Eric M. Huebscher is the President and CEO of Huebscher & Co.
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26 2016

A Failure of Oversight
State, county and federal supervision didn't convey worry about Mesabi Academy

Article by: Tom Scheck and Curtis Gilbert
As Featured on |

A flawed, confused system prevents judges, social services officials and guardians from discovering critical information about the condition of the residential treatment facilities regulated by the Department of Corrections. Mesabi Academy, scheduled to close next month, is a case study. Since opening in 1998, the juvenile correctional facility had been seen as a reliable jobs provider, receiving subsidies from government and tens of millions of dollars in loans from its parent. But attempts to sustain the business may have compromised resident and worker safety.

The judges and social services officials who sent some of the state's most challenging kids to Mesabi Academy in Buhl, Minn., were oblivious to problems there partly because Minnesota's system for sharing information among agencies and parents repeatedly proved inadequate and dysfunctional.

At times, the state didn't inform counties about complaints; at others, county investigators didn't report results to state licensers; and some parents and guardians went uninformed about allegations involving their children.

For example:

  • In 2007, a state that placed 19 boys at Mesabi Academy removed them after complaints surfaced in court. There's no record of the state alerting other states, including Minnesota, about its action or its concerns.
  • In 2012, the grandmother of a boy who was sexually abused at Mesabi Academy wasn't told of the incident by St. Louis County until weeks before the perpetrator was to be sentenced.
  • In 2013, a judge prevented a court-appointed ombudsman from continuing to oversee patient care at Mesabi Academy at the request of the facility's parent, KidsPeace.
  • Key officials in Hennepin County relied on the wrong state agency when they wanted updates on complaints, investigations and incidents at Mesabi Academy.
  • The Minnesota Department of Corrections, the licensing agency for Mesabi Academy, does not disseminate information about complaints and incidents at juvenile facilities it licenses. APM Reports made several public records requests before obtaining information showing Mesabi Academy generated far more complaints than any other youth residential facility the department licenses. The lack of transparency contrasts with the policy of the state's other licensing agency for residential treatment, the Department of Human Services.
  • The state corrections department and St. Louis County, the county charged with investigating maltreatment allegations at Mesabi Academy, did not always share investigations and complaints, a breakdown in communication between the lead investigator and the licenser. Moreover, St. Louis County didn't enforce requirements included in its contract with Mesabi Academy.
  • The person retained to audit Mesabi Academy on behalf of the federal government didn't identify company internal investigations of alleged sexual abuse that were eventually flagged by a different agency. Instead, the auditor gave it stellar marks.

After APM Reports published two stories early this month about allegations of maltreatment and how Mesabi Academy responded, several Minnesota counties and a state agency quickly removed boys they had placed there. The facility, which has a capacity for 123 residents, reported 26 as of May 19.

A week later the Department of Corrections announced that no new residents would be accepted, pending an investigation into allegations of maltreatment. Last Thursday, as St. Louis County continued to investigate new allegations of maltreatment, the facility's parent company said it would close the center by June 30.

But an APM Reports investigation over the past six months also found a variety of failures in the state and county oversight of the center.

Much of this confusion stems from the center's dual identity both as a correctional facility and a treatment facility. Additionally, Minnesota is unusual nationwide in having its corrections department license a center with such a mix of residents, APM Reports found.

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Tom Roy testified before a task force studying the prison population in September 2015.Tom Scheck | File for MPR News

The investigation also found that in the center's nearly 20-year history, it has been under financial pressure, conceived of as an economic engine for the Iron Range but for the past few years struggling financially to cope with shifts in the nation's philosophy on dealing with troubled youths.

Tom Roy, the commissioner of the Minnesota Department of Corrections, has declined repeated requests to discuss the oversight of Mesabi Academy. Mesabi Academy has responded to questions via email but cancelled an interview APM Reports had scheduled with its leaders.

Failure to communicate

In 2012, Betty Gooden got a phone call at her home in north Minneapolis. It was from a St. Louis County prosecutor asking her if she wanted to make a statement in court about her grandson.

"She asked me if I wanted to do a victim impact statement. I had no knowledge of what had happened to him," Gooden said. "I assumed that he was hit or something or hurt bad. She told me it was a sexual assault."

That was the first Gooden heard that her grandson was sexually assaulted by an employee at Mesabi Academy. Authorities had learned of the incident several months earlier, and the employee, Mary Luomanen, had been charged with the crime. (1)

Luomanan had carried on a sexual relationship with the boy, and she remained in contact with him after he was transferred to the juvenile correctional facility in Red Wing.

Minnesota Department of Corrections staffers there learned about the assault and started working with the St. Louis County Sheriff's Department and Mesabi Academy officials to investigate. (2)

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Mary LuomanenSt. Louis County Sheriff's Office

Luomanen admitted the crime. But no one told Betty Gooden.

"I'm his legal guardian and I'm also his grandmother. If an assault had occurred on him, I should have been notified as soon as possible," she said.

