Hannah Hoffman

Statesman Journal

In early 2013, Colette Peters had a problem.

The director of Oregon's Department of Corrections had a subordinate in her midst who was engaged in an elaborate scheme to undercut her leadership.

This man was undermining her authority, disobeying her direct orders and spending $150,000 on a plan that would directly thwart one of her primary goals.

By March 2013, Rob Killgore had a problem.

The director of Oregon Corrections Enterprises, a semi-independent state agency that provides full time work for prison inmates, was in jeopardy of losing his job. Peters, his boss, had become aware of his deceit and insubordination.

Once, from his work email account, Killgore wrote and distributed a message describing her agency as "a pot of crap that is about to boil over."

Peters fired him on March 14, 2013, after reviewing the contents of a report Killgore orchestrated without her knowledge or consent. The report ignored directions she had provided him over an entire year.

The ramifications of that dismissal – and the behind-the-scenes drama that led up to it – make for a saga with elements of backstabbing, email subterfuge and overstated whistle-blowing claims.

All of this has come to light after a review of some 1,500 pages of public documents obtained by the Statesman Journal. The collection includes damning email correspondence, depositions given in painstaking detail, budgets, memos and other records.

Killgore claimed he was a victim of retribution who was wrongfully dismissed by Peters, and sued the state for $1.5 million. But a careful reading of the records demonstrate that it was actually Killgore who was the party guilty of wrongful behavior.

Nonetheless, to settle the case in May 2013 the state cut Killgore a check for $300,000. His lawyer received another $150,000 in taxpayer funds.

Taking control of the situation

In his 11th year as director of Oregon Corrections Enterprises (OCE), Killgore was becoming increasingly frustrated with his boss, Max Williams, the prisons director, and Williams' deputy, Mitch Morrow. State law established that the top person in OCE would report to the top person in corrections, an arrangement that might have seemed manageable at the Capitol, where it was envisioned.

In practice, Killgore felt handcuffed by the reporting structure. By the end of 2011, he decided to do something about it.

Williams and Morrow, a close duo sometimes known around the state as "Mix and Match," had a habit of trying to tap into the OCE budget to pay for expenses that had nothing to do with the for-profit enterprise. As an example, the food served at the prison department's annual awards banquet was paid for by OCE, records show.

Under oath in September 2013, Killgore testified that he felt he could not refuse such requests, for fear of being fired.

Beyond that, Killgore testified that Williams and Morrow tried to foist their discarded or incompetent employees onto OCE, even workers who had legal problems.

Again, he said he felt he couldn't say no.

At the end of 2011, Williams was on his way out as DOC director. Gov. John Kitzhaber was cleaning house during the first year of his third term, and Williams was one of many agency heads who were replaced. Peters would not be named his successor until the end of January 2012, and Williams stayed in his role until then. However, from November 2011 through the new year, he was primarily a placeholder.

At that moment, Killgore saw a small window of opportunity to loosen the binds tying the agencies together – or maybe cut them entirely.

Killgore drove to Portland on Dec. 22, 2011, to visit former Oregon Secretary of State Phil Keisling, who directs the Mark Hatfield School of Government at Portland State University.

According to a deposition transcript, Killgore told Keisling he wanted "operational distance, if not outright separation from the DOC." He sought Keisling's assistance in developing a plan to achieve that distance, perhaps through an institutional governing board or a nonprofit business model.

Either plan would erase the power the DOC director held over the OCE director.

To get this done would eventually take a vote from the Legislature to amend the law that created OCE. But a proposal crafted by a former secretary of state — Keisling — would provide a credible first step. Killgore offered to pay Portland State $150,000 to complete such a study, and Keisling accepted.

Killgore never told his boss, Williams, never asked for permission, never checked to see if the prisons director was even interested in pursuing such an idea. He paid for the study in his capacity as an agency head, but he never talked to the director of the other agency affected.

In short order Keisling and Killgore brought in Mike Greenfield as a third member of the team. Greenfield ran the state Department of Administrative Services in the early 2000s and was an unpaid member of the OCE advisory board. He had a close working relationship with Killgore.

Without Williams' replacement named, they got started. "(Killgore) felt that it was an opportunity to get an outside look, and that he wanted to get it going so that he could share it with whoever the new director might be," Keisling said in a deposition. "I think he was interested in trying to keep it going and not have it undone."

