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Corrections Corporation of America Message Board

  • r7ualj r7ualj Apr 20, 1999 10:21 AM Flag


    The Augusta Chronicle

    Page A04
    (Copyright 1999)

    newspaper has always supported Georgia Corrections

    Commissioner Wayne Garner's no-nonsense policies with regard
    prison inmates. There's a big perception, though,
    that Garner has run
    amok with regard to the new
    private prison program.

    Jenkins County will be
    the home of Georgia's sixth private prison. Yet

    this prison and two others under construction are not
    being built through
    state contracts!

    would the Nashville-based Corrections Corp. of America
    on such a seemingly risky, costly move?

    Well, the CCA claims it has an "understanding" with
    "the state" (through
    Garner?) to fill their three
    prisons and recoup their $135 million
    investment. Now
    guess who is Garner's longtime best friend? Oily
    lobbyist Jim Hammock.

    Yet Garner claims
    he's had no talks with any CCA employee about the

    three prisons. (If any discussion has taken place, the
    law has been
    broken.) State law also requires
    that any contract with a private prison
    firm must
    be awarded through a competitive public bidding

    Garner is leaving office, so what better time to
    ask him and the CCA
    what "understanding" there is
    to circumvent legal open bidding? Gov. Roy

    Barnes says he knows of no such "understanding."

    The CCA already holds state contracts for two
    prisons, and Hammock
    boasts of having powerful friends
    in the Democrat-controlled General
    Assembly. So
    does the nation's largest prison-building company
    figure it
    can just get its legislative cronies to
    get competitors shoved aside so it can
    from running three more prisons?

    Also, did
    Garner provide Hammock with secret inmate statistics

    indicating a new governor would quickly need three more
    prisons in order
    to handle an unanticipated inmate
    influx due to tightened parole board


    An Atlanta newspaper reports Garner called
    Hammock 48 times on his
    state car phone in the 63
    days after the Request for Proposal was issued
    the first two prisons CCA built.

    That was
    before CCA got the contract -- and was a direct
    violation of
    the RFP language. So what other funny
    business has a telephone- happy
    Garner been up to?
    Will he later end up working for CCA?

    governor should intervene in what could be the first
    scandal on his
    watch. If Hammock is successful in
    lobbying key lawmakers to
    rubberstamp and fund the
    three new prisons without competitive bidding
    violation of state law, it will make a mockery of Barnes'
    government" promises.

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    • INS contractor's role and record come under fire
      Elizabeth is
      latest of CCA trouble spots

      The Star-Ledger Newark, N.J.

      troubles have alarmed immigrant advocates, who
      whether the company is capable of dealing with
      the detainees housed at Elizabeth, mainly seekers of
      political asylum who have not been convicted of any crimes.
      They remain under the authority of the Immigration and
      Naturalization Service until they are deported or prove their
      case and win release.

      "Clearly, CCA does not
      have a good track record. It has a horrible track
      record," said Penny Venetis, who runs the Rutgers
      Constitutional Litigation Clinic in Newark and has represented
      various Elizabeth detainees. "If a company has a bad
      track record dealing with criminal detainees, you can't
      trust them to work with a population that is in civil

      The problems at Elizabeth come two years after the
      center reopened under CCA- and with INS officials
      touting it as a model for the agency's far-flung
      detention system.

      The center had been closed in
      1995, after 100 detainees rioted in anger at the
      conditions there under the privately run Esmor Corrections
      Corp. The INS, stung by criticism, terminated the Esmor

      Andrea Quarantillo was named the Newark INS
      director after the riot. CCA took over the center in
      January 1997, and Quarantillo said: "This has got to be a
      success. We will view it as a success if it's a facility
      that is safe for detainees, secure so the public has
      confidence, and humane."

      Yet for some, that confidence
      has been shaken. An assistant warden said he was
      fired in March 1998 after he took complaints about
      detainee mistreatment to CCA officials. Last fall, several
      detainees launched hunger strikes over the lengthy period
      of detention.

      Most recently, the FBI opened
      an investigation into the allegations that guards
      beat and verbally abused two detainees Jan. 28, then
      tried to cover up their actions. Rep. Robert Menendez,
      a Democrat whose district includes Elizabeth,
      called for congressional hearings.

