Previously, PLN reported that both Corrections Corporation of America (CCA) and GEO Group, the nation’s two largest private prison companies, were converting their corporate structure into real estate investment trusts (REITs), primarily to benefit from the tax advantages that REITs provide. [See: PLN, Jan. 2013, p.42].

Among other requirements, a REIT must distribute 90% of its taxable income to shareholders; consequently, the company pays no federal tax on its income and the tax burden is shifted to shareholders. CCA indicated that its initial REIT distribution would be made in stock (up to 80%) and cash (up to 20%).

PLN managing editor Alex Friedmann, who also serves as president of the Private Corrections Institute (PCI), a non-profit organization that opposes prison privatization, filed a shareholder resolution with CCA to require the company’s Board of Directors to issue a report to shareholders addressing the following specific points relative to the company’s REIT conversion:

1. Any known disadvantages to stockholders, and/or advantages to the company, should the company elect to make required REIT distributions primarily in the form of stock rather than cash;

2. The extent to which the Board has taken into account the company’s prior conversion to a REIT in 1999 ...

In 2011, the State of Illinois signed a 10-year, $1.36 billion contract with Wexford Health Sources, a for-profit company, to provide medical services to Illinois prisoners. Since the contract went into effect there have been numerous complaints concerning the level of medical care that prisoners are receiving – or rather not receiving. In fact, more than 170 federal lawsuits have been filed against Wexford by Illinois prisoners since the company’s contract was announced in September 2011.

The relationship between the Illinois Department of Corrections (IDOC) and Wexford has been in the spotlight before. Six years ago, former IDOC director Donald Snyder pleaded guilty to accepting $50,000 in bribes from lobbyists, including a lobbyist for Wexford. He was sentenced to 24 months in federal prison; Wexford was not implicated in the bribery scandal. [See: PLN, March 2009, p.50; Dec. 2007, p.40].

Last year the John Howard Association, a prison watchdog group, released a report which found that Wexford had never been audited prior to the $1.36 billion contract award, and that no one is currently reviewing the quality of care the company provides to Illinois prisoners.

The report recommended a number of remedial actions, including increasing external oversight of prison healthcare ...

The nation's economy remains fragile, U.S. troops continue to fight a losing war in Afghanistan, North Korea has recently threatened a nuclear attack, and in March 2013 Congress and President Obama failed to reach a compromise to prevent the “sequester,” which mandates deep spending cuts on the federal level. Yet issues related to immigration – including immigration reform – still manage to dominate national headlines.

The results of the last presidential election, in which over 70% of Hispanics cast their ballots for Obama, have led many panic-stricken Republican politicians to seek ways to avoid electoral irrelevancy at the hands of an increasing number of Hispanic voters.
Consequently, immigration reform is getting serious play in Washington at a time when federal spending on immigration enforcement and border security – estimated at almost $18 billion in fiscal year 2012 according to a recent report by the Migration Policy Institute – totals more than the budgets of all other federal law enforcement agencies combined, including the FBI, DEA and ATF.

Lawmakers Examine Immigration Reform

On January 28, 2013, the so-called “Gang of Eight,” comprised of eight U.S. Senators – four from each party – released a Comprehensive Immigration Reform (CIR) proposal. Among other ...

The En Banc Missouri Supreme Court held that a private jail must pay $14,056.25 in sales tax and $5,459.79 in use tax, plus interest, on its purchase of prisoner meals, clothing, soap, shampoo, medical supplies and other consumables between 2000 and 2005.

ICC Management Inc. is a private for-profit corporation operating a private jail near Holden, Missouri. It contracts with several Missouri municipalities and counties to house prisoners.

Pursuant to contracts with those government entities, ICC was paid a per-prisoner fee ranging between $32.50 and $50 for ICC to provide prisoners "with consumable items including three meals per day, clothing, soap, shampoo and medical supplies."

Governmental entities are exempt from paying sales tax, so ICC does not, and cannot, charge contracting agencies a sales tax on the consumables it provides prisoners. However, it does factor the cost of those items into the fee it charges the entities, "and, therefore, 'resells' those consumables to the municipalities." As a result, ICC claims that it is entitled to claim a resale exemption from sales and use tax on its consumable purchases.

Based upon this position, ICC did not pay sales or use taxes on consumables it purchased from in-state vendors between January 2000 ...

In the United States District Court for the District of New Mexico, before U.S. Magistrate Lourdes A. Martinez, federal prisoner Anceso Rodrigo Aceves prevailed in his efforts to obtain certain prison records pertaining to himself. Defendants were officials of the private concern, Corrections Corporation of America, and the files were reports and communications relating to educational and medical issues, use of restraint, and other disciplinary related issues in which Aceves was the subject.

Defendants filed a “motion for protective order and to file amendment to Martinez report under seal,” seeking to redact certain reports, to designate others as protected under the Privacy Act of 1974, and others as exempt from the Freedom of Information Act (FOIA). Plaintiff Aceves filed a motion to strike Defendant’s motion and Defendants responded.

The issues before Judge Martinez address individual documents and the proffered arguments to seal, protect, or exempt from disclosure. Defendants contended that material redacted from their amendment to the Martinez report should be filed under seal and not disclosed to Plaintiff because it is exempt under FOIA. Defendants argued without citing authority that the un-redacted amendment was prohibited by the Privacy Act of 1974.

