Exposing Corruption and Preventing Abuse of Power

Locking In Profits: Top ICE Officials Leave Agency to Serve Its Top Contractor

Illustration by POGO.

This piece originally appeared on The Daily Beast.

In April 2018, Tracey Valerio, the top official in charge of “all agency contracting” at Immigration and Customs Enforcement, resigned. Within months, she was recruited as a paid expert witness in a lawsuit to defend ICE’s biggest contractor—a large, private prison and immigrant detention company known as the GEO Group.

The lawsuit charged Florida-based GEO with violating minimum wage laws by paying the same immigrants now being locked up in record numbers by the Trump administration as little as $1 a day for menial work such as cleaning toilets. That case and others like it threaten GEO’s profits.

In April 2018, the top ICE official in charge of all agency contracting resigned. Within months, she was recruited as a paid expert witness to defend ICE’s biggest contractor.

But paying immigrants too little is hardly the only issue. Valerio, the top ICE contracting official who became GEO’s paid witness, not only went spinning through her agency’s revolving door, she was accused of violating the law and an agency rule in the process.

Moreover, Valerio turns out to be just one of a bevy of top officials to work for GEO and other private prison companies after throwing in the towel at ICE and the federal Bureau of Prisons, where government executives seem to form close relationships with the private companies they oversee on taxpayers’ behalf, only to accept lucrative employment with these same contractors later on.

The previously unreported allegations against Valerio were made during a court hearing earlier this year, according to court records, and in an official letter complaining about her role from a senior ICE lawyer that was reviewed by the Project On Government Oversight, a non-profit watchdog group. ICE has objected to the information she provided in the case.

“As Ms. Valerio was not authorized to speak on behalf of the agency or provide the information contained in the declaration submitted, ICE objects to the submission of the declaration to the extent that it purports to be provided on behalf of the agency or express agency views,” ICE attorney Anne M. Rose wrote in the letter  to the court on August 1.

There are laws on the books intended to mitigate ethics concerns related to the conflicts of interest that these job moves can create. One of them is the Procurement Integrity Act. Though seldom enforced and riddled with loopholes, a section of the act specifically prohibits former federal contracting officials from accepting compensation for at least one year from companies to which their agencies awarded a contract worth $10 million or more.

The law requiring former federal employees to wait at least one year before accepting compensation from companies their agency did business with does not apply to many officials who go through the revolving door, but does specifically cover contracting officials. According to former ICE official Tracey Valerio’s own sworn declaration in the court case in which she testified, she was in charge of contracting. Former Bureau of Prisons official Frank Lara had a similar high-level role at the Bureau.

But not a lot is public on how the law—a section of the Procurement Integrity Act (41 U.S.C. 2104; formerly 41 U.S.C. 423)—has been applied. Darleen Druyun, the former chief Air Force acquisition official who pleaded guilty to violating conflict-of-interest laws in 2004 in a scandal involving Boeing, “could possibly have also been found liable” under the Procurement Integrity Act depending on how a court interpreted the law, according to an article published by the American Bar Association’s Public Contract Law Journal.  However, she was not charged under that statute.

(Instead, she was charged under sections of the Ethics Reform Act of 1989, (18 U.S.C. 208(a)). She was sentenced to nine months in prison and an ex-Boeing executive was sentenced to four months. Boeing agreed to pay $615 million to resolve the fraud allegations.)

Each violation of the Procurement Integrity Act section in question can lead to a roughly $100,000 civil penalty assessed to the former official plus twice the compensation they received, and a $1 million penalty for the contractor.

However, this section of the law has huge loopholes and, as advocacy group Public Citizen noted in a 2015 report, the law is “so narrowly construed as to make evasion rather common.” A bill introduced in Congress a decade ago would have patched some of the more gaping loopholes, but it did not become law.

One loophole allows former officials to be compensated if a different division of the company makes the payment than the division that received the relevant contracts (this doesn’t appear to be the case in either the Valerio or Lara situations).

