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The Shocking Ways the Corporate Prison Industry Games the System

The private prison system has rebounded, growing dramatically, and making big bucks with huge help from the Feds, as large numbers of immigrants are incarcerated.

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… with the states pulling back from the trouble-plagued facilities and Wall Street reacting even more strongly to the deaths and scandals, the companies have found themselves overleveraged and undercapitalized-- CCA, in particular. It built new prisons "on spec," assuming that contracts to fill them would follow, and by my estimate the company now has more than 8,500 prison beds standing empty. The firm last year came close to a financial meltdown: Its stock lost 93 percent of its value in 2000, and its accountants reported a fourth-quarter loss of more than a third of a billion dollars.

With demand down, private prisons were forced to seek out new markets if they were to survive, so they turned to immigration detention. According to the Columbia Law Review, the daily average of immigrants detained in 1994 was 6000. After Congress passed Illegal Immigrant Reform and Immigrant Responsibility Act (IIRIRA) in 1996, which authorized the mandatory detention of noncitizens with criminal convictions, immigration detention swelled dramatically. By 2001, the number of detained immigrants more than tripled to 20,000.   But this alone wasn’t enough to save private prisons.

According to the ACLU report, heightened immigration enforcement following the 2001 terrorist attacks were largely responsible for resurrecting the private prison boom, as was predicted by Steve Logan, CEO of Cornell Corrections which has since been acquired by the GEO Group, the 2nd largest private prison operator . On a conference call with investors just two months after 9/11 Logan said:

I think it’s clear that with the events of Sept. 11, there’s a heightened focus on detention, both on the borders and within the U.S. [and] more people get caught. So that’s a positive for our business. The federal business is the best business for us.

He was right. The number of immigrants detained annually has nearly doubled, to 390,000 since immigration enforcement was transferred to the newly formed Department of Homeland Security in 2003, creating a huge market for private prison operators, who house almost 50 percent of all federally detained immigrants compared with just 6 percent of state prisoners and 16 percent of federal prisoners.

Since 2001, CCA revenues have increased 88 percent, earning over $1 billion annually for the last eight years in a row. Today, CCA receives 40 percent of its business from the federal government, including Immigration and Customs Enforcement and the Federal Bureau of Prisons. GEO Group revenues shot up as well, from $517 million in 2002 to $1.3 billion in 2010, a 121 percent increase. 

Given the private prison industry’s heavy reliance on immigration detention, it comes as no surprise that Arizona’s draconian immigration law SB 1070 was shaped with the assistance of private prison leaders and lobbyists. The law authorizes Arizona police to arrest and detain individuals they suspect are undocumented if they fail to provide paperwork proving their legal residence, essentially legalizing racial profiling.  

Gaming the System


Although these companies are increasingly depended on immigration detention, they have not given up on the criminal justice market.   For private prisons whose profits are dependent on a constant and growing pool of prisoners, that means supporting policies that maintain and even increase the incarceration rate.  For inmates, that translates to longer sentences, unsanitary conditions, and as Shapiro documents in the ACLU report, brutal violence, corruption, and abuse with little to no oversight. 

Leniency and sentencing changes actually pose a threat to business models of these companies. The more crime there is the more business private prison companies get, and the more strict sentencing laws there are the more taxpayer money is poured into private prison companies incarcerating individuals for nonviolent offenses,” says Shapiro.

 
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