Prison Gets Rich Locking Up Preschoolers

If you’re looking to make some money, try locking up toddlers.

One for-profit prison company has found that incarcerating infants, toddlers, children, and mothers—as long as they’re undocumented immigrants—is a great way to boost their revenue by upward of $49 million over the previous year.

The latest quarterly finance report from Corrections Corporation of America, a for-profit prison company, indicates that its contract with Immigration and Customs Enforcement to manage a detention center packed with immigrant mothers and children is very helpful to its bottom line.

Part of the reason their deal is so lucrative? The public isn’t particularly bothered by it.

The company can thank President Obama. Facing enormous political pressure and eye-grabbing headlines, the Obama administration moved last summer to dramatically expand the federal government’s capacity for locking up young mothers and kids.

Before last summer—when thousands of mothers and young children fleeing gang violence and bad governance in Honduras, Guatemala, and El Salvador crossed the southern border into this country—the detention of immigrant families was rare.

Antonio Ginatta, the U.S. advocacy director for Human Rights Watch, said there were only 90 beds or fewer in facilities designated for the detention of these immigrants. But then last summer happened, and the number of young children—many entering the country without parents—and young mothers crossing the border went up dramatically.

“There was no family detention in the United States, practically, a year and a half ago,” said Ginatta. “And now we’re in the thousands.”

The feds quickly opened a facility in Artesia, New Mexico, with the specific mission of detaining mothers and young children. But that facility drew controversy and closed down before the year was out. Many of the detainees there were then transferred to a new facility in the town of Dilley, Texas. The benignly-named South Texas Family Residential Center, also called Dilley, is a 2,400-bed immigrant detention center that serves as a temporary home—if that’s the appropriate word to use for a place you can’t leave—for mothers and young children.

Human-rights activists and immigration attorneys have leveled harsh criticism at the practice of detaining families. A group of faculty from the University of Texas decried the facility in a letter to the university’s president, saying family detention “causes permanent harm to the physical and mental health of young children, compounding the trauma they have experienced in their home countries.”

Last month, District Court Judge Dolly Gee released a ruling critical of how immigration officials treated undocumented children—including the detention these children face. That ruling cheered some activists. But McClatchy reported that the Department of Homeland Security indicated that the centers will “continue to operate close to the manner they’re currently running.”

Dilley is managed by the Corrections Corporation of America, or CCA, a publicly traded, for-profit company. The company’s prisons have been dogged by allegations of maltreatment, neglect, and abuse—as if the practice of detaining toddlers wasn’t controversial enough.

Bryan Johnson, an immigration attorney who has represented many immigrants detained at Dilley, said shareholders have a moral obligation to divest from CCA.

“In just one year, these investment companies have profited millions off of the illegal detention of children and babies fleeing unthinkable harm in Central America,” he told The Daily Beast. “Because these companies wanted a bigger quarterly dividend, dozens of children, including some of my clients, were denied medical treatment to such a shocking degree that their lives were put at imminent risk of death or serious bodily harm.”

As CCA’s quarterly report indicates, the public doesn’t really care about this too much—and that means the company can make money from the practice without much profit-inhibiting pushback.

In its report, the company notes that its revenue in the second quarter of 2015 was about $49 million higher than it was in the second quarter of 2014. That happened even though it lost a prison contract in Idaho after the FBI started investigating one of their facilities for understaffing and defrauding the state. The U.S. Attorney’s Office for the District of Idaho didn’t end up prosecuting the company, because—according to a press release on the decision—“the false entries and understaffing could be attributed only to relatively low-level CCA employees.” How nice!

Thanks in large part to Dilley, the company was able to cut its losses—and then some.

“The increase in revenue was primarily attributable to the operational ramp of our South Texas Family Residential Center, which generated approximately $65.9 million in revenue during the second quarter of 2015,” notes the quarterly report, as well as being due to new inmates in Arizona and Colorado.

A recap: CCA made $49 million more in the second quarter of this year than it did in the second quarter of last year. And in the second quarter of this year, Dilley—where mothers and toddlers are locked up—generated a whopping $65.9 million in revenue.

NASDAQ, as you might imagine, has nice things to say about CCA’s stock. The “consensus recommendation,” based on analyst research? Buy.

And Seeking Alpha, “a crowd sourced content service for financial markets,” praised CCA for its “innovative yield strategy.

In the first quarter of the year, according to that quarterly report, Dilley generated $36 million in revenue. So that’s $100 million in revenue in a quick six months.

But it’s not all sunshine and butterflies for CCA. In the second-quarter report, it notes a few things that could go wrong and adversely impact their bottom line. One of those things: “changes in... the public acceptance of our services.”

I contacted CCA’s communications office and asked what they meant by that. They didn’t return my calls or email. We can only assume they meant to say that the American public currently accepts the work CCA does at Dilley, and that that’s good news for their stock. And that is good news for CCA’s major holders, which include The Vanguard Group and BlackRock.

This all comes at a time when the political climate has been a bit dicey for the prison industry. The Motley Fool reported that CCA is a little worried about marijuana legalization.

“[A]ny changes with respect to drugs and controlled substances or illegal immigration could affect the number of persons arrested, convicted, and sentenced, thereby potentially reducing demand for correctional facilities to house them,” it says, per the site.

And of course, any criminal justice reform that shrinks the prison population would hurt their business as well. Texas alone, for instance, has closed three adult facilities since a criminal justice overhaul in 2007.

CCA and other for-profit prison companies are quite adept at lobbying for their business interests, as The Washington Post detailed earlier this year. The Intercept reported earlier this summer that five of Hillary Clinton’s campaign bundlers work for a lobbying and law firm that CCA paid $240,000 last year. The site noted that one of those bundlers, Brian Popper, helped block a policy change that would have made the private prison corporation respond to Freedom of Information Act requests. Given what we know about CCA, one could imagine that it having to respond to such inquiries might have turned up an interesting factoid or two. Oh, well!

Xochitl Hinojosa, a spokesperson for Clinton’s campaign, noted that the former secretary of state told Telemundo in August that the feds should “begin to close down these centers,” and that she told a high school roundtable in North Las Vegas that children and “vulnerable people” shouldn’t spend time in “big detention facilities.” Hinojosa didn’t say if Clinton has distanced herself from lobbyists and bundlers with ties to CCA.

Laura Lichter, an immigration attorney and former head of the American Immigration Lawyers Association, told The Daily Beast that she finds Dilley’s existence baffling.

“The only reason I can see that people are still in family detention is because there must be incredible pressures to keep it going on the basis of its profitability,” she said.