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Letters to PE Firms re Prison Services, U.S. Congress, 2019

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<!Congress of tbe tlntteb ~tates
mmsbinrrton, DC 20510
September 30, 2019
Andrew Feldstein
Co-Founder and Chief Investment Officer
BlueMountain Capital Management, LLC
280 Park Avenue, 12111 Floor
New York, NY 1001 7
Stephen Siderow
Co-Founder and Co-President
BlueMounlain Capital Management, LLC
280 Park A venue, I 2 111 Floor
New York, NY 10017
Michael Liberman
Co-President and Chief Operating Officer
BlueMountain Capital Management, LLC
280 Park A venue, 12 111 Floor
New York, NY 10017
Dear Messrs. Feldstein, Siderow, and Liberman:
We are writing regarding BlueMountain Capital Management 's (BlueMountain)
investment in companies providing support services to prisons, jails and detention facilities
across the country, and to request information about your firm ' s structure and finances as it
relates to these companies.
The United States' criminal justice system, driven by a misguided " tough on crime"
approach that disproportionately targets Black and Latinx Americans, has allowed private
prisons and compani es providing support services to correctional faciliti es to rake in billions of
dollars at the expense of incarcerated individuals, their fam ilies, and tax payers for decades. 1
These support companies, responsible for providing support medical, food, and phone services to
prisons, jails, and detention fac ilities housing over two million incarcerated people across the
country, often deliver low-quality services to incarcerated individuals and their fami lies at
exorbitant fees, collecting over $40 billion in tax -payer fund s annuall y. 2 These problems are
exacerbated by the lack of a functioning, competitive market for these companies and their

1

Prison Policy Initiative, ··Following the Money of Mass Incarceration," Peter Wagner and Bernadette Rabuy,
January 25, 20 17, https ://www.prisonpolicy.org/rcports/moncy.htm l; NAACP, "Criminal Justice Fact Sheet,''
https://1,vww. naacp.ondcri mi nal-j ust ice- fact-sheet/.
2 Worth Rises, ''The Prison Industrial Complex: Mapping Private Sector Players," April 20 19,
https ://worthriscs.orn./picrcport2019.

scrv'ices. 1'he users of these services - incarcerated individuals and their loved ones- are
literally captive, 11ot able to shop arot1nd and find the best inix of price and quality.
We have concerns about tl1e rapid spread and effect of private equity invest111ent in many
sectors of the economy- including the correctional facility support services industry. 3 Private
eq1iity funds often operate under models where they purchase controlling interests in co1npanies
for a sl1ort time, then load thetn ttp \\'ith debt, strip them of their assets, extract exorbitant tees,
and sell then1 at a profit -- implen1enting drastic cost-cutting measures at the expense of workers,
consumers. comm1111ities, and taxpayers. 4 'fhis is why, V•/e have introduced legislation that will
force private eq1tity funds to tal(e responsibilit)' for the outco111es of con1panies they take over
and to discl0,se i1nportant financial i11formatio11 that will provide tra11sparency on tl1eir
composition, financial status, and profits. 5
Likewise, \Ve have concerns about the role BlueMountain and other private equity firms
are playing in tbe continued co11solidation oftl1ese J)rofit-sccking companies, the decline in
quality of the services they provide, and tl1e effects on incarcerated individuals, their fa1nilies,
and their com1nunities. 6 F-'or exa1nplc, as of July 2017, three companies - GTL, Securus
'Technologies (Securus), and In1nate Calling Solutio11s Inc. (ICSolutions)- provided telepho11e
service i11 between 1, 141 and 1,668 correctional facilities across tl1e U11ited States and
collectively controlled an estin1ated 65% to 79% of the correctional pl1one market, with GTL
alone co11trolling about half of the in ark.et. 7 Eacl1 of these co1npanies is private equity-owned and
generates hundreds of inillions of dollars in revent1e eacl1 year. 8
In no s1nall part because of this market concentration, these few companies have the
power to "limit facilities' choices," "lock them i11to tinfair contracts, " 9 and dictate contract terms
that push additional costs on to incarcerated individuals and their loved ones. Companies
providing telepho11c services in co1Tectio11al facilities l1ave been accused of setting "rates and
fees far in excess of those established by regttlar commercial providers," in1posing significant
costs on families and friends of incarcerated individuals, and ultimately "profiting off of people

3 l"he

Nation, "How Private Equity Is '!"urning Public Prisons Into Big Profits," Tim Requarth, April 30, 2019,
htt ps:/fW\\'\\/. tl1 en ati on.co n1/a11\f.Le 1prison-pri vatizat ion-pri vate-equity-h ig/.
4 Private Equity Stakeholder Project and Center for Popular Democracy. "Pirate Equity: How Wall Street Firn1s are
Pillaging An1erican Retai1," July 20 I 9, b.ttps:.1/united4resp.s.ct.org,\\:p-contentfupload~'._ill l 9/07 /Piq1te-Equity-l·lo\V.}Y11ll-Stree!-Firm~-are-Pi!\agin<>-A1ni;trican-Retail-llliy:.'.f..Ql.'2JL41; Center for Economic and Policy Research, "Private
Equity Partners Get Rich at Ta-:payer Expense," f:i!een Applebaum and Rosemary Batt, July 2017,
,hl!p_;,'./cepr .netfi rnages/stories/reports/pJJ.Y..ate-cgill!}_::.nartners-20 J7 -0 7JJ..Qf
5 Stop Wall Street I~ooling Act, S.2155, ln!J2~_:_{1\V\VVi .cqngress."ov1bi\l!_lJ..§.!h:f...Q.ngress/~nat~.Q..illi2155.
c, Private Equity Stakeholder Project. "Fact Sheet: Private equity-o,vned firms do1ninate prison and detention
services,'' Septe1nber 17, 2018. https://pestakeholdci:.orgireporli'.private-equitv-o\vned-finns-don1inate-prison-and<letcnt ion-serviccs,L.
7
Prison Policy lnitiative, "Prison phone giant GTL gets bigger, again," Peter Wagner, August 28, 2017,
https:/ /\\/\\/W .prisonQQ) icy .ortdb lov'JO 17/08/2 $/n2£!·ger/.
8
Urban Justice Center, "The Prison Industrial Co1nplex: Mapping Private Sector Players," April 2018,
ht!ps://~tatic J ,squarespace.com/static/58e 1J7cb I b I_ Oe3 I ed45b20t4/t/5ade028 i f950b7ab293c86a6/1524499083424rr
hc·l Prison ·t.Jndustria! +i,,;.ornplcx+- +M upping +Private+ Sector+ PI ayers + 0/o28A pri l+20 ! 81!'0?9. pdf.
9 Prison Policy Initiative, ''Staie of Phone Justice: Local jails, state prisons and private phone providers," Peter
Wagner and Alexi Jones. February 2019, l1ttps:l/\Vl\/\V.prison1Jolicy.org!pb.ones/stat.LQf....Qhone 1ustice.hhn 1.

2

in ·vulnerable situations. " 10 A February 2019 analysis by the Priso11 Policy Initiative found t11at
tl1ese companies charge up to $25 for a 15-ininute pl1one call and in inru1y cases draw up
co11tracts that a\lov.· tl1em to collect ·'fees to open an accou11t, have an account, j'und ai1 accou11t,
close an account, get a refund, [and] receive a paper bill;' at the expense of incarcerated
individuals and their frunilies. 11 The Federal Con1munications Comn1ission found that t11ese extra
fees "can increase the cost offan1ilies staying in touch by pho11e v.rith loved ones \iVho arc
incarcerated by as 1nuch as 40%." 12
Si1nilarly, the correctional medical care i11dustry is experie11cing consolidation and raising
new co11cerns about the quality of health care provided to incarcerated individ11als. The two
largest private con·ectional medical care providers in the co1mtry - Corizon 1-Iealth Inc. (Corizon)
and Wellpatl1 - collectively provide l1ealtl1 care services to hundreds of thousands of incarcerated
i11dividuals in hundreds of COlTectional it1stitt1tions located iri at lea::.i 36 states. Both companies
are private equity-owned. Wellpath, formed fro1n tl1e 2018 n1erger o[two private prison healtl1
care con1panies, "is expected to bring in about $1.5 billion an11ually, [while] Corizon's reven11e
was pegged at about $1 billion in 2017." 13 'fhese t\VO con1panies 11ave "been sued about fifteen
hundred ti1nes dw·ing the past five years ... over matters inclt1ding alleged neglect, malpractice,
a11d, il1 dozens of cases, \\To11gf1Il injury or deatl1." 14
1·he privatizatio11 and consolidation of the com111issary and food services sector - steered
by pri\'ate equity investn1e11t -l1as allowed private com1Janies to rake in significant profits
despite delivering lov.1-quality services. for exan1ple, over the span of two years a11d 1111der the
ovvncrshiJJ of a private cquit)' fi1n1, Trinity Services Group (1'rinity), one of the largest private
food and con11nissary service providers witl1 contracts in 44 states and 700 faciiities 15 ,
accumulated $3.8 n1illion in fines for contract ·violations in M.icl1igan alone. 16 Trinity has also
been accused of serving n1eals "which included not only maggots but also ''crunchy dirt' ii1
potatoes and n1old in apple crisp and pancakes," and providing such meager portio11s tl1at

10

Nev.' York l'imes, "The }ligh Cost of Calling. the linprisoned," Timothy Williams, March 30, 2015,
https ://\V\V\V. nyt i n1cs. co1n/7 O!'5/03 /3 1/us/steep-costs-o f-i 111n ate-phone-ca! !s-are-und er-scrutiny .htm I.
11
Prison Po!fcy Initiative, "State of Phone Justice: Local Jails, state prisons and private phone providers," Peter
Wagner and Alexi Jones, February 2019, https:f/\V\VJ:~.,priso1_:!policy.orglphoncs/state of phone justicc.htinl~ The
Nation, "I-low Private Equity ls l'urning Public Prisons Into Big Profits," Tin1 Requarth, April 30, 2019,
https://w\V\Y, thenation. co1n/a1tic lc/prison-priyatiz.at ion-pri vate-equitv-h !&'..
12
Federal Coinmunications Commission "FCC takes next big steps in reducing in1nate calling rates,'' press release,
October 22, 2015, https:t/apps.fcc.oovlecill£LR,\-lblic/attachn1atth/l)QC-335984A l.J2.dl.
13 American Federation of Teachers, ''Private prisons and investment risks part two: flow Private Prison Companies
Fuel Mass Incarceration -- and l·lo\v Public Pension Funds Are at Risk," February 2019,
ht!@_//\VW\V.aft.orgisite.,:;iiJs:ll\!!.lt/filesfprivate-prisons-invest-2019.:Q,art2.QQf; The Ai!antic, "1"he Priva1e Option,''
Marsha Mcleod, September 12, 2019, hllfls: l/w\V\V .theatlantic.co1n/politics/archivei2019/09/private-eguitvs-grjp-onjni!-hcalth-care/59787 I/.
14 Nevt' Yorker, "The- Jail 1-lea!th-Care Crisis," Steve Coll, February 25, 2019,
h!!P.s:.I / \V~'.:t-'. ne'.Y}orkQr.co1n/n1a gazine/20 19/03/04fthe-j ail-heal th-care-crisi (i.
15 Prfson Policy Initiative, .. Paging anti-lTUSt la\vyers: Prison co1n1nissary giants prepare to merge," Stephen Raher,
July 5, 2016, https://\V\V\V,prisonpol icy.01gj]:llog/20 J6i07!05/co1n1nissar:y-1n<:_rgerl.
Jfi Prison Legal News, "Michigan's Ne\'i' Prison Food Service Provider Failing to Meet Contract Tcnns," David M.
Reutter, January 20 18, https://V:f.\V\~Jidso1~gfil.nc\vs.org/11e.\VS/20 l 8/jan/Sln1i.1,;hlgans-nc\v~prison-fOod-servjs;e~
Qr.Qvider- l3i li ng:!}1cet-contract-tenn~,

