Friday, November 3, 2017

Disney Gets Down

The Walt Disney Co. (DIS) has gone "rogue" in the way it intends to roll out "The Last Jedi" as evidenced by the abnormally "onerous" terms that it is mandating upon theater owners across the country in connection with the much-anticipated December 2017 release.  The Wall Street Journal reports that Disney is contractually requiring the following: (a) a 65% cash return from ticket sales from all theaters showing the sure-to-be blockbuster (the industry norm is a 55-60% return); (b) a four-week commitment to mandatorily show the motion picture in a theater's largest-seat auditorium (rankling competing studios that will release their own hoped for blockbusters in the weeks following "The Last Jedi"); (c) requiring no cancellations of any advertised show time; and (d) a 5% return "penalty" on any theater owner that breaks the mandatory terms (for example not showing The Last Jedi in the largest-seat auditorium) driving the potential cash-on-ticket sales return up to 70%.  Disney has become a motion picture juggernaut in recent years, with its acquisition of the LucasFilm franchise in 2012 and the Marvel Comics line in 2009. 

While some corporations might be reticent to require such onerous terms upon a motion picture release, Disney now commands 26% of the motion picture market share (as compared to the second-place Time Warner Inc's Warner Bros. at 17%) and can demand such terms if theater owners want to play ball.  Such "onerous" terms make little sense for small theater owners in small-town America, some of whom are choosing to pass on booking "The Last Jedi."  Per the WSJ article "Disney Lays Down the Law for Theaters on 'Star Wars: The Last Jedi':

"Few operators can afford to turn away a Disney windfall.  But some independent theaters have decided against screening 'Last Jedi' when it is released, saying the company's disproportionate share of ticket sales and four-week hold make little economic sense--especially in small towns.  'There's a finite number of moviegoers in my market, and I can service all of them in a couple of weeks,' said Lee Akin, who operates a single-screen theater in Elkader, Iowa (population: 1,213)." 

image courtesy of Wikimedia Commons/
"If he were to sign up for the movie under Disney's terms, Mr. Akin said he would be stuck playing "Last Jedi" to near-empty auditoriums toward the end of a monthlong run while still giving Disney 65% of those paltry sales.  The studio is applying the 65% split across all weeks of the film's release, rather than some studios' practice of beginning a split at a high figure then lowering it in subsequent weeks.  'When [studios] get much bigger than the other guys, that's when all these wacky rules come into place,' said Mr. Akin."

From a contract law and corporate law perspective, Disney is doing its thing by seeking to wring every possible profit avenue out of its upcoming Star Wars release.  From a business perspective is this always the best strategy?

hat tip:  Bryan Higgins, 1L, The John Marshall Law School

Friday, October 20, 2017

Race & Policing: Defining the Problem and Developing Solutions

At the Drexel University Thomas R. Kline School of Law a Symposium will be held on Friday, October 20, 2017 entitled "Race & Policing: Defining the Problem and Developing Solutions" sponsored by the Drexel Law Review.  The Symposium description provides:

"From Ferguson to Chicago to Baton Rouge, the deeds of police and their lack of accountabiliy have sparked outrage and fueled a modern day civil rights movement.  Each death, from Eric Garner to Philando Castille, has shone a spotlight on the intersection of race, policing and the criminal justice system.

This Drexel Law Review Symposium will gather scholars and practitioners at the forefront of exploring anti-black policing, the school-to-prison pipeline, and the ethics of punishment.  Speakers will turn a legal lens on police practices from the time of slavery to contemporary tactics that include no-knock warrants to stop-and-frisk and the excessive use of force.

The program will map out strategies for addressing and reversing troubling trends in race and policing, pointing to new directions that promote a more just path forward."

Tuesday, May 2, 2017

Former Officer Slager Pleads Guilty

Former police officer Michael Slager, who shot and killed Walter Scott, an unarmed black man, in the back as he was running slowly away in North Charleston, South Carolina, pleaded guilty today to violating the slain man's civil rights.  Then Officer Slager was caught on a cell phone camera gunning down Walter Scott as he ran slowly away.  Thereafter, the video shows Slager walking over to the lifeless body and dropping his taser next to the motionless Scott before calling dispatch and reporting that Scott had wrestled with him for his taser causing Slager to fear for his life as justification for shooting the unarmed Scott in the back.

