Dirty Money

Did Private Prison Contractor Illegally Boost Trump?

As a government contractor, the GEO Group private prison company is barred from donating to federal candidates. So why did one of GEO’s contractors seem to do just that?

Photo Illustration by Lyne Lucien/The Daily Beast

In the final days of the presidential campaign, a pro-Trump super PAC may have taken illegal contributions from a private prison company that stood to profit handsomely off a Trump win.

That’s the argument that the Campaign Legal Center, a nonpartisan campaign watchdog group, is making about contributions that a subsidiary of the GEO Group private prison company made to the Rebuilding America Now super PAC. Federal Election Commission filings released last week showed the group took $125,000 from the company on Nov. 1 of this year.

It is illegal for federal contractors to make campaign contributions, both to campaigns themselves and to outside super PACs. GEO Group, one of America’s largest prison companies, contracts with the federal government to house prisoners, as well as state governments and governments in Australia, the U.K., and South Africa, according to their annual filings with the Securities and Exchange Commission. Their business would have suffered if Hillary Clinton had become president; she promised on the stump that she would end government contracts with companies like GEO, while Trump praised the privatization of the prison industry. GEO was one of the companies to see the biggest stock-price jump after Trump won the presidency on Nov. 8.

So it’s understandable that in people affiliated with the company would have wanted to help Trump.

GEO Group defends the contributions to Rebuilding America Now, arguing they were made through a company subsidiary that doesn’t contract with the federal government.

“The donation was fully compliant with all applicable federal election laws; although GEO Corrections Holdings Inc., the company that made the donation, is a wholly-owned subsidiary of the GEO Group, it is a non-contracting legal entity and has no contracts with any governmental agency,” said GEO spokesperson Pablo Paez in a statement to The Daily Beast.

The Campaign Legal Center doesn’t buy it. Brendan Fischer, associate counsel for the group, argues that GEO Correction Holdings, Inc. actually does contract with the federal government. He points to a filing the subsidiary made with the National Labor Relations Board in 2013 as evidence of this. That filing, from a case closed on Dec. 3, 2013, names GEO Corrections Holdings Inc. as the employer, and refers to it throughout as GEO.

“GEO is a large operator of prisons and other correctional facilities,” the brief says, adding that it “has contracts with several state and federal agencies” including the Bureau of Prisons and Department of Homeland Security.

At issue in that suit was the contract for the D. Ray James Detention Facility in Georgia. On Sept. 30 of this year, GEO Group announced that the federal government extended its contract with the company for operating that particular prison.

Also, USASpending.gov, the site that lists federal government contracts, has a page showing that Geo Corrections Holdings Inc. received a $266,666 grant from the federal government on Feb. 1, 2015.

GEO told The Daily Beast that the NLRB filing was an error.

“The D. Ray James facility’s federal contract has never been with GEO Corrections Holdings; nor have any of our contracts,” said Paez in a statement.

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That statement described GEO Corrections Holdings this way: “The entity houses all of our administrative functions and as a holding company it has no operations. GEO Corrections Holdings employs all of our corporate employees. GEO Corrections Holdings does not employ any of our facility employees.”

The Campaign Legal Center argues that this is a distinction without a difference, and that the federal contractor ban should apply to the company’s subsidiary.

“GEO Corrections Holdings Inc. and its parent company are indistinguishable,” Fischer said.

We’ll see if the Federal Election Commission agrees.