3

incarcerated ii1dividuals in one cou11ty jail were reduced to "eat[i11g.J toothpaste and toilet
paper." 17
Tl1ese ser\rices are part of the private equity-owned crin1ina! jtistice ecosystem. \V11en
incarcerated individuals are not satisfied with the quality and quantity of food provided in their
facilities, they are likely to purchase tbod and beverages fro111 commissaries, commissaries that
are increasingly and simjJarly contra lled by pri\ ate eqt1ity Jirn1s. ]'hose con1missaries provide
unaffordable products, pushing the cost on to "fan1ilics, who are overwhel1ningly poor and
disproportionately come from conununitics of color." 18 Trinity counts amo11g its sister
companies, ·'Svvanson Se-rvices Corporation, a leadi11g provider of commissary goods operating
in 41 states," and Keefe Group, 19 the "nation's leadi11g supplier of food prodttcts, personal care
products, electro11ics, clothingi teclu1ology, telecommunications and softvvare solutions to the
correctional inarket. " 20 As a result, in ±8.cilities wl1ere Trinity and Swanson or Keefe operate, if
Trinity fails to pro\'ide quality food for incarcerated individuals) the parent company is still
likely to pro tit \ 1ia its comn1issary businesses. The holdi11g con1pany in control of U1esc
companies ge11erated over $1 billion in revenue in 2017 a1011e. 21
1

Private equit;'-owned priso11 support services use their 1narket po\.ver to make millions of
dollars oil' those who are incarcerated, their fa1nilies, and their communities - often while
providi11g subpar products and services. And, private equity fin11s may be n1aking these problems
even worse- undertaking an effort to control a growing number ot' st1ppo1t service providers in
eacl1 sector. For instance, a single pri\'ate equity ti1m owns Keefe Group, ICSolutions a11d
Wellpath, tl1e large private comn1issary, telephone and tnedical care providers. Tl1is allo-\.\>'S tl1e
cotnpanies to "offer facilities packages of unrelated services in one huge bundled contract" creating a disi11centive ±br facility adn1inistrators to abandon the con11Janies and seek out
alternatives when the quality of services in one arn1 of the compa11y declin_es. 22
BlucM011ntain is a large investor i11 the prison stipport services sector. We have
introduced legislation, tl1e 5;1011 Wcrll Street l~ooting Act, to refon11 the private equity industry by
holding private equity firms liable for tJ1e responsjbilities and debts of co1npanies under their
control and increases transpare11cy by requiring p1ivate equity n1anagers to disclose fees, returns,
and political expenditures. 23 1'o info1m our approach to passing tl1is legislation, and to better
17 Prison Legal News, "Michigan's Ne\v Prison Food Service Provider Failing to Meet Contract 'fenns," David M.
Reutter. Januilry 20 18, bJJrui.;/ /\v \V\x.,m:.i;;.9nlega]ne\vs.orf!/ne\v~L_20 J 8Li_an!8/n1ichi gans-ne\V.:J]J:i,1Q.n-(9_gtl-service~
Q!.QYJ.der:fal!in"-mcet-con1ract-tern;1$.{: Letter fro1n Southern Center for Hun1an Rights to Gordon County Sheriff
Mitch l~alston, October28, 2014,
h.t!P.2.lL.l\:'.~V\V .sc hr .orgi fi k?LJ2ostifi les[;)C Iif{ 0/o2 Qto~lo20ShcJif1o/o20Ra1 stono/020 I Q~/o:w.2Ji~'o2D.l4. pdf,
18 Prison Policy Jnitiative, "The Coinpany Store: A Deeper Look at Prison Con1missaries," Stephen Raher, May
20 I 8, https :ff\V\V\\~Jiso1mo !icy, orgitf!:QOrts/connn i.c;.,~ary.ht1n !.
L9 'fhe Nation, "Ho\V Private Equity Is Turning Public Prisons lnto Big Profits," 1'in1 Requarth, April 30, 2019,
htlg_s:i Ivy,_,,, w. thenation. coinfa1tic le/prison-pri vatj7ation-pri vate-~JJ-lt.Y.:.l}j_gi.
2° Keefe Group, ·•About Keefe Group'', accessed Sep. 2 l, 20 19, htJilli.:!/v.'\V\v.keefg_roup.con1/
21 Wo1th Rises, "l'he Prison fndustrial Cotnplex: Mapping Private Sector Players," April 2018,
https://static l .sguarespace,corn/static/58c j 27cb Ib_lj)e3 l ed45b20f4/t/5ade028 l 1~50b7ab293c86a6/l '.i_24499083424/T
he-t· Pri ~on+ Industrial-+ C01np lex-~-+ Mapping+ Private-+ Sector+ Pl<1vers+o/a2 SA pri 1+20 18C:'o2 9. pdf.
~ 2 Prison Policy Initiative, "State of Phone Justice: Local jails, state prisons, and private phone providers," Peter
Wagner and Alexi Jones, February 2019, fillJls:!/\v\v1v.nrisonpol icy_org/phones/state of phone justice.ht1nl.
23
Stop Wall Street Looting Act. S.21 55, h1tm;J1\v\\'\V.(.:ill.l.fil'.~.ss.gov!bil!Lllli.th-congress/~cnate-bill/215~.

4

understand your firm's role in the prison support service industry, we ask that you provide
answers to the following questions no later than October 14, 2019.
l. Please pro, ide the disclosttre documents and information enumerated in Sections 501
and 503 of the Stop Wall Streer Looting Act. 24
1

2. Wl1ich prison support service con1panies, including aJJ affiliates or related entities,
does BlueMountain have a stake in or own? Please provide the name of and a brief
description of the services each company provides.
a. \\lhich prison support service companies, including all affiliates or related
entities, has BlueMountain 11ad a stake in or owned in the past ten years?
Please provide the name of and a brief description of the services each
company provides or provided.
b. For each BlueMountain~owned prison support service company, i11cluding all
affiliates or related entities, please provide the following i11formation for each
year that you l1ave had a stake in or owned this company· and the five years
preceding your investment.
i. The name of the co1npany
tl. Ov.nership stake
11i. -rotal revenue
1v. Net income
v. Total expenditure
v1. Total number of employees
vii. Total number of corrections facilities or relevant authority with which
the company has a contract to provide services
VIII. 1'otal number of incarcerated individuals for whom tl1e company
provides service
IX. Other private-equity flIIlls that own a stake in the company
3. Does BlueMountain have a stake in or own companies, including all affiliates or
related entities that provide telepl1one services to cotTectional facilities? If so, please
provide the following information for each year that your firm has' had a stake in or
owned each company and the five years preceding your investment.
a. Revenue generated from per-minute phone rates
b. Revenue generated from fees and a list of each type of fee
4. Private equity-owned corrections companies have reportedly entered into countless
settlements over the years and paid millions of dollars in fees for contract violations.
a. Has any prison support service company,.including all affiliates or related
entities, in whicl1 BlueMountain has an ownership stake, been investigated for
violation of any federal or state la\v or regulation? If so, please provide a
complete list, including the date and description, of each investigation.

i.i

Id

5

potential violation of any federal or state law or regulation? If so, please
provide a complete list, including the date and description, of all such
settlements.
Sincerely,

States Senator

Member of Congress

6

cteongress of tbe ~niteb ~tates
Wmdimgton, DC 205 lO
September 30, 2019
Sarni Mnaymneh
Founder and Co-Chief Executive Officer
H.I.G. Capital, LLC
1450 Brickell A venue 3 I 51 Floor
Miami, FL 33131
Tony Tamer
Founder and Co-Chief Executive Officer
H.I.G. Capital, LLC
1450 Brickell Avenue 31 51 Floor
Miami , FL 33131
Dear Messrs. Mnaymneh and Tamer:
We are writing regard ing H.I.G Capital 's (H .l.G.) investment in companies providing
support services to prisons, jails and detention facilities across the country, and to request
information about your firm's structure and finances as it relates to these companies.
The United States' criminal justice system, driven by a misguided " tough on crime"
approach that disproportionately targets Black and Latinx Americans, has allowed private
prisons and companies providing support services to correctional facilities to rake in billions of
dollars at the expense of incarcerated individuals, their families, and taxpayers for decades. 1
These support companies, responsible for providing support medical, food , and phone services to
prisons, jails, and detention facilit ies housing over two million incarcerated people across the
country, often deliver low-quality services to incarcerated individuals and their fami lies at
exorbitant fees, collecting over $40 billion in tax-payer funds annually. 2 These problems are
exacerbated by the lack of a functioning, competitive market for these companies and their
services. The users of these services - incarce rated individuals and their loved ones - are literally
captive, not able to shop around and find the best mix of price and quality.
We have concerns about the rapid spread and effect of private equity investment in many
sectors of the economy - including the correctional facility suppo11 services industry. 3 Private
equity funds often operate under models where they purchase controlling interests in companies
for a short time, then load them up with debt, strip them of their assets, extract exorbitant fees,
1

Prison Policy Initiative, ·'Following the Money of Mass Incarceration,'" Peter Wagner and Bernadette Rabuy,
January 25, 2017, https://www.prisonpol icv.org/repo11S/money.html; NAACP, "Criminal Justice Fact Sheet,"
https://www.naaco.org/cri m ina 1-j ust ice-fact-sheet/.
2 Worth Rises, ·'The Prison Industrial Complex: Mapping Private Sector Players," April 2019,
hnps://worthrises.org/picreport2019.
l The Nation, ·' How Private Equity Is Turning Public Prisons Into Big Profits," Tim Requarth, Apri l 30, 2019,
hups://www. then at ion.com/artic lc/prison-privatizal ion-pri vat e-cgu ity-h ig/.

