Prison Phone Bribe Scandal In Mississippi Highlights FCC Reforms To High Fees Charged To Inmates

The bribes began over lunch.

Once a month, Sam Waggoner, a 61-year-old consultant for the billion-dollar prison technology firm Global Tel* Link, says he would drive to the house of Christopher Epps, then the Mississippi corrections commissioner responsible for overseeing the state’s prison phone contracts. Over three years, Waggoner paid Epps more than $108,000.

For the uninitiated, prison phones are an enormously lucrative industry. Because the contracts are exclusive -- while prisoners are charged notoriously high rates -- companies like GTL cash in by simply offering phone calls to inmates. Meanwhile, because there's little regulation, many critics have argued that it's a business ripe for corruption like this.

“When I was at his house, I'd just put [the cash] on the counter by him,” Waggoner testified at an August plea hearing, according to transcripts released this week. “And then if we're having lunch, I would hand it to him.”

In court, Waggoner described how Epps, who also pleaded guilty earlier this year to related prison contract corruption charges and faces 23 years in prison, strong-armed Waggoner into giving him the money in order to protect the interests of GTL, as well as Waggoner’s other businesses. Waggoner worked on commission for GTL -- getting 5 percent of the monthly revenue generated from Mississippi prison phone calls -- and would split the money with Epps. (Epps was initially to be sentenced on June 7; however his sentenced has been "indefinitely delayed," according to local officials.)

GTL's contract with Mississippi was established legally, but Waggoner says Epps forced him to pay the bribes in order to keep it going. “He wanted some of the money,” Waggoner testified. “And if I didn't do it, I would lose some of my contracts and business in my major business."

'I’ve Long Suspected That There’s Bribery'

For companies like GTL, winning contracts is a high-stakes game. As IBTimes reported in July, companies like GTL and Securus have been known to offer free tablet computers and million-dollar signing bonuses to jails and prisons that sign contracts.

“I’ve been doing this stuff for a while,” says Paul Wright, an outspoken critic of the prison phone business. “There’s no transparency, and there’s no oversight. I’ve long suspected that there’s bribery to get these contracts.”

In normal life, people don’t think too much about their phone bills. But in prisons and jails, it’s another story completely. For years, companies have established monopolistic relationships with jails and prisons, while jacking up the rates to prisoners and their families. In some jails, one minute on the phone might cost $14.

With 2.2 million inmates locked up each year in the United States, it's an enormous opportunity.

“It’s like having your own money-printing machine,” says Wright, the executive director of the Human Rights Defense Center, a nonprofit prison activist group based in Florida.

In 2013, the Federal Communications Commission stepped in to begin regulating the industry, but last week it announced further reforms that would cap the “egregiously high cost of calls,” according to FCC Commissioner Mignon Clyburn.

Specifically, the FCC will establish rate caps that will limit 15-minute calls to no more than $1.65. The agency will also cap or ban certain extra fees and ancillary charges, and it plans to discourage “site commissions” -- money paid back to local police forces from the call revenue. Not surprisingly, companies like Securus Technologies are unhappy with the new regulations. In a letter dated Oct. 7, a Securus lawyer said the new rate caps would be "a business-ending event" for the billion-dollar company and it would "litigate and appeal aggressively" against the regulations.

An official FCC vote will take place on Oct. 22.

Still, Wright believes the FCC could do a better job of requiring companies to be more open and transparent about how they conduct business. In light of the Mississippi bribery scandal, Wright wrote a letter this week to the FCC to encourage it to take a closer look at how companies like GTL and Securus hire out consultants to maintain relationships with state and local officials.

“This prosecution should be a red flag to us all about the inherent corruption that exists with this practice, as evidenced by the Waggoner case,” Wright wrote. “We are calling on the commission to use its subpoena power to further investigate the practice of providers hiring 'consultants' to lobby correctional facilities for monopoly contracts.”

GTL Denies Culpability

Neither Waggoner’s attorney nor GTL responded to a request for comment from International Business Times, but this week, the company filed an official statement with the FCC to dispute any allegations made by Wright or anyone else that GTL was in any way affiliated with the Mississippi bribe.

“Mr. Epps solicited bribes from Sam Waggoner, an independent consultant to GTL,” writes Chérie R. Kiser, a GTL lawyer, in a statement this week. “It is unfortunate and deplorable that Mr. Waggoner succumbed to Mr. Epps’ entreaty, but there is no evidence whatsoever that any officer or employee of GTL was aware of any impropriety, let alone that GTL was the initiator of any wrongdoing.”

GTL added: "Mr. Epps obviously was a bad apple, and Mr. Waggoner unfortunately was not strong enough to resist Mr. Epps’ threats. None of this, however, has anything to do with the legitimacy of GTL’s contract with the Mississippi department, the rates charged by GTL, or the character or ethics of any GTL officer or employee."

Waggoner, who has already forfeited $200,000 to authorities, will be sentenced on Nov. 5.

He faces 10 years in prison and up to $250,000 in fines.