      The center's
      chief of security was removed, while two supervisors
      and six guards were barred from contact with
      detainees. Another guard was fired for refusing to cooperate
      with investigators, and three others soon quit due to
      allegations of drug use. In addition, Warden Karen Nicholson,
      on the job just 11 months, resigned, citing personal

      "I was told by the new district director and by
      Commissioner Meissner that this would be a model for the
      nation," said Menendez, referring to INS leader Doris
      Meissner. "It's obvious to me that this is far from a
      model. It's become a nightmare."

      said, "We're looking at how we can proactively look at
      CCA to instill in their corrections officers a real
      respect for human dignity."

    • When it comes to managing prisons, Garner has
      been controversial due to his belief that prisons
      should be as they were intended -- houses of punishment.
      He got rid of the law libraries, the workout/weight
      facilities, the the TV's, etc. This, coupled with former Gov.
      Zell Miller's "3 strikes and you are locked up for
      life" sentencing reform, habitual felons are getting
      put away in Georga (don't wet the bed, Hampton).
      Garner and Gov. Barnes are on different pages
      politcally. The Augusta Chronicle, a left-leaning daily, has
      been used as the attack machine (contrary to their
      statement, I haven't seen anything in print showing their
      support for Garner). In Southern politics, you just don't
      replace your adversaries. You kick them out, conjure up
      some dark clouds, and sling some mud. I'll follow this
      story and keep the thread updated as it develops. GA
      does need those new facilities. G

      • 2 Replies to Go2Glenn
      • Atlanta Journal Constitution - 4/20/99

        The New Corrections Commissioner - Jim

        The 61-year-old grandfather of eight said he probably
        will order an audit of the agency to "see what I'm
        inheriting," but he already knows he will have to turn his
        immediate attention to space issues.

        "I believe
        Corrections is full," Wetherington said.

        About 3,000
        sentenced felons are backed up in county jails waiting for
        a space in the state system, which already is
        growing by about 1,700 a month. D.O.C. already has moved
        inmates into tents in prison recreation yards and into
        bunks in common areas in cellblocks. The state also is
        renting space in three private prisons.

        Wetherington has served as a police officer in Columbus, Ga,
        since 1959, including 14 years as Chief of

        Due to the ole supply and demand principles, PZN most
        likely will prevail in GA, IMO. G

      • Why is there so much talk about CCA and prison
        guards on this board? I thought PZN was going to become
        a REIT and most of their income was going to be
        derived from building prisons and other correctional
        facilities and leasing them back to whatever governmental
        agency they are doing business with. I thought PZN would
        not have anything to do with the management part of
        the business.

        If the above is true, why
        should CCA's problems reflect negatively on PZN. For
        instance, Franchise Finance of America builds and leases
        restaurants. If somebody gets food poisoning at a Wendy's, or
        Hardees, or a Chili's that was built by FFA, don't blame
        FFA. They just built the physical plant. They didn't
        cook the burgers. Please enlighten me.

    • I do appreciate hearing the downside of any
      situation but so seem obsessed with the negative. You
      bounce from one negative topic to another. IMO, it
      doesn't help your arguement if you are unable to see 2

    • Yes, PZN was formed as a captive REIT for CCA.
      However, upon the merger completion, CCA became PZN. So,
      the captive becomes the captor. OPCO is the captive
      of PZN. Some would argue that the market value of
      the stock has suffered because the market perceives
      PZN to be the captive of the privately held OPCO.
      Such a perception is wrong, IMO. OPCO is totally
      dependent on PZN. PZN can make OPCO disappear at any time,
      simply by merging with it.

      Old CCA (and new PZN)
      always pursued a bricks and mortar strategy (WHC is
      still trying to catch up). As you of all people should
      be most aware (by your postings), the management
      side is frought with problems. What is unchanging is
      the acute shortage of beds for prisoners. If OPCO
      loses a mgmt contract in a PZN owned facility, where do
      you think the prisoners will go? Chances are they
      will stay in the PZN faility and be managed by either
      another private entity or by the government. I suspect
      the government would not balk at a lease value based
      on $75,000 per bed.

      Remember, CCA got to
      where it was for a reason: there was a shortage of
      prison beds. There still is. That doesn't change
      wheteher or not you like CCA or PZN or REITs or Doc or
      Doc is telling us that as the "market" for beds
      evolves, the capital intensive strategy is the way to go.
      I believe he can read this better than his
      competitors, and that he can continue providing a
      product/service that appeals to governments.

      Saying PZN is
      dependent on OPCO to make lease payments is too
      superficial. PZN is dependent on governments needing beds.
      OPCO is a conduit, and will be less important as such
      in the future as PZN leases directly to the
      government. OPCO's just there to meet REIT requirements.