Under state law, St. Louis County Child Protection Services should have notified Gooden upon receiving an allegation of maltreatment. But the St. Louis County sheriff's office hadn't told the agency about it, also required by law. St. Louis County Sheriff Ross Litman said the sheriff's office assumed the Red Wing Correctional Facility had notified St. Louis County Social Services.

The sexual assault also received little attention in the local press. There was a brief story in the local newspaper noting Luomanen had been sentenced for criminal sexual conduct but it didn't specify where she worked. Luomanen was surprised her case got so little attention.

"It surprised me for a lot of reasons. One, it's a small town. Two, it's somebody mistreating somebody locked up," she said. "I thought maybe people would jump at it. Heck, if I was a reporter, I would have been like, 'This is a good story. What's going on here?'"

Officials with the Department of Corrections and Mesabi Academy declined comment about the case.

It wasn't the only time information didn't flow among government agencies regarding events at Mesabi Academy.

Unhappy, Maryland pulls its kids

In the early 2000s Maryland was one of Mesabi Academy's biggest customers. During 2006 and 2007, the state sent 19 boys there.

In late 2007, a boy complained in a Maryland court about Mesabi Academy. A Maryland Department of Juvenile Services inspector followed up and found conditions unacceptable where Maryland youth were sleeping.

"It was in a basement," the department's chief of staff, Jay Cleary, said. "It was not very well lit and not very well kept. It wasn't very clean. They did not have appropriate bedding. There were basically concrete blocks and that's what the youth were sleeping on." The food was cold and some staff members were rude to residents, Cleary said the inspector found.

Within a few months, Maryland removed all its boys from Mesabi Academy. But there is no record — either in Maryland or with the Minnesota Department of Corrections — that Maryland shared its decision or its concerns with regulators in Minnesota.

Only two months later, Hennepin County sent its first boy there. Over time, Hennepin took Maryland's place as Mesabi Academy's largest customer, sending several hundred boys either in need of protection or who had committed offenses.

But Hennepin County, too, operated without a full understanding of the situation at Mesabi Academy, both because of its own mistakes and because it wasn't being told of problems.

Confusion over state agency roles

When asked in an interview in December how well Hennepin County officials could monitor care at Mesabi Academy, the county's Children's Services program manager, Mary Jo Meuleners, whispered to a colleague, "I don't want to answer that."

Just days before that interview, Hennepin County had sent a notice to Mesabi Academy directing the facility to stop using handcuffs to restrain youth. Internal emails (3) show county officials hadn't realized those procedures were allowed under state Department of Corrections licensing rules.

Hennepin County officials were also under the mistaken impression that the Minnesota Department of Human Services included complaints and investigations about Mesabi Academy in a regular batch of notices it publishes about treatment centers, day care centers, foster care, chemical dependency centers and the state run hospital.

"It seems to show up at least once a week — sometimes more — in my email," said Jennie Miskowiec Timm, Hennepin County's out-of-home placement screening unit supervisor, about the DHS report. "I'm constantly monitoring to see if any of our facilities are on that list, so we keep an eye on that."

Jim Libera, division manager for Hennepin County's juvenile probation department, and Janine Wischnack, corrections unit supervisor for Hennepin County juvenile probation, also said in January that they rely on updates about Mesabi Academy through the Department of Human Servcies.

But information related to Mesabi Academy is never disseminated through the Minnesota Department of Human Services. Instead, it's gathered by the Minnesota Department of Corrections and not made readily available to regulators and the public.

Some of the confusion stems from a state policy adopted in 2004 that aimed to bring residential treatment centers for children under a single set of standards, no matter which department was licensing them.

But Minnesota is rare in that its corrections department is charged with licensing a large residential facility that handles the mix of children Mesabi Academy has housed.

The eight other similar facilities nationwide that APM Reports found — privately run centers with capacities of 90 to 150 kids and handling offenders and social service placements — all are licensed by their states' social services departments. That's partly because Mesabi Academy was designed in 1998 as a correctional facility to bring jobs to the Iron Range by housing an expected national increase in incarcerated youth.

Treatment facilities nationwide serving young offenders and social services youths

Abraxas Academy Pennsylvania Dept. of Human Services Abraxas 104
Acadia Montana Montana Dept. of Health and Human Services Acadia Healthcare 108
Bellefaire JCB Ohio Dept. of Mental Health and Addiction Services Bellefaire JCB 98
The Buckeye Ranch Ohio Dept. of Mental Health and Addiction Services The Buckeye Ranch 106
Desert Hills Residential Treatment Center of NM New Mexico Children, Youth and Families Dept. Acadia Healthcare 120
Mesabi Academy Minnesota Dept. of Corrections KidsPeace 123
New Hope Carolinas South Carolina Dept. of Health and Environmental Control New Hope Treatment 150
Resource Residential Treatment Facility Indiana Dept. of Child Services Acadia Healthcare 113
Western PA Child Care Pennsylvania Dept. of Human Services Mid-Atlantic Youth Services, Corp. 99
Wolverine Secure Treatment Center Michigan Dept. of Health and Human Services Wolverine Human Services 100
Among the facilities that APM Reports identified as similar to Mesabi Academy, none outside Minnesota was licensed by the state corrections department. Each of these centers is privately operated, has a hardware-secure area and accepts a wide range of youths, from juvenile delinquents to private referrals to children in need of protection.

