Skip navigation
× You have 2 more free articles available this month. Subscribe today.

U.S. Corrections Corporation Suit Settled for $13.2 Million

The former owners of U.S. Correctional Corporation (USCC) have agreed to settle a lawsuit over misuse of the employee stock-ownership plan for $13.2 million.

Prior to 1998, when it was purchased by Corrections Corporation of America (CCA) for $225 million, USCC ran four private prisons in Kentucky: Marion County Adjustment Center, Lee County Adjustment Center, Otter Creek Correctional Center and River City Correctional Center. Prior to the buyout by CCA, USCC had over 750 employees and an employee stock ownership plan. In 1993, Milton Thompson and Robert B. McQueen, the trustees of the employee stock-ownership plan, used the plan to seize control of USCC. In 1995, faced with the possible conviction and imprisonment of USCC owner J. Clifford Todd for paying almost $200,000 in bribes to Jefferson County Corrections Chief Richard Frey for USCC to keep a profitable contract with Jefferson County, Thompson and McQueen used the employee stock ownership plan to purchase the company from Todd at a higher-than-fair-market price. All told, they paid $9.9 million more than the stock was worth according to the courts expert. In 1996, Todd was convicted and sentenced to 15 months in jail.

The past employees of USCC sued Thompson and McQueen. In 2002, U.S. District Judge Jennifer Coffman found that Thompson and McQueen had failed to investigate the purchase price of the stock, improperly costing the employees millions of dollars. In January 2005, she ordered Thompson and McQueen to pay $20.7 million in damages. Instead of appealing the decision, Thompson and McQueen, who made over $70 million in profit on the sale of USCC to CCA, entered into settlement negotiations.

On May 6, 2005, they agreed to pay $13.4 million in damages to settle the suit. All the parties will contribute to the payment but the amount each party is paying is confidential, according to Sheryl Snyder of Louisville, Kentucky, who represents Thompson and McQueen. We had an all-day mediation session and reached a global settlement of three lawsuits among six parties. It is hardly a surprise that the administrators of a private prison company, an industry that seeks to profit from human misery, have no moral compass when it comes to stock manipulations. See: McQueen v. Corrections Corporation of America, USDC D Ky., Case No. 3:00-cv-00804-JBC-JDM.

Additional Source: Lexington Herald.

As a digital subscriber to Prison Legal News, you can access full text and downloads for this and other premium content.

Subscribe today

Already a subscriber? Login

Related legal case

McQueen v. Corrections Corporation of America