Leading Democrats Press Private Equity Leaders over Controversial Private Prison Operation

Scrutiny of five PE firms’ involvement in private prisons begins with an information request.

Private equity firms dipping their toes in private prison practices are now under investigation from some of the country’s top Democratic lawmakers after receiving a formal request for information pertinent to their respective structures and finances as they relate to the prisons.

Sen. Elizabeth Warren and Reps. Alexandria Ocasio-Cortez and Mark Pocan issued letters to private equity firms American Securities, Apax Partners, BlueMountain Capital, H.I.G. Capital, and Platinum Equity for their affiliations with private prisons.

“We have concerns about the rapid spread and effect of private equity investment in…the correctional facility support services industry,” the lawmakers wrote in a statement. “The users of these services—incarcerated individuals and their loved ones—are literally captive, not able to shop around and find the best mix of price and quality.”

The legislators also brought up disturbing accounts related to private equity firms’ involvement in the regulation and control of private prisons.

They have been “accused of serving meals ‘which included not only maggots but also ‘crunchy dirt’ in potatoes and mold in apple crisp and pancakes, and providing such meager portions that incarcerated individuals in one county jail were reduced to ‘eat[ing] toothpaste and toilet paper.”

A study carried out by the Prison Policy Initiative in February 2019 found that some companies charge up to $25 for a 15-minute phone call, and in tandem with other miscellaneous fees, ultimately “can increase the cost of families staying in touch by phone with loved ones who are incarcerated by as much as 40%.

The legislators requested the following information from each of the five private equity firms: ownership stake, total revenue, net income, total expenditure, total number of employees, total number of corrections facilities or relevant authority with which the company has a contract to provide services, total number of incarcerated individuals for whom the company provides service, and other private equity firms that own a stake in the company.

Earlier this year, Warren introduced legislation that would publicize firms’ private equity fees and returns, and hold them liable for the responsibilities and debts of companies under their control. Called the “Stop Wall Street Looting Act,” the bill is intended to reroute the industry towards more ethical behaviors, ending practices today by private equity firms that makes them “akin to vampires,” Warren said in a statement released with the bill’s introduction.

“They are like vampires, bleeding the company dry and walking away enriched even as the company succumbs,” Warren said when describing what she calls “legalized looting.”

Warren similarly outlined a recent plan that would close the doors on federal private detention facilities by ending all contracts the Federal Bureau of Prisons and US Immigration and Customs Enforcement have with private detention providers.

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