by Matt Clarke

Municipal bonds have long been considered a safe investment. However, recent defaults on bonds used to pay for the construction of privately-run prisons and jails have investors worried about losing their capital, and towns worried about their ability to raise money through future bond issues.

As far back as 2005, bonds used to finance the West Alabama Youth Services detention facility went into default. Those bonds, which were originally issued at par and yielded a 7.25% return, are currently trading at 9 cents on the dollar.

However, such defaults were rare until recent years. Driving the current wave of bond defaults are unscrupulous businesses that sold small towns on the idea of building privately-operated jails while overstating the need for jail bed space and the potential revenue stream. Some of these private detention facilities were able to buck the recent trend of reductions in state prisoner populations by switching to immigration detention.
However, a speedier deportation process and more stringent standards for immigration facilities have resulted in complications.

For example, the Baker County Development Corporation was created to finance a jail and immigration detention center in north Florida. In 2008, $105 million worth of bonds were issued ...

by David M. Reutter

“Florida’s experience with privatized prisons raises serious questions about whether the taxpayers are getting their money’s worth,” concludes an April 2010 policy brief report released by the Florida Center for Fiscal and Economic Policy. The report questions methods used to determine whether private prisons cost less to operate or are more effective at reducing recidivism.

“Between 1989 and 2008, the rate of crime in Florida significantly decreased,” the report states. Violent crime dropped by 41%, property crimes by 46% and the total crime index declined by 46%. Yet the number of Florida’s prisoners grew 108% in comparison to the average 78% rate of prison population growth nationwide over the same time period.
State policymakers, swayed by the potential to save money and reduce recidivism through prison privatization, allowed private companies to manage correctional facilities in Florida. The authorizing statute requires private prisons to operate at a 7% savings over state-run facilities. See: Florida Statutes § 957.07(1).

By 2008, six of Florida’s prisons – Bay, Gadsden, Graceville, Lake City, Moore Haven and South Bay – were operated either by the GEO Group or Corrections Corporation of America (CCA), holding 7,725 state prisoners.

On their face, private prisons ...

Employees of Corrections Corporation of America (CCA), the nation’s largest for-profit prison company, are public servants within the meaning of Tennessee’s criminal code.

In July 2008, CCA guards David Gilliam and Joe Edward McCown III, who worked at the Hamilton County Workhouse in Chattanooga, were charged with official misconduct and official oppression under T.C.A. §§ 39-16-402 and 39-16-403. However, the trial court granted the guards’ motions to dismiss the charges, agreeing that CCA employees were not “public servants” under Tennessee law.

The state appealed and the Court of Criminal Appeals noted that the issue was one of first impression. “The State, citing Alex Friedmann v. Corrections Corporation of America, No. M2008-01998-COA-R3-CV (Tenn.Ct.App., Nashville, Sept. 16, 2009), perm. app. denied (Tenn. 2010), contends that the defendants are public servants because they are performing a service traditionally entrusted to the government.”

The Court of Criminal Appeals found that the state’s Private Prison Contracting Act “specifically extends the provisions of Code sections 39-16-402 and -403 to employees of private prison contractors,” and that the statute was “unambiguous.”

The Court also agreed “with the court of appeals [in Friedmann] that by operating a correctional facility, a function traditionally performed by the State, CCA and ...

by Matt Clarke

Former New Mexico Corrections Secretary Joe R. Williams did not pursue contractual penalties against Corrections Corporation of America (CCA) or GEO Group despite chronic understaffing by the two private prison companies, which operate four facilities in New Mexico.

GEO and CCA manage prisons for the New Mexico Corrections Department (NMCD) in Hobbs, Grants, Clayton and Santa Rosa. The original decision to allow private firms to operate state prisons was controversial, and recent revelations that the privately-run facilities are chronically understaffed have reignited the debate over privatization.

The NMCD’s contracts call for penalties when staffing vacancies reach 10% for 30 consecutive days. In 2007, the Legislative Finance Committee (LFC), the budget arm of the state legislature, reported 37% understaffing at the Lea County Correctional Facility in Hobbs, angering lawmakers. The staff vacancy rate for July 2010 was 22% at Hobbs and 17%, 14% and 13% at the other privately-operated facilities.

However, Williams declined to seek fines for such contractual noncompliance, instead making excuses for GEO and CCA.

Williams said the private prisons were located in rural areas or small towns where recruiting and retaining staff is difficult. He also claimed the companies were offsetting the vacancies by having ...

On June 7, 2010, the U.S. Court of Appeals for the Ninth Circuit held that Richard Lee Pollard, a prisoner in the custody of the Federal Bureau of Prisons (BOP) at the Taft Correctional Institution (TCI) in California, could assert a Bivens claim against employees of a private prison company.

Pollard overcame various procedural challenges before winning the right to pursue his claim. He had alleged that while incarcerated at TCI, he slipped on a cart left in a doorway and suffered possible fractures of both elbows. Employees of GEO Group, Inc., under contract with the BOP to operate TCI, transferred him to an orthopedic clinic outside the prison. Despite Pollard’s complaints, GEO employees forced him to put his arms through his jumpsuit and to wear a “black box” restraint device on his wrists.

After diagnosing serious injuries to both of his elbows, the outside orthopedists recommend that Pollard’s left elbow be placed in a posterior splint for approximately two weeks. Pollard claimed that his elbow was not put in the proper splint by prison medical staff and that he was unable to feed or bathe himself. He also said he was forced to return to work before his injuries ...

