How Wall Street Profits from the Criminalization of Immigrants and Lobbies for More To Be Locked Up
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Soon after the Bush Administration implemented the change in law enforcement affecting immigrants, Wall Street advisors publically recommended buying stock in private prison companies like CCA and GEO. At the time, Vice President Dick Cheney was heavily invested in Vanguard, one of a handful of major shareholders in GEO.
The lobbying paid off for both companies, in huge revenue increases from government contracts to incarcerate immigrants. From 2005 through 2009, for every dollar that GEO spent lobbying the government, the company received a $662 return in taxpayer-funded contracts, for a total of $996.7 million. CCA received a $34 return in taxpayer-funded contracts for every dollar spent on lobbying the federal government, for a total of $330.4 million. In addition, both companies increased revenues over the same period from detention facility contracts with a number of states.
In 2007, the Immigration and Customs Enforcement Agency (ICE) conducted 30,407 immigration raids in workplaces, neighborhoods, and public gathering sites such as bus stops and commuter train platforms. The number of raids conducted that year was double the 2006 total. The number of immigrants placed behind bars, for what amounts to the crime of having been born in the wrong place, increased from 256,842 in 2006 to 311,169 in 2007.
As a result of fear induced by the raids and other factors, pro-immigrant May Day marches in 2007 were much smaller than those of the previous year. In mid-2007, while many activists and organizers were focused on legislative reform, public protests, eliminating the raids, and trying to help families and friends of those who had been taken away by ICE and other enforcement agencies, GEO and CCA shareholders reaped a huge profit. Both companies issued 2-for-1 stock splits that roughly doubled the value of their shareholders’ stake.
Although stockholders profited handsomely as revenues from prison contracts rose for both companies, the increase wasn’t large enough to satisfy some of their respective major shareholders. J.P. Morgan Chase, a major owner of GEO, dumped most of its stock and relinquished its leadership position in the company.
One problem for major investors seeking huge gains from the for-profit prison business was that revenue rates couldn’t keep rising because federal agencies didn’t have enough personnel to arrest and process more immigrants than the expanded number they were now handling. It became apparent that the only way to significantly raise revenue through increasing the numbers of people picked up, detained and incarcerated was to hire more law enforcement personnel.
The private prison industry now needed a new source of low-cost licensed law enforcement personnel. CCA and GEO then turned to state governments as the focus of business expansion. Both companies stepped up efforts to acquire contracts with state and local governments that were entering into lucrative agreements with the Department of Homeland Security to detain immigrants in state and local detention and correctional facilities.
The result of this shift in business focus is exemplified by CCA’s role in Arizona’s SB 1070 and both CCA’s and GEO’s roles in other legislative efforts aimed at dramatically increased numbers arrests of undocumented immigrants in over 20 states. Arizona’s Governor Jan Brewer, who received substantial campaign financing from top CCA executives in Tennessee and employs two former CCA lobbyists Chuck Coughlin and Paul Sensman, as top aides, signed SB 1070 into law on April 23.
On Friday, July 30, 2010 the Republican Governors Association, which so far this year has received over $160,000 in contributions from CCA and GEO, and their respective lobbyists, sent out a nationwide solicitation written by Arizona Governor Jan Brewer requesting contributions to fund an appeal of the partial injunction issued by a judge against SB 1070.