The Securities and Exchange Commission (SEC) has filed a civil action that alleges a consultant for private prisoner operator the GEO Group used information obtained through his contracts to engage in 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, ...

Tenth Circuit: Procedural Defense to Federal Prisoner’s ETS Suit Fails on Inadequate Grievance Record-Keeping

by John E. Dannenberg

The Tenth Circuit U.S. Court of Appeals reversed a summary judgment order in a federal prisoner’s pro se Environmental Tobacco Smoke (ETS) suit against private prison contractor Cornell Corrections, Inc., because Cornell’s grievance record-keeping was so inadequate that the question of administrative exhaustion could not be resolved.

In reversing the lower court, the Tenth Circuit noted that the intervening U.S. Supreme Court decision in Jones v. Bock, 127 S.Ct. 910 (2007) [PLN, May 2007, p.36] made the burden of proving exhaustion an affirmative defense, which overruled prior Tenth Circuit precedent.

Federal prisoner Ethan Roberts was housed in Cornell Corrections’ Santa Fe [New Mexico] County Adult Detention Center from April 1999 to June 8, 2000. He sued Cornell on June 9, 2003 in U.S. District Court under 42 U.S.C. § 1983 for irreparable lung damage caused by his exposure to saturated ETS 14-20 hours per day. Cornell defended on two grounds: That the statute of limitations had expired and Roberts had not exhausted administrative remedies. The district court dismissed the case on Cornell’s motion for summary judgment.

The Tenth Circuit found Roberts’ 3-year-and-one-day ...

Much public attention has been devoted in recent years to the “industrial” side of the prison boom, from the fortunes of private prison operators to the profits generated by telecommunications companies from lucrative phone contracts. Less attention has been paid to the sector of the prison industry that gets paid each time a prison is financed or built. Unlike those who make their money from operations, firms that get paid on the front end may have little stake in the ultimate use or financial viability of a new prison or detention project. They profit whether the beds are empty or full.

Declining public enthusiasm for costly prison expansion plans has closed off traditional options for financing new prison construction. But this trend has created new opportunities for a cottage industry of investment bankers, architects, building contractors, and consultants to reap large rewards with “back-door” financing schemes. A review of recent prison, jail, and detention expansion initiatives shows that federal, state, and local governments are using back-door financing mechanisms to borrow hundreds of millions of dollars to build facilities that the public does not want and cannot afford.

Paying For Prisons—?Corrections Takes The “Public” ?Out of Public Finance

Until the mid-1980s, ...

Fallen Women

For incarcerated women, there is little justice to be found

By Silja JA Talvi

Three years ago, I journeyed back to Santa Fe to return to a city where I had once lived—and that always seemed to call me back.

I headed out from Seattle with a snowboard for the freshly blanketed mountains, as well as an insatiable appetite for the food I could not find in the Pacific Northwest. But most of all, I traveled back because the New Mexico Women’s Correctional Facility had agreed to let me come and spend a day in the state’s only women’s prison in Grants.

I was eager for the experience, not just because much of my work in journalism had centered on criminal justice and prisons, but also because my editor at the Santa Fe Reporter, Julia Goldberg, had given me the kind of assignment that investigative reporters like myself treasure the most: Just go out there and see what you find.

Owned and operated by the Corrections Corporation of America (CCA), now the nation’s biggest private prison company, New Mexico Women’s Correctional Facility (NMWCF) opened its doors in 1989 as the first privatized female prison in the country. From ...

Monitor’s Second and Third Reports Find Medical Care From CMS for Delaware Prisoners Still Lacking

by David M. Reutter

Despite a monitor to provide oversight, Correctional Medical Services (CMS) continues to suffer from a “lack of stable and effective leadership” that inhibits it from supplying adequate medical care to Delaware prisoners. That was the conclusion drawn in the Second Semi-Annual Report of the Independent Monitor of the Memorandum of Agreement (MOA) between the U.S. Department of Justice and the State of Delaware, which was issued in January 2008. The monitor’s third report, released in July 2008, found continued problems with services provided by CMS.

The agreement to monitor prison medical care, which involves the Delaware Dept. of Correction (DDOC), followed a public outcry after The News Journal published a series of damning articles that detailed the abysmal medical treatment (or lack thereof) provided to DDOC prisoners. [See: PLN, Dec. 2005, p.1; July 2007, p.8]. The independent monitor, Joshua W. Martin III, issued his first semi-annual report on July 29, 2007. [See: PLN, Feb. 2008, p.24]. That report focused on challenges faced by the DDOC to achieve “substantial compliance” with the agreement.

The monitor’s second report “acts as a baseline against ...

Could the Fall of Lehman Brothers Signal Trouble for Private Prison Corporations?

by Bob Libal and Nick Hudson

While recent business news has been dominated by the bailout of some of the nation’s largest investment firms, the fall of financial giant Lehman Brothers may have unintended consequences for one of the nation’s most controversial industries – the business of incarceration for profit. Articles about Lehman Brothers’ history have largely ignored the fact that the company has been one of the largest, most consistent financial backers of the private prison industry. 

