Bad Boys, Bad Boys

Danny Stewart was no choirboy. "He had so many problems," says his mother, Nancy Stewart. The eighteen-year-old Littleton boy was addicted to drugs and had a long list of petty crimes. Danny was polite and quiet. But he was a crook--and not very good at it.

"It seems like he got caught at everything he ever did wrong," his mother says. Even minor misdeeds: She remembers a time when he was cold and swiped a hat from a friend. The friend turned him in and he got in trouble for that, too.

After a burglary and a parole violation, Danny was sent to a state juvenile facility. From there he went to Adventures in Change, a group home in Sheridan run by Rebound, a for-profit, Denver-based company that operates a sizable share of the state's privatized juvenile-corrections facilities.

After four months of treating Stewart with counseling and group therapy at the home in 1995, Rebound officials asked their new psychologist, John Dicke, to examine the boy. Dicke says Rebound officials made it clear to him that they wanted a favorable evaluation because Danny Stewart was out of state funding.

Stewart's court sentence to treatment by Rebound had run out, and the company would not be receiving more money from the state to treat him--whether or not the treatment had so far been successful. Any further treatment would have to be picked up by Rebound. Dicke says he was told that a positive report on Stewart's treatment would reflect well on the company.

That put Dicke in a bind. "I talked to the kid," he says, "and it was clear he had received no treatment. None."

Dicke says he tried to figure out some way to get Rebound to persuade the state to keep Stewart at Adventures in Change on the grounds that he was still a danger to himself and to society. He says he was overruled by Rebound officials.

Rebound did not tell the state or Stewart's family about his assessment, Dicke says. Nancy Stewart remembers sitting in a meeting about her son when his time at the facility was about to end. Her son talked, and his parole officer said a few hopeful things, but the representative from Rebound, she says, uttered not a word.

She wasn't expecting much. Danny had been through a stint at Charter Hospital, where the family's insurance paid the bills, and nothing had happened there, either.

"All that so-called treatment was a total farce," says his mother, who, incidentally, thinks that if the treatment had been based on the Bible, her son might have come out better.

A few weeks after his release from the Rebound facility, Danny Stewart was caught shoplifting at Southwest Plaza. After Stewart tried to bolt, a security officer cuffed his hands and legs as the two of them sat in the security office in the back of the mall's Sears store.

While the guard was preparing to call the young man's mother, Stewart reached down with his cuffed hands to a handgun he had stolen from a friend. Stewart contorted his body so that his forehead faced the barrel of the gun. He pulled the trigger.

Danny Stewart spent a week in a coma before dying.
Many of the details of Stewart's short life have started to slip away from his mother these days--she says it's her way of dealing with the pain. "Now the main thing I remember," she says, "is his sweet smile."

Dicke and other former Rebound employees remember more than that. They say there are dozens of instances in which the company has mishandled the cases of juvenile delinquents such as Danny Stewart. A host of current and former Rebound workers say the company often puts profits ahead of the welfare of its clients and staff. They say corners are cut, staff turnover is high, and problems are hidden from the probing eyes of auditors and outside authorities. The ex-workers say Rebound preaches accountability but doesn't practice it.

Rebound officials contend that Stewart's was an "individual case" and can't be blamed on the company, but they decline to comment specifically, citing confidentiality rules. Rebound's top brass, who have had to fend off complaints from officials in several states, have aggressively defended their overall performance with the help of high-powered lobbyists and have attacked their critics as either disgruntled, biased or jealous. They insist that they do a better job than the state for juveniles and at a lower cost to taxpayers. "We've had some problems, but I also think we do some things exceedingly well," says Jane O'Shaughnessy, Rebound's chief executive officer.

Critics say the only thing the company does well is extract taxpayer money for itself--about $15 million annually in contracts with Colorado and other states.  

Loren Warboys, the director of the Youth Law Center based in San Francisco, says he has been monitoring Rebound for years, but because it is a private company, it's not held as accountable as publicly run institutions are. "There is a growing concern because of the states' reliance on private firms, because they are almost entirely unregulated," he says. "If you rely totally on the professionalism and goodwill of the operator, you're going to end up with people who are neither professional nor have goodwill."

