Private equity firms, one of the most powerful arms of Wall Street, have become key adversaries of movements from labor rights to climate action to housing justice. With their wealthy CEOs and aggressive cost-cutting tactics aimed at delivering big returns, these firms are one of the most rapacious expressions of financial profiteering today.
This makes it all the more alarming that private equity has a major foothold in the United States prison system. Private equity firms have nearly monopolized the market in areas like prison telecommunications. They control huge swaths of vital services like prison health care and food service. The lack of oversight around private equity, combined with the sector’s predatory tactics, has created a nightmare for captive prison populations, whose most basic needs are subjected to the whims of investors. Not surprisingly, this has produced numerous scandals and mounting lawsuits.
A new zine by the Private Equity Stakeholder Project (PESP), “From Dawn ‘Til Dusk,” lays out the granular, everyday ways that private equity infiltrates many aspects of prison life. Meant to be an educational and organizing tool, the zine draws from longer PESP reports on private equity and prisons. Other groups, notably Worth Rises, a nonprofit organization working to dismantle the prison industry, have published extensive research on the harmful relationship between private equity and prisons, and led campaigns to challenge it.
Truthout spoke to PESP and Worth Rises about private equity’s presence in the U.S. prison system and some of the impacts of its business practices on incarcerated people. While private equity’s power can seem daunting, there is reason for hope, as organizers have scored significant victories that push back against its most egregious behavior around mass incarceration.
Private Equity Owns “a Pretty Significant Amount of the Prison Industry”
“Private equity” can feel like an opaque or mystifying phrase. But simply put, private equity firms bundle up investments from clients — typically big institutional investors like pension funds and endowments — into “funds” that they use to acquire ownership stakes in private companies.
Private equity firms bundle up investments from clients into “funds” that they use to acquire ownership stakes in private companies.
Private equity firms charge high fees while promising big returns for clients, often by squeezing out profits through restructuring, slashing operational costs and loading companies with debt. Unlike publicly traded companies, private equity faces less regulatory scrutiny, so private equity firms can lack transparency, contributing to their shadowy image.
When it comes to the U.S. prison system, private equity is a major player. “I would describe private equity as owning a pretty significant amount of the prison industry,” Bianca Tylek, executive director of Worth Rises, told Truthout. For example, she says, private equity owns roughly 90 percent of the market share of prison telecommunications.
All this is cause for alarm, says Tylek. Private equity-owned companies don’t just engage in predatory business tactics with less accountability — they’re also backed by big investors who often aim to combine companies and expand their market share, strengthening their reach. Private equity firms “have a tremendous amount of access to capital to essentially scale harmful practices,” says Tylek, which allows them to “consolidate and create, essentially, monopolies and duopolies in these different fields.” Private equity’s cost-cutting practice “obviously creates issues for those who are reliant on the services,” she says.
Private equity-owned companies engage in predatory business tactics with less accountability.
Azani Creeks, a research/campaign coordinator with PESP and a co-author of the zine, emphasizes that, with all the focus on privately owned prisons like GEO Group and CoreCivic, private equity needs more attention because of its dominance over services within public prisons.
“The movements to end contracts with the GEO Group and CoreCivic were incredibly important but didn’t really get at all of the ways that private companies benefit from prison,” she said. “Private equity investment really shows the ways that private companies still benefit even if they’re not owning the prison itself.”
“The Fight for Prison Phone Justice Is Inherently a Fight Against Private Equity”
The co-authors of “From Dawn ‘Til Dusk” hope that the zine can convey, in a more accessible way, a deeper understanding of the nexus between private equity and prisons and its overwhelming presence through the prison system.
In guiding readers through “a day that could take place in any U.S. prison, jail, or immigrant detention facility,” the zine shows in close detail the ways that private equity shapes every nook and cranny of prison life. It moves through multiple areas, from the very facilities that incarcerated people wake up in, to the commissaries where they purchase products at inflated prices, to the food they consume in cafeterias, and more.
Prison telecommunications are a major site of private equity dominance of prison services. Just two private companies, ViaPath (formerly GTL) and Securus, own around 80 percent of the correctional telecom market. The companies are currently owned by two private equity firms, American Securities (ViaPath) and Platinum Equity (Securus).
“When you’re talking about phone service in prisons, you’re essentially talking about private equity,” says Creeks. “The fight for prison phone justice is inherently a fight against private equity, just because of how much they dominate the market.”
With prisoners as a captive market, “From Dawn ‘Til Dusk” notes that these companies, absent regulation, can charge exorbitant rates, and that county sheriff offices and state corrections departments sometimes receive commissions — “a legal form of legal kickbacks,” says the zine.
Tylek says one of the most shocking examples of telecommunications profiteering in prisons involves charging fees for basic things like sending an email or reading a book. JPay, a subsidiary of Securus, makes prisoners pay fees to access email, games and e-books. In 2021, it agreed to pay $6 million in fines and restitution for making prisoners pay fees simply to access their own money. In West Virginia, ViaPath (formerly Global Tel Link) makes prisoners pay 3 to 5 cents a minute to read on their tablets, even if they’re reading free e-books. JPay and Global Tel Link charged prisoners in New York $0.25 cents for “stamps” to send and receive emails.
