James Neal is a short, muscular man with close-cropped hair who has spent the past twelve years behind bars for armed robbery. He is also one of the most valuable commodities to trade hands in Youngstown, Ohio, since the steel industry abandoned the city more than a decade ago. In 1997 Neal was among the first “loads” of inmates bused from the District of Columbia to a new prison run by Corrections Corporation of America, the world’s largest operator of for-profit lockups. CCA stood to make $182 million guarding the prisoners, and Youngstown-area residents lined up to apply for hundreds of jobs with the company. Those who toured the prison before it opened were assured they need not worry about the supply of out-of-state inmates. “If one of them dies,” a company tour guide said, “they’ll send another one.”

The day after Neal arrived, a few of his fellow prisoners argued with guards about their treatment. Although the warden later admitted that no one was in danger and no property was threatened, CCA responded to the inmate complaints by dropping canisters of tear gas designed for outdoor use into four cellblocks. As hundreds of blinded and choking prisoners gasped for air, a team of black-uniformed officers in full riot gear known as the “Goon Squad” handcuffed them, beat them and sprayed them in the face with Mace. “It was kind of like a war atmosphere,” says Neal, wearing a dark-green prison uniform. “You could hear the canisters whistling down and exploding–whump! No life or limb or property was at stake. CCA just overreacted. I thought, ‘Damn, they could have killed me.'”

The excessive use of force proved to be a prelude to stark mistreatment at Youngstown. The medium-security prison was actually taking many maximum-security inmates, and the inexperienced CCA guards were ill prepared to handle the volatile mix. More than twenty prisoners were stabbed in the first ten months, and two died from their wounds. At least seven inmates died from medical conditions, and the company’s own audit showed that the prison provided inadequate care to hundreds of prisoners. After Neal and other prisoners filed a class-action lawsuit over substandard treatment and excessive force, CCA once again ordered the riot squad into the cellblocks, forcing inmates to strip, parade naked in front of female staff and lie on the concrete floors for hours while their cells were searched. “I felt like I was on a slave ship,” Neal recalls. “I never felt anything so humiliating in my entire life.”

Public officials paid scant attention to the abuse of prisoners, however, until the danger began spilling over the razor-wire fence surrounding the prison. Last July six inmates escaped in broad daylight by cutting through the fence–a technique they had routinely practiced in front of guards, snipping the wire to trip the alarms and then running back into crowds of inmates playing softball on a nearby field. After the breakout Ohio Governor George Voinovich called for the prison to be closed and Attorney General Janet Reno ordered a federal investigation.

The abuses at Youngstown are scarcely isolated incidents. Since The Nation reported on CCA last year [see “Prisons for Profit,” January 5, 1998], the company has experienced more than its share of prisoner escapes and brutality by guards. Coming so close together, the repeated misconduct underscores the way private prisons cut corners at the expense of workers, prisoners and the public:

§ The lack of training for guards and the lack of programs for inmates in private prisons exacerbate violence. In Tennessee a prisoner transferred from Youngstown was stabbed and killed last August by another inmate shipped from Ohio. At another prison in Tennessee, CCA covered up abuses of inmates transported from Wisconsin, who were thrown against walls and zapped with stun guns. Eight company employees, including the security chief, were fired after the incident became public. In New Jersey the company improperly restrained and forcibly sedated immigrants awaiting hearings; in Arizona inmates demonstrated at a CCA prison to protest the lack of recreational and educational programs.

§ Lax security at CCA prisons across the country has enabled an unusually high number of escapes. At the company’s South Central prison in Tennessee four prisoners cut through a fence last October with a bolt cutter they received in the mail; a guard who heard the alarm simply shut it off without investigating. In January a convicted killer walked out through the gates dressed in a guard’s uniform given to him by a female employee. A Cuban immigrant overpowered a guard and fled from a CCA lockup in Houston, and a convicted killer in a DC jail run by the company climbed out a window undetected before falling eight floors to his death. Guards did not even notice anything amiss when an unidentified woman loaded the inmate’s body into her car and drove him to a hospital.

Such an inability to handle the most basic function of a prison–keeping prisoners behind bars–seems to suggest that private companies are scarcely the efficient and reliable jailers they claim to be. After fifteen years of privatization, officials still have almost no reliable data to assess whether for-profit prisons are doing their job–or living up to their promise to save taxpayers money. “Only a few of the more than a hundred privately operated facilities in existence have been studied,” a federal report concluded last October, “and these studies do not offer compelling evidence of superiority.”