And things can get out of hand. In 1995 the federal Occupational Safety and Health Administration threatened to close down Rebound's biggest facility, the High Plains Youth Center in Brush, if something wasn't done to better protect the employees. That agency found 110 staff injuries in 1995, including a woman stabbed by two inmates eleven times.

"When I saw that, I hit the roof," says Jerry Adamek, director of Colorado's Division of Youth Corrections, the agency that supplies about a third of the 180 boys at High Plains, which houses hardened juvenile offenders from throughout the country.

Adamek threatened to yank the Colorado youths out of the program, which he says would have effectively shut down the operation because some states use Colorado's continual auditing of Rebound's performance as proof that their own juveniles are being handled well.

From what he can tell, says Adamek, the problems at Rebound facilities have been solved and the company is now complying with its contract. But auditors continue to find problems. For instance, the last audit available from the Division of Youth Corrections for High Plains, dated September 1996, shows that Positive Peer Culture, a concept Rebound adapted from a consultant, "seems to make up the bulk of programming, but it has been even more difficult than the previous audit to determine what groups and activities are, indeed, taking place due to the lack of documentation found."

The butcher-block furniture at the Adventures in Change home in Sheridan is the kind usually seen only at garage sales, but it can withstand the heavy use it gets from the dozen or so boys who live there at any given time.

Herb Goldsmith, the director of program research for Rebound, lays down some of the company's internal documents on a pockmarked table. He says they represent "the Rebound way."

Rebound is the largest provider of services to the state Division of Youth Corrections, which in recent years has begun farming out the housing and treatment of juvenile delinquents to private companies. DYC pays more than $6.8 million to Rebound in four facilities around the state. Rebound's largest competitor in the state is Youth Track, founded by two former Rebound employees. That company gets about $4 million each year from the state, but for a set of thirteen different, smaller programs. Other contractors provide services for smaller amounts. More than half of the 2,000 juveniles incarcerated or otherwise under state jurisdiction are handled by private companies. About 300 of those are in one Rebound program or another.

Adventures in Change is a small place, but it's important, Goldsmith says, because it is supposed to treat boys before they go "deeper into the system."

But Rebound came within days of having to shut the home down in June 1996. DYC officials cited a dirty kitchen, fire danger and a lack of any education or treatment program. Sheridan police have had to respond to a series of violent incidents, including one last year in which an inmate hit a neighbor with a baseball bat.

AIC was threatened with the loss of state contracts with Youth Corrections (for more than $50,000), the state Department of Human Services (total figures unavailable, but about $120 per boy per day) and the Colorado Department of Education (for more than $30,700).

Rebound insists that changes have been made. "We have come, in the last year, so far," Goldsmith says.

The company spent some money to fix up the place. And the new program director, Eric Meyers, says he hopes to hold some fundraisers with a famous sports figure or perhaps at a bingo hall. The for-profit company has spun off AIC into a not-for-profit venture, allowing it to do the kind of fundraising Meyers talks about.

Goldsmith denies that Rebound has too high an emphasis on making a profit. Pointing to another of the Rebound internal documents, one created during a management retreat, he says, "We have adopted accountability as one of our core values."

Goldsmith acknowledges that "accountability" may sound like just another of the faddish buzzwords that are so prevalent in the juvenile-justice system. "It's been 100 years of fads wrapped in paperwork," Goldsmith says of the history of juvenile justice in the United States. The field is full of acronyms and jargon. But he contends the commitment to accountability is real.  

If that's true, it's good news for John Sullivan.
Several years ago, Sullivan came out to Colorado to work with Rebound staff, training them in Positive Peer Culture, which is based on the idea that teens should hold each other accountable for their actions. "We got things working well at the start," Sullivan says from his Richmond, Virginia, office from which he has trained dozens of organizations in PPC. He says the boys he saw were starting to demand real accountability from each other. But Sullivan was not satisfied.

"If that's all you settle for, it's going to come back and bite you," Sullivan says. "After a while it was time for the program to grow or die."

He says he tried to convince Rebound management that it, too, should embrace the notion of accountability. When he felt resistance, he began pushing a little harder until he says it was clear his efforts were going nowhere.

"They disagreed with me, and that's their right, because it's their business and they can do what they want," Sullivan says.