    • <Picture: Yahooins - disclaimer
      April 20, 9:36 pm Eastern Time

      REIT shares climb
      higher on Buffett investments

      NEW YORK, April 20
      (Reuters) - The shares of real estate investment trusts are
      running on high, boosted not only by expectations of
      strong first quarter growth, but on recent news about
      billionaire Warren Buffett's investments.

      Buffett is
      as good a reason as any for the recent rally in real
      estate stocks, say some industry analysts watching the
      shares of larger companies push toward their 52-week

      ``I think it helps,'' Steve Bloom, an analyst with
      Morgan Stanley, said about Buffett's REIT

      ``He's now invested in his second REIT. Sometimes I'm
      surprised by his choice of REITs, but to the degree that a
      well-regarded, valued investor is going into these stocks that
      certainly has given the group a good swift kick in its

      Buffett, chief executive of investment conglomerate
      Berkshire Hathaway Inc. (BRKa - news), recently bought 5
      percent stakes in two REITs -- Tanger Factory Outlet
      Centers Inc. (SKT - news) and Town and Country Trust (TCT
      - news), according to filings with the Securities
      and Exchange Commission.

      Tanger shares soared
      to $26.125 from $20.50 when Buffett bought about
      417,000 shares on April 9. The share closed at $25.375 on
      Tuesday. Likewise, shares of Town and Country are now
      trading around $17, up from $15.50 last week when Buffett
      bought about 797,200 shares.

      Wall Street firm BT
      Alex. Brown said REIT share prices as a group soared
      7.3 percent on its index last week compared with a
      2.3 percent fall in the Standard & Poor's 500

      Buffett, known as the ``Sage of Omaha,'' also recently
      received heightened attention for saying that virtually
      all U.S. stocks are too expensive.

      REITs, on
      the other hand, are widely considered grossly
      undervalued. And after hovering below analysts' price targets,
      shares last week began to rise.

      Shares of
      AvalonBay Communities Inc. (AVB - news), for example,
      jumped to $34.25 on Tuesday from around $31 last week.
      Equity Office Properties Trust (EOP - news) shares
      closed at $27.06, near a year high of

      Buffett was traveling and his spokesman declined comment
      on his investments.

      Most of the larger REITs,
      including Duke Realty Investments Inc. (DRE - news) and
      retail REIT Weingarten Realty Investors (WRI - news) are
      expected to meet expectations as they report first quarter
      results in the next few weeks.

      Investment and Management Co. (AIV - news), or AIMCO, on
      Monday posted first quarter funds from operations of
      $66.2 million, or 96 cents per share, up from the net
      FFO reported a year earlier of $39.1 million, or 80

      ``I think this all seems to have crystallized in last
      couple of weeks,'' said Steve Wechsler, chief executive
      of the National Association of Real Estate
      Investment Trusts, or NAREIT. ``A lot of the industry was
      trading below net asset value. That won't last forever in
      a functioning marketplace.''

      Analysts at BT
      Alex. Brown said in a report that they think the rally
      can last. The firm has strong buy or buy ratings on
      15 companies, including AIMCO, Duke, AvalonBay and

    • I agree with some of your statements. PZN could
      concentrate on design, build, own & lease, or just design and
      build. However, DOC's original business strategy was
      management of facilities, and I think it still is. I could
      be wrong, but the margins and growth appear to be
      predominately on the management side. I think this is why DOC
      took that piece private. It was worth jeopardizing
      PZN's the tax shelter, market capitalization, and so
      on. The evidence seems to suggest that PZN was better
      off before the merger. The accounting games,
      notwithstanding, PZN is still reliant on the long-term lease
      revenues from CCA -- not the other way around. You eluded
      to the downside of the management business. I think
      you are correct in suggesting that it might be
      beneficial for PZN to drop it and concentrate on its core

    • going thru the last half hour of trading. We've
      crossed the 50 day moving avg. convincingly. Time to
      breach the 200 day. Most of the other REITS I've looked
      at have just crossed 200 day moving avg. PZN should
      do the same.

    • Lo' and behold the rest of the investment world
      is starting to notice that there may actually be go
      investments that are not related to the internet. So now we
      see a little money being funneled towards value plays
      and small caps. The result for PZN is very promising.
      And the funny thing is we are soooooooo far from fair
      value. Looking forward to a nice ride and some fat
      dividend checks. Cheers.

      Editor of the Reitmeister Investment
      Newsletter - 4/18 issue is now available

    • Thank you for your more civil tone.

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