The lack of evidence hasn’t stopped public officials from turning to private prisons like CCA. The company added more than 18,000 beds last year, thanks in no small part to its generosity. In Wisconsin, which has shipped more than 2,100 inmates to CCA prisons, the governor and six key legislators received $4,000 in campaign contributions from company chairman Doctor R. Crants. In Ohio the governor’s brother received the contract to build the CCA prison in Youngstown.

Such friends in high places have helped CCA profit handsomely from crime. Net income for the first nine months of last year topped $60 million, up 63 percent from 1997. In April 1998 the company bought US Corrections Corporation, its second-largest rival, further securing its hold on the industry. But as competition declines, officials warn, so does the incentive for private prisons to offer competitive contracts. “CCA is so overwhelmingly bigger than everybody else, they’ll win hands down,” says Russell Boraas, who oversees private prisons for Virginia. “That’s not good for the industry, and that’s not good for taxpayers.”

In reality, “CCA” now exists only as a brand name. The company stopped trading on the stock market in January, when it “merged” with a real estate trust it had formed. Prison Realty Corporation essentially operates as a tax shelter, enabling the company to evade paying any corporate income taxes. Under the arrangement, the trust rents its prisons to a management subsidiary run by the chairman’s son. The subsidiary pays as much rent as possible, transforming its profits into tax-exempt “operating expenses” that it pays to the parent firm. The real estate trust, meanwhile, turns almost all of the rent money over to shareholders, thus sheltering its income from taxes as well. The scheme saves the trust $50 million a year in taxes–at the expense of CCA. On May 14 Prison Realty announced it would spend $86 million to prop up its troubled subsidiary. Its stock plummeted, and former shareholders filed a class-action lawsuit.

The real estate trust made out especially well in Youngstown. City officials eager to bring jobs to their depressed valley gave CCA 101 acres of land, free utility hookups and a five-year tax abatement for the prison. The company then sold the facility to the trust, pocketing $70 million. “This shows what private prisons are all about: profit,” says Robert Hagan, a state senator from Youngstown. “That prison is nothing but a gulag.”

The CCA prison in Youngstown stands on a hillside once home to several thriving steel-related industries. The area is now home to four major new prisons and a host of jails. “Prisons have become Youngstown’s new economic base,” says labor historian and activist Staughton Lynd. “It’s so pathetic to see this working-class town, which has quite a proud history of militant unionism, become one more rural backwater living off the presence of prisons.”

Like other nonunion operations, private prisons make most of their money by hiring fewer people and paying them less. Former guards say two-thirds of the Youngstown officers never worked in corrections before, and starting wages were $1,300 a year less than those of their counterparts at state-run prisons. “They don’t care about the corrections officers, and they don’t care about the inmates,” former guard Daniel Eshenbaugh told the Cleveland Plain Dealer. “Everything there is about money.” Another former guard explained how CCA got workers to take food from inmates to boost profits. “They gave us a rundown saying two slices of bread per inmate costs this much,” he said. “If you can cut corners here, it would mean a possible raise for us.”

While Youngstown represents some of the worst abuses at CCA prisons, it is also the scene of the biggest victory for inmates since privatization began. On April 20 a federal judge in Akron approved a landmark settlement of the class-action lawsuit filed by prisoners. The company has agreed to make cash payments of up to $1,000 to every inmate and create a common fund to settle claims by those with serious injuries–for a total of $1.65 million, the second-highest award ever paid to inmates in a class-action lawsuit. Even more startling, the prisoners were joined in their suit by the City of Youngstown, which will now employ two independent monitors to oversee conditions and medical treatment at CCA. The monitors have the power to order the warden to fix inadequacies and to fine the company if it fails to act.

“This is the first serious attempt to develop a way to hold a private prison accountable,” attorney Al Gerhardstein said before the judge approved the settlement. “The inmates and the city are working together to hold them to the level of staffing and medical care and programs they promised. That raises a question: If you refuse to wink and let them get away with abuses as long as they come in under budget, can they still make a profit?”

Some activists feel the settlement doesn’t go far enough. “We need to shut private prisons down,” says Lynd. “The care and rehabilitation of prisoners is not consistent with the profit motive.”

But until profiteering from prisons is stopped, inmates welcome any step that reins in firms like CCA. “They run this place like GM or Ford,” says James Neal, who urged the judge to approve the settlement. “It’s like the defects in the Pinto. A $12 piece of steel would have corrected the problem, but their accountant showed it was cheaper not to fix it, even if people burned to death. That’s the same way CCA runs prisons. If someone gets killed, so what? They just pay the family and give them some roses. They’ll still be making millions off of misery.