One of the current AIC kids, provided by Rebound for an interview, displays encyclopedic knowledge of phrases such as "thinking issues" and "anger management teachings." Asked whether he is just learning the words or if he is actually changing the way he thinks, he says, "I have a big goal. I want to go home." He says to do that, he needs to work on his "intervals," which will in turn help him go through enough "levels" that he can convince the AIC staff to let him leave.

The kids aren't the only ones who learn jargon. Rebound has severed its relationship with Sullivan, but that doesn't mean the company has rejected buzzwords. The AIC program director, Eric Meyers, says his staff is required to memorize strings of words known by the acronyms "BAMMS, ICADO and BHAG." BAMMS stands for five "limitations of anti-social youth": "Blaming others; Assuming the worst; Mislabeling; Minimizing; and Self-centered." ICADO stands for Rebound's "core values," he says, quoting from its documents: "Integrity, honesty and high ethical standards; Continually striving for excellence; Accountability in everything we do; Decisions based on the best interests of youth; Open communication." And BHAG is the company's "Big Hairy Audacious Goal: "Be #1 in Creating Futures for Youth, 1 X 1."

Can a company learn accountability? "It can work. I've seen it happen," consultant Sullivan insists, citing several public and private programs around the country, such as the Woodland Hills facility in Duluth, Minnesota. "That's a private program, and the difference is that the management there is totally committed to accountability."

And Sullivan warns that the people who run juvenile facilities had better learn, because the kids are "extremely sophisticated" and will simply go through the motions if there's a double standard and the staff and management aren't held accountable.

One former Rebound staff member says PPC actually creates a more dangerous situation because gang leaders in a program are likely to use the words of PPC to manipulate inexperienced staff members. "They always have so many new staff coming through that they get totally bamboozled by the kids," the ex-staffer says.

A current Rebound employee describes the company as one big dysfunctional family. Of course, Rebound starts out with a big disadvantage: a whole host of dysfunctional kids.

Some of its critics say the behavior of Rebound's founder and chairman is also pretty erratic. Rebound was founded in Colorado in 1988 by Marshall Sterman, a Harvard-trained MBA. He has been on the boards of a long list of financial and software firms and has founded several different companies, including the Mayflower Group and M.S. Sterman and Associates investment firms.

Sterman was one of a group of businessmen indicted in 1980 in a complicated tax swindle of 1,200 people, including Elvis Presley, Allen Funt and Margaux Hemingway. The group was accused of selling the rights to some coal in Wyoming as a tax shelter. The problem, prosecutors said, was that they didn't own the coal and the deal was a fraud.

Four people eventually pled guilty in the scam and served time in a federal prison, but charges against Sterman were dropped in 1982.

In 1988 Sterman learned of a facility for sale in Colorado, a juvenile jail that had been partially built with the tax advantages offered by municipal industrial bonds issued by the town of Brush, about ninety miles northeast of Denver. Sterman refinanced the bonds and completed the construction.

The facility was to be a privately run jail, but the original operator ran into financial trouble, and Sterman decided to get into the juvenile-justice business, a fairly new concept at the time. He persuaded Xerox Financial Services Life Insurance Company to lend him the money to buy the 186-bed facility known as High Plains. It was designed from the start to be a place for the worst juvenile offenders in the nation. Many states have sent boys there since it opened, but Colorado leads the way with about a third of the placements; the state pays Rebound $2.7 million per year to house its juveniles there.  

High Plains was the first of what was to become a string of Rebound facilities in Colorado. The company also runs a 120-bed juvenile facility in Ramah, about forty miles east of Colorado Springs, for which it gets more than $2 million annually from the state Division of Youth Corrections. Camp Falcon, a boot camp in Pueblo for eighty boys, also bills the DYC about $2 million per year.

Rebound hammers home the point that it saves taxpayers money. DYC officials say that it's true that Rebound and the other private contractors provide services for an average of about $10 per day less than the state--$139 compared with $148. But state budget analyst John Gomez says what those figures don't show is that the private companies can refuse to accept youths, such as those with severe mental disabilities. Those harder-to-treat cases drive up the state's average cost. "The bottom line is the state has no choice," Gomez says. "We have to take those kids."

High Plains has been a successful business venture for Sterman. He has made bond payments on time, and records obtained by Westword show that High Plains has paid substantial management fees to Sterman or his companies through the years, although the totals are unclear.

