Wells Fargo's Cash Cow

I'd be remiss if I didn't put a link here to an excellent article by Charles Davis about Wells Fargo's ties to the private prison industry.  It's more than a month old at this point, but still an excellent piece.

Earnings

I'm pretty behind on a lot of news, so I'll try to just get down to it.  First up we've got the first quarter 2012 earnings, where we get to see yet again how much a couple of companies profit by locking people up.  I'm happy to report that CCA didn't do quite as well this year as they did last year; it looks like the Corrections Investment Initiative hasn't quite paid off.  They only earned $31.7 million in the first three months of this year, a measly $352,222 per day.  Just last year, the company earned $40 million over that same time frame.

The GEO Group's profit dipped as well, despite the fact that its revenues increased by about $21 million.  They earned a little more than $15 million in profit, which comes out to about $166,666 per day. 

That seems totally justifiable.

Louisiana on the Brink of a Terrible Decision?

Louisiana, the state with the highest rate of incarceration in the country, is considering selling its Avoyelles Correctional Center to a private company in a vain effort to save money.  This was immediately panned as a terrible idea by many in central Louisiana (where the prison is located), including the union that represents COs (AFSCME) and a local mayor who is concerned about public safety issues if the privatization moves forward.  State legislators also voiced concerns about the privatization effort, after witnessing problems at current private prisons within the state; one went so far as to beg the legislature, "Don't do this to the victims of crime all over Louisiana."  A former legislator also lamented the prospect of forcing state employees to take jobs with less pay and benefits, but the bill passed the appropriations committee by a narrow vote.

The first incarnation of the bill to privatize the prison would have set the contract length at 30 years; thankfully, the bill's sponsor had an epiphany of (some) common sense, and introduced an amendment that would prevent the prison from being sold (but not turning over its operation) and limit the contract to ten years.  A second amendment would also prevent a private company from charging a minimum occupancy rate, which could seriously undermine any company's desire to undertake responsibility for the facility.  Which would be a wonderful development.

Even with these new restrictions, privatizing Avoyelles would be a very risky decision; the mayor of Alexandria, Louisiana claims that privatization would present "significant issues" and put Alexandria "on the long-term road to being in a worse place than where [it] started."  The mayor went on to discuss how privatization has failed to save Louisiana and other states money in the past, and was joined by a former corrections official in warning about the potential impact on public safety.  The Southern Poverty Law Center concurred, saying that the long-term costs will far outweigh any short-term benefits achieved through privatization.  A managing attorney at the firm describes how private prison companies often lowball per diem rates at the beginning of a contract, then demand higher rates for prisoners once a government has committed to sending prisoners there.  Basically, the companies get governments by the cojones - once the prisoners are in a private facility, the logistical headache of relocating hundreds of convicts allows the companies to charge more.

It appears as though all this opposition might finally be getting through to legislators; even after the sale of the prison was removed from the bill, the legislation appears to be in danger of failing.  Apparently, politicians in Louisiana are beginning to realize that endangering public safety for corporate profits might not be the most politically palatable course of action.

Punishment and Profits: Immigration Detention

An excellent video from Al-Jazeera's series, Fault Lines.

CCA Utilizing Social Media To Enhance its Image

CCA has recently turned to social media, particularly facebook, to try to boost its image.  CCA posts a bunch of fluff pieces about their company, and even regularly gives out prizes for trivia games, all in an effort to get people to forget about how they mooch taxpayer dollars and earn billions of dollars by locking people up.

Scary Private Prison Presentation for Investors

Update on Crete Debate

I just wanted to drop a quick link to an article discussing the proposed immigration detention center in Crete, IL, that is opposed by most of the residents.  The article's basic conclusion is that any economic windfall that may come as a result of the facility being built will likely go to CCA, not the residents of the town.  Shocking, I know.

4th Quarter Earnings

It's our (least) favorite time of year again here at WhyIHateCCA, when we get to see just how obscenely CCA and the GEO Group have profited off human misery in the past few months.

First we'll go over the GEO Group's earnings report, which shows that their 4Q profits somehow dipped nearly 20%, despite an increase of more than $30 million in revenue, when compared to the fourth quarter of 2010.  But don't worry, GEO Group investors; the company still made $18.74 million in profit over those three months, which averages out to about $208,000 in profit every single day, from taxpayer dollars, or $144 per minute.  They take in about $1.6 billion of taxpayer dollars every year in revenue.

Next, let's look at CCA.  Their 4Q earnings report shows they also had a dip in profits compared to the 4th quarter on 2010 (again, even though revenues increased), but they still earned $40.52 million in profit.  That comes out to  about $13.5 million per month, $450,000 per day, $312 per minute, and $5 every single fucking second.  In profit.

