A private prison company currently being sued for human trafficking expects to handle one quarter of President Donald Trump’s immigrant detention.
The company, GEO Group, contracts with governments around the world to incarcerate 100,000 people, and its top executives expressed optimism on a public shareholder call on Tuesday about how Trump’s immigration crackdown will impact their business. It’s indicative of a cultural overhaul taking place under the Trump administration—where well-connected multi-national corporations are poised to see significant financial gains because of tougher immigration law enforcement.
GEO Group has close ties to Trump’s political circles. The company gave $250,000 to Trump’s inauguration, according to USA Today. A subsidiary of the company gave $225,000 to a super PAC helmed by the Mercer family. And Rebekah Mercer, hedge fund manager Robert Mercer’s daughter, is widely reported to be one of the most influential donors in Trump’s circle. And last October, the company retained two former aides to now-Attorney General Jeff Sessions to lobby the federal government on prison contracts, as Politico reported.
Beyond being politically connected, GEO Group is controversial. Immigrants’ rights groups have long criticized it and its biggest American counterpart, CoreCivic, for the way they treat detainees. And in February, a federal judge ruled that former detainees at one GEO immigrant detention center could direct a class-action lawsuit at the company for forcing them to work for little or no wages—which they allege violates the Trafficking Victims Protection Act. GEO strongly denies those allegations.
On the call, executives noted that Trump’s executive orders on immigration enforcement and Attorney General Jeff Sessions’ recent announcement on prosecuting undocumented immigrants more forcefully will mean more arrests, more detention and, thus, more demand for their services—which their CEO, George Zoley, said were “culturally responsive environments.”
The call gave a broad picture of how private prison companies expect to see the Trump administration roll out its immigration crackdown: with more deportations of people with deep ties to the United States, and more immigrant detention in the northeast of the country.
Zoley said a new ICE contract for a 1,000-bed detention center in Conroe, Texas, will cost $117 million to build and will generate $44 million in revenue per year once it’s opened in late 2018. The CEO said the company expects “increased demand for detention capacity at the federal level,” and that it bought the Maverick County Detention Center in Texas for $15 million to meet that demand.
On top of that, the CEO noted the company has enough space to detain 7000 more people than it is right now, which could mean another $60 million per year in revenue.
GEO Group investors who asked questions on the call were closely following the impact of Trump’s changes on the business, peppering the executives with questions about how policy changes could make the company more lucrative. Michael Kodesch, an analyst with Cannacord Genuity, asked what the company saw as “the new opportunity set” given Congressional budgeting.
“What we see is ICE beginning to implement their interior enforcement strategy,” said David Venturella, the company’s senior vice president of business development. “For the past 8 to 10 years, the focus has been on the border. I think everybody has seen the number of apprehensions and crossings going down, so Phase 2 of that strategy is to focus in the interior.
“We’ll start to see the benefits of that through increased apprehensions and increased detention in the interior part of the United States, not necessarily along the southern border,” he added.
Then Tobey Sommer, an analyst with SunTrust, asked a follow-up on ICE.
“Does the change or, I guess, the introduction of more emphasis on interior enforcement—does that change the agency’s geographic preference, as far as incremental bed demand?”
Venturella responded that he expected more immigrant detention facilities near big cities.
“I think as ICE deploys more resources to the larger metropolitan areas within the United States, I think the bed needs will be closer to those sources,” he said. “So yes, there will be less needs along the border if the rate of border-crossings and apprehensions remain low, then the need will shift to the interior part of the United States.”
Then Sommer asked how enforcement could “impact activity levels” at the U.S. Marshals and Bureau of Prisons, both of which also have contracts with GEO.
“Well, I think any enforcement by federal law enforcement agencies could generate more prosecution convictions and then eventual detention in the federal system,” Venturella said. “I think the attorney general’s recent announcement regarding the prosecution of criminal aliens would apply to all the federal agencies, so we will monitor the impact of that new policy directive. But certainly, any increase in law enforcement activity could generate additional apprehensions and then eventually detentions.”
In the final months of the Obama administration, the Justice Department announced it would stop signing new contracts with private prison companies. That announcement came after a watchdog report concluded people incarcerated in private prisons were more likely to commit crimes again than than people held in public ones. Shortly after becoming attorney general, Sessions reversed this decision.
And the investors sound pleased.