FORT WAYNE – 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.
House Speaker Patrick Bauer, D-South Bend, said he doesn’t believe anything illegal transpired, but the case, combined with others, fosters a culture of secrecy in Indiana government. Bauer believes the Marion call center should lead to full disclosure on state leases.
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 said he is a supporter of government transparency and maintains that whether or not his colleagues at the Statehouse knew about his ownership interest in the call center, he had disclosed it.
As far as I am concerned, it is public knowledge, he said.
Turner said he does not recall specific conversations with his son about whether to invest in the property when Marion Community Schools put it up for sale.
I’m sure we talked about it, he said. He often shares with me ideas he has on investments.
But his son does his own analyses on investment opportunities, Turner said.
Turner has another tie to the Indiana Family and Social Services Administration: His daughter, Jessaca Turner Stults, was named the agency’s general counsel in 2007 and is legislative director.
Turner said his daughter’s role has not meant FSSA had a lawmaker in its pocket, citing his vote against Daniels’ health insurance plan funded by the cigarette tax.
FSSA advances issues before the General Assembly, and some I agreed with, and some I didn’t, he said. She has her job to do, and I have mine to do.
Fighting for jobs
On more than a half-dozen occasions over the past three years, Turner defended the call center’s importance to his hometown newspaper, the Marion Chronicle-Tribune. He said his support was motivated by the 400 jobs the call center represents.
I will continue to defend those jobs in Marion, he said. I can’t apologize for defending those jobs.
While the school district considered Jones Middle School surplus and/or worthless, the property has been anything but worthless to the younger Turner’s company.
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.
Early this month, in an unrelated case, Bauer sent a request to U.S. Department of Health and Human Services Secretary Kathleen Sebelius. Bauer is asking for a review of real estate leases brokered by John M. Bales that put a private contractor involved in Indiana’s welfare-to-work program into two buildings owned by Bales.
In another matter, Bauer also filed a public information request with the Indiana Economic Development Corp., asking for information on job-creation numbers, after an Indianapolis TV station was able to obtain only aggregate data from the agency.
Bauer said he does not believe anything illegal occurred in Turner’s case, but the same let-the-people-judge theory applies and he personally finds the cozy relationship troublesome.
What’s to say it doesn’t cloud your judgment, he said. It creates an impression of impropriety.
The speaker said he was surprised when he learned about the ownership of the call center, as was state Rep. Gail Riecken, D-Evansville.
Riecken presented a bill during the 2009 special session that would have called for an audit of the privatized welfare system, including the physical facilities being used by contractors.
That bill was doomed by the summer session’s express purpose – passing a budget.
By the fall of 2009, the Daniels administration had acknowledged the IBM plan’s failure and canceled the contract.
The state retained many private contractors, including Affiliated Computer Services, and kept the Marion center open. FSSA continues to roll out a hybrid welfare system that combines elements of the IBM-led automated system with more caseworker contact.
Early this year, Riecken offered another bill that would create a 10-member committee to oversee the changes to the welfare system and would have the authority to cancel private contracts under certain circumstances.
FSSA and Republicans argued the bill would surely result in the loss of jobs at the Marion center. Riecken said no one was beating that drum louder than Turner, who told the Marion Chronicle-Tribune he was very offended by the bill.
He was my main opponent, Riecken said
Riecken said the facts of the bill were misconstrued by Turner and others, which contributed to its failure. While she heard rumors about the ownership of the call center, they were never verified, she said.
If it had been verified, I think one of us would’ve called him out on it, Riecken said.
That bill is so much water under the bridge now, but Riecken said this case is leading to other bills being planned that will speak to the broader issue of government transparency.
The issue is bigger than that, she said. The issue is about government and how it works.