and sell the1n at a profit- implen1enting drastic cost-cutting measures at the expense of worl(ers,
consumers, co1n1nunities, and taxpayers. 4 This is why, we 11ave introdl1ced legislation that will
force private equit)' fu11ds to take responsibility for the outcomes of compa11ies tl1ey take over
and to disclose important :financial information that will provide transparency 011 their
con1position, tinancial status, ru1d profits. 5
Likewise, we have concerns about the role 11.I.G. and other private equity firms are
playing in the contintted consolidation of these profit-seel(ing companies, the decline i11quality
oftl1e services they provide, and the effects 011 incarcerated individuals, their families, a11d their
con1rnunities. 6 f'or example, as of July 2017, three co1npanies - GTL, Securus Teclmologies
(Secun1s), and Inmate Calli11g Solutions Inc. (ICSolutio11s)-providcd telepl1one service in
between 1, 141 and 1,668 correctional facilities across the United States and collectively
controlled an estimated 65% to 79% of the correctional pho11e market, with GTL alone
controlling about half of t11e inarket. 7 Eacl1 of tl1ese companies is private eql1ity-ovmed and
generates 11undreds of 1nillions of dollars in revenue each year. 8
In no small pa11 because oftl1is market concentration, tl1ese few con1panies 11ave the
power to "limit facilities' choices," "lock the1n i11to unfair contracts," 9 and dictate contract tem1s
that p11sh additional costs on to incarcerated individuals and their loved ones. Companies
providing telephone services in correctio11al facilities have been accused of setti11g "rates and
fees far in excess of those establisl1ed by regular co111n1ercial providers," in1posing significant
costs on fa1nilies and friends of incarcerated i11dividuals, and ultimately "profiting off of people
in vulnerable situations." 10 A February 2019 analysis by the Prison Policy Initiative found tl1at
these con1panics cl1arge up to $25 for a 15-minute phone-call and in inany cases dra\v up
contracts that allow tl1en1 to collect "fees to open a11 accol1nt, 11a\'e an account, ftn1d an account,
close an account, get a refu11d, [and] receive a paper bill," at the expense of incarcerated
individuals and their fan1ilies. 11 The Federal Communications Con11nission fou11d that these extra
4

Private Equily Stakeholder Project and Center for Popular Democracy, "Pirate Equity: l~O\V Wall Street Finns are

Pillaging Ainerlcan Retail," July 20 19, .bttps:/lunited4respect.org/\vp-cont!;;nt/uploads/20 ! 9/07 /Pirate-Eguily-Ho\V.Wall-Street-Firn1s-are-PilJaaino--A1nerican-Reta.il-Julv-20 19 .pdf; C-enter for Econotnic and Policy Research, "Private
Equity Partners Get Rich at Taxpayer Expense," Eileen Applebauin and Rosemary Batt, July 2017,
h!tp ://cepr. net/ i inageslstories!reports/pri vate-eg ui tV_:pJlrtners- 2 0 17-07 .pdt:
5
Stop \Vall Street Looting Act, S.2155, hl!IIB//\V\vv.-.con°ress. 0 ovfbi!l/Ll 6th-congress/senate-bill/2 ! 55.
6
Private Equity Stakeholder Project, ''Fact Sheet: Private equity-owned firms do1ninate prison and detention
services," September 17, 20 I 8, !l!-!rui!it.Jl:.Stak_tl10lder.org/r9,p9rt/pri vate-egl1 itv-o}YJ,\ed- finn~.:..®m inate-prison-gnQ:
Q.fj~l\.ior1:5.e.rv ices/.
7
Prison Policy Initiative, "Prison phone giant GTL gets bigger, again," Peter Wagner, August 28, 2017,
h1!P.§.;f~w\v. prison no lk.Yc.orgibJQ.g,~ 0 I 7108/? ~iincrgcr/.
8 llrban Justice Center, "1"he Prison Industrial Complex: Mapping Private Sector Players," April 2018,
https:/ist~ilf.l .~respace.con1.lstatic/58e 127cb lb 1Oe3 l e~l45b20f4/t/5ad~ 11'950b7ab293c86a6/l 524499083424n·
he- 1- Prison-;· Jndustrial-:-C 01np Jex+-+ M;ippin g,-.i- Priyate+ Sector+ P !avers+%2 8Apri ! +-20 18%29. pd[
9 Prison Policy Initiative, ''State of Phone Justice: I.ocal jails, state prisons and private phone providers," Peter
Wagner and A lexl Jones, February 20 19, https:/iw\V\V .prisonpolicv .Q.rg/phones/stntc of phone justice.htinl.
w New York Ti1ncs, "The 1-ligh Cost of Calling the [mprisoned," Timothy Willian1s, March 30, 20 l 5,
https :// \V):V\V. nyt ilnes. con1/2 0 ! 5/0 3/3.L/us/stecp-costs-o f- inn1 atc-nhone~cal Js-r:ire-und..::r-scru ti nv. hl]n 1.
11 Prison Policy Initiative, ''State of Phone Justice: Local Jails, state prisons and private phone providers," Peter
Wagner and Alexi Jones, February 2019, https:L/\~'W\V_,prlsonpolicy.org/phoncs/state of phone justk;~html; The
Nation, "!-:low Private Equity ls Turning Public Prisons Into Big Profits," Tlin Requa1ih, April 30, 2019,
htlp~:l/\V\V\V,thenation.£_01n/ci1ticle/prison-privatization-1:rrivate-equity-hig~.

2

fees "can increase tl1e cost of fan1ilies staying in touch by phone \Vith lo\•ed ones \Vl10 are
incarcerated by as 1nuch as 40%.'' 12
Similarly, the c61Tectional medical care industry' is experiencing consolidation and raising
new concerns about the quality of health care provided to incarcerated individuals. The tVv'O
largest private con·ectional medical care providers in tl1e country- Corizon J-Iealt11 Inc. (Corizon)
and Wellpatl1- collectivel:y provide health care services to hltndreds of thousands of incarcerated
indi\'iduals in hundreds of con·ectional institutions located in at least 36 states. Both con1pa11ies
are private equity-o\vned. Wellpail1, for1ned from the 2018 merger of two private prison healtl1
care companies, "is expected to bring in about $1.5 billio11 aimually, [wl1ile] Corizon's revenue
was pegged at about $1 billion in 2017. " 13 Tl1ese two con1panies l1ave "been sued about fifteen
hu11dred ti111es duri11g the past five years ... over inatters including alleged neglect, malpractice,
and. in doze11s of cases, wrongful injury or death. " 14
The privatization mid consolidatio11 of the con11nissary at1d food services sector- steered
by private equity in·vestme11t - l1as allowed private co1npanies to rake in significant profits
despite delivering low-quality services. For example, over the span of two years and under tl1e
ownership ofa private equity finn, Trinity Services Group (Tri11ity), one of the largest private
food and commissm·y service providers with contracts in 44 states ~nd 700 facilities 15 ,
accl1111ulated $3.8 n1illion in fines for contract violations in Michigan alone. 16 Trinit)' has also
been accltsed of serving meals "vvhich included not oni)' maggots but also "'crunchy dirt' in
potatoes a11d nlold in apple crisp a11d pancakes," ai1d providing such meager portions that
incarcerated i11dividuals in one county jail were reduced to "eat[ing] toothpaste m1d toilet
paper." 17
These services arc part of the private equity-owned crin1inal justice ecosystem. Whe11
incarcerated i11divi<.1uals are not satisfied with the qltality and quantity of food provided in t11eir
facilities, they arc likely to purchase food and be·verages fro1n commissaries, co1nmissaries that
are increasingly and si1nilarly controlled by private equity firn1s. 'fl1ose co1nmissaries provide
unaffordable products, pushing the cost on to "families, who are over\vhclmingly poor and
12 Federal Con11nunica1ions Com1nission "FCC takes next big steps in reducing in1nate calling rates," press release,
October 22, 20 J 5·, bilp]!:f/apps.fi.:c.gov/edocsJ!!,!bliclattachn1atch([)QC- 33598<-\A I .pdf.
13 American Federation of Teachers, "Private prisons and investment risks part two: Ho\v Private Prison Companies
Fuel Mass Incarceration - and Ho~v Public Pension Funds Are at Risk," February 2019,
httns://\V\V\V ,aft.on~/sitesfdefault/fil£filj~rivate-prisons-invest-4.0 I!:l.:!2~!12.....Jldf; l'he Atlantic, "The Private Option,"
Marsha Mcleod, Scpten1ber 12, 2019, !HJp_._<;_;//w\vw.thea!lanti~cco1niQ.olitics1archive/20 19/09/privatc-equitys-grip-on":
lail-health-care.Li97§]_[£,
H Ne\v Yorker, "The Jail l"iealth-Care Crisis," Steve Coll, February 25, 2019,
!ill.r.s://\VW \V. nem.Q!J\.er. CQJ.!!(n1agazi.n~G.Q!.2~'.Q.~/04 /lhe-j at l-hf:l!.!iti_-care-crisis.
15 Prison Policy lniliative. "Paging anti-trust la\vyers: Prison com1nissary giants prepare to merge," Stephen Raher,
July 5, 20 16, https:i/\V_wvv.prisonpolicv"'"org/blog/20 \ 6/07/05/co1n1nissarv-n1erger/.
16 Prison Legal Ne\VS, "Michigan's Nev,' Prison Food Service Provider Failing to Meet Contract l"enns," David M.
Reutter, January 20 18, hnm;/i\VV.'\\' .prisoill_e_galne\vs.or!!/news/20 I 8/jan/8/n1ichigans-ne\v-prison-food-servlceprovider-failing-1ne!?.t·contn1ct-tern1s/,
17 Prison Legal News. "Michigan's New Priso11 Food Service Provider Failing to Meet Contract Tenns," David M.
Reutter, January 20 J 8, https:liwv-1\V .prisonlcgalne\vs.org£]1e\V$12b l 8/Jan/8!1njchi!.!.ans-nc\v-prison-food-scrviceprovider-faili11"-n1eet-contract-tern1s/; Letter fi·om Southern Center for l{uman Rights to Gordon County Sheriff
Mitch Ralston, October 28, 2014,
https ://W\V\\I ..?chr. org!ti lcslpost! fl Ie::./_SC i-1R.0/o20to~/b20Sheri fto/o20 Ralst ono/o'0 10~1o2028~-020 I4. pdf.

3

disproportionately come from communities of color." 18 Trinity counts among its sister
companies, "Swanson Services Corporation, a leading provider of commissary goods operating
in 41 states," and Keefe Group, 19 the "nation' s leading supplier of food products, personal care
products, electronics, clothing, technology, telecommunications and software solutions to the
correctional market." 20 As a result, in facilities where Trinity and Swanson or Keefe operate, if
Trinity fai ls to provide quality food for incarcerated individuals, the parent company is still
likely to profit via its commissary businesses. The holding company in control of these
companies generated over $1 billion in revenue in 20 l 7 alone. 2 1
Private equity-owned prison support services use their market power to make millions of
dollars off those who are incarcerated, their families, and their communities - often while
providing subpar products and services. And, private equity firms may be making these problems
even worse - undertaking an effort to control a growing number of support service providers in
each sector. For instance, your firm owns Keefe Group, ICSolutions and Wellpath, the large
private commissary, telephone and medical care providers. This allows the companies to "offer
facilities packages of unrelated services in one huge bundled contract" - creating a disincentive
for facility administrators to abandon the companies and seek out alternatives when the quality of
services in one arm of the company declines.22
H.I.G. is a large investor in the prison support services sector. We have introduced
legislation, the Stop Wall Street Looting Act, to reform the private equity industry by holding
private equity firms liable for the responsibilities and debts of companies under their control and
increases transparency by requiring private equity managers to disclose fees, returns, and
political expenditures.23 To inform our approach to passing this legislation, and to better
understand your firm' s role in the prison support service industry, we ask that you provide
answers to the following questions no later than October 14, 2019.
l . Please provide the disclosure documents and info rmation enumerated in Sections 501
and 503 of the Stop Wall Street Looting Act.24
2. Which prison support service companies, including all affi liates or related entities,
does H.I.G. have a stake in or own? Please provide the name of and a brief
description of the services each company provides.