Judge Martinez noted that FOIA is not determinative ...

by John E. Dannenberg

Even amid a declining prison population, Colorado is paying million of dollars to private prison contractors for unneeded cells in order to protect the economic base of small, rural communities that have become dependent on the jobs that for-profit prisons provide.

With Colorado’s prison population in decline since 2009, five prisons, both public and private, already have closed in the state, including the Fort Lyon Correctional Facility. [See related article on page 43 of this issue]. It is estimated that in the near future, two to ten more closures could follow. After a study is concluded in June 2013, recommendations will be made as to which facilities will be shuttered.

Colorado currently has 20 state-owned prisons with 1,000 empty beds – a number that is rising by around 100 more vacancies each month. Another four prisons are privately-owned, including three Corrections Corporation of America (CCA) facilities and one GEO Group prison that house minimum-to-medium-security prisoners from Colorado and other jurisdictions.

Private prisons originally were used by the state as an “overflow” measure. In 2012, Colorado contracted with CCA to house 3,300 prisoners, at a cost of about $20,000 each, for the fiscal year that ends June ...

Seventh Circuit Reverses Dismissal of Case Challenging Conditions in Illinois Jail
where Mentally Ill Prisoner Died

On March 20, 2012, the Seventh Circuit Court of Appeals reversed a district court’s grant of summary judgment to the defendants in a case claiming inhumane conditions of confinement at a county jail; the appellate court also reversed the dismissal on collateral estoppel grounds of a related suit raising state law claims.

The case involved two lawsuits filed by the estate of Nicholas D. Rice, 21, who died in the Elkhart County, Illinois jail on December 18, 2004, nearly fifteen months after he was booked into the facility pending trial on a charge of attempted bank robbery. Rice suffered from schizophrenia, and 11 days before his death was found incompetent to stand trial and ordered admitted to a psychiatric hospital.

The conditions at the jail and the treatment (or lack thereof) that Rice received are extensively detailed in the lengthy appellate opinion in this case. In sum, the record indicated that although Rice was seen by mental health staff while incarcerated, he “frequently refused to take his prescribed medications, cooperate with medical personnel at the jail, eat his meals, or bathe himself.” Medical care ...

The Federal Bureau of Prisons (BOP) began 2013 with an adverse ruling from the U.S. District Court for the District of Oregon, after the BOP had spent several years refusing to disclose allegedly confidential information that was, in fact, already public.

In May 2009, Stephen Raher, then a law student and former co-coordinator of the Colorado Criminal Justice Reform Coalition, filed a lawsuit against the BOP that alleged the agency had improperly withheld documents requested under the Freedom of Information Act (FOIA). Raher had requested various records concerning the BOP’s contracts with private prison companies, including the contracts themselves, contractor proposals and internal BOP emails.

Under the BOP contracts, private prison companies are paid a designated amount per day for each prisoner they house (“per diem” pricing). The BOP initially argued that it could not release the contractors’ proposals because they contained confidential commercial information and security details. BOP officials also claimed they could not release the number of beds they had contracted for, or the per diem prices.

The BOP argued that a wide variety of information concerning private prison operations was confidential commercial information, protected by FOIA’s Exemption 4 (5 U.S.C. § 552(b)(4)), because it revealed proprietary details ...

A complaint brought in the Court of Chancery of Delaware to appraise the value of a prison healthcare company inadvertently shed light on the big business of providing contracted correctional services.

Certain shareholders of Just Care, Inc., a privately-held Delaware corporation, filed the complaint to determine the fair value of the company in an appraisal action following its acquisition by GEO Care, Inc. (formerly a subsidiary of private prison firm GEO Group). According to the complaint, GEO Care “provides government out-sourced services specializing in the management of correctional, detention, and mental health and residential treatment facilities” in the United States and abroad.

One of the disputes in the case was the value of projected cash flows from payments anticipated from the states of South Carolina and Georgia, both of which had business relationships with Just Care. At the time of the merger, Just Care operated a single facility – the 374-bed Columbia Regional Care Center in Columbia, South Carolina, which provides medical services to prisoners and detainees from South Carolina, Georgia, the U.S. Marshals Service, and Immigration and Customs Enforcement (ICE).

Georgia had not finalized plans with the company to build a facility in that state; Just Care had hoped ...

A $10 million-a-year contract awarded to the Ada Youth Academy Authority for a new juvenile facility has been put on hold while the Oklahoma Attorney General's Office looks into whether the contract was improperly steered to Ada by an Oklahoma senator.

In December 2010, The Oklahoman reported that Republican state Senator Harry Coates may have used his influence to steer the contract to Ada. Coates, 60, has admitted to having an affair with Haley Atwood, a 29-year-old lobbyist working for Ada.

The AG's office decided to open an investigation after the story in The Oklahoman and a subsequent meeting with the Senate Pro Tem, Brian Bingman.

"They presented us with some paperwork that we had not previously seen," said Charlie Price, a spokesperson for the AG's office.

Coates says he welcomes the investigation because "there were no shenanigans."
Atwood similarly claims no wrongdoing. "There was hard work," said Atwood. "There's nothing underhanded. The award was made, and some of the other groups that have cried foul had the same opportunity that we did. We just put together a better proposal."
Scott Barger, Deputy Director of the Oklahoma Public Employees Association disagrees. "It looks to me like you have a state ...