The law also doesn’t necessarily cover every official involved in agency procurement—it applies most clearly to officials with immediate involvement in a contract such as program managers or contracting officers. It’s less clear if their bosses, such as people in Valerio or Lara’s old roles, would be covered. And an agency can provide “safe harbor” to a former official to receive compensation from a contractor, though this is void if the former official or contractor provided “fraudulent, misleading, or otherwise incorrect information.” POGO did not receive comment from the Bureau of Prisons, Immigration and Customs Enforcement, GEO, Ms. Valerio, and Mr. Lara regarding whether any agency ethics advice was provided to Ms. Valerio or Mr. Lara.

POGO’s Recommendation:Congress should close the loophole that allows former government employees to work for an affiliate or division of a contractor that was not the specific division or affiliate of the contractor they oversaw as a government employee. Top officials should be prohibited from being able to seek employment from contractors who significantly benefited from the policies formulated by the government employee. More revolving-door related recommendations can be found in POGO’s recent report, Brass Parachutes.

GEO won several contracts this size from ICE in Valerio’s last year as ICE’s executive associate director for management and administration. GEO is also by far ICE’s largest single contractor, winning more than $327 million in funding from ICE in the fiscal year 2018, the first full budget cycle for the agency year under President Trump. Perhaps reflecting the current administration’s hard-line posture regarding immigration enforcement, this is a marked increase over the $199 million ICE awarded to the company during fiscal year 2016, the last full fiscal year during the Obama administration, according to contracting data at USAspending.gov.

Starting in July 2018, less than three months after she left ICE, Valerio was working as a paid expert witness for GEO to help in its defense in an ongoing lawsuit.

Wage Disparity

The lawsuit involves former detainees from the Northwest Detention Center in Tacoma, Washington, who claim the company was violating minimum wage laws by paying them just $1 a day for work such as cleaning toilets or working in a kitchen.

Critics of the program, which was authorized by an immigration law dating back to 1950, say paying immigrant detainees below the minimum wage is unlawful, because most have not been convicted of or pleaded guilty to any crime and thus there is no valid legal basis for excluding them from minimum wage law. The vast majority face only civil immigration charges. ICE and its contractors vigorously dispute that legal interpretation, however. This legal debate is the complex dispute at the center of this lawsuit and similar ones around the country.

Activists and one former insider, Kevin Landy, who ran ICE’s Office of Policy and Planning, also say the detainee work program means companies like GEO Group do not employ as many local residents, in what are  often economically depressed communities where detention centers are located. A GEO official agreed in a 2016 deposition that GEO would have “to pay more people [who are not detained] to do that work [such as cleaning] if there were no voluntary work program.”

But for now, there is such a work program run by ICE, and many of its contractors, including GEO, use it to put detainees to work for far less money than what they would have to pay local residents who must be paid at least the minimum wage.

According to an Aug. 2, 2018, court transcript obtained by the Project On Government Oversight, attorney Mark Emery with the law firm Norton Rose Fulbright said he represents “the GEO Group in all of the detainee work cases that are currently pending right now.” He stated, “The authorization that ICE gives us is to pay at least $1 a day. We pay $1 a day. This is the exact same rate ICE pays at its own facility. This is the same rate that’s paid in all of the facilities, unless there is some other arrangement made.”

As an expert witness for GEO, Valerio submitted a sworn written declaration dated July 20. Her declaration supports GEO’s argument that it is unable to pay detainees more than a $1 a day because that’s all Congress has funded.

Valerio turns out to be just one of a bevy of top officials to work for GEO & other private prison companies after throwing in the towel at ICE & the Bureau of Prisons.

She wrote, under oath, that she was responsible for “the development and implementation of ICE’s budget and all agency contracting was under my purview and supervisory responsibility.”

“ICE could not expend more than $1.00 a day for detainee wages in a” detention center “without Congress setting a higher rate and appropriating the funds needed to pay the higher rate,” Valerio wrote. “In my capacity wherein I was responsible for advising and developing the budget for the [ICE] Director who then advised the DHS Secretary and, in turn, the President on appropriations requests, I relied upon the Congressional rate.”

Emery, the attorney for GEO, pointed to declarations from Valerio and others as support for GEO’s position. “An important point that I hope has come out in the briefing, and should come out in the declarations filed today, and other declarations we filed,” said Emery, “is that GEO doesn’t pay—GEO doesn’t decide what to pay detainees.”

