Profits Over Kids


In my previous commentary I wrote that: “The development of private prisons represents a world where money rules and profit is the name of the game.  The well-being of society, the rehabilitation of prisoners and savings to taxpayers are only minor concerns by comparison.”  I also noted one of the most outrageous examples was the two juvenile court judges in Pennsylvania who received kickbacks for sending kids to privately operated juvenile facilities.  Mid Atlantic Youth Services Corp owned and operated them.

Now we have a new report published in a two-part series in the Huffington Post called “Private Prison Empire Rises Despite Startling Record Of Juvenile Abuse.”  In this case it is an example of what I call “nothing succeeds like failure.”  I say that simply because in spite of the fact that the company involved in this abuse, Youth Services International (YSI), has been repeatedly cited for “offenses ranging from condoning abuse of inmates to plying politicians with undisclosed gifts while seeking to secure state contracts” by not only the Department of Justice but also New York, Florida, Maryland, Nevada and Texas.  I am personally informed about the case in Nevada, of which I will comment on in Part II.

According to their mission statement, YSI aims to “Develop and provide holistic programs for adjudicated and non-adjudicated youth. Demonstrate, through objective measurements, the positive impact YSI has on the youth entrusted to its care. Develop and maintain the most highly qualified staff in the industry. Demonstrate, through our daily actions, our unrelenting commitment to public safety, youth development and employee welfare.”  It currently operates 14 facilities in five states (Florida, Georgia, Iowa, Minnesota and South Dakota).

The founder of YSI, James F. Slattery, started out by founding Esmor Corporation in 1989.  He and his partner, Morris Horn had purchased a number of old hotels in Manhattan.  For one, called LeMarquis, they proposed leasing out floors to serve as a re-entry housing facility for newly released federal inmates. Soon federal inspectors found significant problems, such as “low-paid, untrained employees, poor building conditions, from vermin and leaky plumbing to exposed electrical wires and other fire hazards, and inadequate, barely edible food.”  In one lawsuit four women housed in the facility charged that “they had been raped and assaulted by Esmor’s ‘resident advocate’ – the employee who was supposed to protect inmates by handling their grievances.”  Slattery and his partner were qualified to engage in “property management” and little else.  Maybe in a way they were qualified to get involved in running programs for offenders.  After all, to Slattery and people like him, offenders are little more than “property.”

In 1994 there was a riot at one of their facilities, a federal immigration detention center in New Jersey. An investigation found that Esmor was negligent in many areas of operation and that the official corporate policy was Keep the Immigration and Naturalization Service (INS) “in the dark as much as possible about any problems or incidents which occurred.” The INS also found a lack of training of the staff and there was “a continuing cycle of contract violations” and a “general failure to follow sound management practices.”  Despite this, the INS did not cancel the contract and instead allowed Esmor to sell the facility to Corrections Corporation of America for $6 million!  Nothing succeeds like failure.

After this Slattery decided to change the name of the company to Correctional Services Corp. and move to Florida where he would receive new contracts to open up several facilities for juveniles.  His problems continued.

The first facility Slattery opened in Florida was the Pahokee Youth Development Center in Sarasota.  This facility ran into problems almost immediately. Juvenile Court judges started to hear complaints about “abusive staff, prison-like conditions and food full of maggots.” According to a story in the Chicago Tribune “Pahokee workers staged gladiator-style matches in which 13- and 14-year-old inmates beat each other bloody while their peers watched, internal facility records and interviews show.”  An investigation revealed that Correctional Services “held juveniles beyond their scheduled release dates to increase the company's income from the State of Florida and billed the government for schooling the company didn't provide.”

After the facility failed an audit, Florida stopped admitting new youth to the facility. Once again nothing succeeds like failure, for despite repeated reports of horrible conditions and treatment within Pahokee, the state did not cancel his contract.  The Florida Department of Juvenile Justice merely allowed him to withdraw from the contract.  Kirkham writes that “the company said it was closing Pahokee and three other facilities across the country that were ‘unprofitable’ in the most recent quarter. There was no mention of the state’s findings. Slattery said the company would continue to review facilities for profitability to ensure the ‘highest quality services for our contracting agencies and a fair return for our shareholders’.” 

By 1999 his annual revenues had reached $223 million, more than double what it was three years before.  Like any other business, Slattery this was not enough and so he began searching for new markets for his “product.”  He bought a company called Youth Services International, which was started by W. James Hindman, the founder and former chairman of Jiffy Lube. With this deal, Slattery got five facilities in Florida, plus access to “new markets” in the mid-Atlantic and the Midwest. 

As the profits rolled in and facilities were acquired, the problems continued, such as:

·         In a facility called Charles H. Hickey, Jr. School, a 2004 Justice Department investigation revealed that the staff at this facility “repeatedly tried to conceal evidence of physical assaults, disclosing only about two-thirds of all incidents. The facility was so inadequately staffed that boys were entering other boys’ rooms and assaulting them. The investigation found that the conditions at the school violated “the constitutional and federal statutory rights of the youth residents.” But the report was released shortly after the company’s contract ended and the state took over the facility. Flattery’s company received no penalties. The state had promised reforms, but never did and eventually closed the facility in 2005.

