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St. Louis halfway house for federal prisoners turns into cash cow for family that runs it

St. Louis halfway house for federal prisoners turns into cash cow for family that runs it

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ST. LOUIS — The oldest halfway house in America was founded on a simple premise, to “provide assistance to the downtrodden and other victims of misfortune ….”

These days, the Dismas House of St. Louis is run like a family business, and a lucrative one at that.

Founded as a nonprofit in 1959 by a colorful Jesuit priest and a lawyer for the mob, Dismas House serves as the last stop for some federal prisoners before they go on probation and reenter society. Long considered a religious ministry, the organization currently has no apparent connection to either the Missouri Jesuit Province or the Archdiocese of St. Louis.

Since 2006, the board has been controlled by John Flatley and his sister, Vivienne Bess, and the two siblings have turned the nonprofit’s contract with the federal Bureau of Prisons into their personal piggy bank.

Between 2011 and 2016, according to federal tax records, Flatley and Bess have been paid more than $4.9 million in salary.

Hundreds of thousands of dollars have been paid to Flatley’s son, Patrick, and another board member, Randy Howard. Howard is the current executive director of the halfway house. He says the Bureau of Prisons contract is the organization’s primary source of revenue.

The salaries, which fluctuate from year to year, are a massive outlay of cash for an otherwise small nonprofit that relies on one federal contract for its existence.

Bess is married to Gary Bess, who until recently was St. Louis County Executive Steve Stenger’s director of parks. After Stenger was indicted on federal fraud and bribery charges, Gary Bess, who also sits on the Dismas House of St. Louis board of directors, resigned his position with the county. He previously held a similar position in the city of St. Louis under the mayoral administrations of Francis Slay, Vincent C. Schoemehl and Freeman Bosley Jr. During the ongoing investigation into corruption in the Stenger administration, the U.S. attorney’s office subpoenaed some of Bess’ records and emails.

The money trail from the federal contract to the Flatley and Bess families is found in the IRS records of a nonprofit spun off in 2011 by the Dismas House board of directors. That nonprofit, called Forward Assist Inc., runs 12 Oxford Houses in the city and the county. Oxford Houses are group homes for recovering alcoholics and drug addicts, where the residents — about eight per home — pay rent and manage their recovery in a community setting.

The homes had been run by Dismas House until 2011, when the board members split them off and transferred their assets to Forward Assist. At the same time, the board members created a private real estate investment holding company called Forward Invest LLC. That company, according to tax records, is wholly owned by the Forward Assist nonprofit. Oxford Houses are each operated independently and not funded by any federal grants. The individual homes do not pay property taxes because they are owned by a nonprofit.

The Bureau of Prisons awarded its most recent contract to Dismas House in 2016. It is a $43 million contract over five years, with Dismas House expected to average about 160 beds a day for federal prisoners at 5025 Cote Brilliante Avenue, in north St. Louis.

Some of those federal prisoners, in interviews with the Post-Dispatch, complain of subpar conditions.

“The place is a dump,” said one federal inmate who asked that his name not be used because he is still under Dismas House supervision. “It’s worse than the federal camp I stayed in before I got here. I have seen multiple people ravaged by bed bugs. The computer lab is never open, making it hard to find work. I can’t imagine what they’re spending their money on.”

Massive salaries

It’s not clear how long Dismas House of St. Louis has been paying Flatley and Vivienne Bess six-figure salaries, in part because the organization doesn’t file IRS 990s. It has long claimed a religious exemption.

Founded by the Rev. Charles “Dismas” Clark and criminal defense attorney Morris Shenker — known for his representation of famed Teamster Jimmy Hoffa, and his alleged ties to the mob — the organization had been run by a priest since its founding. First was Clark, then the Rev. Fred Zimmerman, and finally the Rev. Joseph Kohler. In its early days, the nonprofit lured Frank Sinatra and the “Rat Pack” to St. Louis for a fund-raising concert in 1965 at the Kiel Opera House. Clark’s story spurred a 1961 movie called “The Hoodlum Priest,” and sparked other halfway houses to open across the country, many of them also using the Dismas House name.

When Kohler died in 2006, Flatley, who had been mentored by the Catholic priest, took over. Among his first moves was to put his sister on the board. At various times, she has described her role at Dismas House in public records as its director or its associate director.

