LittleSis: The Immigrant Incarceration Profiteers

by / Jun. 22, 2018 12pm EST

In recent weeks, the Trump administration’s cruel policy of separating children from their parents who are detained at the U.S.-Mexico border dominated news headlines. Disturbing images and audio clips from processing centers and shelters housing children generated mass outrage among millions of people and numerous elected officials. More than 2,300 children that have been separated from their parents linger in shelters like the former Walmart in Brownsville, Texas, which houses around 1,500 children and has come to symbolize the larger story.

After days of intensifying public pressure and outcry, the Trump administration finally decided on June 20 to end its policy of family separation, though families will remain in detention indefinitely. Nor does Trump’s order address what will happen to the children who have already been separated from their parents.

Against this backdrop, there has been increasing concern over who exactly has been profiting from these policies that incarcerate immigrant families. Who are the companies, investors, banks, and top executives that stand to make money—or are already profiting—off of the zero tolerance and family separation and indefinite detention policies? And more importantly, can they be pressured to end their complicity with and enabling of Trump’s inhumane immigration policies?

Campaigns like Sleeping Giants have been working hard to uncover and circulate this information, and articles like David Dayen’s recent piece in the Nation have further unraveled the web of interests profiting from this carceral machine. This article builds upon these efforts to identify some of the major profiteers from the incarceration of immigrant families based on what we know right now.

These profiteers fall into several categories: for-profit private prison companies like CoreCivic and GEO Group that operate family and adult detention centers, and non-profits like Southwest Key Programs that operate child detention centers; contractors that provide support services to this process, such as MVM and General Dynamics, which provide IT, transportation, case management, and other logistical services; and on top of it all, Wall Street banks like Wells Fargo, as well as major money managers like BlackRock and Vanguard, which are financing and investing in all of these companies.

A broad effort to hold the companies and individuals accountable that are enabling and profiting from Trump’s immigration policy is not only moral—it’s strategic. As Dayen writes, without these contractors providing essential support, ICE’s “whole rickety structure will fall on itself.” Profiteers such as GEO Group and CoreCivic need to be named, shamed, and pressured directly as they begin to reap the spoils of prolonged family incarceration. But beyond that, the political, social, and financial relationships on which they depend need to be targeted and disrupted.

In addition to mapping out major profiteers, this piece focuses on some of the Wall Street firms, like Wells Fargo and SunTrust, that are both an important engine for this carceral machine and are also public-facing brands vulnerable to popular pressure. In a coming piece, we will turn to the political and social relationships that prop up these profiteers.

Operators of child, family, and adult detention centers

The operators of detention facilities that benefited from Trump’s family separation policy, and now his indefinite family incarceration policy, fall into two major categories: non-profit agencies, which look a lot like big businesses, and for-profit private prison companies.

The child detention centers came into sharp focus over the past few days, with the release of heartbreaking images of small children packed into cages, as well as recordings of them crying out for their parents. These child detention centers are run by large nonprofits like Southwest Key Programs. Though Southwest Key is a nonprofit, it is also a very large business—it boasted of $242 million in revenue in its 2016 annual report, and is receiving $458 million this year through the Department of Health and Human Services to run shelters for separated children. Its CEO, Juan Sanchez, made $786,822 in 2016, according to the organization’s most recent tax return.

It is important to note, however, that for-profit private prison companies like GEO Group and CoreCivic were major beneficiaries of Trump’s zero-tolerance policy, even if they weren’t detaining the children themselves—they have been detaining the parents and other adults criminally charged due to the zero-tolerance policy. 

For GEO Group and CoreCivic, this is a significant boost to their bottom line. CoreCivic uses the term “man-day” as a key performance indicator in its financial reports, which gives a sense of how closely these companies keep an eye on how many people they are able to detain, and for how long.

Now that the policy has shifted, maintaining zero-tolerance and replacing family separation with indefinite family detention, these private prison companies will likely see a further increase in the “man-days” that they can report to their shareholders. In addition to operating immigrant detention centers, these companies also operate family detention centers—the South Texas Family Detention Center in Dilley, TX (CoreCivic), and the Karnes Residential Center in Karnes, TX (GEO Group), which have been subject to significant legal challenges. In its most recent annual report, CoreCivic singles out the operation of family detention centers as a significant risk factor for its business (See: “Providing family residential services increases certain unique risks and difficulties compared to operating our other facilities” on page 30 of CoreCivic’s 2018 annual report.)