·         In 2001, another riot occurred in Las Vegas when the inmates took over the “Summit View Youth Correctional Facility” which had recently opened amid much fanfare.  I was keenly aware of this facility and wrote several reports in Las Vegas newspapers criticizing what I called a “prison.” (See my web site for an example.)  The state eventually took over after numerous scandals (e.g., two female staff members admitting having sex with inmates) and Slattery moved away because he could not fill enough beds to make a profit.

·         Then there was the death of 18-year-old Bryan Alexander who died of pneumonia while at a Slattery-owned Mansfield boot camp near Fort Worth, Texas. A law-suit filed by the boy’s family resulted in a settlement worth $38.3 million.  Not surprisingly, part of the settlement involved Slattery selling YSI to the GEO group (another private prison corporation, formerly called Wackenhut) for $3.75 million. At the trial testimony it was revealed that the youth was “treated for a cold and flu even though he had coughed up blood for five days before his death.”  Slattery walked away with more than $6.7 million in severance and stock proceeds but was never indicted.

·         Meanwhile, In New York a Democratic state assemblywoman, Gloria Davis of the Bronx, was indicted for accepting gifts from Correctional Services Corp. in return for awarding Slattery’s company state contracts. It was reported that the company had “supplied its vans to transport her to and from the state capitol in Albany free of charge. In exchange, she helped the company secure contracts to operate halfway houses in New York City.”

During the past decade, in Florida alone, Slattery was awarded 13 contracts worth more than $175 million.  Again, nothing succeeds like failure.

Starting in the 1980s James F. Slattery had been investing in old hotels in New York City and turning them into halfway houses and ran into numerous troubles with government officials.  He moved into other areas, notably operating for profit juvenile prisons in Florida.  

The final nail in the coffin of Slattery’s operations in Florida came with a juvenile facility named Thompson Academy, a prison with 154 beds in Fort Lauderdale, plus the Broward Girls Academy, a 30-bed program about a mile away from Thompson. In both of these prisons troubles were a constant resulting in a 2010 lawsuit filed by the Southern Poverty Law Center.  In this suit, Thompson Academy was called a “frightening and violent place” where juveniles were denied medical care when abused. “Children are choked and slammed head first into concrete walls, their arms and fingers are bent back and twisted to inflict pain for infractions as minor as failing to follow an order to stand up.” Slattery’s company settled the lawsuit in 2011 (terms were confidential). 

At Broward girls constantly complained of sexual abuse.  So-called “annual evaluations” by the state were perfunctory.  A former shift supervisor said it “was a joke,” adding that: “The paperwork looked great, because someone was going around and spending overtime just to make sure that paperwork was correct. If there was something missing, they would just forge it.” Another former employee said “Just about every area you could look into, they were deficient…So they made up documents to make it seem like they weren’t.”

Chris Kirkham, who has written one of the best pieces of investigative journalism I’ve ever seen, closes his report with these words:

Last year, Florida opted not to extend YSI’s contract to oversee Thompson Academy…. In a letter to YSI sent in summer 2012, the state told the company that the contract would end because the DJJ was “moving away from large institutional models” and toward smaller, community-based programs. Still, the letter added, “We strongly encourage your participation” in an upcoming bid for new contracts. In January, the state gave YSI a $7.3 million, five-year contract to run the new Broward Youth Treatment Center, a 28-bed program less than a mile away from Thompson. And this summer, YSI won contracts to take over two more state facilities, one in the Tampa area and another in Jacksonville.


Back in 1998, when Slattery’s Correctional Services Corp. was in the process of merging with Youth Services International, a story appeared in the Baltimore Business Journal which expressed concern that the value of YSI ($33.9 million) has not kept pace with the asking price of $42.5 million.  The writer of this article was not sure the deal would ever go through because of this issue. Slattery was quoted saying "We continue to be excited about this merger." 

I bring this up to point out that the writer, wearing his “business hat” so to speak, was commenting as if this was just another ordinary business deal where making money was the only goal.  This is pure capitalism, where the goal is to constantly seek “markets” for “commodities.”  However, in this case we are not talking about new cars, computers, IPhones, oil, etc.  Rather we are talking about human beings – in this case children.  But when the profit motive takes over it doesn’t matter.

It should be pointed out that privately run prisons – for juveniles or adults – are not unique when it comes to abuse and scandals.  It has been documented for almost 200 years that state-run prisons are not immune to this.  Witness the recent reports of abuse and violence in systems operated by federal, state and local governments (click on links here, here and here for examples).

I am of the belief – and there is solid evidence to support this – that such abuse has continued within both public and private prisons because of the skin color and social class of those incarcerated.  It usually takes a monumental effort (e.g., a lawsuit)  to get any corrective action.  But all too often the case gets “settled” and those responsible – the James Slattery’s of the world – ride into the sunset with a pile of money, never feeling the handcuffs or the inside of a jail.