As of the nonprofit’s most recent filing with the Missouri secretary of state’s office, its board consisted of Flatley; his sister, Vivienne Bess; her husband, Gary Bess; his longtime aide at the city parks department, Kathleen Sullivan; and Ron Howard, brother to current executive director Randy Howard.

Patrick Flatley says Vivienne Bess worked for the organization for more than 20 years, and that’s why she was being paid, even as a board member. He described her role as the assistant to the executive director.

He declined to comment on the size of the salaries paid to the two Flatleys and Bess.

Neither of the Besses, nor John Flatley, returned phone calls or emails for comment. Nobody answered when a reporter knocked on the front door of the Bess family’s south St. Louis County home.

“This is our personal family business,” Patrick Flatley said, after refusing to answer any questions about the high salaries. “I have no idea what my father’s salary was. I’m sure he wouldn’t be interested in having the Post-Dispatch nosing around his business.”

That business has earned a virtual fortune for the family that runs the nonprofit’s board.

In 2012, for instance, according to tax records, John Flatley was paid $645,450 in base compensation, the highest amount he earned while executive director. Vivienne Bess made $252,867 that year. The amounts show up in Forward Assist records as coming from a “related organization.” And the only related organizations to Forward Assist are Dismas House and the real estate company created by John Flatley, Forward Invest. That company owns some real estate, mostly residential rentals, and a small strip-mall in Columbia, Mo., with an assessed valuation of about $3 million.

Forward Invest also makes personal mortgage loans to some of the board members of Forward Assist, such as Patrick Flatley, its president; his brother, Michael; and board member Randy Howard and his wife, Sharon.

None of this explains the large salaries paid to John Flatley and Vivienne Bess out of a federal grant intended to help ease federal inmates back into society.

In 2013, Flatley made $567,518 and Bess made $358,359. That year, Gary Bess filed a personal financial disclosure with the Missouri Ethics Commission as part of his job running the city parks department. It listed his wife’s sole source of income as Dismas House of St. Louis.

In 2016, the last year for which tax records are publicly available, Flatley made $464,435 and Bess made $330,668. In several of those years, Patrick Flatley also earned $100,000 or more, and Howard was paid lesser amounts, between $20,000 and $70,000.

Between 2011 and 2016, John Flatley and Vivienne Bess were paid a total of $4.9 million from Dismas House, the tax records say, which is about the same amount of assets that the nonprofit transferred to Forward Assist Inc., when the second nonprofit was formed in 2011.

Where did all that money go?

“I don’t work for Dismas House,” Patrick Flatley says. “I can’t speak to any of that.”

In fact, according to the tax records, Flatley does work for Dismas House. About 25 percent of his 2016 salary of $102,000 as executive director of Forward Assist was paid by Dismas House, as a “leased” employee. He has an office there, too, though Howard says he rarely uses it.

The close connection between the two nonprofits is clearly a sore spot among at least some of those involved in their management.

“I would prefer if you didn’t write about Dismas House and Forward Assist in the same article,” Howard said.

Prison reentry

For Sister Carleen Reck, the high salaries raise questions about Dismas House operations.

For 17 years, Reck was the director of Criminal Justice Ministries, another St. Louis nonprofit that helps prisoners re-enter society. Reck retired from CJM in 2016, but was a leading voice in prison reentry in the region during the entire time Flatley and Bess have been involved in Dismas House.

“I had little interaction with him,” Reck said of John Flatley. “He did not participate in either local or state groups of agency leaders where we worked together on common issues. Our case managers worked directly with the Dismas case managers. I can assure you that CJM has a much higher priority on client assistance than on director salary. As you know, funds to help ex-offenders are generally very limited.”

As director of CJM, Reck was paid $47,000 a year, according to that organization’s IRS 990 forms. Its current executive director, Anthony D’Agostino, is paid $75,000 a year. As a further comparison, J. Paul Molloy, national executive director of the Oxford House nonprofit, was paid just more than $99,000 in salary in 2016. According to the GuideStar annual survey of nonprofit compensation, salaries for an executive director or CEO of such organizations average $120,000 nationally, but are generally much lower in the Midwest.

But at Dismas House, board members from the same family have been paid three or four times more than that.