Having taken that step, Killgore was emboldened. He started pushing back against Williams, who was in his last days as prisons director, and Morrow and eventually confronted them about their pattern of asking for money that he believed was not theirs to spend. For example, Killgore claimed that Morrow's assistant asked him in January 2012 to pay for a 42-inch flat-screen television for the new DOC director's office. Killgore refused.

Killgore met with Williams and Morrow for breakfast at the Holiday Inn in Wilsonville on Jan. 23. Records show Killgore bluntly stated that the prison department had taken advantage of his budget, using it as a "slush fund."

According to a memo Killgore wrote about the meeting, Williams was offended by the "slush fund" term — often meant as a description of money used for illicit or corrupt purposes.

Killgore then disclosed to Williams and Morrow his project with Portland State. They responded by warning Killgore that commissioning the study without first consulting them was a mistake that could get him fired.

According to the memo, Killgore said he "didn't care, as (he) felt strongly that this is the right thing to do in this situation."

Williams left the meeting early, but Morrow stayed and talked with Killgore. They agreed to stop transferring money between the agencies until they could determine a way for both sides to agree on how it should work.

A new boss: Same as the old boss

When Peters took over DOC in February 2012, Killgore saw it as a moment to tell her about his problems with the former director and his deputy. He also disclosed to her his plan with Keisling.

Peters, new to her job, had a vision of the two agencies working even more closely together.

She testified as much in a later deposition. In the transcript, Peters said she envisioned a day when 10,000 inmates would be employed, nearly 10 times the number that work for OCE. She told Killgore the same at their first meeting.

It was not what Killgore had hoped to hear.

In a memo written to Greenfield dated Feb. 17, 2012, Killgore stated, "It will be interesting to see if Colette adopts Max's operational policies. So far she seems to be going in that direction with not wanting an independent OCE audit. I think she is getting bad advice, as in about a year she will own all of Max's poor decisions. I guess that she likes carrying other people's baggage."

Killgore agreed to change the scope of the business review to appease Peters and Morrow, records show. Their edits ruled out examining the possibility of a fully independent OCE and required the review to focus more closely on the agency's operations rather than its structure, records show.

It did not help matters for Killgore that Peters was as close with Mitch Morrow as Max Williams had been with the deputy director. Peters had worked with Morrow when she was inspector general of the DOC.

When Peters was named director, after running the Oregon Youth Authority, Morrow was more than a familiar face. He was a respected colleague.

Peters relied on Morrow's knowledge of the prison system, where he spent his entire career.

Conversely, Killgore's friendship with Morrow had soured over the years, as both men admitted in various emails and records of conversations.

Getting nowhere with past problems

Peters and Morrow were usually united in their dealings with Killgore, and their opinions were often unpopular with the team at Portland State.

Peters and Morrow believed there was a conflict with Greenfield working on the project or benefiting financially, since he had served on the OCE board. They wanted Killgore to take action.

That exasperated Keisling, who did not see Greenfield's participation as a problem and resented Peters' and Morrow's meddling."Geezus criminy, this is weird," he wrote. "At day's end, we may decide to follow the adage that sometimes it's better to fire a bad client than to continue to work with them ..."

Killgore told Peters that Greenfield was off the project on Feb. 8, 2012.

While Greenfield was technically off the payroll, however, multiple records show that he continued to be intimately involved with advising Keisling and Killgore in their work.

Killgore, Keisling and Greenfield created the business plan throughout 2012, meeting just two or three times with prison officials, although Killgore talked with them informally on a regular basis.

Killgore pressed Peters to support his ideas for a new business model for OCE, but she was firmly against it.

Instead, she suggested that the two could solve the problem themselves. Peters suggested amending the "memorandum of understanding" (MOU), a document that explains what is and is not allowed between the two agencies, records show.

A new version would have prohibited OCE from making any cash contributions to the prison department.

The Portland State team roundly dismissed the idea after Killgore shared the suggestion. "So her (and Mitch's) idea is that rather than OCE spending $150K to PSU to come up with recommendations on how to make OCE a stronger organization, the two entities simply modify/update their existing MOU and all will be sweetness and light?" Keisling wrote to Killgore.

After the disagreement about the MOU, Killgore fixated on one particular expense from the Williams era, a request to help pay for the funeral of a murdered corrections officer. Killgore wanted it included in his agency's annual financial report and collected legal opinions supporting his point, records show.

Peters, for her part, did not think it needed to be included, as Killgore didn't want to include other contributions his agency had made to corrections. Peters and Killgore went around and around on this topic for months, in emails and in meetings, seemingly getting nowhere.

Killgore openly discussed internal matters with Keisling and Greenfield, forwarding them documents and emails he was gradually acquiring that supported his point.

