New York City May Expand Investment Bar to Prison Service Providers
by Kevin Bliss
Under a policy adopted in 2017 by the Comptroller of New York City, none of the city’s five pension funds has any investments in private prison operators due to concerns about investing public money in companies that profit from mass incarceration. Now that ban may also be extended to investments in firms that provide other correctional services, such as Securus Technologies, a prison phone service provider.
Securus is wholly owned by Platinum Equity, LLC, whose first acquisition in 1995 was LSI – a company that generated computer graphics for courtroom simulations. Platinum is currently seeking commitments from its investors for a fifth buyout fund. [See: PLN, Aug. 2019, p.22].
Bianca Tylek, founder and executive director of Worth Rises, a nonprofit that opposes commercialization of the criminal justice system, advised that investors need to be concerned about a company that has already bought an asset with considerable ethical and moral issues. She said they should first see how Platinum dealt with Securus’ “exploitable practices,” which have included charging up to $25 for a 15-minute call, requiring jails using the company’s video-calling service to restrict in-person visits, and charging excessive fees for opening, funding and closing prisoner accounts.
Securus currently pays some correctional agencies up to an 80 percent “commission” kickback for monopoly contracts to provide phone services. Platinum, which has made several changes since its 2017 acquisition of Securus – such as providing more transparency for rates and hiring new management – stated, “Some of those practices had already been discontinued by the time we acquired the company ... [others] are being reviewed to ensure that Securus serves not only the best interests of the corrections-facility customers, but balances that where possible against the interests of the incarcerated-inmate consumers.”
New York City has over $200 billion in retirement benefits it manages for the city’s police, teacher, fire and other government employees. Along with the Pennsylvania teachers’ pension fund, it is among the largest investors in the Platinum Equity Capital Partners IV fund. Both have been approached by groups intent on reducing the use of taxpayer money to fund industries that are contrary to the public good.
Pennsylvania has postponed investing any more teachers’ funds into Platinum as more information is gathered. New York is allowing each of its five pension funds to formulate its own regulations and restrictions with respect to any new commitments to Platinum.
“This could be the broadest action we see targeting investments in the prison industrial complex and the first in the private equity space,” said Tylek.
In 2007, New York was among the first states to ban private prison operators – such as CoreCivic (formerly Corrections Corporation of America) and GEO Group – which held about 8.5% of the federal and state prison population, totaling over 128,000 prisoners, as of 2016. Iowa and Illinois have also passed laws banning private prison companies.
Then in 2018, under a bill championed by New York state Senator Brian Benjamin, the state’s pension funds yanked investments from private prison firms. Although the amount was relatively small – the state’s investments in CoreCivic and GEO Group totaled $10 million out of $207 billion in pension funds – Benjamin insisted that it sent a powerful message. In 2019 he sponsored legislation to prevent state-chartered banks, including branches of national chains like Bank of America, from making similar investments.
“My constituents do not put their hard-earned savings in a bank like [Bank of America] ... expecting that those funds will be used to finance mass incarceration,” Senator Benjamin stated. “Whether through organizing and community pressure, or tools like [this] bill ... we can and we must bring an end to private prisons.”
Sources: bloomberg.com, forbes.com, thesource.com, muckrock.com