This incident created a national firestorm when it occurred representing one of the many instances in 2016 where unarmed black men were shot and killed by law enforcement officers across the United States.  The Corporate Justice Blog has reported on these many instances opining that this loss of human capital and the lawlessness exhibited by these law enforcement officers stymies confidence in U.S. law and order and contributes to the extremely difficult relationship that exists between African American communities and state and national law enforcement agencies.  In a recent article, Lord Forgive Me but He Tried to Kill Me: Proposing Solutions to the United States' Most Vexing Racial Challenges, I discuss this deep level of distrust held by black and brown communities toward law enforcement officers.  I propose significant and powerful reforms in both police training and police hiring in the article as well as suggest that deadly force law across the United States' be changed from a standard of "fear for life" to a standard of "preserving human life at all costs."

The New York Times reports:  "More than two years after a North Charleston, S.C., police officer fired eight rounds to the back of a fleeing and unarmed black motorist whose burst of gunfire was recorded on video, the officer stood in a federal courtroom on Tuesday to plead guilty to charges that he violated the slain man’s civil rights.  The plea by the officer, Michael T. Slager, assured a rare conviction of a law enforcement official for an on-duty killing, and it left him facing the possibility of life in prison for the April 2015 shooting of Walter L. Scott. Mr. Slager pleaded guilty to a single charge of willfully using excessive force to deprive Mr. Scott of his civil rights."

Sunday, April 2, 2017

The Corporatization of Criminal Justice

On April 14, 2017 at the Arizona State University Sandra Day O'Connor College of Law, a symposium will be held entitled "The Corporatization of Criminal Justice."  The conference will bring together panelists and keynote presenters from across the nation and world consisting of scholars, attorneys and advocates working on the pressing issue of the role of private for-profit prisons in mass incarceration and immigration detention.  The conference seeks to address a broad range of questions, including how the profit-motive of private prison corporations influences the length and severity of sentences and availability of parole, how private prisons and mass incarceration disproportionately impact communities of color and how private prisons contribute to social inequality and oppression.  This event will examine the corporatization of the criminal justice system writ large, examining prisons, parole, immigration detention, bail and probation.

The event keynote speaker is Benjamin Jealous, former President and CEO of the NAACP.  Other speakers include Marie Gottschalk, Gilad Barnea, Rashad Shabazz, Paul Bender, Yolanda Vasquez, Donald Tibbs, Hadar Aviram, Alex Friedmann, Yvette Lindgren, John Dacey, and dré cummings.  Presenter biographies are available here.

The event is available to attorneys for CLE credit (Arizona and California) (register here) and is free for the general public.  The conference schedule is

Together with ASU Law, this event is being sponsored by:  Abolish Private Prisons, Carolina Academic Press, American Constitution Society, Changing Hands Bookstore, and the law firm of Osborn Maledon.

Wednesday, March 15, 2017

The Case for the Corporate Death Penalty

Corporate Justice Blog contributor Steven Ramirez, together with his co-author Mary Kreiner Ramirez, have just released their new book The Case for the Corporate Death Penalty: Restoring Law and Order on Wall Street.  I was fortunate to review the manuscript of this book prior to publication and it is a breathtaking read.

Professors Ramirez and Ramirez painstakingly describe the many and various frauds perpetrated by corporate executives leading up to the housing market crisis of 2008 and wonder aloud why the Obama administration failed to bring criminal fraud charges against any of the corporate leaders that collapsed the global economy in 2007 and 2008.  Publisher's Weekly reviewed the book as follows:

"This is a thought-provoking call for the prosecution of criminal bankers--and investigation into why such prosecution has not yet occurred--from two who should know: Mary Kreiner Ramirez, a former prosecutor for the Department of Justice Antitrust Division, and  . . . Steven A. Ramirez, a former SEC enforcement attorney.  They charge that in a "historically unprecedented breakdown in the rule of law," the U.S. government failed to prosecute the people at the center of the 2008 financial crisis, opting instead for a huge civil payment from shareholders.  Providing some historical context, the authors demonstrate that never before in modern U.S. history have white-collar criminals enjoyed such immunity."

Inexplicably, the Department of Justice and the Obama administration have been satisfied to see Wall Street leaders agree to hundreds of millions of dollars of civil penalties for misleading investors (i.e., fraud), paid out of corporate coffers (shareholders value) rather than pressing criminal prosecutions against these leaders for engaging in fraudulent corporate behavior.  The Case for the Corporate Death Penalty describes that unlike the federal government during the Savings and Loan scandal and the Enron-era scandal, this time the government did not have the steel/backbone to prosecute Wall Street.

