effort has a financial stake in the building that houses it.

Rep. P. Eric Turner, R-Cicero, says his investment in the building owned by his son is a non-issue. But critics say the link should have been disclosed during the many public debates about problems with the IBM-led welfare changes . . .

In 2007, Indiana inked a $1.16 billion deal with IBM Corp. to modernize the state’s welfare system by providing more services by computer and telephone.

Central to the plan was the creation of a call center to serve the entire state. Instead of caseworkers assigned to clients who need help getting food stamps, Medicaid or Temporary Assistance for Needy Families, contract employees would handle applications submitted through a website and the Marion call center.

Subcontractor Affiliated Computer Services, tasked with creating the call center, entered into a lease in 2007 to rent the former Jones Middle School when the building was still owned by Marion Community Schools, according to school board minutes.

Nearly from the start, the hub was fraught with controversy. The state heard complaints that the call center workers were ill-trained and clients were not getting their benefits, such as food stamps and Medicaid.

By May 2008, 59 of Indiana’s counties had been brought into IBM’s system. Concerns about clients not being served well by the call center had caused state officials to halt the transition of Indiana’s remaining 33 counties.


That’s when Turner toured the call center in his role as legislator and told the Marion Chronicle-Tribune he was impressed.

Turner told the newspaper there could be legislative committees to look into the issues, but the cost of reverting to the old system would be “astronomical” and call center workers were doing their jobs.

At the same time, his son Paul Ezekiel Turner’s company was in negotiations to buy the former Jones Middle School from Marion Community Schools.

On May 5, 2008, the school board voted to sell the building for $350,000 to Mainstreet Capital Partners LLC, a joint venture between “Zeke” Turner and his father.

According to secretary of state records, Zeke Turner created a limited-liability company, MS Jones LLC, co-owned by Mainstreet, to buy the call center.

That company isn’t listed on Rep. Turner’s statement of economic interests required of all state legislators, but Mainstreet and several other joint ventures with his son are, including Turner Partnership, which is MS Jones’ other co-owner.

Turner considers having listed those companies to be sufficient disclosure, he said, adding that all the transactions related to the sale were carried out in public school board meetings and were common knowledge in Grant County.

Turner tells the reporter that he may have talked to his son about the business opportunity but that he generally performed his own analyses without his help. He insists his daughter, Jessaca Stultz, the general counsel of FSSA, had no part in helping out with the lease. I found the financing details of the building to be interesting. The story reports:

After taking out a $280,000 loan to buy the property in July 2008, it was mortgaged for an additional $200,000 in September of that year. This spring, his company took out a second mortgage on the property for $5 million, according to records from the Grant County recorder’s office.


Mainstreet Asset Management did not respond to a request for comment.

Zeke Turner’s portion was assessed for more than $7.1 million in 2009, according to the Grant County treasurer’s office.

Affiliated Computer Services is leasing about 53,000 square feet in the building, FSSA spokesman Marcus Barlow said. That company – not the state – created the lease and pays the rent of $14,400 a month, or $172,800 a year, he said.

The rent is similar to the cost of less expensive industrial warehouse space, not more expensive commercial real estate, Barlow said.

“They actually got a really good deal,” he said.

Speaker Bauer argues it’s hard to know whether something’s a good deal if it’s brokered privately, behind closed doors.

“We’re having trouble in general getting information out of these private contractors,” he said. “Let the people judge.”

It seems kind of odd that a building that was purchased for $350,000 two years ago from the school corporation would now be assessed at over $7 million and have more than $5 million mortgaged against it.
The privatization aspect also gives the Daniels administration cover for what the contractor, ACS, does under its contract. That's one of the problems I have with these privatization deals. The public doesn't really know who was told to do what after it gets turned over to the private operator. This blog was the first to point up the conflict in awarding the contract to IBM, which had partnered with ACS on the billion-dollar privatization deal. FSSA's Secretary at the time, Mitch Roob, worked for ACS prior to joining the Daniels administration as FSSA Secretary. It was common knowledge around town who was going to get the contract even before the RFP process had been conducted, leading some potential bidders not to even waste their time responding to the RFP. The Daniels administration cancelled the contract last fall with IBM but is continuing to use ACS for some services and is keeping the Marion call center open. IBM and the the state are suing each other in the aftermath of the contract's cancellation.

The story also notes a previous call by House Speaker Pat Bauer for federal Health and Human Services, the agency that doles out money that FSSA administers, to investigate a couple of leases for the state's welfare-to-work offices that are located in buildings owned by John Bales, the real estate developer the Daniels administration hired to broker leases for state agencies who is close to Marion Co. Prosecutor Carl Brizzi. Brizzi is a part owner of a building in Elkhart, Indiana that is leased by the Department of Children Services, and the lease was brokered by Bales' firm.

I'm telling you that Daniels has some big-time scandals brewing in his administration. The Obama Justice Department can bury any presidential ambitions he may have if they so desire to investigate these various scandals. I thought Mitch was smart enough to avoid this kind of corruption in his administration when he first got elected, but my once favorable impression of him is fading with the passage of every day. I'm not surprised by Turner's obvious self-dealing, and I doubt many others who've watched him over at the State House over the years are either. The ACS connections run deeper than Roob. Barnes & Thornburg's Bob Grand and Joe Loftus have lobbied the state and the City of Indianapolis for the firm. Their firm has also lobbied the state for Bales' Venture Real Estate. CIB President Ann Lathrop, who replaced Grand in that role, used to work at ACS with Roob and former Mayor Steve Goldsmith, who employed both of them in his administration. Lathrop now works for Crowe Horwath, which has several contracts with the City of Indianapolis. Lathrop personally inked a contract with the Ballard administration's budget office, which Lathrop ran during the Goldsmith administration. And I could go on but you get the point. It's just one incestuous cesspool.