Bureau of Prisons officials refused to comment on the pay of Dismas House board members and executives. The Post-Dispatch filed a Freedom of Information Act request for the contract between the bureau and Dismas House, but the government indicated the request could take up to a year to process.

Howard said he couldn’t find a copy of the contract to share with a reporter.

He said the salaries that show up on the tax records are a surprise to him. Howard is on the board of Forward Assist, and the tax records say the board members viewed and approved the 990s before they were filed. Howard said he never saw them.

“I don’t think they were paid that much,” Howard said in an interview. “If that’s the case, I need a raise.”

He later viewed the IRS 990s himself and verified to the Post-Dispatch that its interpretation of the Dismas House salaries was accurate.

Dismas House of St. Louis

Randy Howard, executive director of Dismas House of St. Louis, 5025 Cote Brilliante Avenue, is photographed on Tuesday, May 14, 2019. Photo by Robert Cohen,

Howard, who says he’s now making about $160,000 a year as executive director, has been affiliated with Dismas House since 2006. That’s the year Father Kohler asked him to serve on the board, he said. For much of his professional life, Howard sold recreational vehicles for a living. He has no training in social work or criminal justice. Starting in 2009, he says, Howard served as a management consultant to Dismas House, making several thousand dollars a year while also serving on the board.

He took over as executive director in 2017, he says, when John Flatley retired.

Howard says he was aware that both Flatley and Bess were earning salaries, but he had no idea they were worth several hundred thousand dollars each. The Bureau of Prisons contract, he says, contains salary ranges for every position at Dismas House, and none of them approach what Flatley and Bess were making.

Lax rules

The result of those high dollar payments to Dismas House board members is that there is less money for programming and services to the inmates who are sentenced to be there.

“There is rampant alcohol and drug abuse,” says one resident of the facility.

Anthony Arrington, associate director of Dismas House, disputed that. He said the facility drug-tests every resident four times a month. He says only two or three positive tests are recorded per month.

Former state Sen. Jeff Smith, who spent some time at Dismas House after his prison term on obstruction of justice charges, wrote about the condition of the facility in his book, “Mr. Smith Goes to Prison.”

“Since the fifty or sixty men in the halfway house were at least somewhat free, they were focused on all that the world had to offer, with special attention to the long-forbidden fruits of wine (Boone’s Farm and Mad Dog were favorites), weed (always blunts, never bongs), and women,” Smith wrote. “Whereas prison rules were always enforced to a tee, halfway house rule violations were often ignored.”

According to other St. Louis professionals who work in the reentry field, the situation Smith described persists today.

“The clients who have come from Dismas aren’t really very successful,” said one social worker who often deals with former residents of Dismas House when they seek services from other St. Louis social services providers and nonprofits. “It doesn’t seem like there is much programming going on over there.”

There were 31 calls for service from police at Dismas House in 2018 and early 2019. They included three drug overdoses, several assaults, larcenies and one sex offense.

Arrington says Dismas House has a staff of about seven case workers and a full kitchen and maintenance staff, as well as others, for a total of about 42 employees.

Arriving inmates begin their stay in a small basement dorm room, with about 10 bunk beds. They graduate to more dorm-style living on the second floor of the century-old building, to a room with 28 bunk beds, and a window overlooking Sherman Park. Eventually, before transitioning to home confinement, the residents of Dismas House move to two-bed apartments on the second and third floor of the building.

“We don’t want this to be a comfortable place to live,” Arrington says. “We want them to go home.”

Dismas House stained glass

A stained glass window remains in place at Dismas House of St. Louis in the former chapel area. At one point, the house had many stained glass windows, but most have been broken or lost in the house's more than century of existence. Post-Dispatch photo by Tony Messenger. 

Howard admits there have been problems with bed bugs.

“Periodically we get them,” he said. “They’re usually eradicated within 48 hours.”

The facility is going through a bit of a remodeling at the moment. The north side of the second floor — the former living quarters and chapel of Father Kohler — has been gutted. Soon, more bunk beds will fill the space, to expand its capacity and potentially bring in more revenue from the Bureau of Prisons.

A solitary stained glass window with a diamond pattern of three shades of blue, pink and gold is still in place, partially covered with blinds. It is a tiny remnant of the past in a building that has seen better days.

Editor’s note: A portion of this story did not appear online Saturday morning because of a production error.

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