Providence Service questions Avalon Correctional CEO's leadership

By Lisa Kerner

Charlotte, N.C., May 28 - Providence Service Corp. chairman and chief executive officer Fletcher Jay McCusker asked the company's shareholders it they are prepared to let Avalon Correctional Services, Inc. founder and CEO Donald E. Smith impose his approach to corporate governance on their company.

McCusker made his comments in a lengthy letter to Providence shareholders on Thursday.

In the letter, McCusker outlined Smith's 17 years as Avalon's leader.

McCusker alleged that "Smith has shown a flagrant disregard for the adoption of best practices in corporate governance" at Avalon as well as "a strong proclivity for engaging in related-party transactions with Avalon Correctional Services, either directly or through entities" Smith owns or controls.

McCusker also urged Providence shareholders to vote for the company's director nominees, which are himself and Kristi L. Meints, chairperson of the board's audit committee.

Providence will hold its annual meeting on June 15.

As previously reported, Avalon and its controlling stockholder, Smith, want Providence shareholders to elect Michael C. Bradley Jr. and retired U.S. Navy captain Brian T. Costello to Providence's board of directors at the company's annual meeting.

On Wednesday, Providence filed a schedule 14A with the Securities and Exchange Commission seeking to correct what it considered erroneous information contained in Avalon's proxy statement recently filed with the SEC.

Providence is a Tucson-based provider of home- and community-based social services to government-sponsored clients under programs such as welfare, juvenile justice, Medicaid and corrections.

Oklahoma City-based Avalon owns and operates private community correctional facilities and correctional programming.

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