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HRDC director quoted re JPay services

NY Post, Nov. 16, 2015.

Service connecting prisoners to family wants to expand app

Inmates could end up in iJails.

JPay, a 9-year-old private corrections contractor, is trying to get prisons across the country to put more of its money-making tablets into inmates’ hands with the promise of free educational services.

The Miami-based company has been pitching New York City agencies on purchasing its Android-powered devices for inmates at Rikers Island and the Manhattan Detention Center, JPay Chief Executive Ryan Shapiro told The Post.

Inmates with the “prison-proof” tablets, which are sold at cost, can download educational materials, learn in their cells and upload course work for grading. Professors would also teach some classes at prisons.

In Ohio, JPay has persuaded state agencies to provide 60 percent of inmates with tablets, and 500 of them are now taking college-level courses, Shapiro said.

“We have further reach in prisons than President Obama,” the 39-year-old CEO boasted.

The New York City Department of Corrections declined to comment.

While the education services would be free to prisoners, JPay has a plan to profit from getting them the devices. The private equity-backed company, which handles money transfers, e-mail and video visitations, is looking to grow revenue by offering music, e-books and other digital media.

These bells and whistles are nice for bored inmates, but they come at a steep price. JPay charges 30 cents a pop to send an e-mail.

As of April, JPay served 2.3 million offenders nationwide through its money-transfer business, reaching 46 percent of federal, state and county inmates. It charges $5.95 for an average
transaction of $70.

By comparison, its digital media business served just 5 percent of the prison market.

Meanwhile, JPay is already turning a nice profit from the nation’s growing prison population. Revenue jumped by 41 percent, to $70 million, in 2014, according to an April presentation to lenders.

The company operated at a 45 percent gross profit margin and at a still-fat 25 percent when accounting for expenses.

Paul Wright, executive director of the Human Rights Defense Center, is not impressed.

“In 2003, when JPay started, jails did not charge families to give prisoners money,” Wright said. “Shapiro’s … genius is, he figured out how to monetize it.”

Shapiro makes no apologies for making money, saying, “Profit is how innovation happens.”

How much profit is the question. The Federal Communications Commission recently took the step of capping prison calling rates after Wright and other activists lobbied against “predatory” rates.

The move hit JPay’s parent company, Securus, which is owned by PE firm Abry Partners. It was also accused of apparently illegally recording thousands of phone calls between inmates and their lawyers, according to a report by Web site Intercept.

JPay said it records all conversations and has no system in place to weed out privileged attorney calls.

“It’s a system built for visitors, for family members and friends,” Shapiro said. “It’s not built for the attorney part of it. Now, if we’re forced to build it in the future, most likely you’ll see us developing it. But for now, it hasn’t been an issue.”

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