Oversight varies dramatically between the two Minnesota departments. If a complaint is made against a facility licensed by the Department of Human Services, the state investigates. For corrections department facilities, the responsibility falls to county child protective services agencies.

Critics say allowing county officials to investigate generates problems because it creates multiple sets of standards across the state.

"It's concerning to me if the only source of accountability is local entities," said Mark Haase, a juvenile justice consultant. "Everybody knows each other and it may be harder to hold them accountable."

Ann Busche, the recently retired director of Public Health and Human Services for St. Louis County, also thinks counties shouldn't be the main investigators. She said the county drafted legislation to shift maltreatment investigations to the Department of Corrections, but it went nowhere this year.

"If we went into a facility, and we walked in and found egregious things happening, we don't have any teeth," Busche said.

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Ann BuscheDerek Montgomery for APM Reports

Corrections department doesn't always inform counties

The Department of Corrections and the Department of Human Services have another glaring difference.

When the Department of Human Services investigates alleged maltreatment at facilities it licenses, the results are published on a web site. When an investigation is conducted into allegations at facilities licensed by the Department of Corrections, they are not.

The Department of Corrections also doesn't have an email list to notify county regulators and the public about maltreatment reports. It keeps an internal log of incidents and complaints, but that information isn't disseminated unless requested.

Deputy Corrections Commissioner Ron Solheid said the department's computer systems aren't set up to disseminate information on the facilities it oversees. "It was never designed as some type of database to share information with others. It's primarily for internal use," he said.

A spokeswoman for the Department of Corrections said there were only four requests for the information since 2010, each from news media.

The information provided to APM Reports listed only a few sentences on each of more than 2,000 incidents and complaints the department logged concerning its 64 youth facilities between 2009 and March 2016.

The information showed the Department of Corrections determined that in only four of those cases, a facility had violated a rule — one tenth of 1 percent of the items.

Among the complaints — from family members, residents, staff and others — logged about facilities, 64 involved Mesabi Academy, far more than any other facility.

The seven largest juvenile residential treatment centers licensed by the Minnesota Department of Corrections

MN Correctional Facility, Red Wing 189 2 State
Hennepin Co. Home School, Minnetonka 184 0 County
Mesabi Academy, Buhl 123 64 Private non-profit
Woodland Hills Residential Treatment Center, Duluth 84 3 Private non-profit
Northwestern MN Juvenile Facility, Bemidji 65 3 County
Boys Totem Town, St. Paul 56 1 County
Anoka County Juvenile Center, Lino Lakes 50 0 County
Unlike some other similar facilities, Mesabi Academy has both secure and non-secure living quarters and it takes young delinquents sent by courts as well as those referred by county child protective services agencies. It has generated far more complaints from 2009 to 2016 by parents, residents, staff and others than any other comparable facility in the state. Complaints can involve a variety of concerns about care, treatment, the staff or the facility itself. Search all DOC-licensed facilities in Minnesota. 

Records of licensing inspections indicated that the Department of Corrections found Mesabi Academy had committed several rule violations during that time, including youth being assaulted by staff, improper restraints, failure to complete intake reports and failing to file monthly treatment plans. These records, too, are not routinely disseminated by the department and were provided to APM Reports upon request.

In contrast, the Department of Human Services makes a detailed report available whenever it investigates maltreatment.

Minnesota's Data Practices law, which was created to give the public access to state and local government records, also contributes to the opacity surrounding corrections-licensed facilities.

For example, St. Louis County Child Protection Services claimed it could withhold investigative files on Mesabi Academy because the information in them was "welfare data" and considered private. In order to obtain data on its investigations, APM Reports negotiated and agreed to pay for a custom-made report summarizing each investigation without names.

That report revealed St. Louis County had found five substantiated instances of child maltreatment at Mesabi Academy since 2007. The incidents include four instances where employees physically abused clients and one instance of an employee sexually abusing a child.

There are also gaps between St. Louis County and the Department of Corrections. Every time an allegation of maltreatment at Mesabi Academy was made, both St. Louis County and the Minnesota Department of Corrections should have recorded it. The county is in charge of investigating the allegation, and once it is finished, the state department is supposed to determine whether the facility followed licensing rules.

In the past four years, however, 21 allegations appear in one agency's records and not the other's.

Busche, the recently retired human services director at St. Louis County, blames an overburdened child protection system. "Our system is stressed and stretched. I think that everyone working in the system is doing the best that they can do, and clearly it's not perfect," she said.