18

Prison Policy Initiative, "The Company Store: A Deeper Look at Prison Commissaries," Stephen Raher, May
2018, hnps:. www.prisonpolicy.org,reports'commissary html.
19 The Nation, " How Private Equity Is Turning Public Prisons Into Big Profits," Tim Requarth, April 30, 20 19,
https· \\.WW thenation com article prison-privatization-private-egu1t)-h1g .
2° Keefe Group, ''About Keefe Group", accessed Sep. 21 , 2019, h.ml£ w~~ keefegroup.com
21
Worth Rises, " The Prison Industrial Complex: Mapping Private Sector Players," April 2018,
https· static I .squarespace.com static 58e I27cb Ib 1Oe3 I ed45b20f4 t 5ade028 I f950b7ab293c86a6/ l 524499083424 'T
he· Prison- lndustrial+Complex---Mapping+Private-Sector-..Players+ 0 o28April+20.18°1029.pdf.
22 Prison Policy Initiative, "State of Phone Justice: Local jails, state prisons, and private phone providers," Peter
Wagner and Alexi Jones, February 20 19, https:/iwww.prisonpolicy.org/phones/state of phone justice.html.
23 Stop Wall Street Looting Act, S.2155, https:'/www.congress.gov/bill/ 116th-congress/senate-bill/2155.
24 Id.

4

a. Whicl1 prison support service cornpanies, i11cluding all affiliates or related
entities, has l-LI.G. had a stalce in or owned in the past ten years? Please
provide tl1e 11an1e of and a brief description of the services each company
provides or provided.
b. For each fLl.G.-owned prison support service company, including all
affiliates or related entities, please provide the following information for each
year that yo11 have had a stake i11 or owned tl1is company and tl1e five years
preceding your investment.
1. 'fhe name of the company
II. Ownersl1ip stake
iii. 'fatal revenue
iv. Net it1co111e
v. 1'otal expenditure
v1. 1'otal nwnber of employees
v1r. 'fotal nun1ber of co1Tcctions facilities or relevant autl1ority with which
the company has a contract to provide services
v11i. 'l'otal nu1nber of incarcerated individuals for whom the company
provides service
ix. Otl1er private-equity firms that own a stake in the co1npany
3. Does ll.l.G. have a stake in or own companies, including all affiliates or related
entities that provide telepl1011e services to correctio11al facilities? If so, please provide
the following information for each year that your firm has had a stake in or owned
eacl1 company and the five )'Cars preceding yo11r investment.
a. Revenue generated fron1 per-min11te pho11e rates
b. Reve1111e generated fron1 fees and a list of eacl1 type of fee
4. Private equity-owned corrections co1npanies have reportedly entered into countless
settlen1ents over the years a11d paid n1illions of dollars in fees for contract violations.
a. I-fas any prison sup1)01i service con1pm1y, including all affiliates or related
entities, in whicl1 l{J.G. has an ow11ership stake, been investigated for
violation of any federal or state law or regulatio11? If so, please provide a
con1plete list, jncluding the date and description, of each i11vestigation.
b. I-las any priso11 support service con1pany, including all affiliates or related
entities, in wl1icl1 II.I.G. l1as an O\.Vllersl1ip stake, been found to have violated
any federal or state law or regulation? If so, please provide a complete list,
includi11g tl1c date and description, of all sucl1 violations.
c. Has any prison support company, inclttding all affiliates or related entities, in
whicl1 Jl.I.G. has an ownership stake, reached a settle1nent with any federal or
state law enforcement entity related to a potential violation of a11y federal or
state la\V or reg11lation? Tf so, please provide a complete list, including the date
and descriJ)tion, of all such settlements.
d. Has any· prison support service company, including all affiliates or related
entities, in whicl1 H.l.G. has an ownership stak:e, reached a settlement with
any incarcerated individual or grotlp of incarcerated individuals related to a

5

potential violation of any federal or state law or regulation? If so, please
provide a complete list, including the date and description, of all such
settlements.
Sincerely,

---~-----~
Mark Pocan
Member of Congress

~
Member of Congress

6

<tCongre55 of tbe ~niteb ~tate5
maslJington, DCC 20510
September 30, 20 19
Michael Fisch
Managing Director and Chief Executive Officer
American Securities
299 Park Avenue, 34th Floor
New York, NY 10171
Dear Mr. Fisch:
We are writing regarding American Securities' investment in companies providing
support services to prisons, jails and detention faci lities across the country, and to request
information about your firm's structure and finances as it relates to these companies.
The United States' criminal justice system, driven by a misguided "tough on crime"
approach that disproportionately targets Black and Latinx Americans, has allowed private
prisons and companies providing support services to correctional facilities to rake in billions of
dollars at the expense of incarcerated individuals, their families, and taxpayers for decades. 1
These support companies, responsible for providing support medical, food, and phone services to
prisons, jails, and detention facilities housing over two million incarcerated people across the
country, often deliver low-quality services to incarcerated individuals and their families at
exorbitant fees, collecting over $40 billion in tax-payer funds annually. 2 These problems are
exacerbated by the lack of a functioning, competitive market for these companies and their
services. 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.
We have concerns about the rapid spread and effect of private equity investment in many
sectors of the economy - including the correctional facility support services industry. 3 Private
equity funds often operate under models where they purchase controlling interests in companies
for a short time, then load them up with debt, strip them of their assets, extract exorbitant fees,
and sell them at a profit - implementing drastic cost-cutting measures at the expense of workers,
consumers, communities, and taxpayers.4 This is why, we have introduced legislation that will

Prison Policy Initiative, " Following the Money of Mass Incarceration," Peter Wagner and Bernadette Rabuy,
January 25, 2017, https://www.prisonpolicy.org/reports/ rnoney.html; NAACP, "Criminal Justice Fact Sheet,"
Imps://www. naac.:p.orn/ cri mi na 1-j ustice-fact-sheet/.
2 Worth Rises, "The Prison Industrial Complex: Mapping Private Sector Players," April 2019,
https:l/worthriscs.orn/ picreport20 19.
:i The Nation. ''I-low Private Equity Is Turning Public Prisons Into Big Profits," Tim Requarth, April 30, 2019,
https://www. thenat ion.com/a11 ide/prison-pri vat izat ion-pri vate-equitv-h ig/.
4 Private Equity Stakeholder Project and Center for Popular Democracy, " Pirate Equity: How Wall Street Firms are
Pillaging American Retail," July 2019, https://united4respcct.org/wp-content/uploads/?O19/07/ Pirate-Eguitv-HowWall-Street- Firms-are-Pillagin g-American-Retail-Jul y-2019.pdf; Center for Economic and Policy Research, "Private
1

force private equity funds to take responsibility for the outcomes of companies they take over
and to disclose important financial information that will provide transparency on their
composition, financial status, and profits. 5
Likewise, we have concerns about the role American Securities and other private equity
firms are playing in the continued consolidation of these profit-seeking companies, the decline in
quality of the services they provide, and the effects on incarcerated individuals, their families,
and the ir communities.6 For example, as of July 20 17, three companies - GTL, Securus
Technologies (Securus), and Inmate Calling Solutions Inc. (ICSolutions) - provided telephone
service in between I , 141 and 1,668 correctional facilities across the United States and
collectively controll ed an estimated 65% to 79% of the correctional phone market, with GTL
alone controlling about half of the market. 7 Each of these companies is private equity-owned and
generates hundred s of millions of dollars in revenue each year. 8
In no small part because of this market concentration, these few companies have the
power to " limit faci lities' choices," " lock them into unfair contracts,"9 and dictate contract terms
that push additional costs on to incarcerated individuals and thei r loved ones. Companies
providing telephone services in correctional facilities have been accused of setting " rates and
fees far in excess of those established by regular commercial providers," imposing significant
costs on families and friends of incarcerated individuals, and ultimately "profiting off of people
in vulnerable situations." 10 A February 2019 analysis by the Prison Policy Initiative found that
these companies charge up to $25 for a 15-minute phone call and in many cases draw up
contracts that allow them to collect "fees to open an account, have an account, fund an account,
close an account, get a refund, [and] recei ve a paper bill," at the expense of incarcerated
individuals and their fami lies. 11 The Federal Communications Commission found that these extra
fees "can increase the cost of families staying in touch by phone with loved ones who are
incarcerated by as much as 40%." 12

Equity Partners Get Rich at Taxpayer Expense," Eileen Applebaum and Rosemary Batt, July 20 17,
http://cepr.net/images/stories/reports/pri vate-eguity-partncrs-20 17-07 .pd f.
s Stop Wall Street Looting Act, S.2 155, https://www.congress.gov/bill/ 116th-congress/senate-bill/2155.
6 Pri vate Equity Stakeholder Project, "Fact Sheet: Private equity-owned firms dominate prison and detention
services," September 17, 20 18, https://pestakeholdcr.org/report/private-equity-owncd-firms-dominate-prison-anddetention-services/.
7 Prison Pol icy Initiative, "Prison phone giant GTL gets bigger, again," Peter Wagner, August 28, 20 17,
https://www.prisonpolicy.org/blog/2017/08/28/mergcr/.
8 Urban Justice Center, "The Prison Industrial Complex: Mapping Private Sector Players," April 201 8,
https://static I .sguarespace.com/static/58e I27cb I b IOe3 Ied45b20f4/t/5ade028 I f950b7ab293c86a6/l 524499083424/T
he+ Prison+!ndustria l+Comp lex+-+Mapping+Private+Scctor+Plavers+%28Apri I+20 18%29 .pd f.
9 Prison Policy Initiative, "State of Phone Justice: Local jails, state prisons and private phone providers," Peter
Wagner and Alexi Jones, February 2019, https;//www.prisonpol icy.org/phones/state of phone justice.html.
10 New York Times, "The High Cost of Calling the Imprisoned," T imothy Williams, March 30, 2015,
https://www.nvtimes.com/20 15/03/3 I/us/steep-costs-of-inmate-phone-cal ls-are-under-scrutiny.html.
11 Prison Policy Initiative, ·•state of Phone Justice: Local Jails, state prisons and private phone providers," Peter
Wagner and Alexi Jones, February 2019, https://www.prisonpolicy.org/phones/state of phone justice.hnnl; The
Nation, "How Private Equity Is Turning Public Prisons Into Big Profits," Tim Requarth, April 30, 2019,
https://www.thenation.com/article/prison-pri vat izat ion-pri vate-equ ity-hig/.
12 Federal Communications Commission ·'FCC takes next big steps in reducing inmate calling rates," press release,
October 22, 2015, https://apps. fcc.gov/edocs public/attachmatch/DOC-335984A I .pdf.