Yet GEO sometime pays detainees above $1 a day at other ICE detention facilities it runs, such as at the South Texas Family Residential Center where it pays $3 a day.

Pointing to this example, Andrew Free, an attorney for the former detainees, argued in the Aug. 2, 2018, court hearing that the federal law does not restrict pay to $1 a day and that as a result detainees could be paid more.

As Ms. Valerio was not authorized to speak on behalf of the agency or provide the information contained in the declaration submitted, ICE objects to the submission of the declaration to the extent that it purports to be provided on behalf of the agency or express agency views.

ICE attorney Anne M. Rose

GEO’s attorney Emery acknowledged that “the rate could be raised,” but ICE would have to make that decision, not GEO.

Judge Robert J. Bryan, who is overseeing the case, appeared inclined to want a jury to address the complex questions: “Isn't it a jury question as to what the employment relationship, if any, was, and how these various contract provisions and legal provisions should be applied?”

Lawsuits often go through months and years of proceedings and still may never get before a jury. If this case ultimately comes before one and if it is decided in the plaintiff’s favor, such a verdict could mean that GEO has to pay detainees—at least at the Northwest Detention Center—Washington State’s hourly minimum wage for any work they do, along with possible back wages.

But this central legal dispute wasn’t the only point raised in the August hearing.

In the course of his arguments, Free alleged Valerio may have violated the Procurement Integrity Act by being paid as GEO’s expert witness in the case within months of leaving ICE, according to the transcript.

The law covers indirect compensation even when a contractor pays “an entity other than the individual, specifically in exchange for services provided by the individual.” This would seem to cover Valerio’s services as an expert witness.

Free also cited another potential violation by Valerio, who did not check with ICE before allegedly disclosing internal ICE information in court as an expert witness. As he put it: “she's actually serving as a paid consultant for GEO, and submitted … [her] declaration in violation, apparently,” of an agency rule that bars disclosure of certain government information in court without agency authorization.

Following objections from ICE and plaintiffs in the court case, Valerio abruptly ceased working as a paid expert witness for GEO Group. According to the transcript, Free said, “I would love to depose Ms. Valerio. We have not had an opportunity to do that yet. Ms. Valerio was subpoenaed, and her testimony was replaced by some other ICE officials. It was scheduled for Washington, D.C. We later found out that the government was going to move to quash those subpoenas.”

Joan Mell, a lawyer for GEO, told the judge, “it is GEO’s position that ICE has not instructed us to withdraw the declaration” by Valerio.

Judge Bryan responded, “I read her declaration, and saw who she is and where she came from, and the contents of her declaration. I didn’t think it made a whole lot of difference in anything.”

GEO is also by far ICE’s largest single contractor, winning more than $327 million in funding from ICE in fiscal year 2018.

Because she did not respond to queries and the court deadline for disclosures on expert witness expenses are not due until March, it is unclear how much Valerio was paid as an expert witness (although it was likely much more than $1 a day). The average paid to expert witnesses for reviewing a case on behalf of a defendant is $398 an hour, according to a 2017 survey of expert witness fees.

Both ICE and GEO declined to comment, citing ongoing litigation.

At roughly the same time that Valerio was being paid as a GEO expert, she was quoted in an interview to NPR where she acknowledged the role of cheaper alternatives to detention like the electronic monitoring of undocumented immigrants, but stressed that “confinement sends a very, very strong message” to immigrants who may be in the country illegally. Her remarks mesh with GEO’s financial interests in that the company makes money both as ICE’s largest operator of detention facilities and on electronic monitoring of immigrants as they await processing by immigration courts.

Valerio is far from the only ICE official to go through the revolving door and, once in the private sector, to be employed or otherwise compensated by major ICE contractors, like GEO.

Last year, as The Daily Beast first reported, Valerio’s former boss Daniel Ragsdale left as ICE’s deputy director to work as a GEO executive. In 2012, David Venturella—formerly head of ICE’s Enforcement and Removal Operations—joined GEO as an executive vice president. Another former senior ICE official, Mary Loiselle, managed GEO’s family case management contract for ICE—a less restrictive program for asylum seekers than detention—until it was shut down by the Trump administration last year. As of July, Loiselle also is treasurer of the privately run ICE Foundation, whose leadership has cozy ties to GEO and other companies with business before the agency, according to an investigation by Sludge, an online investigative site.