Not all of his ventures have been so successful. Sterman is fighting off attempts by Xerox and another lender to get back much of the money he owes on a long list of projects from around the country, including a hotel in Aurora.

Sterman has been battling Xerox since 1992, and court records indicate that sometimes the fight has taken strange twists. He said in one filing, "I have been told that they [the Xerox partners he owed money to] believe that I represent the Devil and that, in fact when they saw my fax number, 266-6666, this signalled my death knell."

A federal court in Massachusetts that is keeping tabs on Sterman's income as part of a suit filed by Xerox ordered him to live on $10,000 per month. But after evidence was presented that showed he was counting such things as his wife's Mercedes payments as a business expense, the court found Sterman in contempt and cut his allowance to $3,000 per month.

In that ruling, the judge wrote that Sterman "has orchestrated a mind-boggling array of transactions among several corporations under his control in an effort to keep his various business undertakings afloat and to avoid his creditors (or at least those creditors he does not like). Rarely has a more tangled web been woven."

Sterman couldn't be reached for comment, but O'Shaughnessy says that Sterman is not involved in the day-to-day operations of Rebound and that his financial dealings in other arenas have nothing to do with the company.

Shenanigans are a regular occurrence elsewhere in the Rebound family. In June a group of AIC boys went on a rafting trip at Rancho Del Rio outfitters, near Kremmling. Left unsupervised for a few moments, the boys stole $50 and some cigarettes and scared the wits out of a fourteen-year-old local girl who had been minding a small convenience store at the time.

Rebound officials made the boys return the money and the cigarettes. The Eagle County Sheriff's office says it has no record of the incident. Rebound officials call it "a learning experience."

Former employee Ellen Rincon-Pruitt remembers an incident in 1995 in which some of the boys at AIC claimed a staff member hit them. She took the complaints to Rebound vice president Joe Newman and says he fired the guy but refused to report it to social service agencies because the employee threatened to contest the firing, a battle that could have racked up legal bills for Rebound.

"I categorically deny that," says Newman, "and in fact I get criticized because sometimes I'm too aggressive in reporting these incidents." Some ex-employees claim that Newman went to state officials with false allegations about employees who badmouthed Rebound. Newman denies that, too.

At other times, some ex-workers say, the company has tried mightily to put a good face on situations.

Rob Pearson recalls that when he was a teacher at AIC, Rebound CEO Jane O'Shaughnessy suddenly showed up in July, 1996, before a scheduled state audit.  

"They were wanting to straighten out all of the records," Pearson says. "She spent two days with me, writing up records so that they met all the specs."

He says he told O'Shaughnessy that he was planning to tell the auditors everything he saw, including the lack of a special-education teacher and a shortage of facilities and equipment. The day before the audit, he was fired.

Pearson says he later learned from friends that O'Shaughnessy used him as a scapegoat. "She blamed me for everything that was wrong with the place," Pearson says.

O'Shaughnessy says she won't discuss an "individual personnel decision," but she does say that the people she has fired have been let go because "they didn't meet the high standards demanded by Rebound."

As to the charge that she fixed the books before an audit, she says she did nothing wrong and then adds: "Don't you clean up your house before you have company over?"

Rebound officials describe High Plains as their "signature" facility. Surrounded by a high, curved fence, the place looks much like the other light-industrial buildings on the frontage road of Interstate 76.

Brush is a small farming town where the sweet smell of cut hay is prominent if the wind is from the east. Brush residents, say police chief Joseph Cortez, don't mind having the jail nearby even though there have been occasional escapes. He says it is not the great local job-producer it was promised to be. Some locals went to work there, he says, but many quit in frustration. "They pretty much drained the Brush labor pool," Cortez says. "Now I see a lot of out-of-state plates in the parking lot."

About 60 of the 180 boys are from Colorado, whose officials pay $141.72 per day per boy as mandated by the state. The rest are placements from twenty other states, along with a large contingent from Washington, D.C. Those out-of-state placements are billed $185 per day, a price set by Rebound.

One former High Plains employee, who asks not to be named, says the mixture of hardcore boys--D.C. and Detroit are currently tops in placements--with the boys from Colorado is dangerous because it creates an advanced criminal training school for the local boys. "By the time they leave High Plains, they're killers," says the recently departed employee.