The continuation of zero-tolerance and implementation of indefinite family detention will require the buildout of significant additional policy, and though it it not clear how this will play out, GEO Group and CoreCivic will likely be key players.

Providers of detention support services like shelter operations, transportation, and information processing

There are also several government contractors who have been providing support services to the family separation and detention process. A number of groupsshared documents, and press reports have identified MVM Inc. and General Dynamics among them. A Yahoo News investigation identified a trio of additional providers of emergency shelter operations: Comprehensive Health Services, Dynamic Service Solutions, and Dynamic Educational Systems.

MVM Inc.

MVM Inc. is a privately-held defense contractor based in Ashburn, Virginia. It has surfaced in recent press reports as a major family separation and immigrant detention profiteer.

According to the Daily Beast, the company has ICE contracts for the transportation of unaccompanied children that have earned it $43 million since September 2017, and was awarded a contract worth up to $8 million over the next five years to “provide assistance in emergency shelter operations for unaccompanied children.”

These contracts appear to be a continuation of a longstanding, lucrative relationship with the federal government for MVM in providing transportation services. Several other massive contracts for “unaccompanied alien children transportation services” were initially awarded in 2014, 2015, and 2016, and have been worth over $150 million.

Kevin Marquez has been MVM’s CEO since 2015, but his father, Dario Marquez, a former secret service agent, founded the company and lead it for decades. The Virginia Hispanic Chamber of Commerce gave Dario an award last October, and in 2015 Virginia Governor Terry McAuliffe appointed him to the state’s Secure Commonwealth Panel.

MVM has seen its share of controversies—including bungled delivery on contracts and racist company discrimination against employees.

General Dynamics

General Dynamics is a Virginia-based aerospace and defense corporation and a top recipient of government contracts. Although they do a wide range of business with the government, many have begun to call attention to their complicity in caging children at the border.

General Dynamics holds a variety of contracts tied to immigrant detention and monitoring, including case management and “infrastructure services for unaccompanied minors” at the border. And they are looking to expand. The company is advertising for new jobs, including a data-entry position within the Office of Refugee Resettlement (ORR) that will monitor children’s’ cases as they move through the system, a position involving ORR policy analysis, and a position tracking “tracking “new placements and progress of minors in ORR funded care.”

General Dynamics’ subsidiary, General Dynamics Mission Systems, has over a dozen locations across the U.S., which are listed on its website

Comprehensive Health Services, Dynamic Service Solutions, and Dynamic Educational Systems

Additionally, Yahoo News has identified a trio of companies—Comprehensive Health Services, Dynamic Service Solutions, and Dynamic Educational Systems—that have been provided lucrative contracts for shelter operations and services in recent months.

Comprehensive Health Services has won the most work, by far, with three contract awards worth up to $65 million since September 2017 for emergency shelter operations and support services. Company CEO Gary Palmer is a former executive at defense contractors Lockheed Martin and Martin Marietta, where he oversaw international business development in Australia and Saudi Arabia.

The Wall Street banks that finance them all

A slew of big banks finance the companies that profit from immigrant and family detention—and profit, in turn, from these lucrative lending arrangements. The credit these banks extend to these companies will be especially important as they look to continue growing their operations under Trump’s zero-tolerance and family detention policies. Additionally, these financial institutions—as well as large money managers like BlackRock—are also significant investors in the stock of publicly-held corporations.

While many of the above-named contractors are not consumer-facing companies, the financial institutions that make their operations possible include some of the largest consumer banks in the U.S.

SunTrust, MVM Inc., and Comprehensive Health Services

SunTrust Bank has a major lending arrangement with MVM, according to a 2016 UCC filing. While the exact amount of the loan is not revealed, the loan is secured by “all assets of debtor,” which means it is likely significant.

