Wyatt creditor takes aim seeking payment for services performed nearly 20 years ago

CENTRAL FALLS — After surviving attempts by lawmakers in the last legislative session to essentially shut it down by 2030, the Donald W. Wyatt Detention Facility faces a new legal challenge in its effort to dig itself out of hundreds of millions of dollars in debt.

AVCORR Management LLC, a Warwick-based management firm, petitioned Providence County Superior Court on June 2 for the appointment of a special master at the 770-bed privatized prison in Rhode Island’s smallest city. 

In the complaint, discussed by the Central Falls Detention Facility Corporation Board of Directors (CFDFC) in closed session Monday night, the firm seeks $1.2 million for administrative services provided between 2006 and 2009 plus another $200,000 in interest on the unpaid bill as of May 26. The firm intends to keep charging interest accruing at a rate of 6%, or $197.26 a day, according to the complaint. 

AVCORR and Wyatt’s governing board have been in litigation since 2012. A Rhode Island U.S. District Court magistrate had certified a payment agreement between AVCORR and Wyatt on July 1, 2020. 

“Despite its continuing ability, as strengthened by the recent substantial increase in revenue, the CFDFC has failed and, in fact, refused to make a single payment in satisfaction of the Stipulated Judgment,” the petition read. 

But the firm has to get behind a much larger creditor going after Wyatt’s governing board.

UMB Bank filed a suit in April 2019 asking for an amount “no less than $130 million” to pay bondholders on a $106 million bond sale for renovations and improvements to the facility in 2005. The suit was filed a month after Wyatt’s governing board canceled its contract with ICE, resulting in a loss of revenue. But shortly after the suit was filed, a U.S. District Court Rhode Island judge ordered the detainees’ return so that the prison continued to pay hundreds of millions of dollars in fiduciary obligations. 

In its response to AVCORR’s latest complaint, attorneys for Wyatt’s governing board referred to a December 2022 judgment against AVCORR after the company attempted to intervene in the prison’s ongoing litigation with bondholders represented by UMB Bank.

“Here, the entire premise of AVCORR’s request for this extraordinarily [sic] relief is based on just a few things,” Wyatt attorneys wrote in their response. They said the company was upset with being prioritized behind UMB Bank, who Wyatt now owes $160 million. 

Wyatt attorneys seconded U.S. District Court Magistrate Judge Patricia Sullivan’s ruling that the AVCORR move was merely an “attempt to sow chaos” and pressure UMB Bank and CFDFC to resolve their issues.

In an email Wednesday, Bruce Gladstone, the attorney representing AVCORR in the litigation, declined to comment.

The corporation’s chair said before going into Monday’s executive session that he expects to make a public statement on both cases in the near future.

A turbulent history

According to court filings, the 770-bed facility had 705 inmates in May, the most housed there since at least 2016. A report presented at the board meeting Monday by Acting Warden Michael Nessinger showed a marginal decrease to 698 for June.

Established as the first privately-operated publicly-owned detention facility by statute in 1991 — and in operation since 1993 — Wyatt was conceived as a revenue generator for Central Falls. At the time, it was presented as a way out of a severe municipal financial crisis.

“I think the Wyatt Detention Center has been an albatross around everybody’s neck ever since it was first opened,” said Steven Brown, executive director of the Rhode Island Chapter of the American Civil Liberties Union. “It has not brought the financial bonanza Central Falls was looking for and has put the city in a very difficult position.”

According to a 2012 report on the Wyatt by the General Assembly, from 1994 to 2009 — when payments stopped — the city received more than $5 million in impact fees from the Wyatt. 

In 2009, the detention facility went into receivership, which halted payments to the city. The Central Falls Detention Facility Corporation paid the city a voluntary $133,000 impact fee in 2017 and another $50,000 in donations in 2021. 

A spokeswoman for the City of Central Falls declined to comment on the case due to pending litigation.