A new “green paper” released on July 19, 2010, entitled Operation Streamline: Drowning Justice and Draining Dollars along the Rio Grande, takes a look at the impact of Operation Streamline on the private prison industry.

Operation Streamline, initiated in 2005 in Del Rio and expanded to much of the Texas and Arizona border, mandates that immigrants apprehended at the border must be detained, prosecuted and incarcerated in the criminal justice system in addition to the civil immigration system. This is a departure from previous policy in which most immigrants were only dealt with in the civil immigration system.

The result has been a mess. In Texas alone, 135,000 immigrants now have criminal records and many have done prison time under Operation Streamline before being deported (far from streamlining the process, the policy adds another layer of incarceration on top of the existing civil detention system). 

While most researchers believe the program hasn’t deterred unauthorized immigration, it has affected the judicial system in serious ways. The federal courts are horrendously over-booked. Fifty-four percent of 2009’s federal prosecutions across the country were for immigration violations. In the Southern District of Texas, a district that includes Houston, a full 84% of prosecutions in ...

The California Court of Appeal has held that the State may be vicariously liable for the acts or omissions of its employees in failing to provide needed medical care for an infant living with its mother in a private, community-based correctional facility operating under a contract with the California Department of Corrections and Rehabilitation.

In a complaint filed on behalf of herself and her daughter Esperanza, Denisha Lawson alleged that, while she was housed at Family Foundations - San Diego, a 40-bed residential facility run by Center Point, Inc., Esperanza sustained serious and permanent physical injury as a result of a delay in receiving medical treatment for a respiratory infection.

According to the complaint, Lawson was pregnant in November 2006 when she was placed at the Center Point facility under an alternative sentencing program for women prisoners with young children. She gave birth to Esperanza prematurely in March 2007.
When she was barely five weeks old, Esperanza developed severe respiratory problems.
Lawson allegedly asked facility personnel, over the course of more than a week, to obtain medical treatment for her daughter, who had stopped breathing on at least three occasions. Her requests were repeatedly denied; ultimately, however, one of the ...

On December 21, 2010, just days before recessing for the holidays, the U.S. Senate confirmed Stacia Hylton as director of the U.S. Marshals Service in spite of opposition by a coalition of human rights, citizens’ advocacy and criminal justice-related organizations that argued she had a conflict of interest based on her close connections with private prison firms.

Hylton, a former Acting Deputy Director of the U.S. Marshals with a lengthy career in law enforcement, was employed from June 2004 to February 2010 as the Federal Detention Trustee. Following her retirement she was nominated by President Obama to head the Marshals Service, which handles security for federal courthouses, apprehends federal fugitives and oversees the detention of federal prisoners awaiting trial or immigration proceedings.

During Hylton’s tenure as Federal Detention Trustee, GEO Group, the nation’s second-largest private prison company, was awarded a number of lucrative contracts to house federal prisoners. Those included a ten-year contract at GEO’s Western Region Detention Facility in San Diego, generating approximately $34 million in annual revenue; a 20-year contract to operate the 1,500-bed Rio Grande Detention Center in Laredo, Texas with an estimated $34 million in annual revenue; and a 20-year sole-source contract to manage the Robert ...

In June 2010, the advocacy group Disability Rights Vermont (DRV) released a report faulting the staff of the Chittenden Regional Correctional Facility (CRCF) in South Burlington, Vermont in connection with the death of a disabled prisoner.

Michael Crosby, 49, was arrested after he turned himself in on charges of selling prescription drugs. Crosby, who was on parole at the time, had a lengthy history of minor criminal misconduct that was mostly related to drug abuse and misbehavior while under the influence of drugs or alcohol. He also had a documented history of accidentally overdosing on his prescription medications and at least two serious suicide attempts. At the time of his arrest he was receiving outpatient mental health, psychopharmacological and substance abuse services. He was also obese, sedentary and receiving Social Security benefits for his disabilities.

Crosby was taken to CRCF, a minimum-medium security facility in the Vermont Department of Corrections’ (VDOC) integrated jail/prison system. One of the guards who transported Crosby to CRCF noticed that he was sweating profusely. When asked about the sweating, Crosby allegedly replied that he was a “big guy” and “not in very good shape.” It was undocumented whether the arresting and transporting guards adequately conveyed ...

A troubling investigative report by the American Civil Liberties Union of Eastern Missouri (ACLU-EM) has exposed a culture of abuse, corruption and cover-ups at the City Justice Center and the Medium Security Institution in St. Louis (CJC/MSI).

The most damning evidence came from six current and former guards whose identities were not revealed “because of the atmosphere of intimidation and retaliation” at the two jails. The guards, including a Captain and a longtime, nationally-certified training officer, are referred to as CO1 through CO6 in the report, which was released in March 2009 following a two-year investigation.

“The accounts and descriptions of conditions provided” by guards and prisoners at the jails “lead to the conclusion that there is endemic abuse ... and a pattern of policy violations at the CJC/MSI,” the ACLU-EM found. “Without an intervention there is no reason to think that any of these conditions are going to change.”

Culture of Abuse, Corruption & Cover-Ups

The ACLU-EM described a profoundly broken, out-of-control system where guards routinely subject prisoners to vicious, unwarranted beatings and other abuse. The report also found elaborate cover-up schemes. While the abuse is clearly systemic, one particular clique of high-ranking guards was cited as the most ...