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Private Prison Firms Spend Billions of Taxpayer Dollars Acquiring Other Companies

by Christopher Zoukis

A fact sheet compiled by In the Public Interest (ITPI), a public policy research organization, indicates that Corrections Corporation of America – CCA, now known as CoreCivic – and the GEO Group, the two largest private prison firms in the nation, have spent a combined $2.2 billion since 2005 acquiring other, smaller companies.

That’s $2.2 billion in taxpayer dollars, since almost all the revenue that private prison firms receive are from government contracts paid with public funds.

It’s not surprising that GEO Group and CCA make such acquisitions. They are for-profit corporations seeking to expand their revenue, after all. And therein lies the rub.

According to the ITPI fact sheet, “If government agencies insourced the services provided by these private prison companies, the tax dollars the companies spend acquiring other companies could be invested in programs to rehabilitate incarcerated people and keep at-risk people out of the criminal justice system.”

In the 10 years between 2005 and 2015, GEO Group spent $2 billion to acquire nine companies. Several of those businesses, such as Correctional Services Corporation, also operated private prisons, while others provided monitoring services. The monitoring firms included Soberlink, Inc. (alcohol monitoring), Protocol Criminal Justice, Inc. (electronic monitoring) and BI, Inc. (electronic monitoring).

GEO also recently acquired Community Education Centers (CEC), a for-profit reentry and treatment provider, paying $360 million for that company in April 2017. [See: PLN, July 2017, p.29].

After a several-year hiatus, CCA has purchased several smaller companies, too. All three purchases between 2013 and 2016, totaling $229 million, were for firms operating residential reentry centers – including Correctional Alternatives, Inc., Correctional Management, Inc. and Avalon Correctional Services. [See: PLN, June 2017, p.24].

The trend is clear. Both GEO Group and CCA are diversifying their business operations and seeking new revenue streams. As “tough on crime” policies are slowly being rolled back in favor of reentry programs and community corrections, private prison firms are preparing to feed at a new taxpayer-funded trough.

Much-needed money for reentry and rehabilitative programming is also being redirected from taxpayers to some of the largest banks in the world – such as Wells Fargo, Bank of America, JP-Morgan Chase and SunTrust. CCA and GEO Group relied on bank loans to make the majority of their acquisitions, and use taxpayer funds to pay the interest on those loans.

The fact sheet providing this information, released on September 1, 2016, is part of ITPI’s “Programs Not Profits” campaign, which promotes the replacement of private, for-profit prisons with publicly-funded and managed programs “that provide job training, mental health care, and substance abuse treatment.” 



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