Providence Service accuses Avalon Correctional of spreading lies

By Lisa Kerner

Charlotte, N.C., June 3 - Providence Service Corp. urged shareholders to vote for the company's director nominees - Fletcher Jay McCusker, the company's chairman and chief executive officer, and Kristi L. Meints, chairperson of the board's audit committee - at Providence's annual meeting on June 15.

Both Glass, Lewis & Co. and Proxy Governance, Inc. recommended the election of McCusker and Meints, Providence said in a letter to shareholders on Wednesday.

Avalon Group, led by Avalon Correctional Services, Inc. and its CEO, sole director and controlling stockholder, Donald E. Smith, are seeking support for the election of Michael C. Bradley Jr. and retired U.S. Navy captain Brian T. Costello to Providence's board.

The Avalon Group nominees have never been members of a public company's board of directors and have no relevant experience, the Providence letter said.

According to Providence, over the past month Avalon Group has "embarked on a desperate strategy to spread outlandish lies and innuendo in an attempt to disparage Providence and impugn the reputation of Providence's board of directors and its management team."

Avalon, Providence said, is trying to distract stockholders from focusing on the company's "extraordinary progress," including record revenues and earnings in the first quarter.

In the letter, Providence said it is "a complete lie" that McCusker has never purchased any Providence shares in the open market.

In addition, the company said Avalon Group's claim that all of the Providence board members were "handpicked" by McCusker or have a longstanding personal or professional relationship with him is false.

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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