No wonder private prisons don't save money despite cutting services in every conceivable way; they just rake in more and more profit for their executives.  But that's exactly what privatization proponents want.  Because, let's face it; privatization is NEVER about increasing efficiency or competition.  It's a legal way for conservatives to funnel money to their friends in private business who would never survive on a truly free market, since all they care about is lining their own pockets.

From the Inside

Really quick, I want to just turn your attention to an excellent article that came out today regarding a riot at the North Fork CF, a CCA facility in Oklahoma.  This article was written by a prisoner from California who had been transferred to the prison and experienced the riot first-hand.  It's called "Riot at North Fork: Private Prison Exchanges Security for Profits," and it's a great read.

ACLU files new lawsuit against CCA

By Elaine Hirsch

A lawsuit recently filed by the American Civil Liberties Union of Texas (ACLU-TX) against the United States Immigration and Customs Enforcement agency and the Corrections Corporation of America (CCA) underscores the perils of the American prison-industrial complex, an aspect of corrections facility management studied by politicians, master’s degree candidates, and lawyers in the United States.

The class-action lawsuit was filed on behalf of three female detainees whose identities were withheld to maintain anonymity. According to the ACLU-TX filing, the immigrant women were being transported from the T. Don Hutto Residential Center in Williamson County to Austin, Texas, when they allegedly suffered sexual abuse while in the custody of ICE. One CCA employee and three ICE officials have been named in the lawsuit.

This isn’t the first time that CCA has come under fire for prisoner abuse. The CCA has operated the T. Don Hutto Residential Center since 2006. The day-to-day operations of the detention center are conducted by a cadre of ICE employees and CCA guards. In August 2010, the ACLU reported that a CCA guard was charged with numerous counts of sexually abusing female inmates at the same ICE facility in Williamson County. The Graduate Employees and Students Organization at Yale University teamed up with the school’s employee union to force a divestment based on CCA’s long record of civil rights violations.

Days after the filing the latest lawsuit against the CCA, the ACLU released a scathing report criticizing the massive profits realized by private prison contractors such as CCA during recessionary times. “Banking on Bondage: PrivatePrisons and Mass Incarceration” is the name of the report that shows the two most prominent prison profiteers, CCA and the GEO Group, received a combined revenue of $3 billion and earned hundreds of millions in profits in 2010.

CCA’s sketchy record of managing American prisons comes at a time when the state of Arizona is preparing to award a lucrative contract to private jailers despite a report from the Auditor General that state-operated facilities would actually cost less to maintain.

The meteoric rise of the private prison population in the United States is certainly sobering: a 1664% increase over the last two decades. According to industry analysts, there are plenty of long-term growth opportunities for business entities such as CCA. Mark Whitburn, an attorney at the ACLU of Texas, believes that the complaints lodged by the three plaintiffs in the most recent lawsuit against the CCA are only “the tip of the iceberg.” 

---

Elaine Hirsch is kind of a jack-of-all-interests, from education and history to medicine and videogames. This makes it difficult to choose just one life path, so she is currently working as a writer for various education-related sites and writing about all these things instead.  She is currently a writer for a master's degree program resource.

What CCA's Q2 Earnings Mean

Another piece from a guest author, Elaine Hirsch:

(Elaine Hirsch is a kind of jack-of-all-interests, from education and history to medicine and video games.  This makes it difficult to choose just one life path, so she is currently working as a writer for an online doctorate blog.)

A few weeks ago, Mike covered the $42.4 million in profits that CCA announced as part of its Q2 earnings report.  It doesn't take an online doctorate to figure out that profit equals revenues minus costs, and whitout any significant spike int he supply for prison needs, this article will look at how CCA reaped profits by cutting costs in the recent months.

According to the company's earnings call, headed by CEO Damon Hininger and CFO Todd Mullenfer, one of their main focuses has been on cutting costs in operations.  Citing a company-wide initiative in 2009 aimed at driving greater efficiencies, Hininger admitted that CCA gave merit increases to employees last month, causing a dent in their bottom line.  It seems counter-intuitive that a CEO would apologize for pay raises (especially merit-based ones!), because such raises are essentially investments into employees.  Given that statement, it seems as if CCA values its employees as little as the prisoners they manage, a terrible way to run a company.

Later into the conference call, Mullenger announced that a cost-cutting measure employed by CCA was to reduce average employee benefits and legal expenses.  According to Mullenger, operating expenses per man-day declined 1.4% compared to a year ago.  Apparently, CCA's CFO agrees that reducing investments in their employees in an overall positive for the company.

Mike has covered the immense profits that CCA continues to rake in in his previous posts.  Although it's quite shocking to see a company view employee benefits as a negative, in this case, it's not to suprising.