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Inspector General pries into conflicts in prison contracts


Smith State Prison in Glennville, GA


Consultant Michael Lovelady leased office space to the contractor whose work he monitored installing new locks at a south Georgia prison. Lovelady named his son’s business as one of three acceptable suppliers for the $638,000 job. Lovelady’s son also owned Lovelady may even have owned half of the contractor’s company.

But Georgia prison officials never noticed anything amiss, Inspector General Deron R. Hicks reported Monday.

In a new investigative report, Hicks called on the Georgia Department of Corrections to tighten up procurement policies, including the need for an explicit ban on collusion in the bidding process and authority to terminate contracts over undisclosed conflicts of interest.

Hicks singled out Larry Latimer, Corrections’ chief of engineering and construction, for failing to detect such conflicts between three seemingly interconnected businesses:

  • Correctional and Security Consulting Inc., owned by Lovelady, a go-to consultant for prison officials looking for help with construction projects;
  • Engineered Systems for Manufacturing Inc., owned at one time by Lovelady and partner Charles T. Cimarik, a business that won more than a dozen jobs installing locking systems at Georgia prisons from 2007 to 2009; and
  • Correctional Electronics Supply Inc., owned by Lovelady’s son Gary, which sold parts to ESM for a number of the prison projects. Gary Lovelady now owns ESM.

Together, the three firms have collected nearly $8 million from Corrections since 2007, investigators said.

Hicks said Latimer should have caught the cozy relationship between the businesses, which shared  offices, staff, a computer server — even credit cards. Another business owned by the elder Lovelady leased office space to ESM for $5,000 a month.

Lovelady, reached by telephone today, declined to comment until he had reviewed the Inspector General’s report. A Corrections spokeswoman said the department would have no comment because the investigation is ongoing.

Competitors told Hicks’ office they didn’t even bother to bid on projects for which Lovelady was the consultant:

OIG Investigators spoke with representatives from two companies that have historically bid on Division 17 and locking control renovation/repair projects for GDC, both of whom stated that their companies would no longer bid on any projects on which CSC – i.e., Michael Lovelady — served as the consultant.

Corrections procurement director Charles Smith, Hicks’ report observed, had noticed that Lovelady’s and Cimarik’s companies seemed to be  “getting most of the business”:

Smith had worked with Ken Stone of GDC Engineering to attract other qualified vendors who were also interested in working with GDC. Smith recalled that initially his efforts seemed productive and other vendors were responding to solicitations. However, he stated that it seemed like GDC Engineering Staff and the institutions always wanted to return to working relationships with Michael Lovelady.

Latimer told investigators he had known Lovelady and Cimarik had been in business together but thought they had separated years before Corrections employed the two companies on the same project.

It’s unclear whether Lovelady and Cimarik worked together at other prisons. Corrections officials told Hicks’ office they could not tell who consulted on contracts for locking systems at four other facilities.

Lovelady told investigators he had owned 50 percent of ESM until the end of 2007, when he transferred his interest to his son. Investigators said they could find no evidence that Corrections was notified of that transaction no evidence of that transaction until 2010, which is when Gary Lovelady said he learned that he owned half of the firm, and no written evidence that Corrections was ever informed of either man’s half-ownership of the business.

After learning of these connections and ownership interests, one GDC official stated that he felt as though he had been deceived. The official added that if he had learned of these connections prior to OIG’s investigation, it would have affected his decisions to use the companies.

As a consultant, the elder Lovelady was tasked with preparing bid specifications for the project and providing oversight until it was completed.

Consultants are instructed not to communicate with prospective bidders, prison officials said. Lovelady maintained he and Cimarik operated as separate entities and that Cimarik never asked to see specifications concerning projects on which he might bid, the inspector general reported.





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3 Responses to “Inspector General pries into conflicts in prison contracts”

  1. Michael Lovelady says:

    Mr. Walls,

    The opening paragraph of your article is misleading and more attributable to sensational journalism than factual reporting. The allegation of possible ownership of “the contractor’s company” is completely speculative and not supported by facts or existing documentation. Official documentation was provided to the OIG showing transfer of stock in 2007. This documentation was maintained as part of the corporate records of ESM.

    L3C Property Management LLC, manages 58 rental units one of which is a multiple suite office building which ESM along with 6 other unrelated entities leased space during the time period. All tenants had access to the adminstrative infrastructure of the facility. ESM was a tenant prior to the the transfer of stock and remains a tenant currently.

    Article 10 and Article 11 of the consulting contracts have provision for the termination of services either with or without cause. After ESM was purchased by Gary Lovelady, GDOC officials were notified of the transaction by both ESM and CSC, Inc. GDOC officials were notified subsequent to the acquisition that CSC, Inc. would have no issue in a decision by the department to excercise termination of the contract for Smith State Prison or any other open contract under Article 10 should they feel it to be in the best interest of the state.

    In complete cooperation with the investigation, all financial transactions of all entities in which I have interest including personal transactions were voluntarily made available and reviewed by both officials of the OIG and GBI. No improprieties were noted by either organization as a result of this review.

  2. Concerned Citizen says:

    A quick search of Mr. Lovelady at the SOS Corporations Search by Officer shows that he is not a principle of ESM. However, it did show him in 2008 as President of CESI, Corrections Electronic Supply residing at the same address as ESM. He is operating as CSC, Correctional Systems Consulting in his capacity as the commissioning agent for DOC, DHR and DJJ projects. CSC is also listed in the SOS database. All have the same address or agent address. The agent address we believe is the lawyer’s office for incorporations.

    A quick look at the documents shows that CESI was incorporated by the President of ESM Charles T Cimarik. 2007/2008 renewals show Michael Lovelady as the President/CEO. Additionally, they appear in a number of googled web publications and civic web sites as President and Vice-President of ESM during this time period.

    While we cannot obtain these documents, you will likely find that Mr. Lovelady is a stockholder in ESM and Mr. Cimarik is a stockholder in CESI and maybe CSC. You will likely find income from all of these on each of their tax returns both corporate and personal. You will likely find they share the same building, staff and general compensation.

    Looks real fishy to me. I say thet the IG needs to turn over a few more rocks and follow the worm trail.

  3. Another concerned citizen says:

    I agree 100% did a little deeper and there is no telling what will get found out. I know first hand how Michael Lovelady likes to take what is not his, anyway he can. He want’s everything for himself and It makes me sick to know my tax dollars went to pay him 8 million.