The GEO Group (GEO) is the second largest private prison corporation in the U.S., and the largest provider of community corrections and electronic monitoring services in the world. As of December 2016, GEO had approximately 87,000 beds at 104 correctional, detention, and community facilities in the U.S., Australia, South Africa, Canada, and the United Kingdom.
In 2016, GEO reported $2.18 billion in revenue, an increase from $1.69 billion in 2015. The majority of the revenue was derived from federal contracts with the Bureau of Prisons (BOP), Immigration and Customs Enforcement (ICE), and the U.S. Marshals. The amount of revenue deriving from federal contracts has increased. In 2014, federal contracts accounted for 42 percent of total revenue, and, in 2016, it accounts for 48 percent. The increase has come primarily from ICE, which accounts for 23.1 percent of total revenue in 2016, an increase from 17 percent in 2015.
One of GEO’s growth strategies is to acquire existing, smaller prison companies and absorb their contracts. In 2016, GEO stated in its annual report that it had spent over $1.7 billion in acquiring businesses, including acquiring LCS Facilities and its eight correctional and detention facilities in 2015, totaling more than 6,500 beds.
In February 2017, after the Trump administration’s reversal of the previous directive to eliminate the use of private prisons at the federal level, GEO stocks were up 100 percent. The previous directive had caused the stock to drop significantly.
In January of 2013, GEO converted to a Real Estate Investment Trust (REIT). Although GEO operates prisons as its primary form of business, the prisons themselves constitute real estate. By creating an entity called a taxable REIT subsidiary (TRS), the company can separate the operational side of their private prison management from the real estate side of owning and generating income from correctional facilities. There are special tax advantages for REITs, which generally pay no income tax. They also must distribute at least 90 percent of their income to shareholders in the form of dividends.
Correctional and Detention Facilities
In 2016, approximately 63 percent, or $1.35 billion, of GEO’s revenue was derived from US corrections and detention facilities. GEO operates and/or manages 74 correctional facilities, contracted with 33 states and the federal government.
As of June 2017, GEO has approximately 65,000 beds at 74 correctional facilities in the U.S.
There has been significant controversy surrounding GEO prison facilities. Many GEO contracts include occupancy clauses that require the contracting agency to keep the occupation of the facility at or above a certain level and penalize the agency if that level is not met. The clause incentivizes “tough-on-crime” legislation. Additionally, GEO has been accused of understaffing and overcrowding prisons to cut down on costs. These measures have led to increases in assaults, riots, escapes, and deaths.
Immigration Detention Centers
In 2016, ICE was the single largest customer for GEO. From 2013 to 2016, revenues from ICE have steadily increased, from 16 percent to 23 percent of total revenue. In 2016, GEO owned and/or managed 10 detention centers in the US and over 14,000 beds. In December 2016, GEO announced a contract for 780 beds, that is expected to generate approximately $21 million annually.
Many of GEO’s detention centers have been the source of public scrutiny. In 2017, a class action lawsuit was filed against GEO for forcing detainees to work at its center in Aurora, Colorado, violating federal trafficking laws. From April to June 2017, in Adelento Detention Facility, three detainees have died. The facility lacks proper medical access. In 2015, 400 detainees launched a hunger strike to demand better medical access and members of Congress sent a letter to ICE demanding an investigation of the facility. However, in 2016, the contract was renewed with GEO until 2021. In 2017, detainees launched another hunger strike to bring attention to the lack of medical access, poor food, and high bail.
Facilities Outside the US
GEO also owns and/or manages correctional and detention facilities in Australia, South Africa, and the United Kingdom. In December 2016, GEO’s international operations accounted for 19 percent of the total revenue, a significant increase from 8 percent in 2014.
In the UK, GEO’s immigrant detention centers have faced public scrutiny over the deaths of detainees. In South Africa, GEO manages a correctional facility with a capacity of 3,000. In 2014, a riot broke out at the facility after prisoners claimed to be underfed and abused. And in Australia, where GEO manages 4 correctional facilities, critics have claimed that private prison operators lack transparency, and make it impossible to gauge whether or not these companies reduce recidivism.
