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This site contains over 2,000 news articles, legal briefs and publications related to for-profit companies that provide correctional services. Most of the content under the "Articles" tab below is from our Prison Legal News site. PLN, a monthly print publication, has been reporting on criminal justice-related issues, including prison privatization, since 1990. If you are seeking pleadings or court rulings in lawsuits and other legal proceedings involving private prison companies, search under the "Legal Briefs" tab. For reports, audits and other publications related to the private prison industry, search using the "Publications" tab.
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GEO Group Consultant Civilly Charged With Insider Trading
Zachariah P. Zachariah, a prominent cardiologist and Republican fund raiser from Broward County, Florida, has been a long time friend of GEO’s chairman and chief executive officer, George Zoley. That contact no doubt led to Zachriah obtaining consulting contracts with Geo through his two companies, the Zachariah Consulting Group, Inc., and ZPZ, Inc. Zechariah also leased a private airplane in which he had a beneficial interest to GEO for charter flights.
In addition to those inside contacts, Zachariah’s son, Reggie, was employed as a financial analyst for GEO’s mergers and acquisitions group. It is through these sources that Zachariah learned that GEO was about to acquire Correctional Services Corp., (CSC) a Florida company involved in the prison industry.
On May 11, 2005, Zachariah spoke to Reggie via telephone. The next day, Zachariah purchased 3,500 shares of CSC stock for about $9,700. He bought another 2,300 shares for approximately $6,000 on May 16. The best information, however, seemed to come from Zoley during a conversation on May 18, which was the same day GEO agreed to increase its offer price for CSC.
The next day, Zachariah bought 20,200 shares of CSC stock for around $56,000. Another 5,000 shares worth about $13,000, was bought between May 24 and 27. During the month of June, Zachariah purchased another 41,000 CSC shares for approximately $109,000. On June 15 and 30 his buying comprised 78 and 64 percent, respectively of CSC’s share volume for the day. Days after a trip to the Bahamas with Reggie, Zachariah bought another 5,150 shares for around $14,500. That trip came days after Reggie was involved in GEO securing financing for the CSC purchase.
Zachariah informed his brother, Mammen Zachariah, and friend, Sheldon Nassberg, about the CSC deal. Mammen bought approximately $162,000 worth of CSC stock in a three day period; he borrowed $30,000 of that from Zachariah. Nassberg purchased approximately $32,000 of CSC stock in July 2005.
On July 14, 2005, GEO publicly announced it was acquiring Correctional for $62 million in cash, or $6 per share. After the announcement, Zachariah, Mammen, and Nassberg sold their Correctional stock for profits of $232,000, $132,000, and $25,000, respectively. The SEC’s suit seeks the profits to be turned over, civil fines imposed, and a permanent ban upon Zachariah serving as an officer or director of any publicly traded company.
The suit alleges similar acts of insider trading of IVAX. Corp., which Zachariah was a director of at the time it was subject to acquisition by Teva Pharmaceuticals, Inc. In that situation, Zachariah and Mammen collectively profited $150,000 by insider trading. See: Securities and Exchange Commission v. Zachariah, USDC, S.D. Fla., No: 08-60698-civ.
