ProvPort’s Managers Tied to Creating Wyatt Detention Center’s Financial Failure
Monday, June 20, 2016
Two of the key players who helped create the Wyatt Detention Center and were ultimately tied to its financial collapse are poised to benefit again from public financing -- if the recently proposed $20 million ProvPort bond is approved by Rhode Island voters in November.
The two players are Bill Brody and Ray Meador - both were instrumental at Wyatt and were closely tied to Anthony Ventetuolo and his AVCORR company. Brody is currently ProvPort's sole employee; Meador is a co-owner and manager of non-profit ProvPort's sister for-profit company, Waterson Terminal.
READ: Non-Profit ProvPort Paid $11 Million in Management Fees to For-Profit Company
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTAn independent investigation by former State Auditor General Ernie Almonte conducted 2011 and subsequent Forensic Investigative Report in 2013 found Ventetuolo, AVCORR and others guilty of conflict of interest, potential breaches of state law and financial abuse.
In 2014, after years of financial struggling, the prison went into receivership. The prison had at the time over $93 million in outstanding bond debt.
Meador was brought in by Ventetuolo to serve as the “financial advisor” to the Wyatt Detention board in the early 2000s. Simultaneously he was the de-facto owner of ProvPort. Meador purchased ProvPort from former-Providence Mayor Vincent "Buddy" Cianci’s administration in 1994 -- and later worked with Brody to create the two symbiotic companies. The non-profit ProvPort has revenue of over $7 million annually, but lists just only employee — Brody who earns $225,000 annually.
Rocky Start for ProvPort
ProvPort’s financial ride has sometimes been bumpy. According to a Providence Phoenix story in 2001, “In 1994, supporters touted the controversial $16.7 million sale of the Port of Providence as a financial benefit for the city. But over the last three years, the City of Providence has spent $1.3 million to bail out ProvPort, the private company that runs the port," according to the article written by Steven Stycos.
“The situation angers Ward Six Councilman Joseph DeLuca, who vigorously opposed the 1994 sale of the city-owned-and-operated port to balance Providence's budget. 'The whole thing was a scam to begin with and it's still a scam,' DeLuca says. Meanwhile, another opponent of the original deal, Council President John J. Lombardi, says the city should go to court to recoup the $1.3 million if ProvPort fails to repay it,” reported Stycos.
“As Brody notes, Providence has no legal obligation to replenish the reserve, but the failure to do so would lead investors to question the city's trustworthiness and perhaps increase the cost of future borrowing,” wrote Stycos.
The non-profit ProvPort and a for-profit Waterson Terminal Services have been intertwined since their respective creations. Over the last three reported years, non-profit ProvPort has paid approximately half its revenue to Waterson — over $11 million.
Now, it looks to be deja vu all over again. In 1992, the Rhode Island Port Authority sold $30 million in bonds to finance the Central Falls Detention Center Facility Corporation as the newly envisioned private prison was unable to attract financing. ProvPort claims that they do not have the resources to make land acquisitions.
Fast forward nearly 25 years to last week’s last minute budget article for $20 million in land acquisition for ProvPort. If approved by voters in November, two of the key players of ProvPort that helped create and are tied to the financial failure of the Wyatt Detention Center will benefit immensely.
Meador Working both ProvPort and Wyatt
California financier Meador has never lived in Rhode Island. He purchased the Port and simultaneously through Brody teamed up with Ventetuolo on the Wyatt Detention Center. Meador’s Public Asset Management helped direct the financial strategy for Wyatt. According to Wyatt Detention Center meeting minutes, Meador served as the financial advisor to the Board.
“Ray Meador from Public Asset Management made a presentation to the Board and submitted a memorandum of financial performance and compliance issues,” according to a Board meeting from September of 2005, secured by GoLocal.
The financial documents provided to GoLocal show that Meador was earning tens of thousands of dollars and setting the financial strategy that helped Ventetuolo and his firm AVCORR earn millions.
In just over three years, Ventetuolo’s firm was able to earn over $1.6 million during the same period that the prison was in the midst of a financial death spiral. While Meador was financial advisor, the financial condition of Wyatt was such that the facility incurred negative operating results as follows (according to the 2012 Special Joint Legislative Commission on the Wyatt Detention Facility Report):
2007 – ($1,440,099)
2008 – ($2,175,200)
2009 – ($2,638,409)
2010 – ($1,755,456)
Brody, Meador, and Ventetoulo
And, according to documents provided to GoLocal, Brody was also one of the founders and principal architects of the creation of the for-profit Wyatt Detention Center.
The intertwined relationships are decades old, and just as relevant today.
“By the end of the 1980s, Donald W. Wyatt had met several groups wanting to develop a private prison or jail. One of these groups consisted of William Brody, a lawyer in Providence, Jack Marshall, owner of Marshall Contractors of Rumford, Rhode Island, Mike Doyle, a public relations expert who advised many Rhode Island politicians, and Anthony Ventetuolo, a prison consultant who had worked at the Rhode Island Department of Corrections. In 1989, they formed Detention Center Associates (DCA). DCA responded to the RFQ of the US Marshals Service and, in August 1989, DCA was judged well qualified. DCA received an RFP in December 1989,” according to a Harvard case written on the “DONALD W. WYATT DETENTION FACILITY.”
Brody not only worked with Ventetuolo in creating Wyatt, he served as the agent for Meador setting up his Public Asset Management corporation which serviced the controversial prison and gave financial advice. According to business registration forms filed with the Secretary of State, Brody created Meador’s company from his office at ProvPort.
A 2010 New York Times article outlined the financial collapse and how the prison had been manipulated for personal financial gain:
But the deal that emerged, like many elsewhere, proved better at paying private investors than generating public revenue. The municipal corporation borrowed $30 million through a state bond issue to build Wyatt, and hired the Cornell company to run it. Six years later, the municipal body borrowed $38 million to refinance, buying back most of the bonds at a premium that gave the original bondholders a lump-sum return of 28.5 percent on their investment in addition to 9 percent annual interest.
And from its opening party in November 1993, Wyatt ran into the same problem as its competitors: finding enough inmates. For a time it imported murderers and rapists by the busload from North Carolina’s crowded prisons. When city residents objected, they learned that Central Falls had no control over who was housed at Wyatt and would get no money unless it was full.
At best, Wyatt paid Central Falls $2 to $3 a day for each detainee — less than $400,000 in the good years — to offset its use of city services. At times when the flow of inmates faltered, payments slowed to a trickle. Yet, following the strange logic of prison growth, Cornell and Wyatt officials were soon pushing to refinance yet again and expand.
Thomas Lazieh, the mayor who had championed the deal that built Wyatt, defended it as the best the city could get. His successor, Lee Matthews, took a darker view and sued to stop the expansion. “The city was sold a bill of goods,” he said.
Wyatt doubled in size anyway, with the backing of the current mayor, Charles D. Moreau. Convinced that it could wrest more revenue from the jail as immigration enforcement boomed, the municipal corporation took full control in August 2007. The budget it approved late that year included $6,000 a month for a Washington lobbyist to seek more detainees at higher rates.
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