Hennepin, Ramsey do about-face

Early May marked a sudden turnaround for Hennepin and Ramsey counties when they removed several dozen boys they had sent to the facility after the initial stories by APM Reports.

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Womazetta JonesJennifer Simonson for APM Reports

Hennepin County had given Mesabi Academy glowing marks in a 2015 correctional program checklist. And Ramsey County's Social Services Department director, Womazetta Jones, said she was aware of no problems before the first story by APM Reports on May 2.

Hennepin County and the Minnesota Department of Corrections have denied interview requests to discuss their oversight and the decisions to pull children from Mesabi Academy.

Ramsey County officials, who visited Mesabi Academy and interviewed its residents, said they decided to remove them after the boys raised concerns about the program, the use of restraints and cleanliness.

"We certainly felt that the health and safety concerns that we were seeing were significant enough that it was in the best interests of our kids to move them," said Meghan Mohs, Ramsey County deputy manager.

Mohs said the county also notified St. Louis County about two new resident complaints over alleged maltreatment that emerged from the interviews. Hennepin County also has referred new allegations of maltreatment since it interviewed boys it removed.

Another vivid example of failed oversight came from St. Louis County: It neglected to enforce the contracts it signed every year with Mesabi Academy. Those contracts show that the facility added programs and changed age and IQ eligibility requirements, increasing the number of children eligible for Mesabi. (4)

The contracts also require annual reports to St. Louis County detailing the makeup of its population as well as the company's audited financial statements. But since putting the requirement in place in 2009, the county has received just one document — a 2010 overview of the parent company, KidsPeace.

Busche told APM Reports the county did a "bad job of making sure that information is provided."

A state lawmaker who represents the district that includes Mesabi Academy is pushing to have an investigation into the effectiveness of the treatment programs where counties and judges place kids.

In 2013, Rep. Carly Melin, DFL-Hibbing, said she wanted the Legislature to direct the legislative auditor to conduct a review of the programming. Melin's request was denied but she said she's still pushing for it.

"I wanted to make sure we had effective juvenile programming in Minnesota," she said. "It's also unique that we allow private nonprofits to run juvenile facilities in Minnesota because we don't allow that for our (adult) prison system."

Federal audit excludes allegations

Federal law requires facilities like Mesabi Academy to do periodic audits under the Prison Rape Elimination Act. A 2015 review didn't raise any concerns about Mesabi's internal investigations. In fact, it found the facility met all applicable standards for investigation, documentation and reporting of alleged sexual misconduct. (5)

The audit was conducted by Kurt Streed, who has worked for more than two decades at the state juvenile correctional facility in Red Wing. His work as an auditor is not part of his official job duties at the Minnesota Department of Corrections. The U.S. Department of Justice trains and certifies auditors.

In July 2015, Streed reviewed a year's worth of sexual misconduct reports maintained by Mesabi Academy. He noted that only two had been referred to law enforcement. Both involved alleged misconduct by residents. There was a third allegation Streed simply referred to as "unfounded" that was the subject of an "administrative investigation."

But St. Louis County findings showed Mesabi Academy officials in at least three other cases knew of allegations but did not report them to the county.

When contacted to discuss his audit, Streed said only that he stood by his report.

Tough for kids to complain

Tony Chadderdon was one of the boys who was pulled out of Mesabi Academy after the allegations first surfaced earlier this month. The 16-year-old, who has an IQ of 72, suffers from a traumatic brain injury and has been diagnosed with post-traumatic stress disorder, was placed there by his parents in July after a residential treatment center in Wisconsin discharged him because he had been too aggressive with staff.

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Tony Chadderdon, center, with his father, Mike, and stepmother Andrea Connell. Tony, 16, had a traumatic brain injury and post-traumatic stress disorder when he was sent to Mesabi in July. During his time there, Tony said he was kicked and punched by other residents. Employees said he'd lose privileges if he complained.Tom Scheck | APM Reports

In an interview Saturday, Tony said he was kicked, punched and spit on by other boys at Mesabi Academy. One boy threw a milk crate at his head, he said. At school, he said he shared classroom time with boys who were sent there by the courts after committing a crime. He said they'd call him names and convince him to make inappropriate comments to his teachers.

But he said he hadn't complained because staffers told him he would lose privileges like home visits, phone calls and field trips.

"Staff would not let you tell your parents because they said they'd do stuff about it," he said.

"I didn't like that. Kids were mean, calling me fat. I got hit a couple of times," he said. "They (employees) said they couldn't do anything because they didn't see it. even though sometimes I had marks."

Tony's father, Mike, and his stepmother, Andrea Connell, said they worried their son normally complained about minor things in other residential centers but didn't complain about anything at Mesabi.

Tony's parents said an employee secretly called them in January to warn them he was being attacked by other children at Mesabi. They said they notified their case worker in Chisago County who promptly notified St. Louis County Child Protective Services. Documents from St. Louis County say an investigation was opened but later closed because the allegations could not be substantiated.