Other states send just a few boys, usually after they have committed some crime against other inmates in that state. Because there are so many states that send boys, the facility is subject to audits from all of them, although one current employee says a few states just think of High Plains as a "dumping ground" and never make checks.

Ex-employee Amy Gerstner says she liked it when auditors showed up during her shift, because Rebound would rush other workers over to help do the work. "Usually we were left alone to do all this stuff with the clients," says Gerstner, now an employee of the Morgan County sheriff, who is also an ex-Rebound worker. During some audits, she says, teachers, counselors and other workers--some brought in from other Rebound programs--would pour in. "You had people coming out of your ears," she says. "It was great for that day."

But not all auditors have been impressed. One audit that the company is still recovering from was done at the end of 1995 at the request of Illinois officials, who were sending about twenty boys to High Plains.

"I didn't go looking for trouble," says Ron Davidson, director of the University of Illinois at Chicago Mental Health Policy Program, who conducted the review.

Davidson, who has conducted about sixty such audits of public and private facilities, says he understands that High Plains has a tough job. The boys there have either committed serious felonies or have attacked inmates or guards in other facilities.

And he has no beef with a private company making money in the juvenile-justice arena. "I've seen good and bad programs in the public and private sectors," Davidson says.

He didn't like what he saw at High Plains. His scathing report detailed, among other things, the continual rape of a boy by another inmate. Davidson interviewed the rapist and reported that the boy said High Plains was more violent and out of control than any of his previous juvenile jails, including one at Joliet, which Davidson says is the worst Illinois has to offer.

According to the report, Rebound's own logbooks at High Plains indicated that the Illinois boy had repeatedly beaten the other boy in public and said in front of staff that he was going to "beat the shit out of him and use him as his sex slave." The victim, locked in a dorm room with the rapist overnight, was pleading for help when a staff member told him to "be a man," according to the report.  

Davidson also reported widespread gang influence, drug use, a staggeringly high turnover rate prompted in part by constant attacks on employees, and sexual activity between female staff members and inmates.

And Davidson's report blasted Rebound's officials in Denver. "The information provided by all of these independent sources," Davidson wrote, "points to a consistent and disturbing pattern of violence, sexual abuse, clinical malpractice and administrative incompetence at every level of the program. Moreover, in assessing broader responsibility for these conditions, we were especially struck by the firewalls of corporate 'deniability' that had been erected between Denver and Brush."

Davidson noted that his team "reviewed a number of monthly management reports from Brush to Denver that presented a highly 'sanitized' account of the problems at High Plains," and he concluded, "Whether corporate officials knew about the conditions endured by residents and staff alike at High Plains, then, it is fair to say that they should have known."

Four employees of the Illinois Department of Children and Family Services accompanied Davidson and agreed with the report.

Immediately after Davidson's report was made public, Rebound attacked his motives, saying he was sabotaging High Plains because he wanted to start his own juvenile prison.

"It was a strange and bizarre turn of events," Davidson says. It started with a quote he gave to an Illinois newspaper. "I told that reporter that with the money we would save in air fare [by not sending boys to High Plains] we could start a pretty good program here. They [Rebound officials] figured from that that I was somehow trying to start my own program. It was ridiculous."

And Rebound started bringing in heavy hitters to salvage its reputation. At a meeting last summer to discuss whether or not Illinois should pull its boys from High Plains, Rebound officials showed up with Fred Edgar, the brother of Illinois governor Jim Edgar. Fred Edgar had been a fraternity brother of Richard Young, an investment banker with ties to Rebound.

According to news accounts in Chicago papers, Fred Edgar didn't say anything at the meeting, but the Illinois juvenile-justice officials said the message was clear that they should not terminate the contract, because their boss--the governor--wouldn't like it.

Davidson says he has great respect for the governor and feels bad that his brother, who hadn't read the report, was called on for such a task. "If Jim [Edgar] had known somebody was trying to influence policy in that way, brother or no, he would have kicked his butt," Davidson says.

O'Shaughnessy says Edgar's presence was like hiring a lobbyist and was completely appropriate. And the company's not shy about pouring money into its local lobbying efforts, either. In Colorado, Rebound pays the powerful lobbying firm of Bledsoe, DeFellippo and Rees $2,500 per month to protect the nearly $7 million it receives from the state.

