This site contains over 2,000 news articles, legal briefs and publications related to for-profit companies that provide correctional services. Most of the content under the "Articles" tab below is from our Prison Legal News site. PLN, a monthly print publication, has been reporting on criminal justice-related issues, including prison privatization, since 1990. If you are seeking pleadings or court rulings in lawsuits and other legal proceedings involving private prison companies, search under the "Legal Briefs" tab. For reports, audits and other publications related to the private prison industry, search using the "Publications" tab.
For any type of search, click on the magnifying glass icon to enter one or more keywords, and you can refine your search criteria using "More search options." Note that searches for "CCA" and "Corrections Corporation of America" will return different results.
Private Prison Companies Face Stock Crash, Credit Crunch
At the close of trading the first week of 2021, both firms’ stocks were significantly off their 52-week highs achieved the previous winter, before the March 2020 market crash related to the COVID-19 pandemic. While the broader market had largely recovered, shares of Florida-based GEO Group, the larger of the pair with nearly $2.5 billion in 2019 revenues, had lost over half their value, tumbling 53 percent to close at $8.68. Tennessee-based CoreCivic, which recorded just under $2 billion in 2019 revenues, had seen its stock price fall even farther — 63 percent — to close at $6.69.
As a result of its declining market value, CoreCivic was demoted in August 2020 from the S&P Midcap 400 to the S&P SmallCap 600, indexes used by investors to track stock performance. CoreCivic announced it was suspending dividend payments to preserve cash, but that also necessitated a change in its corporate status to a C Corporation from a Real Estate Investment Trust, which is required to pay out most profits as dividends.
“CoreCivic is underperforming the market,” wrote Rick Smith in Motley Fool, which gives advice to investors. “I see little reason for investors to buy the stock today.”
CoreCivic’s cash-flow problem reflects its loss of access to credit from major banks, which “have largely turned their backs on the private prison industry,” according to the Nashville Post. That reflects public pressure over the banking sector’s role in financing mass incarceration and immigration detention. CoreCivic’s credit rating has now dropped below “junk” bond status.
GEO Group is not faring any better. It has not changed its corporate status, but it will try to preserve cash by curtailing its dividend. The firm is also facing an investor lawsuit over its inadequate response to the pandemic.
JP Morgan Chase and Wells Fargo were the largest financiers of private prisons until activist organizations in the Families Belong Together coalition got involved. Groups such as MomsRising/Mamas con Poder, Presente.org, Real Money Moves, Make the Road New York, CREDO, Little Sis, and ICCR organized over 500 in-person actions and 600,000 petitions nationwide calling for an end to private prison financing. After that, eight major banks, representing 87.4% of private prison financing, closed their credit windows to the industry.
The activists also succeeded in getting investors to drop the stocks from their portfolios, as New Mexico’s Educational Retirement Board did in October 2020. And they have successfully targeted the firms’ “customers,” getting California to begin a phase-out of private prisons that will affect also all seven federal Immigration and Customs Enforcement (ICE) detention centers in the state by 2028.
Boston University law professor and pension divestment expert David Webber said it was “rare for a divestment campaign to actually inflict financial harm on its target,” but he added that the pullback by banks from financing private prisons — as well as by investors from buying their stock and governments from contracting with them to hold their prisoners — “seems to be some of the strongest evidence I’ve seen to date that divestment campaigns ... can actually work in that bottom-line sense of hurting the target economically, and not just raising attention.”
Potential liability for its response to COVID-19 also looms large in GEO Group’s future. Internal emails discovered in the course of a lawsuit against ICE indicate that company officials chose not to have all detainees tested at its Mesa Verde facility in California because making room for known COVID-19 cases would have required reducing the number of detainees and diminished revenues.
In another response to the pandemic, ICE is more quickly deporting immigrant detainees, reducing its population by more than half from 50,000 in 2019 to just 22,000 a year later.
Finally, President Joe Biden has pledged to phase out the federal government’s use of private prisons, further clouding the future for firms like GEO Group and CoreCivic.