Andrea Connell said Tony's case manager assured them an employee would be assigned to monitor Tony at all times. When Tony complained to his parents about the treatment by other boys, they complained again. They say they were told there wasn't enough staff to be with him at all times so it was Tony's responsibility to stay close to staff members.

"How is it that he can't go in his room and be safe?" Mike Chadderdon asked. "We're trying to send him to a place to keep him safe and it's happening to him there?"

Now that he knows he's going to a group home close to their home in Wyoming, Minn., Tony's parents said he started talking about other incidents at Mesabi.

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Mark HaaseJennifer Simonson for APM Reports

Tony Chadderdon isn't the only child who didn't disclose what he saw at Mesabi Academy.

Ramsey County public defender Dianne Dodd said her clients told her after they were pulled from Mesabi Academy last week that they had asked to speak with her but employees wouldn't allow it.

Ramsey County Community Corrections Director John Klavins said boys at Mesabi were reluctant to share concerns about Mesabi until Ramsey County officials interviewed them directly about concerns earlier this month.

Juvenile justice advocates say there aren't many ways for a child to complain about conditions. The Minnesota Department of Corrections said boys could tell their parents, write a letter or tell their case manager.

Haase said he'd like the state to appoint a juvenile justice ombudsman, who could independently investigate complaints at juvenile correctional facilities across Minnesota.

"Having some kind of an office and entity where any concerns about mistreatment can be reported in Minnesota is something that we should really strongly consider," he said. "These kids are some of our most vulnerable children."

Minnesota had an ombudsman for the Department of Corrections between 1972 and 2003. The office, however, was eliminated due to a budget shortfall in 2003.

Ombudsman kept out of Mesabi

Three years ago Mesabi Academy's parent company, KidsPeace, tried to prevent a potentially disruptive outsider from seeing inside Mesabi.

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Eric HuebscherClaudio Papapietro for APM Reports

When KidsPeace declared bankruptcy in 2013, a judge in Pennsylvania appointed an ombudsman to ensure care wasn't being compromised among its properties as a result of financial troubles.

But KidsPeace officials worked to limit the oversight of the ombudsman, Eric Huebscher. In court records the company said Mesabi Academy should be off limits to the ombudsman because it was a juvenile correctional facility, not a health care business.

"Mesabi Academy is actually a juvenile justice facility," KidsPeace chief executive officer Walt Isemann testified. "You have to actually be court-appointed to gain access to that particular facility." (6)

But the center is more than a juvenile justice facility. Forty percent of its residents were non-delinquent males, according to Department of Corrections juvenile placement data in 2014. Some residents are placed voluntarily by parents and guardians to obtain treatment.

Huebscher said he visited Mesabi Academy once, in July 2013, before KidsPeace sought to limit his oversight. He said it was mostly a "superficial tour" because he didn't speak with any children or staff members and was accompanied by a KidsPeace executive.

"They went to great extremes to limit my access," he said.

Huebscher said he was appalled when told by APM Reports that Mesabi Academy accepts children for mental health treatment and chemical dependency.

The bankruptcy judge allowed Huebscher to continue monitoring KidsPeace facilities in Georgia, Maine and Pennsylvania, but not Minnesota. After learning later that Mesabi Academy had far more complaints than any other corrections-licensed juvenile facility in Minnesota between 2009 and 2016, Huebscher said he wished he would have pushed harder to continue his oversight of the facility.

"Knowing what I know now about what happened . . . I would have been much firmer in my conviction to the court that they really can't limit access. That this is the wrong thing to do," he said.

KidsPeace emerged from bankruptcy in 2014 with a plan that included wiping away internal debt from Mesabi Academy and its other facilities.

But federal tax filings show that state and county overseers were dealing with a facility struggling financially almost since its inception, a facility whose value was originally seen as an economic driver seeking to take advantage of an increase of juvenile incarceration.

States in which KidsPeace operates

9eafed 20160525 kidspeace operations
Founded in 1882, KidsPeace is a private charity that operates a youth psychiatric hospital in Pennsylvania, residential treatment centers for youth in Pennsylvania, Maine, Georgia and Minnesota and foster care programs and educational programs in other states.Jaime Chismar for APM Reports

Coming to the Iron Range with government help

Mesabi Academy reported losses averaging $2.35 million a year from 2002 to 2014. (7) During that time, Mesabi Academy paid $14.5 million in management fees to its Pennsylvania headquarters, roughly 16 percent of revenue.

KidsPeace explained in an email that those fees represented a way to allocate overall expenses across the company's programs.

KidsPeace also lent its Minnesota operation money to keep running for years. In 2014, though, it forgave a $41 million debt Mesabi Academy owed, according to the subsidiary's 2014 nonprofit tax exemption filing.

Asked to explain the transaction, the company wrote, "We believe in the service and its potential to serve our mission to help at-risk youth."

Those losses weren't in the initial plan.