2

Similarly, the correctional medical care industry is experiencing consolidation and raising
new concerns about the quality of health care provided to incarcerated individuals. The two
largest private co1Tectional medical care providers in the country - Corizon Health Inc. (Corizon)
and Well path - collectively provide health care services to hundreds of thousands of incarcerated
individuals in hundreds of correctional institutions located in at least 36 states. Both companies
are private equity-owned. Wellpath, formed from the 2018 merger of two private prison health
care companies, "is expected to bring in about $1.5 billion annually, [while] Corizon 's revenue
was pegged at about $1 billion in 2017." 13 These two companies have " been sued about fifteen
hundred times during the past five years ... over matters including alleged neglect, malpractice,
and, in dozens of cases, wrongful injury or death." 14
The privatization and consolidation of the commissary and food services sector - steered
by private equity investment - has allowed private companies to rake in significant profits
despite delivering low-quality services. For example, over the span of two years and under the
ownership of a private equity firm, Trinity Services Group (Trinity), one of the largest private
food and commissary service providers with contracts in 44 states and 700 facilities 15,
accumulated $3.8 million in fines for contract violations in Michigan alone. 16 Trinity has also
been accused of serving meal s "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." 17
These services are part of the private equity-owned criminal justice ecosystem. When
incarcerated individuals are not satisfied with the quality and quantity of food provided in their
facilities, they are likely to purchase food and beverages from commissaries, commissaries that
are increasingly and similarly controlled by private equity firms. Those commissaries provide
unaffordable products, pushing the cost on to " families, who are overwhelmingly poor and
disproportionately come from communities of color." 18 Trinity counts among its sister
companies, "Swanson Services Corporation, a leading provider of commissary goods operating

13
American Federation o f Teachers, "Private prisons and investment risks part two: How Private Prison Companies
Fuel Mass Incarceration - and How Public Pension Funds Are at Risk," February 2019,
https://www.aft .org/sitcs/dcfault/ files/private-prisons-invcst-20 l 9-part2.pdf; T he Atlantic, "The Private Option,"
Marsha Mcleod, September 12, 20 19, https://www.thcatlantic.com/po litics/archive/20 I9/09/private-eguitys-e:ri p-onjail-health-care/59787 1/.
14
New Yorker, "The Jail Health-Care Crisis," Steve Coll, February 25, 2019,
https://wv.:w. newyorker.com/magazine/20 19/03/04/the- ja iI-health-care-crisis.
15 Prison Policy Initiative, ''Paging anti-trust lawyers: Prison commissary giants prepare to merge," Stephen Raher,
July 5, 2016, https://www. prisonpolicy.org/ blog/201 6/07/0 5/commissary-merger/.
16 Prison Legal News, " Michigan ' s New Prison Food Service Provider Failing to Meet Contract Terms," David M.
Reutter, January 2018, https://www.prisonlegalnews.org/ncws/2018/ jan/8/michigans-ncw-prison-food-serviceprovider-failing-meet-contract-terms/ .
17 Prison Legal News, ·'Mic higan's New Prison Food Service Provider Failing to Meet Contract Terms," David M.
Reutter, January 2018, hnps://www.prisonlegalnews.org/news/201 8/ jan/8/michigans-new-prison-food-serviceprovider-faili ng-meet-contract-terms/; Lener from Southern Center for Human Rights to Gordon County Sheriff
Mitch Ralston, October 28, 20 14,
https://www .schr.org/filcs/post/ fi les/SCH R%20to%20Shcri ff%20Ralston% 20 I0%2028%2014.pdf.
18
Prison Policy Initiative, "The Company Store: A Deeper Look at Prison Commissaries,'· Stephen Raher, May
2018, https://www.prisonpolicy.org/reports/commissary. htm I.

3

in 41 states," and Keefe Group, 19 the " nation's leading supplier of food products, personal care
products, electronics, clothing, technology, telecommunications and software solutions to the
correctional market." 20 As a result, in facilities where Trinity and Swanson or Keefe operate, if
Trinity fails to provide quality food for incarcerated individuals, the parent company is still
likely to profit via its commi ssary businesses. The holding company in control of these
companies generated over $1 billion in revenue in 2017 alone. 21
Private equity-owned prison support services use their market power to make millions of
dollars off those who are incarcerated, their families, and their communities - often while
providing subpar products and services. And, private equity firms may be making these problems
even worse - undertaking an effort to control a growing number of support service providers in
each sector. For instance, a single private equity firm owns Keefe Group, ICSolutions and
Wellpath, the large private commissary, telephone and medical care providers. This allows the
companies to "offer facilities packages of unrelated services in one huge bundled contract" creating a disincentive fo r facility administrators to abandon the companies and seek out
alternatives when the quality of services in one arm of the company declines. 22
American Securities is a large investor in the prison support services sector. We have
introduced legislation, the Stop Wall Street Looting Act, to reform the private equity industry by
holding private equity firms liable for the responsibilities and debts of companies under their
control and increases transparency by requiring private equity managers to disclose fees, returns,
and political expenditures. 23 To inform our approach to passing this legislation, and to better
understand your firm's role in the prison support service industry, we ask that you provide
answers to the fo llowing questions no later than October 14, 2019.
1. Please provide the disclosure documents and information enumerated in Sections 50 l
and 503 of the Stop Wall Street Looting Act.24
2. Which prison support service companies, including all affiliates or related entities,
does American Securities have a stake in or own? Please provide the name of and a
brief description of the services each company provides.
a. Which prison support service companies, including all affi liates or related
entities, has American Securities had a stake in or owned in the past ten years?
Please provide the name of and a brief description of the services each
company provides or provided.

19

The Nation, " How Private Equity Is Turning Public Prisons Into Big Profits," Tim Requarth, April 30, 2019,
httos://www.thenation.com/article/prison-privatization-private-equity-hig/.
2
Keefe Group, " About Keefe Group", accessed Sep. 21 , 20 19, https://www.keefegroup.com/
21
Worth Rises, "The Prison Industrial Complex: Mapping Private Sector Players," April 20 18,
https: 'static I .sguarespace.com 'static 58e 127cb Ib I Oe3 I ed45b20f4 tt5ade028 I t950b7ab293c86a6 J524499083424rr
he· Prison~Industrial-t·Complex+-- Mapping-Private ·Sector· Pla\ers+ 0 o28April · 20 I 8°ei29.pdf.
22 Prison Policy Initiative, "State of Phone Justice: Local jails, state prisons, and private phone providers," Peter
Wagner and Alexi Jones, February 20 I 9, hnps: ' ~ww.prisonpolic> .org phones state of phone justice.html.
23 Stop Wall Street Looting Act, S.2155, hnps: www.congress.gov/bill'l 16th-congress/senate-bill/2155 .
24 Id.

°

4

b. For each American Securities-owned prison support service company,
including all affi liates or related entities, please provide the following
info rmation for each year that you have had a stake in or owned this company
and the five years preceding your investment.
1. The name of the company
11. Ownership stake
111. Total revenue
1v. Net income
v. Total expenditure
v1. Total number of employees
v11. Total number of corrections facilities or relevant authori ty with which
the company has a contract to provide services
vi ii. Total number of incarcerated individuals for whom the company
provides service
1x. Other private-equity firms that own a stake in the company
3. Does American Securities have a stake in or own companies, including all affiliates
or related entities that provide telephone services to correctional fac ilities? If so,
please provide the following information for each year that your firm has had a stake
in or owned each company and the five years preceding your investment.
a. Revenue generated from per-minute phone rates
b. Revenue generated from fees and a list of each type of fee
4. Private equity-owned corrections companies have reportedly entered into countless
settlements over the years and paid millions of dollars in fees for contract violations.
a. Has any prison support service company, including all affiliates or related
entities, in which American Securities has an ownership stake, been
investigated for violation of any federal or state law or regulation? If so,
please provide a complete list, including the date and description, of each
investigation.
b. Has any prison support service company, including all affili ates or related
entities, in which American Securities has an ownership stake, been found to
have violated any federal or state law or regulation? ff so, please provide a
complete list, including the date and description, of all such violations.
c. Has any prison support company, including all affiliates or related entities, in
which American Securities has an ownership stake, reached a settlement with
any federal or state law enforcement entity related to a potential violation of
any federal or state law or regulation? If so, please provide a complete list,
including the date and description, of all such settlements.
d. Has any prison support service company, including all affiliates or related
entities, in which American Securities has an ownership stake, reached a
settlement with any incarcerated individual or group of incarcerated
individuals related to a potential violation of any federal or state law or
regulation? If so, please provide a complete list, including the date and
description, of all such settlements.

5

Sincerely,

Mark Pocan
Member of Congress

6

<!Congre£)£) of tbe ~niteb $tate£)
Waubington, D<C 20510
September 30, 2019
Andrew Silli toe
Partner and Co-Chief Executive Officer
Apax Partners
601 Lexington Avenue 53rd Floor
New York, NY 10022
Mitch T ruwit
Partner and Co-Chief Executive Officer
Apax Partners
601 Lexington Avenue 53rd Floor
New York, NY 10022
Dear Messrs. Sill itoe and Truwit:
We are writing regarding Apax Partners' (Apax) investment in companies providing
support services to prisons, jails and detention faci lities across the country, and to request
information about your firm's structure and finances as it relates to these companies.
The United States' criminal justice system, driven by a misguided "tough on crime"
approach that disproportionately targets Black and Latinx Americans, has allowed private
prisons and companies providing support services to correctional facilities to rake in billions of
dollars at the expense of incarcerated individuals, their fami lies, and taxpayers for decades. 1
These support companies, responsible for providing support medical, food, and phone services to
prisons, jails, and detention facilities housi ng over two million incarcerated people across the
country, often deliver low-quality services to incarcerated individuals and their fami lies at
exorbitant fees, collecting over $40 billion in tax-payer fund s annually. 2 These problems are
exacerbated by the lack of a functioning, competitive market for these companies and the ir
services. 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.
We have concerns about the rapid spread and effect of private equity investment in many
sectors of the economy - including the correctional facility support services industry.3 Private
equity funds often operate under models where they purchase controlling interests in companies
for a short time, then load them up with debt, strip them of their assets, extract exorbitant fees,
1

Prison Policy Initiative, "Following the Money of Mass Incarceration," Peter Wagner and Bernadette Rabuy,
January 25, 20 17, https://www.prisonpol icv.org/reports/money.html; NAACP. "Criminal Justice Fact Sheet,"
https://www.naacp.org/cri minal-justice-fact-sheet/.
2 Worth Rises, "The Prison Industrial Complex: Mapping Private Sector Players," April 2019,
hllps:/tworthrises.orglpicreport20 19.
' The at ion, ··How Private Equity Is Turning Public Prisons Into Big Profits," Tim Requarth, April 30, 2019,
https:!'www.thcnation.com/art ic le' prison-pri vat ization-pri vate-egu ity-h ig/.

a11d sell the1n at a profit-impleme11ting drastic cost-cutting n1easures at the expense of workers,
consumers, co1nmunities, and taxpayers. 4 "fl1is is wl1y, Vl'e have i11troduced legislation that will
tOrce private equity funds to take respo11sibility ibr tl1e outcomes of companies they take over
and to disclose i1npo1iant fina11cial inforn1ation that will provide trru1sparency on their
composition. ·financial stat11s, ru1d profits. 5
J_.ikewisc, v,re have concerns about tl1e role Apax and other private equity firms are
playing in the conti11ued consolidatio11 oftl1ese profit-seel(ing con1panies, the decline in quality
of the services they provide, and the effects on incarcerated individuals, their fan1ilies, and tl1eir
commurtities. 6 For exa1nple, as of July 2017, three co1npa11ies - GTI. . , Securus 1·ecbnologies
(Sccurus), and 111TI1ate Calling Solutions Inc. (ICSolutions)- provided telephone service in
behveen 1, 141 and 1,668 correctional facilities across tl1e United States and collectively
controlled an estimated 65% to 79o/o of the correctional _pl1one n1arkct, with G1'L alone
controlling about half of the mar1cet. 7 Each of these companies is private eqtlity-o\\med and
generates hundreds of 111illions of dollars in reve11ue each year. 8
ln no sn1all part because of this market concentration) these fe\v companies have t11e
pO\Ver to '·limit facilities· choices," "lock then1 into unfair co11tracts,''9 and dictate co11tract ter.ms
that push additional costs on to incarcerated individuals and their lo\1ed ones. Companies
providing telephone services in correctional facilities ha,,e bee11 accused of setting "rates and
fees far in excess of those established by regular com1nercial providers;' imposing sign_ificat1t
costs on families antl friends of incarcerated i11divid11als, and ultimately "profiting otfofpeople
in vulnerable situations." 10 A Februar~y 2019 anal)'Sis by the Priso11 Policy Initiative fou11d t11at
these co111panies charge up to $25 for a 15-minute phone call and i111nany cases draw up
contracts that allow tl1em to collect "fees to open an account, have an account, fund an account,
close an account, get a refund, [and] receive a paper bill," at the expense of incarcerated
individuals and tl1eir fa1nilics. 11 ·r11e Federal Co1nn1unications Commission found that these extra
4

