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How “Big Capital” Learned to Love Mass Incarceration

How “Big Capital” Learned to Love Mass Incarceration

“Who is accountable for the imposition of punishment in our carceral system?” asked Laura I. Appleman, Professor of Law at Willamette University, in an article published on April 13, 2023. An answer is no longer simple, she notes, since responsibility for U.S. incarceration has increasingly been farmed out to private companies—some publicly held, others owned by private equity firms—all seeking to profit off those swept up in the U.S. criminal justice system.

“Where there is a flow of public money, there is always a rush of capital in to drink,” Appleman observes, using the term “Big Capital” to describe the interconnected web of companies exploiting the explosive growth of what are known as “correctional services.” The professor decries the involvement of Big Capital, saying it distorts American values regarding punishment and rehabilitation, creates conflicts of interest and corrupts administration of justice.

Such involvement includes operating prisons, jails, juvenile facilities and other detention centers; providing medical care, mental health care, food services, commissary services and transportation services for prisoners; as well as supplying correctional telecommunications, video visitation, electronic tablets and money transfer services.

While some private-sector involvement has long been a feature of the public justice system, its scope and scale has vastly increased since the 1990s. The disturbing trend of private equity firms investing in juvenile justice services, for example, has left 40% of U.S. juvenile detention facilities run by for-profit operators, who are dogged by preventable deaths, rapes, sexual assault, abuse and excessive use of restraints.

Big Capital is also actively involved in contracting with prison systems and jails to provide medical treatment for prisoners. Due to cost-cutting, that treatment is often inadequate and untimely, resulting in preventable deaths, illnesses and injuries. A 2020 Reuters investigation found that jails using contracted medical providers had higher prisoner mortality rates—18% to 58% higher, depending upon the company.

Appleman also describes the various ways Big Capital has found new markets in oversight and surveillance of those entering or leaving the carceral system. This includes the commercial bail bond industry, which is completely privatized. Bail bond companies are “almost entirely unregulated and frequently corrupt,” she notes, often opposing reform measures such as pretrial diversion programs that don’t condition pretrial release on a person’s ability to pay. Other privatized forms of institutional control include electronic monitoring services, probation supervision, substance abuse treatment programs and halfway houses.

It is sometimes difficult to unravel the corporate ownership of companies providing these services, though all have one thing in common: the need to generate profit. As the professor warns, “The rise of enormous corporations and private equity firms as owners and operators of a realm of correctional services means oversight and regulation of these companies is increasingly important. And yet there is little supervision over what these companies do and how they are structured.”

The nation’s two largest private prison operators, Tennessee-based CoreCivic and Florida-based GEO Group, trade on the New York Stock Exchange. But they get little oversight from institutional shareholders—investment firms and mutual funds own most of their stock.

Notably, private equity firms providing “correctional services” have no particular expertise in prisons, jails or other detention centers. There is also a concerning lack of public accountability as government employees and elected officials once responsible for what happens in prisons and jails increasingly find their responsibilities contracted out to private corporations.

Privatizing the criminal justice system creates many problems, including monopolistic outcomes when private equity firms buy up and consolidate smaller companies. There is also less transparency as private companies in many cases are not subject to public records laws.

Private companies also can exert a corrupting political influence by hiring lobbyists and making campaign contributions. CoreCivic spent $1.8 million on lobbying at the federal level alone in 2022. The bail bond industry’s trade group, the American Bail Coalition, employs 234 lobbyists.

There are also problems in publicly operated prisons and jails, of course. But deficiencies in those that are privately operated trace directly to their profit motive, resulting in cost-cutting measures that cause understaffing, inadequate staff screening and training, poor facility maintenance, and insufficient public oversight.

“While delegating punishment and imprisonment is technically legal,” Appleman asks, “do we truly want to delegate the role of incarcerating, punishing, deterring, and rehabilitating justice-involved individuals to private companies primarily focused on reaping profits?” See: Big Capital & the Carceral State, Hastings Law Journal (Apr. 2023).

Web of Large Prison Profiteers

Altamont Capital Partners, a private equity firm, owns juvenile residential lockup operator Sequel Youth & Family Services.

American Securities, a private equity firm, owns prison and jail telecommunication provider ViaPath Technologies, formerly known as Global Tel*Link (GTL).

Apax Partners, a private equity firm, bought electronic monitoring firm Attenti from 3M.

Bison Capital Asset Management, another private equity firm, owns privatized probation services provider Sentinel Offender Services.

Centene Corp., ranked 25th on the 2023 Fortune 500, operates Medicare, Medicaid and TriCare (for U.S. military members) health plans; until January 2023, it also owned prison and jail healthcare provider Centurion Health, selling it then to an undisclosed buyer.

CoreCivic, a publicly traded company, owns prisoner transport firm Trans­Cor­America; Recovery Monitoring Solutions and Rocky Mt. Offender Management Systems, which supply electronic monitoring; and halfway house operator Avalon Correctional Services.

Fairfax Financial Holdings LTD, an insurance firm, owns bail bond underwriters Crum & Forester and Bail USA.

Flacks Group, an investment firm, owns Corizon Health, which spun off its prison and jail healthcare services into another company, YesCare, Inc. The restructuring saddled another new entity, Tehum Care Services, with the firm’s debt—including settlements in prisoner lawsuits—which then filed for bankruptcy, as reported elsewhere in this issue. [See: PLN, Jan. 2024, p.29.]

GEO Group, also publicly traded, owns psychiatric hospital subsidiary GEO Care; electronic monitoring firm BI, Inc.; and halfway house operator Community Education Centers.

HIG Capital, a private equity firm, owns prison and jail healthcare giant Wellpath; Access Corrections, which supplies money transfer services; and indirectly controls TKC Holdings, which owns prison and jail food services provider Trinity Services Group and Keefe Group commissary services. Keefe owns prison and jail phone service provider ICS Solutions.

Platinum Equity, a private equity firm, owns Aventiv, which in turn owns prison and jail phone services provider Securus; JPay, which supplies messaging and money-transfer services; and AllPaid, a payment processing service.

Randall & Quilter, a global insurance company, owns Accredited Surety & Casualty Co., one of nine main insurance companies underwriting bail bonds.  

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