October 01, 2019
Reports show private equity-owned prison support services companies with government contracts provide dangerously deficient medical care, rotten food, and abhorrent service
Warren, Pocan, and Ocasio-Cortez Investigate Private Equity Firms Profiteering Off Incarcerated People and Their Families
Reports show private equity-owned prison support services companies with government contracts provide dangerously deficient medical care, rotten food, and abhorrent service
Washington, DC - United States Senator Elizabeth Warren
(D-Mass.), Representatives Mark Pocan (D-Wisc.), and Alexandria Ocasio-Cortez
(D-N.Y.), wrote to five private equity firms -- BlueMountain Capital
Management, H.I.G. Capital, American Securities, Apax Partners, and Platinum
Equity -- that own companies providing support services to prisons, including
health care, food service, and telephone services, highlighting how private
equity firms deliver poor quality food and services at exorbitant prices,
making huge profits off of incarcerated people, their families, and taxpayers.
These companies, responsible for providing 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 cost, collecting over
$40 billion in taxpayer funds annually and much more from the loved ones of
incarcerated individuals. "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, detainees, their families, and taxpayers for
decades," the lawmakers wrote in their letters to the firms. "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."
To counter these abusive practices, Senator Warren and Representative Pocan,
along with a number of their Democratic colleagues including Representative
Ocasio-Cortez, introduced the Stop
Wall Street Looting Act, a comprehensive bill to reform the private equity
industry by holding private equity firms jointly liable for the debts of
companies under their control and by requiring greater transparency in private
equity firms' practices.
In their letters, the lawmakers also asked the firms to provide the
disclosure documents and information required in Sections 501 and 503 of the
Stop Wall Street Looting Act, and to explain their role in the
consolidation and deterioration of the prison services industry by October 14,
2019.
Senator Warren has been a vocal critic of private equity abuses throughout
her time in the Senate and is fighting for reforms that protect students,
workers, communities, and investors:
- Senator Warren and Representative Pocan recently wrote
to six private equity firms with current or recent holdings in for-profit
colleges, highlighting private equity's destructive role in for-profit
colleges, and asked the firms to provide information on their fees,
returns, marketing, and other financial practices, as required under
the Stop
Wall Street Looting Act.
- Senator Warren and Representative Dave Loebsack
(D-Iowa) opened
an investigation into private equity firms behind some of the
country's largest manufactured housing communities to obtain information
about their use of predatory practices to boost profits in the communities
they own.
- Senator Warren and Representative Ocasio-Cortez questioned Treasury
Secretary Steven Mnuchin on his involvement in dubious financial
engineering and other managerial decisions that enriched investment
company executives while decimating Sears' long-term growth and
sustainability -- ultimately resulting in Sears' bankruptcy and the loss
of tens of thousands of jobs.
- Senator Warren's requested
answers from Vornado Realty Trust and five major hedge funds on
their role in the liquidation of Toys "R" Us, which resulted in
30,000 workers losing their jobs without severance pay, after the company
went into bankruptcy as the result of a leveraged buyout in 2005.
- In June 2015, she was an original co-sponsor of
the Carried
Interest Fairness Act, legislation to close the carried interest
loophole that allowed private equity fund managers to pay lower
taxes. The legislation was re-introduced in March 2019 and is
included in the Stop Wall Street Looting Act.
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