Sunday, January 1, 2017

Happy New Year

photo courtesy of Wikimedia Commons

We wish all of our readers, followers, contributors, and commentators a happy and healthy 2017.  As always, it is our hope that 2017 will lead to saner and fairer economic polices across the nation and across the world so that crushing economic inequality becomes a distant memory.  Here is to a fabulous 2017.

Tuesday, November 1, 2016

Will Social Benefit Corporations Be Our Future?

     Morgan A. Cline is a student in my Corporate Governance seminar.  She wrote the following post regarding Benefit Corporations:

Who does a corporation owe responsibilities and duties to? Corporations that embrace social responsibility want to increase profits to satisfy their shareholders, while giving back to communities, and improving society as a whole. In today’s world, being green or environmentally friendly, is not only seen as a lifestyle, but many companies are seeking to change the way in which their business is conducted to be socially responsible. Familiar companies such as Kickstarter, Patagonia, Warby Parker, and even Ben & Jerry’s have entered the do-good realm. In fact, state legislation has been introduced, in which a new legal entity may be incorporated as a benefit corporation.
            Lynn Stout, a Corporate and Business Law professor at Cornell Law School, argues that, “shareholder primacy is a ‘myth.’” Stout’s book, The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public, opposes the well accepted idea that corporations are required to, “maximize shareholder value.” Alternatively, individuals such as Leo E. Strine, Jr., of the Delaware Supreme Court, have argued that it is, “not only hollow but also injurious to social welfare to declare that directors can and should do the right thing by promoting interests other than stockholder interests.”
            Numerous articles interchange the labels, “Benefit Corporation,” and “B Corp.” While both have similar goals, they are in fact, separate models that have specific distinctions. B Corp is a certification awarded to companies that have been certified by B Lab. B Lab was founded in 2006 by a group of founders with the goal to, “build a global community of Certified B Corporations who meet the highest standards of verified, overall social and environmental performance, public transparency, and legal accountability.” In order to meet certification, there is a performance Assessment. In addition, there are legal requirements in which it may be necessary to amend the governing documents and/or adopt benefit corporation status to meet legal requirements for some states.
            Although B Lab has made major growth within this certification process, they have also been working towards the larger goal of changing legislation overall. In 2010, the beginning stages of this goal were reached, when Maryland became the first state legislature to pass a Benefit Corporation Act. This new law has allowed corporations to ensure that their, “mission-driven businesses are held accountable and operate transparently.”  This is done by filing annual reports, which specify their social impact. In addition to increasing profits, when corporate leaders are making decisions, their fiduciary duties now require them to consider the social and environmental impact that they may have. Since 2010, 30 other states and the District of Columbia have passed similar legislation in order to recognize Benefit Corporations. While most of these state statutes are similar to Maryland’s statute, others have made deviations. For example, Connecticut allows business owners the choice of, “legacy preservation.” This option provides that despite change in the ownership of a company or the structure in which it may operate, the corporations overall mission to positively impact society, will remain.
            Arguably, society is benefitting from the new social approach of incorporation and certification available to companies. While skeptics argue that benefit corporations are not succeeding in their goal of large-scale societal impact, there can be no argument that the mission of these corporations to have a larger influence is commendable.

For further information about the differences between a Benefit Corporation and a B Corp, please see this helpful chart.

Monday, October 17, 2016

Homeland Security to Review Use of Private Prisons

photograph courtesy of Bob Jagendorf/wikimedia commons
On the heels of the United States Department of Justice announcing that it will end future use of private for-profit prisons based on the failure of these prisons to deliver promised efficiencies and safe conditions, the Department of Homeland Security has recently announced that it too will review its use of private prisons.  With Homeland Security using private prison facilities as immigration detention centers, the profit motive for private prisons has inspired a wave of crimmigration laws in recent years.  Once again, this review is bad news for private for-profit prison giants Corrections Corporation of America (CCA) and the the GEO Group as federal contracts for prisoner warehousing is a large part of their business and profit model.

According to the Wall Street Journal: "The Department of Homeland Security will review whether private prison operators will continue to run immigration and customs enforcement’s immigration detention centers, the latest sign that the federal government is turning away from using these private contractors.  The move comes 11 days after the Justice Department said it planned to eventually stop using private facilities and operators to house federal prisoners.  Homeland Security Secretary Jeh Johnson said Monday that he directed an internal council to determine whether the use of private immigration detention centers should be eliminated."

