“Wildly Substandard”

While immigration detention in the United States has for decades brought windfalls to private companies, at the end of the Obama administration, the federal government’s spending on immigration and corrections contractors surged dramatically. The big expenditures continued through the Trump years.

Danielle Jefferis, a professor of law at the University of Nebraska–Lincoln focusing on the for-profit prison industry, called private investment in detention a “founding feature of the immigration detention space in the U.S.”

“Certainly, though, the expansion of it — and the sheer scope of the privatization of immigration detention — is, I would say, a more modern phenomenon,” Jefferis added.

Private equity firms have fought to get their share of the profits. Hundreds of millions of dollars from immigration contracts are now flowing to these firms, according to the Private Equity Stakeholder Project report.

“If there are additional facilities opened, either by ICE or by individual cities, a good amount of that profit will definitely go to private equity firms,” Creeks said, noting that because private equity had diversified its interest in immigration detention, “there’s an opportunity for them to be present no matter what the framework of the facility is.”

ICE’s biggest contractors have long been global private prison companies like CoreCivic and the GEO Group, which, unlike private equity firms, are publicly traded, allowing the public a glimpse into their inner workings. Together, the two contractors receive more than $1 billion annually in government contracts, hundreds of millions of which come from ICE.

Less attention is often paid to the sprawling, opaque landscape of private equity firms preying on this same system, which Private Equity Stakeholder Project researchers examined in detail. The report identified more than a dozen private-equity-backed companies that have won contracts for immigration detention and surveillance.

Such vendors include three companies owned by the global private equity firm H. I. G. Capital: TKC Holdings, which provides commissary services, Wellpath, a prison health care company that recently declared bankruptcy, and ICSolutions, one of the country’s primary prison telecom and tablet providers. Other private-equity-backed ICE detention contractors include telecom services owned by Platinum Equity and Argosy Private Equity.

Private equity’s aggressive profit-driven business model, advocates warn, can degrade the quality of services their companies provide. The industry’s prominence in these detention facilities can subject immigrants to “wildly substandard” services, emphasized Bianca Tylek, the executive director of Worth Rises, a nonprofit that advocates against the prison industry.

Wellpath, H. I. G. Capital’s health care company, has been accused of medical neglect in detention facilities, leading to scrutiny from lawmakers and federal regulators on multiple occasions over the last decade. The company currently has contracts to provide health care to immigrants in a dozen ICE detention facilities.

“This has been the reality for a long time,” Tylek said, noting that as private equity has increasingly monopolized prison services like health care and telecommunications, it has increasingly developed offshoots in the immigration business.

But the new report also illuminates private equity’s newer expansion within the immigration business: providing shelter services for vulnerable migrants.

“People Are Suffering”

Outside of the federal immigration detention system, which is overseen by ICE, cities and states are increasingly turning to private equity to provide emergency shelter and other services to migrants, researchers found.The prominence of private equity in this realm was perhaps “the most surprising” finding of the report, Creeks said — and indicative of a growth opportunity for private equity investors. “I can imagine that there’s space for them to invest in these companies that will be profiting from increased shelter and housing contracts,” said Creeks.

Jefferis, the University of Nebraska professor, agreed that the companies’ expansion into shelter services is one example of how private companies invested in prisons and immigration detention are constantly finding new ways to expand.

When a company is pushed out of one market, Jefferis said, “it’s going to turn to some other business plan it can put forward to do something similar.”

“These companies are in the market, and they’re going to continue to innovate and provide services as long as there’s a demand for it,” Jefferis continued. “And there’s an ever-growing demand for different ways of surveilling, incarcerating, and controlling people.”

In Chicago, confronted with a growing migrant crisis last fall, city officials contracted with GardaWorld, a private security firm, to provide emergency shelter for asylum seekers arriving in the city — though initial, controversial plans for a migrant tent camp quickly fell apart. GardaWorld, researchers noted, was at the time owned by BC Partners, a global private equity firm (although in October, BC sold its majority stake in the company, bringing in massive profits).

GardaWorld and its private equity backers have won contracts to run migrant shelters in Fort Bliss and El Paso, Texas, leaving behind a trail of alleged mismanagement and dangerous conditions. In El Paso, it staffed an emergency shelter on Fort Bliss, which housed minors. Staff there reported “acts of potential retaliation and whistleblower chilling” for reporting concerns about child safety and case management at the facility, according to one government watchdog report.

Yet despite its track records, the company — mirroring actions by other private equity giants — has looked to expand its footprint in the immigration detention business, partnering with Palantir, the tech giant that provides digital profiling tools to ICE and software to the US military, and attempting to acquire G4S, a private security firm that carries out deportations for immigration authorities.

Chicago is also contracting with a private-equity-owned company called Favorite Healthcare Staffing to staff and manage other of its migrant shelters, a contract that was extended in September for $100 million. The extension came despite concerns about the company’s exorbitant costs and migrant complaints of discrimination, denial of medical care, and cruel treatment.

Meanwhile, in New York, the city has inked contracts with multiple private-equity-owned vendors to provide migrant services. That includes RXR Realty, which is owned by three Wall Street ventures: the private equity firm Blue Owl Capital; the health care services company DocGo, which is backed by the hedge fund Light Street Capital; and the venture-capital-backed Mobility Capital Finance.

All three of these companies have been plagued by scandals. One migrant staying at RXR’s New York shelter described it as a “prison,” saying it was overcrowded and offered little privacy. The shelter’s living conditions sparked protests outside its doors. DocGo, which had a $432 million contract with the city until May, was accused of hiring unlicensed guards, and the city declined to renew the contract this spring in the face of mounting public scrutiny.

With Trump coming into power, and migration to cities like Chicago slowing at the moment, the future of many of the migrant shelters that opened within the last two years is uncertain. But Creeks said she believed private equity companies may still be looking at emergency shelters as a market opportunity.

“I can imagine that there’s space for them to invest in these companies that will be profiting from increased shelter and housing contracts,” Creeks said.

In addition to the harms that private equity can inflict on migrants and immigrant communities, private equity’s immigration detention business can have broader consequences, Tylek said. Private equity’s aggressive profit-seeking can drive companies to overcharge for their services, she noted, inflating government contracts and potentially wasting taxpayer dollars.

“Because the new administration has been so vehement about its detention and deportation agenda, it’s going to lose footing at the negotiation table,” Tylek said. “A lot of these companies, I think, are going to be able to really overcharge the government.”

All in all, she concluded, “People are suffering while private equity gouges our system.”