Regarding ethics concerns with former ICE officials going to work for ICE contractors, an ICE spokesman wrote, “the personnel associated with a private business would not impact acquisition decisions unless—perhaps—they employed an individual suspended, debarred or declared ineligible by the U.S. government.”

“Acquisition decisions are made based on the ability of any given vendor to adequately provide services needed and the costs associated with those services,” the ICE spokesman wrote.

GEO says it “strives to enlist the top talent from within our industry, which means recruiting individuals with the appropriate experience and expertise to fill critical positions across our organization.” The company says limiting “recruitment efforts to only the private sector would exclude many accomplished and experienced individuals who have built their careers in public service.”

But this practice can create, at a minimum, appearances of conflicts of interest, especially when an official goes to work for a contractor soon after taking actions that seem to benefit it.

"A Recent DOJ Directive"

GEO has also brought on board former officials who work at other federal agencies where it has major contracts, such as the Justice Department’s Bureau of Prisons. After ICE, the Bureau is the second largest source of GEO’s federal contract awards.

In January 2018, Frank Lara, then the Bureau’s assistant director for correctional programs, issued a directive—first obtained by Government Executive—calling for transferring more inmates to privately run federal prisons, a move that is likely to benefit GEO’s bottom line. The directive states it aims to “alleviate the overcrowding at Bureau of Prisons' (BOP) institutions and to maximize the effectiveness of the private contracts.” It only cites one facility by name, Rivers Correctional Institution, a facility in North Carolina run by GEO, which has been criticized for poor medical care. Months earlier, the Bureau also awarded GEO a$19 million contract for its prison services at Rivers and another $14 million contract to GEO for its prison in Big Spring, Texas.

On an earnings call in April 2018 GEO executives had with financial analysts, a GEO executive referred to Lara’s January memo. “We continue to be encouraged by a recent DOJ directive regarding increasing population levels in private contract facilities in order to relieve overcrowding in BOP-operated facilities,” said David Donahue, GEO’s senior vice president for corrections and detention.

According to a transcript of the call on GEO’s website until last week, Donahue referred to Lara’s memo as “our recent DOJ directive.” In response to queries about Lara and the directive, GEO provided audio of Donahue saying “a recent DOJ directive.”

The transcription “error... appears to be the basis for your thesis that our company somehow had an involvement with the DOJ directive in question, which is in fact not the case,” GEO vice president Pablo Paez emailed POGO. He also said neither GEO nor its lobbyists were in communication with Lara or anyone else at the Bureau or the Justice Department regarding the directive.

Regardless, GEO’s lobbying efforts during the Trump administration are related to the topics addressed in the memo. One lobbying firm working for GEO is Ballard Partners, which is led by Brian Ballard, whom Politico dubbed “The Most Powerful Lobbyist in Trump’s Washington.” Ballard Partners has disclosed that it has lobbied on “the use of public-private partnerships in correctional services” as well as “Labor policy; Immigration regulation.” The other firm is Bradley Arant Boult Cummings, which has disclosed that it lobbied on “federal government use of contract correctional facilities.” The lobbying firms did not respond to queries.

We continue to be encouraged by a recent DOJ directive regarding increasing population levels in private contract facilities.

GEO executive

Lara left the Bureau where his position involved “oversight of 11 private correctional facilities under contract with the Bureau,” including GEO facilities, and in August began working as GEO’s director of operations.

In October 2018, 18 Democratic senators asked the Justice Department’s inspector general to investigate Lara. “Though this may just be another disturbing incident of the revolving door between former BOP officials and private prison corporations, Lara’s work on expanding use of private prisons, including facilities owned and operated by his new employer, raises unique questions,” according to the senators’ letter.

GEO told POGO, “At no point was Mr. Lara’s consideration for employment with GEO connected in any way to any of the actions he may have taken as a senior executive with the BOP. Furthermore, to our company’s knowledge, Mr. Lara’s oversight responsibilities with the BOP did not encompass procurement or contract decision-making.”

The Bureau declined to comment.