Private Equity Stakeholder Project and Center for Popular Democracy, "Pirate Equity: f-.loW Wall Street Firms are
Pillaging American Retail," July 20 l 9, https://united4respecto_rgL,vp-contcnt{!!Jl!.oadsi20 I 9j07 /Pinne-Eguitv-J-lowWal l-Street-Fi1J11s-ar<;:.!:illagit1g-A1ncrican-Retail-J uly-2019.111[; Center for Economic and Policy Research, "Private
Equity Part11ers Get Rich at 'raxpayer Expense," Eileen Appleba11111 and Roseinary Batt, Ju!y 2017,
http :Ii i.:epr. netl i1nages/fil.orles[n:..norLsipri vat e-eg ui tv-partners- 20 17-0 7. pd f.
5 Stop Wall Street Looting Act, S.2155, https://1v1v1v .congress.l!ov/bill/l ! 6th-congress/senate-bi!!/? 155.
6 Private Equity Stakeholder Project, "Fact Sheet: Private equity-owned finns do1ninate prison and detention
services," September l 7, 2018, htt.n§.Jfuestakeho!der.org/report/privare-eg_uily-Q..\;Yned-linns-do1ninate-prison-and:
detentig_n-service~!.
7

Prison Policy Initiative, ''Prison phone giant Gl'L gets bigger, again,'· Peter Wagnei·, August 28, 2017,

https ://\V\'!_ w ,flriSQl!Q_O IIcy. or<> !b Iog/20 17/08/2 8/n!.<1I£.~L
8

Urban Justice Center, "l'he Prison Industrial Cotnplex: Mapping Private Sector Players,'' April 2018,
https://static l.sg_.ua1:.Q.ffiac_g~co1n/static/5Se J27cb I b ! Oe3 .~.9-45b70f4/t/5ade028 l f950b7abf93c8jia6/_l 524±2..<t,983424/T
11 e-i; Prison+ Industr iaH- C 0111 p lex f·-+ Mapping+Prl vate+Sector+ Players 1-~'02 8Apri l+20 J 8~/o29 ..ru.\f
9 Prison Polley Initiative, "State of Phone J usLice: Local jails, state prisons and private phone providers," Peter
Wagner and Alexi Jones, February 20 ! 9, hUJ2$:.-'/\\:\v1v .prisonpolicy,org/phonesislatc of phone iusticc.htrnl.
10 Nc1v York 1'in1es, ''The High Cost of Calling the lmprisoned," ·rin1othy Willian1s, March 30, 2015,
hltps:/(1v1v 1v .nvl i111i;.;i,,_co1n/20 l 5/0 3/3_ I 1usis.k!m.-costs-o f-in1n ate- phon?~ca!ls-are- under-scrutiny. ht1n).
11 Prison Policy Initiative, "State of Phone Justice; Local Jails, state prisons and private phone providers," Peter
Wagner and Alexi Jones, February 2019, htUJs://\V\V\V.prlsonpolicy.org/phonesistate of phone Justice.html; The
Nation, "I"Iow Private Equity Is Tu1T1ing Public Prisons Into Big Profits," 1·i1n Requarth, April 30, 2019,
https: 1f\Y\V1v ,thenatlon. co1n/arti c le/prison-pri vat i zation~pri vat e-eq u it y-hi g!.

2

fees ·'can increase the cost of fan1ilies staying in touch by phone with loved ones \Vl10 are
incarcerated by us much as 40%." 12
Si111ilarly, the correctional medical care industry is expe1iencing consolidation and raising
new concen1s about the quality of health care provided to incarcerated individuals. The tv..·o
largest private co1Tectional incdical care providers in the country - Corizon Health Inc. (Corizon)
and Wellpath - collectively provide health care services to 11u11dreds of thousm1ds of incarcerated
individuals i11 l1undrcds of correctional insti1utio11s located in at least 36 states. Both con1panies
arc private equity-owned. Wellpat11, formed fi·om the 2018 merger of two private prison health
care cotnpanies, ''is expected to bring in about $1.5 billio11 annually, [while] Corizon's reven11e
was pegged at about $1 billion in 2017." 13 Tl1ese two co1npanics have. "been sued about fifteen
11undred times during the past five years ... over n1atters includi11g alleged neglect, malpractice,
and, in dozens of cases, wrongful injury or death." 14
The pri\ atization ai1d co11solidation of the co1nn1issary ai1d food services sector- steered
by private equity i11vcstn1ent - has allowed private companies to rake in significant .profits
despite delivering low-quality services. For example, over the span of two years and under the
ownership of a private equity finn, Trinity Services Group (Trinity), one of the largest private
food and con1missary service providers with contracts in 44 states and 700 facilities 15 ,
accu1nu!ated $3.8 111illion in fines for contract violations in Miclliga11 a1011e. 16 Tri11ity has also
been acc11sed of serving 1neals "wl1icl1 inclttded not only maggots b11t also '"crw1cl1y dirt' in
potatoes and 1uold in apple crisp and pa11cakes," and providing such tneager portions that
incaTcerated h1dividtta!s in one county jail were reduced to "eat[ing] toothpaste m1d toilet
paper." 17
1

1'11ese services are part oftl1c private equity-owned crimi11ialjustice ecosystem. When
incarcerated i11dividuals are i1ot satisfied \Vith the quality and quantity of food provided in their
facilities, t11ey are likely to purchase food mid beverages fro111 con1n1issm·ies, conunissaries that
arc l11creasingly and similarly controlled by private equity firms. Those com1nissaries provide
t1naffordable products, pushing the cost on to "fan1ilics, wl10 are overwl1cln1ingly poor and
1

Federal Con1municatlons Co1n1nission "FCC takes next big steps in reducing inmate calling rates," press release,
October 22, 2015, l!!!P.s://npps.fcc.gov/edoc~blic/attachn1atch/DOC- 33 5984A1Jllif
1.i A1nerican Federation ofTeachers, ''Private prisons and inveslment risks part t\vo: 1;ovv Private Prison Companies
Fuel Mass !ncarceration ·~and f;ow Public Pension Funds Arc at Risk," February 2019,
hltM://\Yl;Y\V -<!fl. org/s it~lslJ~.@11 lti fi l.~stpri vare-prlsODs-ii1vesJ:,f.Ql2::nan2 .pttl; The At !antic, "'fhe Private Option."
Marsha Mcleod, Septernber 12, 2019, J.:ittps:{L_\}:'\V\v.t..bgl1otlant ic.conVpo!itlcs/arch.iY~DO I 9/09/private-eguitys-grip-Q.D..::
uil-health-curel59787 ! i.
l.··-------------·
14 New Yorker, '"The Jail Health-Care Crisis," Steve Coll, February 25, 20 l9,
http_~L"Yl£\V. newYQ.i:l'\£r.!...(;.Q!!lf.n1ag,azi ne/2 0 19.1.Q3iQ.4/the-j o1Hi.J!:a lth_:f.<lJ}~-crjsL'_i_.
15 Prison Policy Initiative, "Paging anti-trust lawyers: Prison co1nmissary giants prepare to merge," Stephen Raher,
July 5, 20 !6, https://~\l\Y!V.prisonpolicy.org:blog/20 l 6/07 /05/co1nmissary~1ncrgcr/.
16
Prison Legal News, "Michigan's New Prison Food Service Provider Failing to Meet Contract Terms,'' David M.
Reutter, January 2018, 11.~~/l\V\V\li.prisonlegalnc\vs.org!ne\vs/20 ! 8/jan/8/inichigans-ne\v-m:ison-food-serviceQIQV ider-fa i Ii ll" -111 eel-con.tract-terms/.
17
Prison Legal Ne\YS, "Michigan's Ne\v Prison Food Service Provider Failing to Meet Contract Tenns," David M.
Reutter, January 2018, https://\VW\v,prisonlee.alnews.org/ne\vs/20 I 8/jan/8/Jnichigans-ne\v-prison-fbod-serviccQrovider-fai!jng-1neet-contrac1-teri:ns/; Letter from Southern Center for ~hnnan Rights to Gordon County Sheriff
Mitch Ralston, October28, 2014,
https ://\\l\\'\V .sch r. ora ! fi lcs/post'fi les/S(__~I IR'Vo20to~lo20Shqri ff"/o 7 0 Ra Istonl?lo'J 0 100,'o2028o/o20 14 .pd l.
t

3

disproportionately come from communities of color." 18 Trinity counts among its sister
companies, "Swanson Services Corporation, a leading provider of commissary goods operating
in 41 states," and Keefe Group, 19 the "nation' s leading supplier of food products, personal care
products, electronics, clothing, technology, telecommunications and software solutions to the
correctional market. " 20 As a result, in facilities where Trinity and Swanson or Keefe operate, if
Trinity fails to provide quality food for incarcerated individuals, the parent company is still
likely to profit via its commissary businesses. The holding company in control of these
companies generated over $1 billion in revenue in 2017 alone. 21
Private equity-owned prison support services use their market power to make millions of
dollars off those who are incarcerated, their families, and their communities - often while
providing subpar products and services. And, private equity firms may be making these problems
even worse - undertaking an effort to control a growing number of support service providers in
each sector. For instance, a single private equity firm owns Keefe Group, ICSolutions and
Wellpath, the large private commissary, telephone and medical care providers. This allows the
companies to "offer facilities packages of unrelated services in one huge bundled contract" creating a disincentive for facility administrators to abandon the companies and seek out
alternatives when the quality of services in one arm of the company declines. 22
Apax is a large investor in the prison support services sector. We have introduced
legislation, the Stop Wall Street Looting Act, to reform the private equity industry by holding
private equity firms liable for the responsibilities and debts of companies under their control and
increases transparency by requiring private equity managers to disclose fees, returns, and
political expenditures. 23 To inform our approach to passing this legislation, and to better
understand your firm's role in the prison support service industry, we ask that you provide
answers to the following questions no later than October 14, 2019.
1. Please provide the disclosure documents and information enumerated in Sections 501
and 503 of the Stop Wall Street Looting Act. 24
2. Which prison support service companies, including all affiliates or related entities,
does Apax have a stake in or own? Please provide the name of and a brief description
of the services each company provides.