It was the kind of information that Morrow and Williams had already warned him against sharing, advice Killgore did not heed, records show.

Outsiders becoming insiders

In March 2012, Keisling and Killgore met with Peters and Morrow.

In shared emails beforehand, Keisling and Greenfield discussed how they should hide what they knew about Killgore's work frustrations.

Keisling wrote: "They might ask us, point blank, 'Has Rob talked to either of you about issues of concern re: inappropriate expenditures, misuse of hiring authority, possible legal compliance issues, between DOC and OCE?'

"What would you recommend we say to such direct queries? … I want to have a decent answer to such direct questions -- but in a way that doesn't compromise Rob or our own integrity."

Greenfield responded, "Colette and Mitch want to avoid a crisis about misuse of authority, and rather have a crisis about Rob not being a good 'family member'. My current advice to Rob is, if there is going to be a come-to-Jesus meeting with Colette that we have (Department of Administrative Services Director) Mike Jordan there as well … Colette has chosen to join Mitch in the Bunker – I don't expect any smarter choices in the future."

An investigation begins

Peters gave Killgore six months, from February to August, to adjust to her leadership and move forward together, according to their email correspondence.

By late summer, she saw he couldn't let go of his old problems with Williams or his animosity toward Morrow.

She wrote him an email on Aug. 27 in which she frankly acknowledged the lack of trust between Killgore and her office, and she invited him to present her every past concern he had in effort to fix it once and for all.

"I think we need to explore the past a little bit. I think as your new Director I need to understand things that have happened in the past that make you nervous so that I can fully support you. I understand you are out for a couple of weeks but when you get back, will you create a list of all the personnel moves or issues, expenditures, DOC actions, OCE actions, etc. that have made you nervous during your tenure as the administrator?" she wrote.

"And, I want them all - big and small. Then I'd like to spend some time with you understanding the list and talking about the history and the intent. I'm hoping this will put us all in a better place going forward."

Peters also made it clear that Killgore needed to adjust his attitude toward Morrow.

"As far as your relationship with Mitch, I'm less concerned with the personal relationship - the 'dysfunctional brothers' as you put it. That is up to the two of you to either resolve, or not, as friends. What I'm most concerned about is your professional relationship as Administrator to Deputy Director," Peters wrote. "...I do sense a lack of respect and even acknowledgment of his background, experience, history, dedication to OCE's success, and dedication to your personal success. I'd like you to spend some time reflecting on this..."

Killgore forwarded her letter to Greenfield, who did not read it as "supportive."

"Watch out," he wrote back.

"Hopefully I can last long enough to find another job," Killgore replied. "What did you tell me awhile back; It's easier to find a job when you have a job ... Are you going to help me get that (Oregon Liquor Control Commission) job? It will probably be open by the time you get back (from Europe)…"

It was not the first time during 2012 that Killgore had considered leaving for a different job.

Back in February, Killgore wrote an email to Greenfield, asking him to help him get hired as the Port of Portland's chief financial officer.

"I'm just being a good family man until Bill Wyatt hires me at the Port," he wrote. Wyatt is the executive director.

The same month, he wrote again, "I equate DOC to a pot of crap that is about ready to boil over…It's probably for the best that I didn't get a DOC job. Now go help me get to (Oregon Youth Authority)..."

Killgore's effort in August to leave for the OLCC was his last apparent attempt at a new job. After that, Killgore's work situation unraveled further and he eventually seemed to be holding on as long as he could.

Killgore did assemble the documents Peters asked for in August. He showed them to Greenfield, who offered advice via email on what to include and what to leave out.

Killgore arranged his documents in a binder, but he didn't hand it to Peters.

Instead, he showed it to the Oregon Department of Administrative Services and then handed it over to the Oregon Department of Justice.

Based on the evidence Killgore provided, newly installed Attorney General Ellen Rosenblum launched a criminal investigation into the prisons department on Oct. 8, 2012.

Taking back control

As investigators were seizing computers and interviewing officials, Killgore felt he had a temporary freedom from the DOC director.

It is illegal to retaliate against an employee who "blows the whistle" on perceived crimes at his job, and Peters could not fire Killgore during the investigation. In fact, she couldn't even discipline him without raising legal concerns.

Killgore took back full control of the Portland State project just four days after the investigation began.

He emailed Keisling and rescinded all the previous edits of the report that correction officials had approved. He asked the consulting staff to concentrate on structural changes to OCE, the opposite subject from what Peters had wanted.