As federal contracts have increasingly made up a larger and larger portion of the GEO Group and CCA's revenue, a future finding by Homeland Security that it will end its reliance on private prison facilities would be a devastating blow to those companies and shareholders that seek to profit off of the incarceration business.  Again, according to the Wall Street Journal:  "Since 2001, GEO and Corrections Corp. have become increasingly reliant on federal government revenue to drive results. In 2015, just over half of Corrections’ revenue came from various federal government agencies. For GEO, that figure was 45%." 

Stock prices for both companies dropped (even further) on the news of the Homeland Security review.

Thursday, October 13, 2016

Trump Treason?

For example, recently more allegations that Trump committed serious crimes surfaced. Newsweek ran a story by renown investigative journalist Kurt Eichenwald that Trump violated the US embargo against Cuba in the 1990s, as shown in its cover, above. Given ever increasing findings and allegations of pervasive legal violations throughout Trump's adulthood, these new allegations threatened the political viability of Trump's candidacy. At a certain point even Trump faces political extinction for unlawful wrongdoing. In any event, apparently the Russians concluded it could hurt Trump's chances and they hacked Newsweek
According to author Kurt Eichenwald: "Hackers attacked, took site down. Lots of IP addresses involved. Main ones from Russia." We cannot know for certain if Russia is behind this cyber attack. However, the FBI already announced that it is investigating a number of attempts to hack into state election systems and it is looking into "what mischief is Russia up to in connection with our elections." Further, according to Time:  "[the] U.S. intelligence community has 'high confidence' that Russian intelligence services were in fact responsible" for the DNC hack earlier in the summer. Finally, the intelligence agencies apparently briefed Trump on this fact and yet he insists on deflecting responsibility from Putin and Russia. Russia has a long history of interfering with elections in other nations. Even GOP senators privy to classified information now openly proclaim that Russia is directly attacking our democracy and trying to hack the election on behalf of Trump.

The entire (16 agencies) US Intelligence Community says:
The U.S. Intelligence Community (USIC) is confident that the Russian Government directed the recent compromises of e-mails from US persons and institutions, including from US political organizations. . . .These thefts and disclosures are intended to interfere with the US election process. Such activity is not new to Moscow—the Russians have used similar tactics and techniques across Europe and Eurasia, for example, to influence public opinion there. We believe, based on the scope and sensitivity of these efforts, that only Russia's senior-most officials could have authorized these activities.
In other words: our top intelligence agencies consisting of patriotic Americans of all political stripes is outing Vladimir Putin for trying to corrupt our democracy and hack our presidential election. In fact, a key Putin ally today stated that if America does not vote Trump we face nuclear war. This is a serious threat to our democracy and an act of war, pure and simple.

And Donald Trump, for mysterious reasons, seems to be taking the Russian sideFor the first time in history, a candidate for the White House appears to flirt with possible treasonous behavior under federal law (as well as possible violations of other national security laws), by helping to cover-up these attacks. Indeed, he seemingly parrots Russian propaganda.

Obviously, only a jury can convict Trump of any crime, and thus far the Department of Justice refrains from any type of public criminal investigation. Nevertheless, the disturbing facts emerging this past few weeks raise serious questions of just what is going in this election as a result of the Trump "bromance" with Vladimir Putin.
18 USC section 2381 defines treason as follows:
Whoever, owing allegiance to the United States, levies war against them or adheres to their enemies, giving them aid and comfort within the United States or elsewhere, is guilty of treason and shall suffer death, or shall be imprisoned not less than five years and fined under this title but not less than $10,000; and shall be incapable of holding any office under the United States.
The courts long ago applied this provision to aiding "enemies" even without a formal declaration of war, during the Civil War. Still, in order to be an enemy, there must be "open hostility" with the United States. So, Russia may or may not be an enemy for purposes of this statute, but the hacking of our democracy seems openly hostile to me. That could suffice in the eyes of the law given the manifest and grave dangers cyber-warfare may pose. And, during WWII, the statute was applied to seemingly innocuous conduct such serving as a broadcaster of enemy propaganda

Trump's misconduct could constitute "aid and comfort." First, Trump actually invited the Russians to hack Hillary emails. Second, he seems intent on spreading Russian disinformation to cover up Putin's hacks. If Trump continues to invite hacking against his political opponents, and assist in misleading the voting public regarding the source of these cyber-attacks, then he is aiding in such attacks and violates the above statute.  Professor Laurence Tribe at Harvard Law articulated this view even before the recent evidence of increasing hacking attempts emanating from Russia. Treason is no joking matter, and it carries the death penalty because loyalty to the US is the least demand made upon a US citizen.

