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OpEdNews Op Eds    H3'ed 3/28/09

High Crime - and Profit - in Jailing Kids: Monopoly Capitalism at Work

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I have long been enraged by the idea of for-profit corrections facilities. It is just not a good idea to make locking people up (or detaining them) profitable. In a capitalist system such as the U.S., profit becomes king - ruling over all other consideration. This is something we have seen a lot of lately. However, a case in point is the Pennsylvania corruption case that has resulted in overturning hundreds of juvenile convictions. The short version of the story is that two (and perhaps more) Luzerne County PA judges (Mark Ciavarella and Michael Conahan) received $2.6 million for sending juveniles who came before them to private juvenile facilities. They have plead guilty to fraud and conspiracy charges. However, while the short version is shocking, tracking down the details is educational. The Longer Story The two judges involved, did not just take kickbacks for sending juveniles to private "kiddie prisons." In 2002, Conahan, then president judge of Luzerne County, had shut down the county facility, and signed an agreement to send juveniles to PA Child Care LLC (AP). Then Conahan and Ciavarella, started sending a disproportionate (compared to other juvenile court judges - 25% compared to 10%) number of juveniles to two private facilities - PA Child Care and Western PA Child Center. So the two judges received the $2.6 million from 2002-2008. Now PA Child Care and Western PA Child Care are owned by Mid-Atlantic Youth Services. The owner of Mid-Atlantic is one Gregory Zappala. Zappala is also an attorney (among other things). The "other things" makes for interesting reading. Gregory Zappala is the son of former state Supreme Court Justice Stephen A. Zappala. Aside from being an attorney himself, he was also the head of a municipal financing company RRZ Public Markets - later purchased by JP Morgan (Pittsburgh City Paper). Zappala is also connected to Bush Jr.'s "go to guy" Tom Hardiman - who married into the well-connected (democratic) family.
Side Note from Lord article: (Hardiman) met Lori Zappala, who would become his wife, bring him to Pittsburgh -- and give him instant entre'e into the legal and political circles that have made him a nominee for judge. Lori Zappala is the daughter of Richard A. Zappala, whose real-estate interests include the McIntyre Square shopping center in Ross Township. Her uncle is former state Supreme Court Justice Stephen A. Zappala, whose son and namesake is Allegheny County's district attorney. Another of the former justice's sons, Gregory Zappala, headed up municipal financing firm RRZ Public Markets, until it was purchased by New York-based JP Morgan Chase & Co. in February. Hardiman married into the politically connected, heavily Democratic clan...
In the purchase of RRZ, Gregory Zappala became JP Morgan's VP of Pennsylvania operations. One has to think that the well placed Zappala was part of the reason for the "no questions asked" investment by Pennsylvania educators in JP Morgan.
Schools Flunk Finance: Education officials in Erie and Bethlehem, Pennsylvania, were so impressed with the quantitative skills of JPMorgan and Morgan Stanley that they bought interest-rate swaps without ever knowing the price. That cost taxpayers millions of dollars for the errant financings. ... David DiCarlo, an Erie-based JPMorgan Chase banker, told Barker and the school board on Sept. 4, 2003, that all they had to do was sign papers he said would benefit them if interest rates increased in the future, and the bank would give the district $750,000, a transcript of the board meeting shows. "You have severe building needs; you have serious academic needs," Barker, 58, says. "It's very hard to ignore the fact that the bank says it will give you cash." So Barker and the board members agreed to the deal. What New York-based JPMorgan Chase didn't tell them, the transcript shows, was that the bank would get more in fees than the school district would get in cash: $1 million. The complex deal, which placed taxpayer money at risk, was linked to four variables involving interest rates. Three years later, as interest rate benchmarks went the wrong way for the school district, the Erie board paid $2.9 million to JPMorgan to get out of the deal, which officials now say they didn't understand. ... During the past four years in Pennsylvania alone, banks have pitched at least 500 deals totaling $12 billion like the one JPMorgan Chase sold to Erie, according to records on file with the state Department of Community and Economic Development. Most of the transactions--which occurred outside the state's largest cities of Philadelphia and Pittsburgh--have been made without public bidding, which means that banks and advisers privately arranged the deals with small school districts, the records show. (I recommend reading the whole article)
Indeed, JP Morgan did well with Zappala at the helm of the Pennsylvania "operations." The very busy Zappala was also a partner with Gladstone Partners, L.P. which is trying to get an cargo-capable airport built in Hazle Township, Luzerne County. The proposal received a "Conditional No Objection" from the FAA in May 2007 (Bond Buyer). The Zappala family is obviously a big player in Pennsylvania, and Greg Zappala is no exception. He has contributed politically personally, and through his companies, to both Republican, and Democratic campaigns. It does not appear that he contributed to the Biden Presidential campaign; however, there is a Charles Robert Zappala who was listed as a Congressional Staffer for Biden in 2005 and 2006. Summing Up The story of the kids summarily sent to private detention centers for profit is a case study in power, money, and its abuses. Just as Bernie Madoff bilked his friends and those who trusted him of billions of dollars with apparently no qualms, Zappala and Judges willing threw aside any care for the juveniles who were shunted into for-profit facilities. Just as Wall Street and big finance went on an exploitation scheme that we may never know the full extent of. One and all, they are reflective of a perverse system where people's lives are below consideration. The U.S. public has been told for decades that "What's good for business is good for us." We have been fed a line that "Government is bad and business is good." We have been told that "Government is inefficient and business is efficient." So we were sold a bill of goods to privatize as much of government as we could, and private corrections are right up there at the top of the list. As the Pennsylvania situation shows, "corrections" can be very profitable indeed. However, that does not mean that is a cost saver for the public. It does mean that there are incentives to throw away important considerations - like people's lives, worker safety, environmental protections, troop safety - so more money can be made. In the corrections arena this translates into more people incarcerated for longer periods of time - because there is more money to be made that way. So we get the constant spin of crime out of control and "let's get tough on criminals." We take away discretionary sentencing and put in mandatory sentencing. We say "lock them up forever" with the "three-strikes" law. So the incarcerated population grows, and the cost grows, The "solutions" we are offered are to undercut prisoners detainment facilities (decrease health care, education, even prisoner population limits), force prisoners to "work" for their keep, and privatize, privatize, privatize. Of course this means that private facilities get to stack prisoners on top of each other, decrease staff training, and use the incarcerated population as a low wage captive workforce. Meanwhile, they also collect from the government for each prisoner for the duration of their incarceration. A nice deal for the corporations, though perhaps not what the public thought they were signing onto. The "game" is rigged, and the sooner people quit buying into the lies the more likely we will get to a reality-based life. Aside: I am vehemently against the death penalty, and am heartened that it is finally coming under serious questioning by the states. However, life imprisonment in a privatized prisons scenario makes me wonder at the sudden change of heart. This is particularly true since it is being said that it is "cheaper" to keep someone for a life sentence than it is to execute them. Cheaper for whom? Profitable for whom? Court Documents: PA Childcare LLC v Stephen Flood, Thomas Crofcheck and Leonard Pocius - regarding release of audit of PA Childcare. (2005)
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Rowan Wolf is an activist and sociologist living in Oregon. She is the founder and principle author of Uncommon Thought Journal, and Editor in Chief of Cyrano's Journal Today.

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