In the days after Donald Trump’s election, business leaders across a swath of industries celebrated the victory of a man they thought would bring them a financial bonanza. Crypto bros, oil and gas honchos, and tycoons looking to orchestrate mergers all did a victory dance.
Now, a new report details how private equity companies — operating in relative obscurity — stand to benefit too. Trump’s promised mass deportation campaign will enrich private equity companies, according to a new report released Wednesday by a watchdog organization tracing the industry’s far-reaching involvement in the business of detention and deportation.
“Declaring an emergency opens up all these avenues for companies to rush in without the proper vetting.”
“Trump is pretty set on expanding the deportation and detention system, he is pretty set on declaring a national emergency, and as shown in the report, declaring an emergency opens up all these avenues for companies to rush in without the proper vetting,” said Azani Creeks, the senior research and campaign coordinator at the Private Equity Stakeholder Project. “The companies with the most power and the most money will win those contracts — so that will be private equity firms.”
Public to Private
For years, advocates concerned about private industry’s role in immigration have focused their ire at two large, publicly traded companies that dominate the business of owning and operating lock-ups for immigrants.
Those companies, Geo Group and CoreCivic, both saw their stocks soar after Trump’s election on the expectation that he will follow through on his pledge to deport millions of people.
While private prison operators might play top dog at many detention facilities, advocates say they are only one part of a constellation of companies that stand to profit off deportation. Some companies are simply privately held, but a growing number are owned by private equity firms.
Those firms do not offer stock to the general public, instead collecting investments from pension funds and other institutional funders to buy companies they believe are undervalued. Sometimes they make structural changes and sell their acquisition targets for a profit. Sometimes, they slash expenses by firing employees and use the companies they have purchased as piggy banks by issuing debt in their name.
Unlike publicly traded companies, which must disclose certain financial information, there is little visibility into the world of private equity.
Creeks said that while some publicly traded companies pull back from operating in the detention and deportation world under public pressure, private equity firms have rushed in to fill the void. Some 63 percent of federally designated immigration detention facilities contract with companies owned by private equity firms, according to the report.
Asked for comment by The Intercept, none of the firms listed in the report that are mentioned in this story provided one.
The services that the private equity-owned companies provide might sound like a benefit at first blush: Immigration detainees obviously need access to nurses and doctors, for instance. Still, Creeks said inserting a profit motive into services such as health care carries serious risks for immigrants.
Nurses, Food, and Phones
One of the top private equity-owned medical providers, Wellpath, operates at 12 detention facilities in states ranging from California to Florida, according to the report. The company, which also provides services to people in criminal detention, has been named in more than 1,000 lawsuits, including 70 alleging wrongful death.
Wellpath’s owner, H.I.G. Capital, owns another company called TKC Holdings that served a detention facility in Laredo where immigrants complained of “inedible food and undrinkable, foul-smelling water,” according to the report.
Even the telephone calls that immigrants in detention make to their loved ones serve as a profit center. Two private equity firms, American Securities and Platinum Equity, dominate the jail and prison telecommunications industry through firms they own.
In July, the Federal Communications Commission cracked down on prison phone companies by capping how much they can charge for calls. Republican state attorneys general are challenging the phone rate caps in court. Regardless of how that case plays out, the report says that companies such as ViaPath and Securus have found new ways to profit by offering tablets where detainees can pay to access entertainment.
In addition to providing services at detention centers, private equity-owned companies offer surveillance systems used to track immigrants and the contracts to deport them.
A security firm called G4S ultimately owned by the private equity firm Warburg Pincus has racked up contracts with Customs and Border Protection and U.S. Immigration and Customs Enforcement amounting to more than $1 billion for transportation and security services that include deportation, according to the report.
Another private equity owned firm, Peraton, has a contract with DHS estimated at $6.2 billion to develop a massive biometric database.
Private equity firms are also heavily involved in artificial intelligence — which could be employed to aid in deportation efforts under the second Trump administration, according to Creeks.
President Donald Trump signed an executive order on Wednesday to stop the separation of families seeking asylum at the border. Prior to this, more than 2,300 immigrant children had been separated from their parents due to the zero-tolerance policy for border crossers.
The increasing presence of private equity-owned contractors serving ICE, the Department of Homeland Security, and other federal agencies involved in detention and deportation reflects the growing influence of private equity in the U.S. economy. The number of companies owned by private equity firms has grown significantly over the past twenty years, surpassing publicly traded companies around 2012. This means more employees are now accountable to private equity firms that promise high returns to their investors.
Many of these investors are pension funds representing government employees and other institutional investors. Despite the lack of transparency surrounding private equity firms, individuals like former teachers and firefighters may unknowingly have a stake in their operations.
“We’re all implicated in it, in a way,” Creeks stated. “Since these services are operated by federal, state, and local governments, there should be greater transparency and accountability for these companies. Unfortunately, due to the private equity structure, we do not have access to this information.”
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