Profiting Off Mass Incarceration: Detroit Pistons Owner Buys Private Prison Phone Company
by Brian Dolinar, Truthout
The election of Donald Trump has already given an economic boost to those profiting from mass incarceration. The stock prices of the two biggest private prison builders – CoreCivic (formerly Corrections Corporation of America) and GEO Group – doubled after Trump took office.
Companies that charge for expensive phone calls from prisons and jails also won big after Trump’s victory. One of the president’s first appointments placed Ajit Pai at the helm of the Federal Communications Commission (FCC), who promptly rolled back the agency’s 2015 decision to regulate the prison phone industry. The companies hailed it as a victory.
Shortly after the FCC’s reversal, Securus, one of the largest prison phone companies, announced it was being sold to Platinum Equity, a large investment firm for a reported $1.5 billion. (To date the deal has not been finalized.) Tom Gores, Platinum’s founder and CEO, is an investment mogul who also owns the Detroit Pistons. In 2011, Gores purchased the basketball team with the stated intent of improving the struggling city.
In the United States’ current economy, prisons and basketball are growth industries. Both profit from the exploitation of black bodies, pulling in people from poor neighborhoods in major cities like Detroit. Yusef Shakur grew up on these streets. He ran in a gang at a young age and spent nine years incarcerated. He is an activist today working in Detroit’s black community. In an interview with Truthout, he called Gores’ purchase of Securus another “capitalist adventure” taking advantage of the “most marginalized and most oppressed.”
Securus, Leading Prison Profiteer
Securus has seen steady economic growth in recent years, trading hands between several large hedge funds. In 2011, Securus was purchased by the investment firm Castle Harlan for an estimated $440 million. Two years later, the company was bought out by another big investor, Abry Partners, which reportedly paid $640 million. In leaked documents, Securus boasted of making $114 million in profit in 2014, a 30 percent increase from the previous year.
Securus is a modern-day carceral conglomerate, a company that is traded by big investment firms and owns a diversity of prison products and services. It is the second-largest prison phone company, behind Global Tel*Link (GTL), although Securus is quickly moving into various new markets. As Securus describes itself in a recent press release, it is “a leading provider of civil and criminal justice technology solutions for public safety, investigation, corrections and monitoring.”
The company is responsible for phone calls for more than one million people incarcerated in the U.S., but this is not all. Securus is now installing Skype-style video calling systems that can cost $20-$40 per session. Securus has also acquired two companies in the growing market of electronic monitoring.
In 2015, Securus bought out JPay, an automated billing company that charges families to send money to their loved ones who are incarcerated. Securus, and its parent company Abry Partners, paid $250 million for JPay, a fast-growing business that operates in 33 states and has 1.6 million customers.
The prison phone industry has come under intense public scrutiny after a 20-year campaign waged by families of those incarcerated, sympathetic attorneys and prison activists. Retired nurse Martha Wright first filed a lawsuit to cap phone rates, which in 2001 was referred to the FCC. Commissioner Mignon Clyburn championed the issue in front of the communications board. In October 2015, the FCC passed sweeping regulations of these calls.
However, shortly after coming into office, Trump promoted FCC Commissioner Ajit Pai to serve as chairman. Just days into the position, Pai came out with news the FCC would no longer defend its 2015 decision. In June 2017, a U.S. Court of Appeals in Washington, D.C. ruled 2-1 to strike down the FCC’s ruling.
Truthout spoke with Lee Petro, one of the attorneys representing the Wright petitioners, who cited Pai’s role in undoing the regulations.
“The decision by Chairman Pai to prohibit his attorneys to defend the Commission’s authority to regulate intrastate rates was a devastating blow, and was directly cited in the majority decision as a basis for overturning the FCC rules,” Petro said.
U.S. Senator Tammy Duckworth introduced a bill that would regulate video calling systems and authorize the FCC to rule on prison phones. Organizing behind this legislation may be the next step for those in the prison phone justice campaign.
During Pai’s confirmation process, he revealed in a questionnaire that, during 2011 and 2012, Securus was one of his clients when he was working as an attorney at the law firm of Jenner & Block. He was confirmed as FCC chairman by the Senate on Oct. 2, 2017.
Not long after Pai’s appointment, Securus announced that it was up for sale to Platinum Equity. Its reported $1.5 billion price tag is more than double what was paid for Securus five years ago. Prisons promise to be profitable in the Trump era.
How to Win
In 2011, the Detroit Pistons were a struggling basketball team that had a losing record. By that time, Detroit had a reputation as one of the most economically-depressed urban centers in the U.S. Not long after, the city declared bankruptcy. When Platinum’s Tom Gores bought the Pistons, it was a risky venture. Gores purchased the team for $325 million, a bargain price that one commentator called “shocking.” The same year, Platinum was listed as the 23rd largest private company by Forbes. Today, Gores is worth an estimated $3.3 billion.
Gores was raised in Genesee, Michigan, a suburb of Flint, not far from Detroit. He moved to California where he established Platinum Equity in 1995, with headquarters in Beverly Hills. Platinum has bought and sold more than 185 different companies in a variety of industries, including information technology, manufacturing and transportation. It owns the largest newspaper in San Diego, the Union-Tribune. A global company, Platinum also has offices in New York, Boston, London and Singapore.
Growing up near Detroit, Gores professed his desire to use the Pistons to help turn the city around.
“If all I do is make a few bucks,” Gores wrote in Forbes, “that’s not good.” A winning team would bring people back to Detroit, he said, “so we have to figure out how to win, how to compete. I know the city needs that.”