In the summer of 1997, KidsPeace representatives visited Buhl and proclaimed it "an ideal location for our proposed Minnesota facility," then KidsPeace chief executive John Peter wrote (8) to the mayor of Buhl. The company forecast growth (9), and its timing apparently couldn't have been better.

Economic development officials in northeastern Minnesota had been looking for a way to diversify the Iron Range economy, and they embraced (10) the idea of a business that would take in juvenile delinquents exported from other parts of the country, taking advantage of a get-tough approach to crime.

KidsPeace, an organization founded in the 1880s, runs a hospital, treatment facilities and foster care and other services in 10 states. "Increasingly, the children once served in the children and youth and mental health systems are now diverted to the criminal justice system," it told Iron Range officials.

President Clinton had recently signed a major crime bill introducing harsher sentencing, and states were getting tough on crime, too. KidsPeace predicted the number of juveniles in residential and non-residential juvenile justice programs would double to 200,000 between 1995 and 2005.

Twenty years of turbulence: A history of Mesabi Academy

Not everyone welcomed KidsPeace

Officials with the Department of Corrections were skeptical.

They argued there wasn't a need for another private juvenile correctional facility in Minnesota. Two state corrections officials said they discouraged the company.

"We just didn't have a significant need for more beds coming into the state of Minnesota," said Dennis Benson, former Minnesota Department of Corrections deputy commissioner.

Several state lawmakers on the Iron Range Resources and Rehabilitation Board dismissed that analysis. Dan Kasperkoski of KidsPeace told the board that the Buhl facility would attract children from the Twin Cities who were being sent outside of Minnesota.

"With the Buhl facility, we would be able to bring the children home and work our program out of the Buhl campus as well as reintegrate them into their home community," he said.

Several members of the IRRRB board raised concerns that the project would take away business from two other youth treatment facilities, Thistledew in Togo, Minn., and Woodland Hills in Duluth. (11)

But three months later, the IRRRB approved $1 million in loans. (12) It added a sweetener, a $130,000 grant to renovate Thistledew. In all, the IRRRB, St. Louis County, the Minnesota Department of Trade and Economic Development and others provided $1.7 million to help create the facility.

Don Samuelson, a Democrat from Brainerd on the IRRRB, voted against the loan, warning it was a big mistake. "I don't think another kiddie jail of that magnitude is a good idea," he said at the time. "I don't think it's a good idea to go with the privatization and I don't think it's a good idea hauling some pretty tough kids in from all over the country."

In October 1998, KidsPeace held its grand opening of Mesabi Academy. City and state leaders praised it. "It's diversifying our economy," said Tom Rukavina, a state legislator then and St. Louis County commissioner today. "We need it. We know what's happening and it's scary what's happening right now in the steel industry again."

But the relationship with the city of Buhl and St. Louis County quickly turned testy. KidsPeace, which delivered 25 percent of Buhl's property tax base, won a court ruling in 2002 to make it tax exempt. (13) The company eventually agreed to pay more in rent to the city of Buhl. It also renegotiated its loan repayments in 2005 despite not hitting hiring goals. (14)

Nonetheless, over the years, city and county officials said Mesabi Academy helped bring more than 100 jobs to the city of Buhl. Mayor Shari Swanson said Buhl is mostly a bedroom community on the Iron Range, and Mesabi Academy has been its largest employer.

Company officials said in 1997 that Mesabi Academy would generate $10.5 million in revenue by 2005. Tax returns filed by Mesabi Academy show the facility has never hit those projections. The most recent filing in 2014 shows revenue of $8.1 million.

Hunting for more residents

In 2000, Mesabi Academy entered into a contract (15) with the Minnesota Department of Corrections to run a unit for girls who had been convicted of offenses.

The contract, valued at $855,000, allowed Mesabi to take 12 girls. The state needed Mesabi because its only other facility for girls, in Sauk Centre, was being used for other services.

"They had no place else for girls," said Mary Whitaker, a former Minnesota Department of Corrections official. "It was the only game in town."

The contract called for Mesabi Academy to operate the facility but for state corrections staff to run the treatment programs. Several former corrections staff members said the relationship with Mesabi Academy staff was acrimonious.

"It just felt toxic," said Terry Casey, who was under contract with the Department of Corrections to provide services to the girls. "You felt like you were grimy leaving it."

She said KidsPeace officials seemed more focused on the daily census than on helping the girls return to the community.

"If we had an open bed, they'd say, 'If the girls move on, how are we going to get another girl in? We have to go out and sell this program to counties to keep those beds filled," she said.

At the end of the contract a year later, the Department of Corrections transferred the girls to Woodland Hills in Duluth.

The state's decision to switch facilities was driven by two factors, said former staffers: The disagreement over treatment philosophy and a male staffer employed by Mesabi being charged with sexually abusing a girl.

In the meantime, the number of juveniles placed in residential treatment facilities nationwide was dropping by half between 2000 and 2013.

Dr. Keith Cruise, a juvenile justice expert at Fordham University in New York City, said judges, prosecutors and social service workers started changing their approach to juvenile justice in the early 2000s.