"We're not unlike other groups that have business before the state legislature," O'Shaughnessy says.

The lobbying in Colorado has been so effective, according to observers at the Capitol, that a few lawmakers have made calls to bureaucrats they thought were leaning too hard on the company.

Representative Steve Tool, a Republican from Fort Collins, complains that legislators don't get enough information about whether the treatment juveniles get from Rebound and other private companies does any good. (Rebound's Herb Goldsmith says things like recidivism rates are "impossible to quantify with any degree of certainty.")

But Rebound's lobbying doesn't always pay off. Illinois hasn't canceled its contract with the company, but since the Davidson report, it hasn't sent any new kids to High Plains.

And O'Shaughnessy acknowledges that the company has had "troubles," both here and in other states. In Maryland, Rebound ran what was supposed to be the most secure facility in the state. After more than eighty boys escaped, the state fired the company in 1992. Rebound spokesman Bill Botkin blamed the state government for not providing a fence around the facility.

Earlier this year the State of Florida fired Rebound from a $2.3 million contract after a series of complaints similar to those in the Davidson report on High Plains, including concerns about staff injuries and a lack of safety for the inmates. Florida canceled the contract after a riot among the juveniles had to be put down by local police.

O'Shaughnessy says she took the rap for the debacle in Florida. "I sent out a company-wide e-mail taking complete responsibility for what happened in Florida," she says. And in a defensive jab at her critics, she adds, "I bet none of the people you are talking to told you that, did they?"  

Meanwhile, this October, Rebound will open another boot camp for juveniles in Virginia. Several stories in local papers there have mentioned the "signature" facility in Brush but have not mentioned the troubles there or in Florida or Maryland.

Botkin calls Davidson's report on the Brush facility an "unfair exaggeration." Turnover, he says, "is something many companies face in a full-employment economy." (Botkin has left the company since being interviewed for this story.) O'Shaughnessy adds that "we have many employees who have been working for us for many, many years."

Rebound's position on the rest of the Davidson report now is that it is old news and that the problems that did exist have been fixed. The sex offenders are now in a separate building. The company says the report's concerns about drugs, gangs and the like have been dealt with. They cite the company's "core values," one of which is safety.

Rebound vice president Joe Newman says High Plains has turned its operation around. "And I'm relying on facts," he says. "Not rumors, not complaints from some disgruntled employee. Facts."

He points to a recent accreditation of High Plains by the American Correctional Association, whose board once included company CEO O'Shaughnessy. And Newman cites a letter from another Illinois college professor hired to review High Plains. In that letter, Sonny Goldenstein from Governors State University refers to improvements at the facility. Newman says the question of safety is answered in the last line of the letter. "On a personal note," Goldenstein writes, "I would not hesitate to have my grandson as a student in this program." (Goldenstein did not return calls from Westword.)

Newman says he doesn't understand why people continually question what the company is doing, but he thinks some critics are jealous. Like O'Shaughnessy, he blames the people who have been fired "who couldn't meet our standards."

"There are people with agendas," Newman says. "I think there's a lot of people disappointed that we are doing well." He refuses to elaborate on who those people are.

"There's a certain amount of paranoia on my part," he adds.

At facilities like Rebound's, there's also real fear.
In early 1995 Rob Pearson was working as the only certified teacher at Rebound's boot camp (the camp was required to have three) when he ran across a kid named Nick Reed.

"He had reptilian eyes," Pearson recalls. Of all the boys he taught, Reed was the only one who scared him, and he couldn't communicate with the boy at all. Pearson says that he told his bosses that Reed was too dangerous to be allowed to attend school and that he talked to Rebound officials about finding another program for the boy. His warnings never even made it out of the camp. Rebound graduated Reed along with all the other "recruits" in that class. Pearson says Rebound could have done much more to let parole officers and others know that Reed was potentially dangerous to himself and others. But Pearson believes that Rebound did nothing because it could have reflected badly on the company. (Rebound won't comment on the case.)

Reed was returned to his mother and enrolled at Gateway High School. Two months after his release the fifteen-year-old shot a cabdriver in the back of the head. Nick Reed is now the second-youngest person serving time in Colorado's adult prison system.

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