Why is Donald so over-the-top pro-Russian? Even his own VP candidate, Mike Pence disagrees with his extreme pro-Russian views. It seems the only thing constant about Trump's campaign is its unfailing support for all things Putin and Russian.

In the end, perhaps this is a political question rather than a criminal matter. Nevertheless, the American people deserve an explanation and all should withhold their votes from Trump until one is forthcoming. He needs to fully disclose all elements of his relationship with Russia and its oligarchs. Until then it could not be clearer that a vote for Trump is a vote for Vladimir Putin, and his neo-imperial agenda to restore the Soviet Empire.

Trump is simply determined to help Putin however and wherever possible, and Putin seems willing to do whatever takes to elect Trump. Why?

Saturday, September 24, 2016


Earlier this month, I warned about the possibility of non-transparent influence of Russian oligarchs and Russian dictator Vladimir Putin on Donald Trump under Citizens United. I argued that Trump could easily benefit from money flowing from Russia into his pockets and allow Russian militarism to run amok. This post focuses on that concern as well as our failure to secure our elections from computer hacking as I proposed in this law review article. The fear is that Trump will further the geopolitical ambitions of Vladimir Putin to the great detriment of long term US interests. A former CIA Director views Trump in precisely the same light, as do many mainstream conservative Republicans, as manifest here, and in the above image, from here. A Trump victory poses the unprecedented threat that a dictator could seize control of American foreign policy and politically defeat our armed forces that otherwise cannot be defeated.

Recent news spotlights the heightening of that concern.

First, media outlets reported yesterday that the US intelligence community is probing whether Trump foreign policy adviser Carter Page (a former Moscow-based investment banker with investments in Gazprom) already opened discussions about lifting US-led sanctions with high level Russian agents and officials. This sort of tampering with US foreign policy on behalf of a dictator by a presidential campaign stands without precedent in US political history. Worse, the Trump effort appears to seek the patronage of Putin's vast arsenal of dirty political tricks, including his hacking capabilities (discussed further below). Of course, Trump has long called on the US to ally itself with Russian efforts to maintain its client state in Syria.

Second, earlier this week, ABC News reported its investigative findings into Trump's Russian business ties. They uncovered "hundreds of millions of dollars" flowing from Russian business interests into the coffers of Trump, Inc. Trump benefits directly from these Russian business ties through sales concessions paid to him as a result of Russian purchases of Trump-sponsored properties. ABC News also found that many Russian oligarchs frequently furnish investment capital for Trump business. Russian business leaders openly admit to these connections:
"The level of business amounts to hundreds of millions of dollars -- what he received as a result of interaction with Russian businessmen. They were happy to invest with him, and they were happy to work with Donald Trump."
Donald Trump, Jr., also openly admitted to these same links in 2008: "Russians make up a pretty disproportionate cross-section of a lot of our assets. We see a lot of money pouring in from Russia." At this point, it is beyond dispute that Trump has major business ties with Russian business interests. These findings directly support conservative columnist George Will's position that Trump refuses to produce his tax returns because they would reveal unflattering ties with Russia.

Third, high level US Congressional leaders, from both parties, with access to classified material, recently warned that Russia appears poised to hack American democracy itself to get Trump into office. Vice-Chair of the Senate Intelligence Committee, Senator Dianne Feinstein, and the Ranking Member of the House Intelligence Committee, Adam Schiff, released the following joint statement:
"Based on briefings we have received, we have concluded that the Russian intelligence agencies are making a serious and concerted effort to influence the U.S. election. At the least, this effort is intended to sow doubt about the security of our election and may well be intended to influence the outcomes of the election. We can see no other rationale for the behavior of the Russians."
In short, the axis of interests between Trump and Putin now poses an unprecedented external threat to the security of the US and its citizens. Even in the Election of 1940, which I previously identified as the last concerted effort by a dictator, Adolph Hitler, to interfere with American politics, Hitler had neither the capabilities nor brazenness to pull off what Putin and Trump appear to be doing: the subversion of US democracy and defense capabilities in the service of a dictator.