"There has been an emphasis nationwide to reduce the number of large institutional-based correctional facilities to either house or treat juvenile offenders across the country," Cruise said.

Source of residents shifts, so did Mesabi

13b1f3 20160525 sources of mesabi academy residents
Mesabi Academy initially drew a large number of its residents from outside Minnesota. But as other states began to keep their kids closer to home, Mesabi Academy leaned more heavily on Minnesota courts and social service agencies, particularly those in Hennepin and Ramsey Counties. These two charts are not precisely comparable because they were compiled from different sources of data.Jaime Chismar for APM Reports

Ten years ago, about two-thirds of the boys at Mesabi Academy came from outside Minnesota. But states began keeping kids closer to home, and Mesabi Academy shifted focus, expanding its program offerings. Enrollment increased, a big share of it coming from Ramsey and Hennepin counties.

"The first and most significant change was moving from the idea that clients were sent for punishment, to the idea that clients were sent for treatment," then-executive director Karen Moller wrote to the Department of Corrections in 2010. (16)

But the facility continued to report losses.

When KidsPeace filed for bankruptcy in May 2013, in the Eastern District of Pennsylvania, it reported $249 million in debt that included $101 million in pension obligations to the Pension Benefit Guaranty Corp. (PBGC) (17)

The PBGC said KidsPeace had underfunded its pension plan by 59 percent. The company filed a plan to reorganize on Dec. 19, 2013, and it emerged from bankruptcy eight months later.

Mesabi Academy and KidsPeace have long relied on county, state and federal contracts to help fund the operation. The company has also been aggressive in seeking federal funds.

KidsPeace lobbyists targeted a bipartisan group of lawmakers over the years, including Democrats Paul Wellstone, Amy Klobuchar, Al Franken and Jim Oberstar and Republican Norm Coleman.

Oberstar warned by staff

Oberstar, who grew up just miles from where Mesabi Academy was started, was a top target.

His internal papers stored at the Minnesota Historical Society show that lobbyists for KidsPeace turned to him regularly for help with funding. Throughout his years in Congress, he sought millions in federal funding for the facility.

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Rep. Jim OberstarDerek Montgomery | For MPR News 2010

"Today, the Mesabi Academy has become an economic engine for my constituents in the small town of Buhl," Oberstar, who died in 2014, wrote in a 2001 letter to two powerful members of the House Appropriations Committee (18). "The services Mesabi provides bring in more than $5 million in spending to a town in which unemployment skyrocketed when the local school consolidation forced the closing of Martin Hughes School in 1984 .... Much more should — and must — be done ...."

By 2003, however, at least one staffer warned Oberstar to keep his distance from Mesabi Academy and KidsPeace. Oberstar's legislative liaison, Kate Troy, wrote a memo (19) to Oberstar reminding him of the earlier sexual abuse claims, allegations of financial mismanagement at Mesabi's now-defunct charter school and problems with the workforce.

"I have concerns about your continued support of the Mesabi Academy and Martin Hughes School of Buhl and think we should be cautious," Troy wrote to Oberstar.

Oberstar's pursuit of funding, however, continued until he was defeated by Republican Chip Cravaack in 2010.

He secured $147,000 for construction, renovation, expansion and buildout of the youth services facility in 2008. (20)

Klobuchar and Franken were unsuccessful in their pursuit of federal funding for Mesabi Academy. Franken sought $475,000 in funding for Mesabi Academy in 2010. Klobuchar sought funding in 2008, 2009, 2010 and 2011 for the facility.

Congress never approved those requests. The money was intended to help improve safety and security at Mesabi Academy, concerns that many employees at Mesabi Academy shared.

Tough place to work

Amy Samuelson says she applied for a job at Mesabi Academy because she thought she could be a role model to the boys there. She had grown up in a violent home, she said, and was placed in foster care when she was 11.

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Amy Samuelson, a former Mesabi Academy employee, said she suffered a concussion after being punched by a resident and then was sent back to work in the same part of the facility, against her wishes.Jennifer Simonson for APM Reports

"I liked being able to help them and be there for them," said Samuelson, who started work Jan. 5, 2015.

But Samuelson's time at Mesabi Academy quickly turned frightening.

On Super Bowl Sunday, Samuelson was working near a few boys playing PlayStation. One became upset because the staff was not allowing him to play and he attacked Samuelson, who is 5 feet 2 inches tall.

"He punched me several times in the head and shoulders mostly," she said. "He pulled a chunk of my hair out of my head to where the doctor could see and feel a bald spot and there was a baggie full of hair."

Samuelson said she received lumps and bruises on her face, head and shoulders. Other workers quickly broke up the incident but Samuelson said she was in shock, her head pounding and her hands shaking. She said she left her unit and went outside, thinking her supervisors would allow her to leave.

She was forced to stay and finish her shift.

