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Private Prisons Equal Big Business

High Incarceration Rates Boosts Income for Operators and Government Officials

Stacy M. Brown | 5/22/2013, 10:36 p.m.

CCA is currently trading on the Big Board at $38.90 a share while stocks for GEO are listed at $38.81.

"The emergence of CCA as a leading prison profiteer is a result of a thoughtful promulgation of laws and policies on a federal and state level," said Seema Sadanandan, of the American Civil Liberties Union (ACLU) of the Nation's Capital in Northwest Washington, D.C.

Sadanandan, 31, organized a rally on May 7 at the Central Detention Facility on 19th Street in Southeast Washington, D.C., to protest the way CCA operates that jail and its other prison facilities.

"Through tactics like pushing for minimum occupancy guarantees in its prisons, CCA has both contributed to and benefited from the explosion in incarceration," Sadanandan said.

Private prison operators are also making a fortune off of prisoners, who are primarily immigrants and African Americans. About half of all immigrants detained by federal officials are held in facilities run by private companies, at an average cost per inmate of approximately $200 a night. Many prisoners are paid about $2 a day for labor.

Ten years ago, more than 3,300 immigrants were sent to private prisons under two 10-year contracts the Federal Bureau of Prisons signed with CCA worth $760 million.

Now, more than 23,000 immigrants are housed in private prisons in the U.S. The incarceration rate for African Americans is about 3,074 per 100,000 residents, which is more than six times as high as the national average.

CCA raked in $162 million in net income in 2011, in large part because of federal contracts. The Geo Group saw its net income rise from $16.9 million in 2000 to $78.6 million in 2011. Two years ago, The Geo Group finalized a merger with Cornell Companies, Inc., that was valued by Wall Street at $730 million.

CCA pays its chief executive officer more than $3.2 million a year while The Geo Group's top executive earns $3.4 million annually.

"Companies that house prisoners for profit have a perverse incentive to increase the prison population ... there is no motivation to rehabilitate prisoners," said Lisa Wade, a cultural critic and associate professor at Occidental College in Los Angeles, Calif.

State-run prisons are much more likely than privately-run prisons to offer programs to help prisoners, including psychological interventions, drug and alcohol counseling, and course work toward a college degree, said Wade, 38.

"What is good for private prisons, in other words, is what is bad for individuals, their families, their communities, and our country," she said.

A 2011 report by the Justice Policy Institute in Northwest Washington, D.C., disclosed that private prison operators allegedly paid judges to sentence juveniles with minor offenses to disproportionately longer terms in their correctional facilities.

Two Pennsylvania judges were sentenced to prison in 2011 for illegally sending teenagers to jail in a scam that came to be known as, "Kids for Cash."

Over a five year period, at least 5,000 teenagers appeared before Luzerne County, Pennsylvania, President Judge Mark Ciavarella and the county's Senior Judge Michael Conahan.

The judges illegally sentenced many of them to prison in exchange for nearly $3 million in kickbacks, prosecutors said. Ciavarella, 58, ultimately was sentenced to 28 years in federal prison. Conahan, 56, received more than 17 years.

Prosecutors said the judges created the potential for an increased number of young offenders to be sent to juvenile detention facilities.

"Somebody is going to make more money by holding more kids, there is a pretty good predictable profit motive," said criminal justice consultant Judith Greene, who heads a nonprofit group called Justice Strategies in New York.

In a 2010 Securities and Exchange Commission filing, CCA officials stated that, "The demand for our facilities and services could be adversely affected by leniency in conviction or parole standards and sentencing practices."

Private prison operators, who spend a total of $45 million annually on lobbying lawmakers for tougher and longer sentences, should be carefully scrutinized by the government, ACLU officials said.

"Privatizing prisons may undermine cost effective sentencing reforms and increase recidivism rates," said ACLU policy director, Shakyra Diaz. "Despite these well-documented concerns, private prison companies continue to promote policies that put money in their pockets and people behind bars," Diaz said.