Killgore believed he could do that, he said in his Oct. 12, 2012 email, because he was the "executive sponsor" of the project.

At the end of the email to Keisling, Killgore explicitly asked that no one tell Peters. "I would also appreciate this being kept confidential until it is an appropriate time to bring the new direction forward," he wrote.

Everyone working on that project knew how fraught Killgore's work situation had become. They wrote emails discussing how to handle the situation from an outsider's vantage point, and it was clear that Keisling was wary of getting involved.

In September, he referred to the situation as "a soap opera" and remarked that the Portland State team needed to decide "how much 'we' collectively want to take on in terms of poking the hornet's nest."

He noted that the draft they had written was public record and that anyone who insisted could see it. However, "we don't want it to come to that at least not yet…"

At the end of November 2012, as the investigation wore on, Keisling sent out a survey to OCE employees asking questions about its structure and soliciting opinions about having more distance from the prison system.

The survey was passed on to Peters and Morrow, who saw the direction the research was clearly headed. Peters demanded that Killgore take it down, and he and Keisling did.

Then Peters got on the phone with Keisling to talk about the direction his research had gone. Keisling conferred with Greenfield before the phone call via email, and it was clear they knew Peters was angry from the points they anticipated she'd make during the call.

Greenfield told Keisling she would say: "PSU was engaged by Rob for political reasons, mainly your status as a past state official (Keisling was previously secretary of state), and is just cover for moving OCE out of DOC. I've been clear about what I want from PSU, why haven't you done what I want? I'm terminating this contract. Greenfield has an agenda and you included him on the survey list."

In concluding his email, Greenfield told Keisling to just keep quiet. "I'd suggest you take any points she makes under consideration without responding to them during the call," he wrote.

Greenfield's assessment was insightful.

Emails show Peters and Morrow did, in fact, suspect early on that Greenfield had political motives for helping Killgore with the business review. They thought Greenfield wanted to take over leadership of OCE, and Morrow had told Peters in an email back in February that Killgore didn't understand what he'd gotten into.

He was "taken to the cleaners a little bit," Morrow said in his email.

Whether Killgore was in over his head or not, Peters didn't seem to care anymore by the time she was off the phone with Keisling. She emailed an angry letter to Killgore the same day detailing his transgressions.

Peters issues a warning

That email went against explicit warnings about the appearance of retaliation that Peters had received from the Department of Justice.

Peters had met with the DOJ general counsel's office Oct. 16 to talk about Killgore's personnel issues, eight days after the investigation began and five days after the Department of Justice came to the corrections executive building to seize computers to look through email.

As it is with many high-level state managers, Killgore did not receive formal performance reviews. Instead, Peters' feedback was delivered informally and personally, on a regular basis, including via email on Nov. 29, 2012.

In her email, Peters told Killgore he had "gone beyond disagreeing" in how he interacted with other officials, and she dressed him down in the email for how the Portland State project had unfolded.

"I am not sure I can be any clearer now than I have been in the past with you about what I am expecting from the PSU contract … I have shared my expectations with PSU leadership," she told Killgore.

The Portland State team felt the project was "theirs" when they were being paid for a consulting service, Peters said. "I am concerned that they … believe they are driving the scope of the work."

Finally, she told Killgore it was not appropriate for him to forward emails regarding their working relationship to other people.

Later, when asked about that practice during a deposition, Killgore said it was acceptable because his emails were public record and Peters "preaches" transparency.

Killgore forwarded the entire email to Greenfield.

"FYI, this is her termination case," Killgore wrote.

It wasn't quite yet, but he wasn't far off.

Things fall apart

The attorney general's investigation ended in February 2012, nearly the same time Keisling and his staff finished their business review of OCE. The attorney general's investigation found no criminal wrongdoing, although investigators did question the relationship between the agencies.

Peters' hands were no longer tied, and she was holding a report that was the product of Killgore's insubordination.

Keisling, tired of Peter's and Morrow's lack of cooperation, tried an end run to avoid them when he turned in the final draft. He emailed it to Michael Jordan, the head of the Department of Administrative Services, in January.

"DOC leadership has made abundantly clear to us their displeasure about our even examining this particular subject (of OCE independence). We have informed them that even if our actual client (OCE) asked us to steer clear of this particular question, we wouldn't necessarily do so, if we felt it relevant and material to our work," Keisling wrote.

