Alex Friedmann may be better acquainted with the daily operations of Corrections Corporation of America (CCA) than any other investor in the company. The bearded and bespectacled 44-year-old owns only a modest amount of stock in the multibillion-dollar corporation. But he spent six years locked up in one of its Tennessee prisons.
Although he is enjoying healthy returns on his small investment, Friedmann is not looking to turn a profit. Instead, the ex-con is one of America's leading activists for criminal justice reform, and he’s attempting to leverage the byzantine SEC rules that govern Wall Street in an attempt to reform the world’s two largest private prison companies, CCA and The GEO Group.
Friedmann has been a thorn in the side of CCA ever since his six-year stretch in the company’s South Central Correctional Facility in Wayne County, Tennessee. He was imprisoned for a total of 10 years for armed robbery and assault with attempt to commit murder in 1987, and attempted aggravated robbery in 1991. He used his time behind bars to study law and hone his writing skills, penning several articles critical of prison profiteering and the poor conditions at CCA facilities. Paroled in 1999, he eventually became managing editor of Prison Legal News and associate director of Human Rights Defense Center, a non-profit that advocates for prisoner rights.
Friedmann bought his first share of CCA in 2004 for about $20. Owning it allowed him to attend shareholder meetings — the same tactic Michael Moore used to attend a GM shareholder meeting in his 1989 film Roger & Me — where he was often the only outsider in the room. He estimates that 96 percent of CCA stock is controlled by mutual funds, pension funds, and indexes, and says shareholder meetings are not surprisingly attended by executives and attorneys; not the sort of crowd that takes kindly to a public grilling from a former inmate.
“I would ask questions like, ‘Why do your employees keep raping prisoners?’” Friedmann told VICE News. “Of course they don’t have a good response, other than ‘We’re doing the best job we can.’”
'The downside of working inside the system is that the system is grossly stacked against you. It’s designed by people in power to work for corporations and governments.'
Confronting CCA executives at shareholder meetings never offered much in the way of substantive change, so Friedmann upped the ante. In 2010, he purchased another $2,000 worth of CCA stock, a stake just big enough for him to qualify to submit shareholder resolutions to the SEC. If resolutions meet certain guidelines, they are subject to a vote at a company’s annual meeting. Friedmann’s first resolution asked CCA to produce biannual reports on rape at their prisons.
“They really went haywire when I did that,” Friedmann said gleefully. “They didn’t like it."
CCA fought hard to keep the SEC from letting the resolution proceed, and Friedmann spent $5,000 of his own money lobbying shareholders for additional support. The measure was easily defeated, but Friedmann considers it a moral victory.
“The downside of working inside the system is that the system is grossly stacked against you,” he said. “It’s designed by people in power to work for corporations and governments.”
Last year, Friedmann expanded his portfolio to include 130 shares of GEO, which oversees 73,000 beds at 96 prisons around the country. His latest resolution — aimed at both CCA and GEO — was an attempt to lower the cost of phone calls for inmates, which Friedmann described as being “more expensive than using your cell phone from outer Mongolia.” Activists have long asserted the exorbitant rates increase inmate isolation and unfairly punish families; calls out from prisons were known to sometimes cost inmates more than $1 per minute.
Last month, the FCC finally moved to cap the cost of outgoing calls at 25 cents per minute, but Friedmann wants to go even further and require CCA and GEO to sign phone contracts with bidders that offer the lowest per-minute rate, rather than the company that offers them the biggest kickback on commission.
GEO filed documents with the SEC in December accusing Friedmann of harboring “a personal grievance” against the company, and claiming they “lack the power or authority” to implement his proposal. Friedmann hired an attorney to argue on his behalf, but the SEC rejected his resolution on February 21, precluding a vote by GEO’s shareholders. Friedmann claims he never really expected to win, and was instead just trying to raise awareness and convince a few shareholders to reconsider their investments.
“Personally, I would like to see at some point private prison stock be lumped in the same category as tobacco companies, arms manufacturers, and people that make land mines," he explained. "Toxic stocks that people do not want to be involved in for ethical and moral reasons.”
Friedmann is acting independently, but his efforts coincide with another campaign to make investors wary of private prison stock. On January 22, the civil rights group Color of Change released a series of emails between their CEO Rashad Robinson and Larry Zimpleman, president and CEO of Principal Financial Group, which controls about $114 million worth of stock in CCA and GEO. Robinson took exception to the fact that Principal touts itself as “one of the world’s most ethical companies” while owning a stake in private prisons. He asked Zimpleman to divest all stock in CCA and GEO or risk a public shaming.
“If Principal wants to keep their money inside the GEO Group and make money off the incarceration of Americans with a disproportionate impact on black folks, that is their right,” Robinson said. “All we’re saying is we’ll no longer let people do that in private. People will publicly know they’re involved.”
'No banks or private equity firms are losing sleep at night because prisoners might be getting raped.'
Principal responded with a public statement that drew particular attention to Color of Change’s stated mission to “strengthen Black America's political voice,” and claimed the vast majority of their private prison investments are “maintained on behalf of clients.” Principal further stated that their CCA and GEO investments are “designed to replicate an index,” a type of fund that mirrors broader trends in the stock market.
Thus far, Principal has refused to budge. A similar divestment campaign by the prisoner-advocacy group Nation Inside targeting “the million shares club” of private-prison investors has enjoyed marginally better success, convincing Wells Fargo and two other firms to sell off their stakes in GEO and CCA.
Paul Wright, editor of Prison Legal News and co-editor of the book Prison Profiteers: Who Makes Money From Mass Incarceration, says divestment campaigns are great for publicity but accomplish little in the way of actual reform. Wright lauds Friedmann for his shareholder actions, but says activists ought to focus on convincing politicians to cut private prison contracts and pass immigration and drug policy reforms that would reduce the number of inmates.
“The only customer private prisons have is the government,” Wright said. “These are elected officials, and [the government] is a more accountable body than a bunch of hedge funds.”
Friedmann has no illusions about the futility of his shareholder resolutions, but says he’s simply trying to raise awareness and force a few Wall Street executives to think twice about the implications of their investment. For most, the potential for profit is too tempting to resist.
“Really, you don’t file resolution with the notion that you’re going to win,” Friedmann said. “The metric you use to gauge success is not that people divest or their stock price is hurt. You do it for publicity and to have something to organize around. Nobody in corporate America gives a crap about the cost of phone calls for inmates. No banks or private equity firms are losing sleep at night because prisoners might be getting raped.”
Since Friedmann purchased his first share of CCA stock, it has split several times, more than doubled in value, and currently pays a healthy dividend.
Follow Keegan Hamilton on Twitter: @keegan_hamilton