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Pasco company wins $31 million for deal with prison program that went bad

For a Pasco County manufacturing firm, the deal back in 2001 sounded like the start of something huge:

Custom Converter Sales would team up with a St. Petersburg company that could provide prison labor for 29 cents an hour. Custom Converter would expand its production of automatic transmission components at a time when business was booming and workers were nearly impossible to find. And to top it off, the company would help society by giving meaningful work to inmates looking for honest careers.

But eight years later, the deal is dead, and the companies are out of business. Holiday-based Custom Converter has won a $31 million judgment for breach of contract and other issues against Global Outsourcing of St. Petersburg, but may never collect.

And PRIDE Enterprises, a St. Petersburg-based prison work program that was affiliated with the company that was sued, denies any responsibility or wrongdoing.

"For me it's been a devastation, a nightmare that's eight years old that's definitely changed my life for the worse," said Ron Vassallo, who was Custom Converters' general manager.

Vassallo said the ill-fated deal began when Custom Converters was approached by officials from PRIDE, a program launched 20 years earlier by drug store entrepreneur and philanthropist Jack Eckerd.

Vassallo said officials from the program gave out business cards that said "PRIDE," and explained the benefits of teaming up with a company that worked closely with the state of Florida to rehabilitate prison inmates. Vassallo said at the time, Custom Converters was a 30-year-old company that had never lost money in the business of refurbishing torque converters for automatic transmissions.

But, Vassallo says, when it came time to sign the deal, the PRIDE officials they had been talking to wanted to put the paperwork in the name of a different company called Global Outsourcing. The head of Global Outsourcing was Pamela Jo Davis, who also was the head of PRIDE, and the two companies shared an address.

A 2003 state report explains the function of Global Outsourcing. It says that allowing businesses to "interact with Global, which in turn subcontracts with PRIDE, insulates the partners and customers from consumer concerns about using prison labor."

After the deal was signed in 2001, Vassallo said much of Custom Converter's equipment was taken to a prison near Lake Okeechobee so inmates could go to work. But Vassallo said his company soon had trouble gaining access to the prison-based workplace.

At the new location, production faltered and quality suffered, according to allegations raised by Custom Converter in court papers. The business everyone hoped would take off eventually collapsed. Vassallo, 60, now says he is out of work and struggling with health problems.

Vassallo blames it on Global and PRIDE. But Pamela Jo Davis, now Pamela Jo Mooney, says the opposite. She said the problem was that Custom Converter couldn't meet its sales goals.

"I don't know why the units didn't sell. Once units are produced, they have to be sold."

Custom Converter and Global Outsourcing sued each other, and a circuit judge awarded Custom the judgment after Global stopped defending itself. PRIDE was not named in the lawsuits.

Mooney said she wasn't aware of the $31 million judgment issued in July against Global, a company she used to lead. "I'm surprised that there was a judgment, frankly."

She said she has not been involved in PRIDE or related businesses for several years.

Asked about the lawsuit, Wilbur Brewton, an attorney for PRIDE, said "this is all seriously old news," and said the lawsuit has nothing to do with PRIDE itself, or anyone who currently works there.

Everett Rice, an attorney with the law firm that represented Custom Converter, said attorneys would look into options for collecting the judgment.

Times researcher Will Gorham contributed to this report. Curtis Krueger can be reached at ckrueger@sptimes.com or (727) 893-8232.

Pasco company wins $31 million for deal with prison program that went bad 10/09/09 [Last modified: Friday, October 9, 2009 9:08pm]
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