18

Prison Policy Initiative, "The Company Store: A Deeper Look at Prison Commissaries," Stephen Raher, May
2018, https://www.prisonpolicy.org/reports/commissary.htm I.
19
The Nation, " How Private Equity ls Turning Public Prisons Into Big Profits," Tim Requarth, April 30, 2019,
https://www.thenation.com/article/prison-privatization-private-eguity-hig/.
2
° Keefe Group, " About Keefe Group", accessed Sep. 21 , 20 I 9, https://www.keefegroup.com/
21
Worth Rises, "The Prison Industrial Complex: Mapping Private Sector Players," April 2018,
bttps://static l .sguarespace.com/static/58e 127cb 1b I Oe3 Ied45b20f4/t/5ade028 l f950b7ab293c86a6/l 524499083424/T
he+Prison-rlndustrial+Complex+-+Mapping+Private+Sector+Players+%28April+2018%29.pdf.
22
Prison Policy Initiative, "State of Phone Justice: Local jails, state prisons, and private phone providers," Peter
Wagner and Alexi Jones, February 2019, https://www.prisonpolicy.org/phones/state of phone justice.html.
23 Stop Wall Street Looting Act, S.2155, https://www.congress.gov/bill/l I6th-congress/senate-bill/2155 .
24

Id.

4

a. Which prison support service companies, i11cluding all affiliates or related
entities, has Apax had a stake in or ov.,rned in the past ten years? Please
provide the na1ne ofa11d a brief description oftl1c services each con1pany
pro\ides or provided.
b. For each Apax-owned priso11 support service con1pany, including all affiliates
or related entities, please provide the following information for each year that
you have had a stake in or O\Vncd this co1npany and the five years precedi11g
)'Our investment.
L 'fhe name of the co1npany
11. O\vnership stak_e
iii. 'fatal re\1enuc
1v. Net inco1ne
v. Total expe11diture
vi. Total nun1ber of employees
VIL ·rota[ number of co1rections facilities or relevant autl1ority \Vith which
the cotnpan)' has a contract to provide services
VIII. Total nun1bcr of incarcerated individltals for whom the co1npany
provides service
1x. Otl1er private-equity firms that own a stake in the company
3. Does Apax have a stake in oro\vn con1panies, i11cluding all affiliates or related
entities that provide telephone services to correctional facilities? If so, please provide
the follo\ving inforn1ation for eacl1 year that your firtn has had a stake in or ov./ned
each con1pany and t11e five years precedi11g your invest1nent.
a. Revenue generated from per-minute pho11e rates
b. Revenue generated from fees at1d a list of each type of fee
4. Private equity-o-wned corrections companies have repotiedly entered into cou11tless
settlements over the years and paid millions of dollars in fees for co11tract violations.
a. J~Jas any prison suppo1t service cotnpany, including all affiliates or related
entities, in \Vl1icl1 Apax has an ownership stake, been it1vestigated for violation
of any federal or state lavv or regulation? If so, please provide a complete list,
including the date and descriptio11, of each investigation.
b. Has any prison support service cotnpany, inclltding all affiliates or related
entities, in whicl1 Apax has an ownership stak:e, been fol1nd to 11avc \.'iolated
any federal or state law or regulation? If so, please provide a complete list,
including tl1e date at1d description, of all such violations.
c. J.Ias a11y prison sl1ppo1t company, including all affiliates or related e11tities, in
v., l1ich Apax has an ovvnership stake, reached a settleme11t with any federal or
state law enforcemc11t entity related to a potential violatio11 of any federal or
state lav.' or regulation? If so, please provide a co1nplete list, including the date
and ·description, of all such settlements.
d. I-las any prison support service con1pany, including all affiliates or related
entities, in which Apa:x has an ownership stake, reached a settlement with any
incarcerated individlta! or grol1p of incarcerated individuals related to a
1

5

b. Has any prison support service company, including all affiliates or related
entities, in which BlueMountain has an ownership stake, been found to have
violated any federa l or state law or regulation? If so, please provide a
complete li st, including the date and description, of all such violations.
c. Has any prison support company, including all affiliates or related entities, in
which Bl ueMountain has an ownership stake, reached a settlement with any
federal or state law enforcement entity related to a potential violation of any
federal or state law or regu lation? If so, please provide a complete list,
including the date and description, of all such settlements.
d. Has any prison support service company, including all affiliates or related
entities, in which BlueMountain has an ownership stake, reached a settlement
with any incarcerated individual or group of incarcerated individuals related to
a potential violation of any federa l or state law or regulation? ff so, please
provide a complete list, including the date and description, of all such
settlements.
Sincerely,

---~~
Mark Pecan
Member of Congress

&Y;rctJ

Alexandria Ocasio-Cortez
Member of Congress

6

C!Congress of tbe ~niteb ~tates
mnS'bmgton, I:lC 20510
September 30, 2019
Tom Gores
Chairman and Chief Executive Officer
Platinum Equity
360 N. Crescent Dr.
Beverly Hills, CA 90210
Dear Mr. Gores:
We are writing regard ing Platinum Equity's (Platinum) investment in companies
providing support services to prisons, jails and detention facilities across the country, and to
request in formation about your firm's structure and financ es as it relates to these companies.
The United States' criminal justice system, driven by a misguided " tough on crime"
approach that disproportionate ly targets Black and Latinx Americans, has allowed private
prisons and companies providing support services to correctional facilities to rake in billions of
dollars at the expense of incarcerated individuals, their families, and taxpayers for decades. 1
These support companies, responsible for providing support medical, food, and phone services to
prisons, j ails, and detention faci lities housing over two millio n incarcerated people across the
country, often deliver low-quality services to incarcerated individuals and their families at
exorbitant fees, collecting over $40 billion in tax-payer funds annually. 2 These problems are
exacerbated by the lack of a functioning, competitive market fo r these companies and their
services. 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.
We have concerns about the rapid spread and effect of private equity investment in many
sectors of the economy - including the correctional facility support services industry.3 Private
equity funds often operate under models where they purchase controlling interests in companies
for a short time, then load them up with debt, strip them of their assets, extract exorbitant fees,
and sell them at a profit - implementing drastic cost-cutting measures at the expense of workers,
consumers, communities, and taxpayers. 4 Thi s is why, we have introduced legislation that will

1

Prison Policy Initiative, ·' Following the Money of Mass Incarceration,'· Peter Wagner and Bernadette Rabuy,
January 25, 2017, https://www.prisonpolicv.org/reports/ monev.html; NAACP, "Criminal Justice Fact Sheet,"
https:// www.naacp.org/cri mi na 1-j ustice-fact-sheet/.
2 Worth Rises, "The Prison Industrial Complex: Mapping Private Sector Players," April 2019,
https://worthrises.or0picreport2019.
3 The Nation, "How Private Equity Is Turning Public Prisons Into Big Profits," Tim Requarth, April 30, 2019,
https://www.thenation.com/an ic lc/prison-pri vatizat ion-pri vate-egu ity-h ig/.
4 Private Equiry Stakeholder Project and Center for Popular Democracy, "Pirate Equity: How Wall Street Finns are
Pillaging American Retail," July 2019, https://united4rcspect.org/wp-contcnt/uploads/2019/07/ Pirate-Eguirv-HowWall-Strcet-Firms-are-Pil la!!ing-American-Retai l-July-2019.pdf; Center for Economic and Policy Research, "Private

force private equity funds to take responsibility for the outc01nes of co1npanies they take over
and to disclose itnportant financial infonnation that \Vil1 provide transparency 011 tl1eir
cornposition, tlnancial status, and profits. 5
Like\vise, we have concerns abotLt tl1e role Platinum ·and otl1er private equity finns are
playing in the continued co11solidation of these profit-seelcing companies, the decline in (}Uality
of the services they provide, and tJ1e etiects on incarcerated individuals, their families, and their
co1nn1unities. 6 For exa1nple, as of .fttly 2017, tl1ree co1npanies ~ G1'f,,, SecurttS Tecl1nologies
(Secttrus), and Inmate Calling Soltttions Inc. (ICSolutions)- prov·ided telephone service in
between 1, 141 and 1,668 correctional facilities across t11e lJhited States and collectively
controlled an estitnated 65% to 79% of the correctional phone market, 'vith G1'I, alone
controlling about half of the i11arket. 7 Each of these co1npanies is private equity-owned and
generates hundreds of 1nillions of dollars in_ revenue eacl1 year. 8
In no small part because of this n1arket concentratio11, tl1ese few con1panies have tl1e
power to '·limit facilities' choices," "lock them into unfair contracts,'' 9 and dictate contract tenns
that pusl1 additional costs on to i11carccratcd individuals and ·their lov'ed ones. Companies
providing telephone services in correctional facilities have been accused of setti11g "rates and
fees far in excess of those established by rebrular co1nn1ercial providers," imposing sig11ificant
costs on fa1nilies and friends of incarcerated individuals, ancj. ultimately "profiting off of people
i11 vul11erable situations.'' 10 A February 2019 analysis by the Priso11 Policy Initiative fotmd tl1at
t11cse con1panies charge up to $25 for a 15-minute phone call ai1d i11 many cases draw up
contracts that allow them to collect "fees to open an account~ have an accottnt, fund an account,
close an account, get a refund, [and] receive a paper bill," at the expense of it1carcerated
individuals and their families. 11 1'he Federal Communications Commission found that these extra
fees ''ca11 increase the cost of families staying in touch by phone wit111oved 011es who arc
incarcerated by as 1nuch as 40%." 12

Equity Pa1tners Get Rich at ·raxpayer Expense," Eileen Applebaum and·Roscmary Batt, July 20 l 7,
b!lp :/ lcepr. net!i 111 agesistories~1}!portsjgrivate-eq ui l v-partners- 20 l 7-67. pdf.
5 Stop Wal I Street Looting Act, S.2155, h!!:ps:/l\\"Vi'\V.con°ress.uov/bill! I· l 6th-congressfscnate-bi!l/2 l 55.
6 Private E-quity Stakeholder Project, "Fact Sheet: Private equity-owned 11nns dominate prison and detention
services," Septen1ber 17, 20 I 8, h1tps:.1{pestakeholder,Qrg!s~.9rt!private-equLty-o\vned-f1nns-don1 inate-prison-nnddetent ion -servic.,,£.
7 Prison Policy Initiative, ''Prison phone giant G'fL gets bigger, again," Peter Wagner, August 28, 2017,
bttrs://\VW\Y .pJ:l,'iQllR!iliD:..oryblog/20 J 7!081'].8/in~r.L.
8

Urban Justice Center, "The Prison Industrial Co1np!cx: Mapping Private Sector Players," April 2018,
https:/1statii;:J .squg_@.§.I!fil:"~.con1/~tatic/S8e 127c.!2Lhl0e3 1ed4Sb20f4/tJSacle0_28 ! f9_50b 7a.hf9Jc~qa6/1524499083424((
he-_!:_Prifill!!+l n§iustrial !_C 011.JQlex +-~·Maggi J}g_+Prj vate+ fiecto1~!- P!avers+ 0/o2 8Anri l+?O 18'!"029 .n.c;lf
9 Prison Policy Initiative, ·'State of Phone Justice: Local jails, state prisons and private phone providers," Peter
Wagner and Alexi Jones, February 2019, https:![\V\V\v.prlsonpol\.0: 0 2rg/phones/state of phone justice.html.
10 New York Ti1nes, "The I'iigh Cost of Calling the lmprisoned," Tiinothy Williatns, March 30, 2015,
https :/f\V\V\\', nythnes. coni/70 ! 5tOJ/3 1/us/fil£.\;.P.-costs-of-1 n tn ate-phone-ca !ls-are-under-scrutinv. ht1n l.
11 Prison Policy lnitiative, ''State of Phone Justice: Local Jails, state prisons and private phone providers," Peter
Wagner and Alexi Jones, February 2019, !l1ms://\~'\Vw.prlsonpolicy,org/phones/s1ate of phone justice.htn1l; The
Nation. "Ho\v Private Equity ls "fuming Public Prisons Into Big Profits," l'itn Requarth, April 30, 2019,
https:/!j_v \V\V. thenat ion .corn/artic let.Qrison-pri vati zal ion-gri vate-egu itv-h \g !•
12 Federal Con1mttnicalions Commission "FCC takes next big steps in reducing inmate calling rates," press release,
October 22, 2015, !1ttps:1.1apps.tCc.go\'.:'..cdocs publlciat1achn1atch/DOC-335984A 1.pdf.