Also known for his philanthropy, Gores pledged to raise $10 million for residents of Flint after news broke of their toxic water supply.
However, activists who spoke to Truthout questioned Gores’ good intentions. Ronald Simpson-Bey is an alumni associate at JustLeadershipUSA who currently lives in Detroit. He did 27 years in Michigan state prisons before having his conviction overturned in 2012. Platinum’s purchase of Securus “speaks volumes,” he said. “People like Gores need to invest money in people, not prisons.”
Truthout attempted to reach Gores, but he did not return a request for comment.
Gores recently announced the Pistons are coming back to the city in a move that is being billed as key to building a “New Detroit.” For years, the Pistons have played at The Palace in the suburb of Auburn Hills. A new stadium named Little Caesars Arena is expected to open before the end of the year in downtown Detroit and will host games by the Pistons as well as the hockey team, the Detroit Redwings (owned by Christopher Ilitch, who made his fortune from the pizza chain and acquired the naming rights to the arena). In an interview with the New York Times about the team’s move downtown, Gores described the Pistons as the missing “family member” in Detroit.
Yet not everyone in Detroit feels they are part of one big happy family. The city’s downtown appears to be on a “comeback,” said Simpson-Bey, with investment downtown, cultural activities and a new rail system, “but just a mile away you see lots of urban decay.”
Dr. David Leonard, author of Playing While White: Privilege and Power On and Off the Field, who writes widely on race and sports, told Truthout that basketball has often been sold as a “rebirth for communities.” What is lost in these narratives is how “basketball franchises, and the league itself, are so often drivers of gentrification. While owners cash in on the benefits of tax breaks and their celebrity status resulting from fandom, many inside these communalities continue to suffer. Stadium construction and gentrification continues to destroy neighborhoods, displacing families and communities that are overwhelmingly of color.”
The new Detroit arena was built with the help of $344 million in taxpayer-backed city bonds. A public-private arrangement, it is technically owned by the city, but will be run by Ilitch’s company.
Gentrification and prisons both destabilize poor people. Mass incarceration is a “driving factor” behind poverty in Detroit, commented Dr. Amanda Alexander, Assistant Professor of Afro-American Studies and Postdoctoral Fellow in Law at the University of Michigan, and founder of the Prison & Family Justice Project.
“In buying Securus, Gores and Platinum Equity are profiting off the immiseration of incarcerated people and their families,” Alexander told Truthout. “Two in three families have difficulty meeting their basic needs when a loved one is incarcerated, in part because of the high costs of phone calls.”
Detroit is the poorest major American city, with nearly 60 percent of children living in poverty, she pointed out. A 2016 study called “A Shared Sentence,” conducted by the Annie E. Casey Foundation, found that one out of ten children in Michigan has a parent in prison. Detroit teachers and social workers who have reached out to Alexander for assistance estimate that half of the children in their classrooms have had a parent or caregiver in jail or prison.
By building the new stadium, the Pistons and Gores “claim they want to be part of a thriving Detroit,” but this move is “completely against the well-being of families struggling to make ends meet in the city,” Alexander stated.
African American families are bearing the greatest costs of mass incarceration in Michigan. According to a report by the Prison Policy Initiative, although black people make up 14 percent of the state population, they are 49 percent of those in prisons and jails. Black residents are incarcerated at a rate six times that of whites.
Detroit is also a black city, with a population that is 80 percent African American. On the court, the Pistons are dominated by black players. The Pistons’ roster for the 2017-18 season includes 15 players, 10 of whom are African American.
In the New Detroit, Gores has found a way to make a profit from black bodies both on the court and in prison. This is an investment strategy that monetizes successful athletes, as well as those who fail to assume their place in the postindustrial economy. It is reinforced by a powerful ideological message.
“We collectively celebrate Jordan, Kobe, and LeBron, purportedly proving that we are beyond race and racism,” Leonard said. “At the same [time] we spotlight their successes, their fulfillment of the American Dream, we suggest that those locked behind bars are there because of bad choices.”
Throwing People Away
Speaking from firsthand experience, Ronald Simpson-Bey described phone calls as an “umbilical cord” between those in prison and their families. Yet companies like Securus are “exploiting” the downfall of others. “The people who can least afford it are being charged the most,” he said.
Yusef Shakur also testified to the importance of phone calls, saying they were a “lifeline” for those inside. Many people affected by mass incarceration, “inside and out,” Shakur noted, are functionally illiterate, making letter writing uncommon. Visiting prisons often located in rural areas is difficult. “Phones are the most realistic option,” he said.
Families can rack up hefty monthly bills paying for regular phone communication with a loved one locked up. Securus has the contract for Wayne County, where Detroit is located, and a 15-minute call from the county jail costs $7.50. In nearby Flint, where Securus is also the provider, a 15-minute call costs $17, one of the highest rates in the country.
To date, no local newspapers have picked up the story of Gores’ purchase of Securus.
“They are all in cahoots,” said Simpson-Bey. “Newspapers are not going to make a peep about it.”
The redevelopment of the city also involves plans for a new county jail, which has been contested by grassroots organizations.
“Look at what’s being built in New Detroit. What about the criminals?” questioned Yusef Shakur. “They are going to need somewhere to throw them away. That is what’s fueling the new county jail.”
Race, class and economics are tied together in Detroit, according to Shakur.
“It is a monopoly for the benefit of the wealthy,” he said.
This article was originally published by Truthout (www.truth-out.org) on September 25, 2017. Copyright, Truth-out.org. Reprinted with permission, with minor edits.