"They said normally they would let a person leave after being attacked like that," Samuelson said, "but because of the staff shortage they were not able to let me leave."

Samuelson went to the hospital later and was diagnosed with a concussion.

Her case is a vivid example of how the energy needed to treat a highly demanding and aggressive juvenile population places significant stress on the workforce. On many occasions, according to several current and former employees, new employees don't even come back for a second shift after realizing the strain it places on them.

Samuelson did come back, two weeks later, to the surprise of colleagues. When she walked through the doors, she said she had an anxiety attack. She asked her supervisors to not put her in the same treatment unit where she had worked previously.

Her supervisors honored the request, but only for a day. Nervous, she complained to Mesabi Academy's program director, Lance Edminster. "I told him that I was having bad anxiety and didn't like being on the same unit with that same youth," she said. "And he said, 'Well, that's a good thing though because that just shows the youth that you're not afraid."

Two months later, on April 13, 2015, the same boy attacked Samuelson. "He punched me several times once again, and ended up getting my head yanked down and a bunch of hair pulled out that time as well," she said.

Again, the unit was short-staffed because a co-worker had walked off the job after the incident, so Samuelson was forbidden to leave. After her shift was done, Samuelson went to the hospital. She was diagnosed with another concussion, post-traumatic stress and a neck strain. She never went back. After a battle over worker's compensation benefits, Samuelson settled with the company.

Mesabi Academy spokesman Robert Martin would not comment on Samuelson's case but said the facility takes several steps to protect the youth and employees at their facility including a camera system, staff discussions on ways to improve safety and unannounced visits by senior leaders.

Workers found rewards but safety worries a constant

Samuelson said she was told repeatedly that Mesabi Academy employees should know the risks of working in a facility with violent youth. But she and other employees say Mesabi Academy should have taken better precautions to protect her and others.

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Leroy KosolaCurtis Gilbert | APM Reports

Samuelson is one of several employees who complained to APM Reports that staffing levels compromised their safety.

Client care counselors like Samuelson, who worked directly with the boys, earn as little as $10 per hour. At times, they are also expected to work a 16-hour shift with relatively few breaks.

"You've got to be a little insane and have a whole lot of patience," former staffer Leroy Kosola said when asked what it takes to work there. "I had one gentleman decide he was going to choke himself to death with a t-shirt. That one put me back. I've never seen anything like that in my life."

APM Reports interviewed more than 40 past and current staffers. Many said they liked the mission of working with troubled youth but that the demands of the job and worries about safety were constant. Many said they were attacked at least once during their time there. But some said they gained satisfaction when they made a breakthrough with a child.

David Sainio, a former clinician at Mesabi Academy, said he thought working there was a good job because he was helping kids. But he acknowledged the work was difficult, especially for front line staff who worked with the kids the most.

"It's exceedingly hard to find staff in northern Minnesota that will work for $10 an hour and be willing to deal with the potential physical incidents that will happen there," Sainio said.

Allegations of workplace safety and unsafe staffing levels have also prompted lawsuits from former employees.

In 2006, KidsPeace settled one of those lawsuits by a former female staffer for $2 million. The plaintiff — known as TJ in court records — was sexually assaulted by a resident in 2003. She filed in federal court, claiming sexual discrimination and harassment by supervisors and co-workers and saying negligent supervision and insufficient safeguards on the part of KidsPeace led to her rape.

Another employee, Jamie Montcalm, settled a lawsuit with KidsPeace for an undisclosed sum in 2008. She alleged chronic understaffing frequently left her alone with dangerous offenders. Montcalm was assaulted by two youths on May 24, 2003.

Julie Matonich, an attorney who represented TJ and Montcalm, declined comment and said her clients would not comment because of settlement agreements.

Martin, with KidsPeace, said the company does not comment on specifics of litigation.

David Cope, who works in the Human Services Division of the Fond du Lac Band of the Lake Superior Chippewa, said he was fired from Mesabi Academy after he wouldn't fill in on a shift because his school studies took priority. Cope, who worked at Mesabi from 2005 through 2009, said three supervisors escorted him out of the building when he showed up for his next shift.

"They looked at me, and they said 'You seem to be pretty happy, why are you smiling?'" Cope said. "And I said I'm smiling because everybody that I've talked to that has left this place has always done better for themselves after here. So I'm looking forward to leaving and bettering myself."

Some former employees said they thought a greater focus needs to be on addressing the problems youth face before they get to a place like Mesabi Academy.

David Bard, who worked as a case manager, said a lot of the kids faced childhood trauma from broken homes, gang activity or other factors. He said the best way to reduce the number of kids being sent to places like Mesabi Academy would be to find help for those kids earlier through early childhood education, mental health treatment and community programs.

"I thought a lot of times for kids at Mesabi the only thing worse than what they've done in the community is what's been done to them," he said.

Deena Winter, Emily Haavik and Will Craft contributed to this story. Aerial photo of Mesabi Academy in Buhl, Minn., by Jennifer Simonson for APM Reports.


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