Additionally, a March 2018 UCC filing shows that SunTrust is also involved in a major lending arrangement with Comprehensive Health Services, secured by “All assets of the Debtor, whether now owned or hereafter acquired.”

As we discuss below, SunTrust is also one of the 6 major banks that props up private prison companies GEO Group and Core Civic. Its CEO, William H. Rogers, Jr., has raked in over $25 million in compensation over the past 3 years.

Six banks behind GEO Group and CoreCivic

As mentioned above, GEO Group and CoreCivic, the two largest private prison operators, are major profiteers off of immigration detention. A 2016 report from In The Public Interest identified six banks as the primary financiers of GEO and CoreCivic. They are: Bank of America, JPMorgan Chase, BNP Paribas, SunTrust, U.S. Bancorp, and Wells Fargo. As of 2016, both companies had $900 million in lines of credit from this consortium of banks.

The report detailed several ways that these banks have financed and helped expand the private prison industry. These include extending huge lines of credit for GEO and CoreCivic to buy up other companies tied to mass criminalization, including electronic monitoring and reentry services. Bank of America also negotiated credit agreements with other banks on behalf of GEO, and BNP Paribas did the same for CoreCivic. Wells Fargo served as the largest underwriter of corporate bond offerings for GEO and CoreCivic. Wells Fargo and US Bancorp serve as trustees to GEO and CoreCivic respectively and are responsible for enforcing the bond agreements put in place.

It’s also important to note that GEO Group and CoreCivic are structured as Real Estate Investment Trusts (REITs), which allows them to pay very low taxes—GEO paid only $1.5 million in Federal taxes in 2015—while giving 90 percent of their taxable income to shareholders. As a result of this structure these companies have limited cash reserves and rely wholly on these banks to extend credit to keep their operations going. Simply put, if the banks rescinded their credit agreements these companies would struggle to continue being operational.

The banks behind General Dynamics

A group of 8 banks signed a credit agreement with General Dynamics in March 2018 that is worth $7.5 billion. The banks include Wells Fargo, JPMorgan, Bank of America, and Royal Bank of Canada as the biggest financiers, each putting up $1.275 billion for the agreement. The other four banks put up $600 million each; they include Banco Bilbao’s New York Branch, Lloyd Bank, Mizuho Bank, and Bank of Tokyo-Mitsubishi.  

Wells Fargo took over from JPMorgan as administrative agent for the credit arrangement shortly after it was filed, though it is unclear if JPMorgan is still involved as a lender.

A vulnerable Wells Fargo stands out

Wells Fargo stands out as a consumer-facing bank that is fueling these operations and may be  particularly susceptible to public pressure.

In the wake of its massive fake accounts scandal and public outcry over the bank’s behavior,  Wells Fargo is desperately trying to bolster its image with consumers—upon whose business the bank relies, unlike private prison companies. It has even gone so far to rebrand itself as “re-established in 2018.” It is perhaps uniquely vulnerable to public pressure at this moment.

In addition to leading the $7.5 billion credit agreement for General Dynamics, Wells Fargo is a major creditor, bond underwriter, debt trustee, and investor in private prisons. In the past, it has been one of the top shareholders in GEO, and the bank still has over $16 million invested in CoreCivic and $10 million invested in GEO Group.

Of course, Wells Fargo is not only tied to private prisons and detention. It is an enabler of the fossil fuel industry, police militarization, mortgage fraud, and Trump’s border wall. It is also worth pointing out that Warren Buffett, who is often portrayed as an enlightened billionaire, has a nine percent stake in Wells Fargo, worth $24 billion.

Organizations like Enlace and efforts like Forgo Wells provide models of recent campaigns pressuring Wells Fargo over its funding of private prisons and other destructive industries, as well as its role in perpetuating structural racism. They offer instructive examples for potential efforts to pressure Wells Fargo, SunTrust, and other financial backers of immigrant detention that, thus far, have received little attention for their role in financing the crisis at the border.

LittleSis is a free database detailing the connections between powerful people and organizations. We bring transparency to influential social networks by tracking the key relationships of politicians, business leaders, lobbyists, financiers, and their affiliated institutions.