Over the past decade, Lehman Brothers supplied billions of dollars in capital and credit to for-profit private prison firms such as Corrections Corporation of America (CCA), the GEO Group (formerly Wackenhut) and Cornell Corrections, while at the same time provided those companies with a safety net in times of financial difficulty.

An Industry Criticized

Private prison scandals often go unreported, but occasionally a situation is so egregious that the media takes notice. Such was the case with Scot Noble Payne, an Idaho inmate who committed suicide by cutting his throat with a razor blade in 2007 at the GEO Group’s Dickens County Correctional Center in Spur, Texas. [See: PLN, Dec, ...

So much human feces covered the floors of a GEO Group-run juvenile prison in Coke County, Texas that departing inspectors stopped outside to wipe their shoes in the grass. The Coke County Juvenile Justice Center was in such bad shape that Texas Youth Commission (TYC) executive director Dimitria Pope ordered all juvenile offenders removed from the facility following the inspection, then canceled the state’s contract with GEO. [See: PLN, July 2008, p.18].

What was even more alarming was the fact that such abysmal conditions had existed for years while the prison received high marks from inspectors and literally no oversight by state officials. Then again, four of the TYC’s monitoring staff overseeing the GEO-run center were former GEO employees.

The Coke County facility was the state’s only privatized secure juvenile facility. However, around 9 percent of Texas’ adult prisoners are housed in privately-run prisons or state jails. For two decades, Texas has been on a binge to build prisons, fill them and keep them full. This is what lured so many private prison contractors to the Lone Star state. Texas has about 120 lockups and over 160,000 prisoners; 17 are privately-operated facilities that house more than 14,000 men and women. ...

by David M. Reutter

A report submitted to Mississippi’s legislature found serious deficiencies in the delivery of medical care to prisoners in the Mississippi Dept. of Corrections (MDOC). The December 11, 2007 report was issued by the Joint Legislative Committee on Performance Evaluation and Expenditure Review (PEER). It found that MDOC and its for-profit healthcare contractor, Wexford Health Services, failed to assure that prisoners received timely access to quality medical care.

PEER stated this shortcoming may not only have an adverse effect on prisoner health, but may cost MDOC more in specialty medical expenses. Increased specialty care costs was an issue of concern due to MDOC’s use of a new model for providing prison medical services.

Prior to July 1998, MDOC used the traditional services model, which entailed employing physicians and other medical service providers. From July 1998 to June 30, 2003, MDOC contracted with the University of Mississippi Medical Center to provide prisoner healthcare. On July 1, 2003, Correctional Medical Services took over MDOC’s healthcare contract, but the company decided in July 2005 that it did not want to be reconsidered for renewal once the contract expired on July 30, 2006.

Wexford won the new contract. Rather than accept ...

That Delaware prisoners have been subject to dreadful health care by the state’s medical contractor, Correctional Medical Services (CMS), is not a new revelation for readers of PLN. We previously published an exposé on the deaths, injuries and deliberate indifference suffered by Delaware prisoners as a result of CMS’s medical services, or lack thereof. [See: PLN, December 2005, pg 1].

Those with knowledge of the situation would think it could get no worse. Never say never. A lawsuit filed in federal court on April 3, 2008, on behalf of 15 Delaware prisoners, brings to mind prison medical experiments. Of course, whether CMS “Nurse Beth” was experimenting, made a mistake, was trying to save money because the prison infirmary was short on supplies, or was just being sadistic is unknown.

What is known is that she used the same needle on 15 prisoners to draw blood and inject medicine. In the end, her motivation and reasoning are irrelevant. “Legally, it doesn’t matter,” said attorney Joseph M. Bernstein, who along with attorney Bruce Hudson are representing the prisoners. “They were still entitled to a minimum level of care.”

The 15 prisoners allege that Nurse Beth used a syringe to test their blood, ...

Trifecta for Michigan DOC: Three Reports Find Deficient Prison Medical Care

by David M. Reutter

From the advent of federal oversight of medical services for Michigan prisoners, the focus has been on three Michigan Dept. of Corrections (MDOC) facilities that house the state’s sickest prisoners in close proximity to Duane Waters Hospital in the Jackson area. Health care at those prisons – the Southern Michigan Correctional Facility, the Charles Egeler Reception & Guidance Center and the Parnall Correctional Facility – is provided by a private contractor, Correctional Medical Services (CMS).

Despite federal court monitoring of MDOC health care, which has been ongoing since the mid-1980s, little progress has been made to improve the quality of the care provided. To the contrary things seem to have worsened, which has resulted in egregious examples of medical neglect. Last year PLN reported several preventable deaths and injuries among Michigan prisoners caused by substandard medical care, as well as a court order holding the MDOC in contempt. [See: PLN, May 2007, pp.1, 7].

In an effort to hasten the end of federal court oversight, which is part of a long-standing class-action lawsuit known as the Hadix litigation, the MDOC proposed closing the Southern Michigan ...