Friday, September 23, 2016

Corporate Justice

Hot off the presses, a new coursebook for law school classrooms entitled "Corporate Justice" has just been released by the Carolina Academic Press authored by blog contributors Todd J. Clark and andré douglas pond cummings.  This coursebook offers an alternative approach to traditional Corporate Law courses.

“Corporate justice” refers to a shared responsibility, even a moral obligation, between corporate decision makers, shareholders, external organizational constituencies, and society to ensure that the corporate decision making process is fair, civil, responsible, and just. More than that, corporate justice requires that corporations do no harm in their pursuit of profits and that shareholders as well as society in general have an affirmative responsibility to facilitate this pursuit. Corporate justice expects that founders, stakeholders, and executives in a business will honor human potential and eschew profits when such derive from unfairness, inequality, danger, and damage. This book explores each of these themes in depth, providing an insight practically non-existent in corporate law textbooks and treatises available today.

The book is available at the Carolina Academic Press site.

Saturday, September 3, 2016

Trump, Putin, Hitler & Citizens United

The election of 1940 functioned as a referendum on US participation in WWII and the willingness of the US to defend western democracy as well as capitalism itself. FDR staked out a powerful anti-Hitler position. The rather farsighted measures he implemented to assure US survival prior to that fateful election include: 1) the Two Ocean Navy Act, the largest naval procurement act in US history which assured US naval dominance throughout the war and was signed into law on July 19, 1940; 2) the first peacetime conscription act which FDR signed into law on September 16, 1940;  and 3) agreeing in September of 1940 to trade 50 old navy destroyers to Great Britain (already at war and suffering daily bombing from the Luftwaffe)  in exchange for bases around the world. Hitler had no doubt that FDR was a foe to be reckoned with.

Image result for 1940 election amid a stormConsequently, Hitler possessed a strong incentive to try to influence the election of 1940 and history proves he did exactly that. William Shirer reported from Berlin at the time that the Nazis "ardently wished" that the GOP would triumph in the election of 1940 giving them time to overrun Europe before America could reverse the tide as they did in 1918. Due in part to recent books on the topic, we now know that Nazi operatives in the US solicited Hitler's government to fund ads in the New York Times to persuade American voters to stay out of the European conflict that was at full boil after the invasion of Poland in September 1939. Such ads ultimately appeared in the Times during the GOP convention in June of 1940. Further, Nazi Germany funneled $160,000 ($2.7 million in 2016 dollars) to defeat pro-Roosevelt democrats and to stop Roosevelt himself at the Democratic convention through William Rhodes Davis. Fortunately, Hitler's effort to defeat Roosevelt in the election of 1940 failed and the US once again destroyed the irrational autocrats of Europe.

This Nazi effort in 1940 counsels us today to exercise vigilance over the possible foreign influence over our elections and democracy. Unfortunately, the Supreme Court essentially gave all money--domestic or foreign--the green light to subvert American democracy in the Citizens United decision which today figures as a major Achilles heel in our national defense. Justice Kennedy basically invited any foreign autocrat to spend unlimited funds (through domestically domiciled corporations) to defeat our nation, which even Vladimir Putin admits cannot be defeated on the battlefield.

As a direct result of Justice Kennedy's decision to throw his weight behind big money we now need to fear foreign threats as never before. Autocrats like Putin no doubt understand that Justice Kennedy's ruling allows foreign dictators to use Citizens United to turn the Constitution into a suicide pact. They simply funnel their cash through a US corporation that does not coordinate with a candidate's campaign and they can spend unlimited funds to install a friendly government in Washington DC. Justice Stevens predicted all of this in his dissent in Citizens United highlighting that the majority's opinion in Citizens United opened the door to foreign controlled corporations.

This issue of opening the door for foreign enemies to influence US elections has not gone away since Citizens United. Federal Election Commissioner Ann Ravel tried earlier this month to cut back foreign election influence. She states that foreign influence over our elections poses a threat that was unthinkable a decade ago. 

Which brings us to the strange and unprecedented relationship between Presidential nominee Donald Trump and Vladimir Putin. According to the Washington Post (banned from press credentials by the Trump Campaign):
"The overwhelming consensus among American political and national security leaders has held that Putin is a pariah who disregards human rights and has violated international norms in seeking to regain influence and territory in the former Soviet bloc. In 2012, one year before Trump brought his beauty pageant to Moscow, then-Republican presidential nominee Mitt Romney called Russia the United States’ top geopolitical threat — an assessment that has only gained currency since then."