2

Similarly, tl1e correctional 1nedical care industry is experiencing consolidation and raising
new co11cerns about the quality of health care provided to incarcerated individuals. 1'he two
largest pri·vate correctio11al 111edical care providers in tl1e country - Corizon l.Jealtl1 Inc. (Corizon)
and Wellpath - collectively pro\':ide health care services to hl1ndreds of thousands of incarcerated
individuals i11 11undreds of correctional ii1stitutions located in at least 36 states. Botl1 con1panies
are JJTi\1 ate equity-o\vncd. Well path, formed from the 2018 merger of two private prison health
care con1pa11ies, "is expected to bring in about $1.5 billion annually, [whilel Corizon's revenue
V.'as pegged at about $1 billion in ·2017 :' 13 Tl1ese two co1npapies have "been sued about fifteen
hu11dred times during the past five years ... over matters including alleged neglect, malpractice,
and, in dozens of cases, \Vrongful injury or death.'' 14
'fhc privatization and consolidation of tl1e con1missary and food services sector- steered
by p1ivate equity investment- has allo\ved private companie.s to rake i11 significant profits
despite delivering low-quality servjces. For example, over the span of two years and under the
ownership of a private equity :firm, Trinity Services Ciroup (1'rinity), one oftl1e largest private
food and co1nn1issary service providers with co11tracts in 44 states and 700 facilities. 15 ,
accmnulated $3.8 n1illion in fines for contract violations in Michigan alone. 16 Trinity has also
been accused of serving 1neals "which it1c\uded 11ot only n1aggots but also "crunchy dirt' in
potatoes and n1old i11 apple crisp and pancakes," and providing SltCh meager portions that
incarcerated individltals i11 011e c0Lu1ty jail were reduced to '\::at[i11g] toothpaste and toilet
paper." 17
Tl1esc services are part of the private equity-owned criminal justice ecosyste1n. Whe11
i11carcerated individl1als are not satisfied witl1 the quality and quantity of food provided in their
facilities, tl1ey are likely to purchase food and beverages frorn comn1issaries, com1nissaries that
are i11creasingly and similarly controlled by private equity firn1s. Those co1n1nissarics provide
linaffordable products, pusl1ing tl1e cost 011 to "'f8milies, \Vl10. are overwhel1ningly poor and
dispropo11ionately come from co111n1unities of color." 18 ·rrinity counts among its sister
companies, ''Swanson Services Corporation, a Icadit1g provider of commissary goods operating

u A1nerican Federation ofTeachers, "Private prisons and investment risks part two: f~O\V Private Prison Co1npanies
Fuel Mass Incarceration~ and ~{o\V Public Pensio11 Funds Are at Risk," February 2019.
)!tllls:/.\v,vw.af1.org/sites/de!ll.1.1lt/filcs1private-prisons- invest-20 l 9-part2.pdf; 'f'hc Atlantic, "The Private Option,"
Marsha Mcleod. Septetnber 12, 2019, https:i£~}Y\V.theatlanlic.co1nlpotitics/archivcr'O 19/091private-equitvs-g.rfp-onilliJ.-heal!b-care/59787 lf..
14
New Yorker, "l'hc Jail !·lealth-Care Crisis," Steve Coll, February 25, 2019,
hl!:Qo<;_;//w\y~rker .co1nimagazine/20 l 9/jl3/04/the-j ai !-l1~q_[lh-car?-crisb_.
15 Prison Policy Initiative, "Paging anti-trust Jav1yers: Prison coinmissary giants prepare to n1erge," Stephen Raher,
July 5, 20 t 6, https:i/\VVi\V .prison,p_glicv.or\!J'b\og/2JL1§/07/05/co1n1n issary-mgrger/.
16 Prison Legal Ne\vs, "Michigan's New Prison Food Service Provider Failing to Meet Contract Tenns," David M.
Reutter, January 20 ! 8, http5;//\V\VW .prisonJcgalnc\vs.org/ne\vs/20 18/jan/8/Jnichigans-ne\V·prison-food-serviceR.fO\;'..i<ler -fail in 2-1neet-conirac1-tenns/.
17 Prison Legal News, "Michigan's Ne\v Prison Food Service Provider Failing to Meet Contract Terms," David M.
Reutter, January 20 l 8, h!!Ps ://\vv.;w. prison Je1@!.rtc\vs.org/ne 1Nsl20 I 8/j an/8/in ich i gans-ne\v-prison-IOo<l-serv iceprov idcr-failing-meet-contract- tennsl: Letter from Southern Center for tluman Rights to Gordon County Sheriff
Mitch Ralston, October 28, 2014,
htt ps:/!wv-1\V .sch r. org/ fi les/pos11 fi Jes/SCH H5'/Q20to~O 70Sherit'f!/i120 llalstoh:)1i20 JOo/0202 8o/o20 14 .pd f.
18 Prison Policy lnitiative, '"rhe Co1npany Store: A Deeper Look at PrisOn Cotnmissaries,'' Stephen Raher, May
2 018, b.lli!s:/ /Ww\v. prisonpol icy .org/reP,01ts/co rn in i ssarv .ht1n l.

3

in 41 states," and Keefe Group, 19 the " nation's leading supplier of food products, personal care
products, electronics, clothing, technology, telecommunications and software solutions to the
correctional market." 20 As a result, in facilities where Trinity and Swanson or Keefe operate, if
Trinity fails to provide quality food for incarcerated individuals, the parent company is still
likely to profit via its commissary businesses. The holding company in control of these
companies generated over $1 billion in revenue in 20 17 alone. 21
Private equity-owned prison support services use their market power to make millions of
dollars off those who are incarcerated, their families, and their communities - often while
providing subpar products and services. And, private equity firms may be making these problems
even worse - undertaking an effort to control a growing number of support service providers in
each sector. For instance, a single private equity firm owns Keefe Group, ICSolutions and
Wellpath, the large private commissary, telephone and medical care providers. This allows the
companies to "offer facilities packages of unrelated services in one huge bundled contract" creating a disincentive for facility administrators to abandon the companies and seek out
alternatives when the quality of services in one arm of the company declines. 22
Platinum is a large investor in the prison support services sector. We have introduced
legislation, the Stop Wall Street Looting Act, to reform the private equity industry by holding
private equity fi rms liable for the responsibilities and debts of companies under their control and
increases transparency by requiring private equity managers to disclose fees, returns, and
political expenditures. 23 To inform our approach to passing this legislation, and to better
understand your firm 's role in the prison support service industry, we ask that you provide
answers to the fo llowing questions no later than October 14, 2019.
1. Please provide the disclosure documents and information enumerated in Sections 501
and 503 of the Stop Wall Street Looting Act.24
2. Which prison support service companies, including all affiliates or related entities,
does Platinum have a stake in or own? Please provide the name of and a brief
description of the services each company provides.
a. Which prison support service companies, including all affiliates or related
entities, has Platinum had a stake in or owned in the past ten years? Please
provide the name of and a brief description of the services each company
provides or provided.

19

The Nation, " How Private Equity Is Turning Public Prisons Into Big Profits," Tim Requarth, April 30, 2019,
hnps. W\\W thenauon.com article pnson-privatization-private-eguity-hig .
2° Keefe Group, " About Keefe Group'', accessed Sep. 2 1, 20 19, hilp,L_ww\\ keefegroup.com
21 Worth Rises, "The Prison Industrial Complex: Mapping Private Sector Players," April 2018,
~ static l .sguarespace.com/static 58e I27cb I b IOe3 l ed45b20f4 t 5ade028 l f'J50b7ab293c86a6/ l 524499083424 'T
he... Prison Industrial· Complex· -+Mapping-Private- Sector· Players· 0 }28April+2018%29.pdf.
22 Prison Po licy Initiative, "State of Phone Justice: Local jails, state prisons, and private phone providers," Peter
Wagner and Alexi Jones, February 2019, https: www.prisonpolicy.orgiphones/state of phone justice.html.
23 Stop Wall Street Looting Act, S.2 155, hnps: l/www.congress.gov/bill/ I I6th-congress/senate-bill/2155.
24

Id.

4

b. For each Platinum -ovvned prison support:service company, including all
affiliates or related entitiesi please provide the following information for each
year that you have had a stake in or O\Vned this company and tl1e five years
precoding your investment.
i. The nan1e of the compa11y
JI, Ov·inership stake
iii. l'otal reve11ue
1v. Net incoine
v. 'fotal expenditure
v1, Total n11mber of en1ployees
VII. 'fotal number of corrections facilities or relevant authority witl1 whicl1
tl1e company has a contract to provide services
v111. Total 11u1nber of incarcerated individuals for whom the co1npany
provides service
ix. Ot11er private-equity fin11s that own a stake in tl1e co1npany
3. Does Platinu1n 11ave a stake i11 or own con1panies, including all affiliates or related
entities tl1at provide telephone services to correctional facilities? If so, please provide
the follo\ving i11formation for each year tl1at your fi11n has had a stake in or owned
each co1npany ancl U1e five years preceding your investme11t.
a. Re·ve11ue generated from per-minute pl1one rates
b. Revenue generated f-Tom tees and a list of each type of fee
4. Private equity-owned corrections companies .have reportedly entered into countless
settle1nents over 1l1e years and paid millions of dollars in fees for co11tract violations.
a. l-Ias m1y prison support ser;.'ice company, inclt1ding all aftiliates or related
entities, in which Platinum has an o\vnership stake, been investigated for
violation of any federal or state law or regulation? If so, please provide a
co1nplete list, including the date and description, of each investigatio11.
b. Has a11y priso11 support service company,. i11c!uding all affiliates or related
entities, in which Platinum has an ov.'tlership stake, been found to have
violated a11y federal or state law or regulation'? lf so, please provide a
co1nplete list. including tl1e date and description, of all s11ch violations.
c. Has any prison support company, including all affiliates or related entities, in
\Vl1ich Platinum 11as an ownership stake, reacl1ed a settlerne11t with a11y federal
or state law enforce1ne11t et1tity related to.a potential violation of a11y federal
or state law or regulation? If so, please provide a complete list, including the
date and description, of all such settlements.
d. I-Ias any priso11 support service company, including all affiliates or related
entities, in which Platinum has an ovvnership stake, reached a settlement witl1
any incarcerated i11dividual or group of incarcerated individuals related to a
potential violatio11 of ru.1y federal or state law or regulation? lf so, please
pro\'ide a complete 1ist, including t11c date and description, of all st1ch
settlements.

5

Sincerely,

Mark Pecan
Member of Congress

United St

~(J;;?fJ
Member of Congress

6

 

 

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