Prison health care is another arena in which private equity is a huge player. Two of the biggest prison health care providers, Wellpath and YesCare, are owned by private equity firms (the Miami-based H.I.G. Capital and the New York City-based Perigrove Capital, respectively).
Prison health care profiteers have faced numerous scandals for alleged negligent treatment.
Prison health care profiteers have faced numerous scandals for alleged negligent treatment. Organizers in California have been campaigning around H.I.G. Capital’s Wellpath, which provides health care at the majority of the state’s 56 county jail systems. Wellpath has been the subject of damning investigations and numerous lawsuits around its inadequate services and corruption.
Meanwhile, Perigrove Capital’s YesCare has faced more than 1,000 lawsuits over poor care. As an example of how private equity evades accountability, YesCare split itself into two companies in May 2022, creating a new subsidiary called Tehum Care Services that, according to The Wall Street Journal, it loaded with its “unpaid bills and legal liabilities” before filing the company for bankruptcy. This is a controversial maneuver known as the “Texas Two-Step” that allows companies to limit their exposure to lawsuits.
In addition to Wellpath, H.I.G. Capital owns TKC Holdings, whose companies provide prison commissary and food services. There have been reports of mold, maggots and dirt in TKC Holdings’ (formerly Trinity Services Group) food.
Creeks says it’s “deeply troubling” that H.I.G. Capital holds contracts for both cafeteria food service and the commissary, which creates clear conflicts. “They can make the food so shitty in the cafeteria that people are forced to buy food in the commissary,” she said. “And they’re just making money on both sides of it.”
Not all prison private equity profiteers are well-known firms, but H.I.G. Capital oversees $59 billion in assets. The zine also highlights the iconic Warburg Pincus, among the top private equity firms in the world, as one of several private equity owners of electronic monitoring services used by the U.S. prison and detention system. Warburg owns Allied Universal, which owns the electronic monitoring company Attenti Group.
“Private Equity’s Hold on the Prison Industry Is Very, Very Quickly Slipping”
Creeks says that abolitionist struggle and resistance to private equity go hand in hand. “There are a lot of other aspects of prison life that haven’t gotten much attention, and that will inherently be private equity fights, just because it dominates the market,” she said.
K Agbebiyi, a senior campaign coordinator at PESP and co-author of “From Dawn ‘Til Dusk,” believes the zine can help demystify private equity and make its relationship to mass incarceration more accessible for organizers. They hope it will be printed out and spread far and wide, from zine fairs to protest action, “the kinds of places where people might be interested in prison abolition but might not be well versed in private equity,” Agbebiyi said.
Tylek says there are reasons for hope in the fight against private equity’s prison profiteering. For one, organizing over the past decade has resulted in legislation that, while not targeting private equity specifically, regulates some of its flagrant practices. The Federal Communications Commission’s ability to regulate interstate communications from prison — and now, with the Martha Wright-Reed Just and Reasonable Communications Act of 2022, intrastate calls — has become a counterweight to private equity price-gouging. States like Connecticut, California, Minnesota, Colorado and Massachusetts have made calls from prison free (or are in the process of doing so).
Moreover, campaigns against private equity prison profiteers have made headway. The best example might involve Tom Gores, the billionaire chairman and CEO of Platinum Equity, which owns Securus. By 2019, organizers convinced the Pennsylvania State Employees Retirement System to decline a $100 million investment in Platinum Equity. The firm’s debt tanked. A merger with another prison telecoms company collapsed.
Then, in 2020, after Tom Gores gave lip service to Black Lives Matter protests, Worth Rises, accusing Gores of hypocrisy since he profits from racist mass incarceration, began a high-profile campaign that grabbed national headlines. They protested Gores, who owns the National Basketball Association’s Detroit Pistons, at a Pistons game and put a full-page ad in The New York Times shaming him. This campaign successfully pressured Gores to resign from the board of the prestigious Los Angeles County Museum of Art.
“It’s those kinds of things that we can accomplish in targeting these private equity firms on their face,” says Tylek.
Agbebiyi says there are all kinds of opportunities for local and campus organizers to take on private equity prison profiteering. In addition to targeting endowment investments in prison-tied private equity funds, some firms may have representatives on university boards. For example, hundreds of Princeton University seminary students have called for the removal of ViaPath Founder and CEO and American Securities owner Michael Fisch from the Board of Trustees of the Princeton Theological Seminary.
For PESP, appealing to big institutional investors like pension funds and endowments, which are core clients of private equity firms, is key to dismantling private equity’s profiteering in the prison system. In recent years major pension funds — California teachers and New York City public employees, for example — divested from investments in private prisons. The #FamiliesBelongTogether coalition drove major banks away from private prison groups like GEO Group and CoreCivic.
Agbebiyi and Creeks don’t want to see private equity firms unload portfolio companies to continue business as usual. In the immediate term, they say, the companies could be turned into nonprofits, and services like phone calls could be made free. While taking private equity out of the prison system won’t end mass incarceration, public and nonprofit entities overseeing services could be held more accountable and subject to greater oversight, says Tylek.
Tylek says that the growing pushback against private equity’s prison profiteering and its harmful impacts gives her hope.
“I believe that private equity’s hold on the prison industry is very, very quickly slipping,” she said.