"As you also know, there are other dynamics swirling around the OCE/DOC relationship. But suffice it to say…we simply transmitted the final version to OCE. If DOC asks for this Phase 2 document, I expect OCE will gladly offer it up (though that may prompt another round of ruckus). But absent their asking, OCE and we prefer to concentrate on getting the Phase III report done -- and have the conversation then revolve around that, rather than revisit the preliminaries."

When Peters finally read it, she saw it as the product of Killgore subverting her specific directions.

Around the same time, the Association of Oregon Corrections Employees (AOCE) had filed a labor complaint against Killgore's agency over the hiring of a different, competing union at Coffee Creek Correctional Institution. Emails show that complaint was the latest in a string of problems between Killgore and the union, which led to serious mistrust.

Killgore seemed to sense his time as OCE director was up."This is just one of many problems that will arise in the near future," he wrote to Greenfield. "I hope they get a good replacement for me as prison industries can get ornery (as you know)."

Peters waited until March 13 to fire Killgore.

In the firing letter, she talked about the Portland State report and his insistence on studying a plan her agency did not want to follow. She also mentioned his poor relationship with the union and low morale among his staff.

Peters and Morrow both spoke to the attorney general's office about Killgore's performance during the investigation. Peters also said Killgore was missing important management meetings, missing work and generally disengaged from his job throughout the year, according to transcripts of interviews conducted during the investigation.

Morrow told investigators that Killgore said he was "exhausted" and "burned out" in his position and had been looking for a new job for several years.

Both, however, said they originally had no plans to fire him.

Ultimately, Peters wrote in her letter, she changed her mind after seeing the way the Portland State contract played out and Killgore's inability to fix his relationships with anyone at work, from the union to herself.

"I need an advisor, rather than an administrator who advocates for approaches he already knows I have chosen not to pursue," Peters wrote.

In the aftermath

In April 2013, about a month after his firing, Killgore filed a wrongful termination suit seeking $1.5 million.

Killgore alleged that Peters had retaliated for his reporting problems between the agencies to the attorney general, even though records show he'd known for a long time he was on a path that could lead to termination.

At the same time, Keisling and Greenfield mocked Peters in emails and derided her abilities.

"I am concerned that the Administration appears to be untroubled by the budget, operational, structural, authority, judgment, ethical and policy problems," Greenfield wrote to Keisling in an email in April 2013. "Collet (sic) has the skills to deal with this the same way I have bee-keeping skills."

Keisling, Greenfiled, Killgore, Peters, Morrow, Williams and others were deposed during the year following the lawsuit, and the case very nearly went to trial.

But in October 2013, Killgore's lawyer, Richard Busse, asked the state's attorney, Steve Lippold, for a settlement deal.

The parties reached an agreement in May after the state spent $119,167 contesting it.

Killgore came out $300,000 richer. Of that, $275,000 was paid out in settlement of the emotional distress and loss of reputation claims, and $25,000 in settlement of Killgore's lost wages claim.

Busse's firm, Busse & Hunt, earned $150,000.

Altogether, the $450,000 settlement was just 30 percent of what Killgore originally sought, and the state of Oregon denied "any and all allegations of wrongdoing and any liability for the claims."

The state did not offer an explanation for why it chose to settle with Killgore rather than go to trial. Ultimately, DAS spokesman Matt Shelby said, the attorneys and departments would have examined every email and piece of evidence and weighed the risk of a trial against the cost of paying out a settlement.

As Killgore once quipped to Greenfield with unintentional irony, "It pays to save emails."

Document:Colette Peters Deposition

Document:Deposition transcripts

What is Oregon Corrections Enterprises?

Oregon Corrections Enterprises (OCE) is a semi-independent state agency that employs prison inmates. It has existed for the past 15 years and is run by an administrator who answers to the director of the Department of Corrections (DOC).

In 1995, the Oregon Legislature responded to public sentiment to see inmates engaged in productive, full time work or on-the-job training while serving time. Oregon voters passed Ballot Measure 17, which enacted a constitutional amendment that requires correctional facilities to provide such employment. In 1999, voters approved Ballot Measure 68, creating OCE, an agency established to be self-sustaining through the sale of goods and services.

At present, OCE has 95 employees and an annual budget of $25 million, a fraction of the $1.4 billion budgeted for the DOC and its 4,600 employees.

The agencies share the same buildings, work with the same inmates and regularly collaborate on projects. But at times, the DOC-OCE relationship has been strained.

The Legislature gave the DOC director the authority to hire and fire the OCE director, although it expected the smaller agency to be independent, with its own budget, employees and autonomy over internal operations.

Document:Killgore Keisling & CJ Emails

Document:Greenfield emails