Trump has deep ties with Russia. His son Eric Trump admitted that Russian money has flooded into Trump investments: "Russians make up a pretty disproportionate cross-section of a lot of our assets. We see a lot of money pouring in from Russia." On the issue of Russia's military aggressions into the Crimea and the Ukraine, Trump simply parrots the Kremlin's party line. Trump has been castigated by GOP leaders as well as others for weakening NATO in accordance with the very high priority that Russia has to divide the western allies. Conservative columnist George Will suspects that if Trump released his tax returns (like all other Presidential candidates) they would show even more financial connections to Putin. A former CIA Director suspects that Trump is already acting as an unwitting Russian agent.

Despite Putin's nasty conduct Trump has curried his favor just as he has with other dictators. Indeed, North Korea has officially endorsed Trump for president. Trump reportedly has directly solicited foreign campaign contributions.

Trump's candidacy thus poses a serious national security threat to the US without precedent. Hopefully, American citizens will disregard all super-PAC spending in favor of Trump for the simple reason that it could all be funded through foreign dictators that wish us ill, and seek to destroy America's traditional role as opponent of autocrats and dictators. If money pours into this election in favor of Trump it is likely to be from some foreign dictator.

Thursday, August 18, 2016

Department of Justice Will End its Use of Private Prisons

The United States Department of Justice announced today that it no longer intends to house federal inmates in private, for-profit prisons.  The DOJ cited its own study finding that private prisons "simply do not provide the same level of correctional services, programs, and resources; they do not save substantially on costs; and as noted in a recent report by the Department's Office of Inspector General, they do not maintain the same level of safety and security."  In a memo released by Deputy Attorney General Sally Q. Yates, federal prison officials were directed to no longer renew contracts with private prison corporations, like the Corrections Corporation of America and the GEO Group, or to significantly reduce the scope of the contract with the end-goal of eliminating federal use of private prison facilities.  According to Deputy Yates' release:  "Today, I sent a memo to the Acting Director of the Bureau of Prisons directing that, as each private prison contract reaches the end of its term, the bureau should either decline to renew that contract or substantially reduce its scope in a manner consistent with law and the overall decline of the bureau’s inmate population.  This is the first step in the process of reducing—and ultimately ending—our use of privately operated prisons."

This is clearly not good news for CCA, the GEO Group, and other for-profit private prison operators.  The federal government had steadily supplied prisoners to these profit centers for the past decade as mass incarceration overwhelmed good moral and fiscal judgment in the United States.  In fact, CCA and GEO Group stock plunged nearly 40% upon the news today.  CNN reports: "[A]dvocates for prison reform believe this could be the beginning of the end for private prisons. Wall Street appears to agree. The stocks of two of the largest private prison operators fell dramatically after The Washington Post reported the news. Corrections Corporation of America (CXW) lost 40% of its value Thursday. Geo Group (GEO) also slumped about 40%" 

The Street reports:  "Shares of private prison operators have plunged to new lows for the year on steep declines Thursday following the [DOJ's] decision to effectively end contracts with those companies. . . . Neither company [CCA or GEO] figures to weather this storm very easily, as they don't have any significant brand extensions that insulate them from their primary business of providing correctional facilities for the government. In 2015, for instance, 45% of GEO revenue came from the Federal Government. However, these companies also operate state penitentiaries, which should not be directly affected by the DOJ's action."

The Corporate Justice Blog has long maintained that private, for-profit prison corporations are fundamentally immoral as its leaders are perversely incentivized to injure U.S. citizens by lobbying for harsher sentences (three-strikes laws), developing "new" crimes punishable by prison time (AZ SB 1070, crimmigration), providing poorer services to inmates in order to cut costs, and forcing cities and municipalities into signing contracts that guarantee 90% occupancy rates in the private prisons.  Recent research and scholarship indicate that the promised benefits of private prisons, that they are  cheaper, safer, and more efficient, are simply not true.  This research shows that private prisons keep inmates locked-up longer (for same-time sentences), are less safe, and are more costly, each attributable directly to a profit motivation.

Adam Lamparello and I recently published an update on the perverse incentives that motivate private prison executives summing up the research that finds that private, for-profit prisons do not deliver on their promised efficiencies:  Private Prisons and the New Marketplace for Crime.