Community Correctional Services
GEO is the largest provider of community correction services, youth services, and electronic monitoring services in the US. In 2016, 18.1 percent of GEO’s revenue came from its GEO Care division. The division manages the community correction services, including reentry facilities, day reporting centers, and youth service facilities, and electronic monitoring services. As of June 2017, GEO manages 50 residential reentry facilities, 61-day reporting centers, and 12 youth residential facilities. B.I. Incorporated (BI), a wholly-owned subsidiary of GEO, tracks approximately 70,000 people and is the leading provider of electronic monitoring in the country.
In February 2017, GEO announced that it acquired Community Education Centers, a company that reentry and treatment facilities for $360 million. GEO will acquire approximately 12,000 beds from the transaction.
The diversification of GEO’s businesses has been a central strategy of growth for GEO. GEO launched the “GEO continuum of care” program to combine GEO’s in-house prison services to its post-release services. The program has resulted in increases of $42.4 million at certain facilities in 2016. In 2017, GEO will increase its annual investment in GEO continuum of care from $5 million to $10 million.
GEO Transport, Inc. (GTI) is GEO’s in-house transportation division. Since 2007, GTI has transported over 2 million incarcerated people over 33 million miles. GTI contracts with the BOP, ICE, and the US Marshals, and 27 states.
GEO claims to reduce the national recidivism rates through its correctional and detention services, but there is a perverse incentive for the company to keep people in custody longer to maximize profits. In 2016, GEO boasts a 90 percent renewal rate for its contracts. According to federal lobbying records, GEO spent $1 million in lobbying expenditures in 2016. In Florida, from January to July 2017, GEO has donated more than $480,000. In that same time, GEO was awarded a $3 million dollar contract “for the provision of enhanced in-prison and post-release recidivism reduction programs.” After receiving the contract, GEO donated $15,000 to Florida House Speaker Richard Corcoran.
Economic Activism Highlights
- On June 8, 2017, New York City's pension funds divested $48 million from private prison companies, including GEO.
- In March 2017, a class-action lawsuit is filed against GEO for forced labor in its immigration detention center. The class-action lawsuit, originally filed in 2014, marks the first time a class-action suit against a private prison in the United States has moved foward.
- On July 22, 2016, the Berkeley City Council passed a resolution to divest from "major human rights violators," including GEO.
- On February 25, 2016, University of California Davis ASUCD passed prison divestment resolution that urges “both the Board of Regents of the University of California (UC Regents) and the ASUCD to undertake practices of corporate social responsibility by divesting in corporations which are directly and indirectly involved in the private prison industry,” including CoreCivic, Inc., Geo Group, and Wells Fargo.
- On February 22, 2016, Portland’s Social Responsible Investments Committee unanimously voted to recommend to the city to divest from Wells Fargo & Company for its ties to private-prison companies, such as Geo Group.
- On February 10, 2016, California State University, Los Angeles administrators have agreed to divest from private prison companies after pressure from CSULA Black Student Union.
- In December 2015, University of California Chief Investment Officer announced that the UC endowment, covering 10 campuses across the state, divested from private prisons, including GEO.
- In December 2015, the California Endowment divested its holdings from "companies that derive significant annual revenue from private prison services," including GEO Group.
- In July 2014, Columbia University divested its shares in GEO Group after a student-led campaign. The decision also prohibits any future investment in the prison industry.
- In April 2014, three investors, Scopia Capital, DSM, and Amica Mutual Insurance pledged to remove their collective investments of about $60 Million from the CoreCivic, Inc. and the GEO Group. DSM President Hugh Welsh explained, “In accordance with the principles of the UN Global Compact, with respect to the protection of internationally proclaimed human rights, the pension fund has divested from the for-profit prison industry.” This marks full divestment for DSM and Amica and a 27% decrease in shares for Scopia, which has decreased its private prison stock by 59% since December 2012.
- In December of 2013, Systematic Financial Management divested 74,550 shares of GEO stock, thereby exiting from the private prison industry completely. Systematic Financial Management is an investment company that manages over $13 billion in investments for local governments, retirement funds, corporations, wealthy individuals, and unions.
- In April 2013, Florida Atlantic University ultimately rejected a 6 million dollar donation from GEO Group in exchange for naming rights on the university's football stadium, after severe pressure from students, faculty, and community activists protesting the company's human rights record and links to the prison industry.
- In 2012, Wells Fargo divested nearly 33 percent of their holdings in GEO Group.
- In 2012, the United Methodist Church voted to permanently divest its shares in GEO Group, and simultaneously moved to institute a screen against future investment in any prison-related industry.