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Private prison stock skyrockets in anticipation of Trump’s promises to lock up more immigrants and people of color

November 10, 2016

Disgraced private prison companies profit from DHS bailout and prospective increase in incarceration.

(AUSTIN, Texas) — Private prison stocks surged after Tuesday night’s election, in speculation that Donald Trump will make good on his promise to put more people behind bars. After the Department of Justice announcement in August that declared private prisons less secure and efficient, the imminent closure of Bureau of Prisons facilities and possible extension to other facilities caused private prison stock to dive. They have now been bailed out by new DHS contracts, high detention numbers, and now the promise of even higher incarceration under a Trump administration.

Trump has also named William Palatucci, a former executive for New Jersey-based private prison corporation Community Education Centers, as general counsel to the transition team.  Palatucci left CEC after widespread criticism that the company’s halfway houses were violent and poorly supervised.  

Even before the election, private prison corporations reported increased revenues from immigration detention. In their third quarter shareholder calls last week, Corrections Corporation of America (now re-branding to CoreCivic) and GEO Group both cited high occupancy numbers in ICE detention and new or renewed immigration contracts as main contributors to their profit this quarter.

According to a CCA executive, “Per share results exceeded expectations largely due to stronger revenue driven by higher than anticipated inmate populations across numerous facilities. Our federal revenue, particularly from Immigration and Customs Enforcement, remained elevated during the third quarter in Arizona and California, and we also recently experienced higher than expected federal populations at our Torrance facility in New Mexico.”

A GEO Group executive said, “Where in previous years, the fourth quarter usually shows a downturn in the census, this year is normally that there is actually uptick in the census that we expect to see continue for the balance of the year at least and it will be reflected in our operational and financial performance.”

CCA touted its ability to seamlessly transition to an ICE contract for its disgraced former Criminal Alien Requirement prison contracted with the Bureau of Prisons, the Cibola County Correctional Center in New Mexico. The contract was recently picked up by ICE despite the fact that the prison received more repeat deficiencies and significant medical care violations than any other private federal prison currently in operation, according to an exposé in The Nation.

“Our contract with the BOP at this facility expired in September and was extended to October 30, 2016. So, this facility will transition very smoothly with in-place staff, trained and ready to accept the new ICE population,” said a CCA executive. “This new contract has no net impact on our fourth quarter 2016 guidance due to the ramp down and transitions from the BOP contract to the ramp up and transition to the ICE contract within the quarter.”

This casts serious doubt on whether the company plans to make any improvements to this atrocious facility to improve conditions or respond to the unique needs of detained immigrants who will now be held there. CCA’s rebranding to CoreCivic, which the company claims is a result of a multi-year process, conveniently obscures that this remains the very same prison the BOP closed a few short months ago.

The companies claim that DHS’ only option to accommodate the record detention numbers is to rely increasingly on private prison companies.

“With respect to detention capacity, I think, the private sector is really the only logical solution for organization sector we will quickly meet the detention standards that ICE needs for our residential type of detention,” said a GEO Group executive.

The company is actively marketing that viewpoint through its lobbying, and recent presentation to the Homeland Security Advisory Committee, mentioned in its shareholder call. In addition to the renewal and signing of additional contracts with private prisons during the Advisory Committee’s investigation, the fact that private prisons are permitted to testify before this committee that has yet to announce any opportunity for public testimony calls into question the legitimacy of the process.

“The need for increased capacity to lock up more people in immigrant detention is a manufactured one,” said Bethany Carson, immigration researcher and organizer at Grassroots Leadership. “DHS has created these astronomical detention numbers by rejecting common sense reforms that would allow immigrants to live with their families and communities while their legal cases are in process.”

Detention is at the highest level in history, and expected by advocates and the companies to reach 47,000 people in detention during fiscal year 2017. There are also now more asylum seekers held in detention than ever before. This expansion has been condemned by immigrant and civil rights organizations, and even former immigration judges. The ACLU has released common sense reforms to reduce detention in its white paper including ending family detention and the detention of asylum seekers, ending prolonged detention without bond hearings, and a reduction in exorbitant bond amounts.

The Obama Administration should use its remaining days in office to end family detention, as the government’s own advisory committee on family detention recommended, and halt the expansion of the detention system.

Other highlights from the shareholder calls included CCA’s emphasis of its skill in building prisons with fewer staff. A CCA executive said, “[When] we design a facility, we can do it in a way that is very staff efficient. So, that's two-thirds the operational costs of the facility but with that we can kind of pass expertise back to the jurisdiction and they can see staff savings from an older inefficient staff facility to a newer modern facility.” This gives further credence to advocate reports of understaffing in private prisons that creates unsafe conditions and undermines the argument that prisons are good economic development plans for communities.

Additionally, both CCA and GEO reported increased profits from halfway houses and electronic ankle monitoring. CCA announced “acquisitions totaling $214 million for 23 residential reentry centers from the beginning of the third quarter of 2015 to the third quarter of 2016” and GEO announced that its BI subsidiary continues to increase the number of people it monitors electronically, with 60,000 people monitored by just its ISAP program through Immigration and Customs Enforcement. 

“Placing more immigrants and other people of color under government surveillance is not the answer,” said Bethany Carson.  “Federal, state, and local governments should not allow troubled private prison corporations to take over recovery and re-entry services.”

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Grassroots Leadership is an Austin, Texas-based national organization that works to end prison profiteering and reduce reliance on criminalization and detention through direct action, organizing, research, and public education.

Contact: 

Bethany Carson, bcarson@grassrootsleadership.org, 512-499-8111