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Prisoners' Families Are Paying for State Prison Kickbacks in Order to Phone Their Loved Ones

Thursday, 24 May 2012 10:42 By Dina Rasor, Truthout | Solutions

Calling from prison(Image: Jared Rodriguez / Truthout)Recently, I was speaking to a former prisoner on the effect of prison on his life. He told me that when you are in prison and then out of prison, you have two lives, or two personas. Outside of prison, you have your family and close friends and an investment in the rest of society. Inside prison, you have your fellow inmates in groups or gangs and the prison guards. He said that the more that you can keep contact with the outside world, the better chance you have to keep straight and not identify with and return to the prison world.

Prisoners only have two legitimate ways to keep in contact with their families, letters and phone calls. Letters just require stamps, but phone calls are more complicated as prisoners have to use the prison phone system and call their relatives and loved ones collect. This means that the burden of paying for calls to the family rests with the families themselves, and can be a monetary burden for even a 15-minute call. The newsletter, Prison Legal News (PLN), in April 2011 published an exhaustive study in April of this year showing that, in many states, not only do the phone companies charge outrageous rates to the families, but the highest rates are with states that require the phone company to give them large "commissions" (read kickbacks), based on the gross revenue of prisoners' phone calls, in order to secure the exclusive contract with the facility. The study, done by John Dannenberg, who has degrees in engineering and mathematics and is a former prisoner himself, rips open this state/prison phone company formula that lays a huge cost burden on prisoner families and the prisoners themselves.

In this time where having many phone companies on the open market has led to much lower rates, including unlimited long distance calls, the US prison system has exclusive contracts with a few phone companies. The Federal Communications Commission (FCC) does not allow this type of phone monopoly on the open market, but does allow it for prisoner phone systems. They also allow the states to extract large commissions for the right to the exclusive contracts. The companies, to make sure that their profits are secure despite the large state commissions, jack up the rates for prisoners' families who often don't have the resources to pay such high rates.

This is not a small amount of business across the country. Since the US has the largest prison population in the world, PLN has found that these kickback commissions generate "more than $152 million per year nationwide for state prison systems alone, the commissions dwarf all other considerations and are a controlling factor when awarding prison phone contracts." This means that prisoners' families have to shell out that amount every year to try to keep the vital contact with the loved ones so that these states and phone companies can keep their cash flow high.

Prison and Money flag(Image: Nick Lawson)PLN painstakingly gathered the data of contracts, Requests for Proposals (RFP), and other data for 2007-2008 to find out just how widespread the problem was in the state prison systems. They published a chart in their April 2011 issue that shows the rates and which states charge commissions etc. The chart, which is attached here, is a depressing sight. They found that Louisiana and Alaska actually mention in their RFPs that the size of the commission to the state is the deciding factor for phone companies in their bids instead of the lowest rates possible for their prisoners' families.

The average state commission was 42 percent, but some reached as high as 60 percent of the money from the phone calls. According to PLN, the "kickbacks are not controlled by state or federal regulatory agencies and the only limit on the maximum rate for prison phone calls is the top rate permitted by such agencies or the phone service contract itself. Some of states claim that these commissions go to a prisoner welfare fund that is supposed to help prisoners. Based on my many years of investigative federal and state bureaucracies, some of the biggest abuses of money in funds comes from money that has been generated by the government, but is not appropriated money from the legislators. This type of money often is diverted to other uses with very little oversight, and once a bureaucracy gets this type of income, they are loath to give it up.

A Federal Communications Law Journal laid out the pernicious incentives that this system has created: "In the prison context, the state contracts with a private entity and the private entity provides services to the prisoners and also to the state.... Due to the perverse financial incentives and political climate surrounding the prisons and prisoners, however, neither the state nor the private entity acts in the best interests of the consumers in particular or of the society in general." One can expect the phone companies to do everything inside and perhaps outside the law to maximize their profits, but many of the state prison systems are colluding with these companies to keep their commissions high.

Eight states have eliminated the commissions in recent years, and looking at those states' phone contracts and rates from the same phone company compared to the states with high commissions tells the story on how these commissions do jack up the rates for the prisoners' families. PLN found that the same phone company, Global Tel*Link (GTL), charged very different phone rates for a state that does not allow these commission kickbacks compared to a state that has a high percentage commission rate:

... GTL charges only $.70 for a local collect call in commission-free Rhode Island. But the company stiffs prisoners' families in Alabama with $2.75 for a local call and charges $4.80 for local calls in Arkansas - no doubt due to GTL's 61.5% and 45% kickbacks in those states respectively. This indicates that GTL can provide lower rates absent the need to pay hefty commissions to the contracting agency. 

A similar drop in rates happened in New York, once they eliminated their commission from the prison phone formula due to pressure from prisoner family groups. From PLN:

Previously, New York had received a commission of 57.5% to 60%, the highest in the nation at the time, which generated $200 million in kickback payments from 1996 to 2007. The no-commission statute went into effect in 2008 and under a new contract with Unisys and VAC, New York prisons now have some of the lowest phone rates in the country - a flat $.048/minute for any time of call (i.e., $.72 per 15-Minute call whether local, intrastate or interstate.) Before banning kickback commissions, New York's prison phone rates were $128 + $.068/minute for all categories of collect calls (i.e.$2:30 per 15 minute call whether local, intrastate or interstate). Thus, after the commissions ended, the rates dropped 68.7% based on a 15-minute collect call. 

Ironically, these exorbitant phone rates have led to another problem - prisoner guards sneaking in private cell phones and charging inmates money to call their families in an illegal, but cheaper way. Several former prisoners that I interviewed admitted that it was a security issue of having prisoners use these cell phones without monitoring it because they could be doing illegal activity on these phones or even planning revenge murders and this cell phone usage should not be tolerated. The State of California just sealed a contract with GTL to put in a screening process to find and block these cell phones as well as provide the phone service for their prisons. GTL has had some success in finding the phones. California claims that the taxpayers are not paying more for this new service and GTL is absorbing the cost. Whether that is true or not, GTL certainly has an incentive to eliminate these illegal cell phones so that the inmates are, once again, stuck with just GTL's phone service and the high prices. Seems like everyone, from the prison guards to the phone companies to the states are making money off the desperate need of prisoners to phone their families.

Just last week, concerned groups got together a press release to urge the FCC to investigate this problem and end the practice of predatory prison phone rates. For years, there have been attempts by lawsuits and state laws to try to stop the commission debacle and high phone rates. The groups came from a wide range of the political spectrum, from the ACLU and the National Association for the Advancement of Colored People (NAACP) to the American Conservative Union and even evangelist Gary Bauer from American Values.

These groups sent a joint letter to the chairman of the FCC and urged the FCC to act on a petition that had been languishing before it since 2003 that would help end these practices. In their letter, they point out that it is "cheaper to call Singapore at 12 cents a minute from a cell phone that it would be to speak to someone in prison in this country." Calling the current system "a moral hazard," they point out how important it is to prisoners to keep their family ties and how that actually helps our society by lowering the number of repeat offenders:

Healthy relationships with their families and other members of the community are the most important factor in prisoners' successful return to their neighborhood. Maintaining the bonds of a family and support network is a very effective way to reduce recidivism among inmates, which is an important national goal. The rate of recidivism is at crisis levels in the U.S.; within three years of being released, 67 percent of ex-prisoners re-offend and 52 percent are re-incarcerated. Americans are paying dearly for this trend. According to Pew Center on the States, state and federal spending on corrections has grown 400 percent over the past 20 years, from about $12 billion to about $60 billion. Yet, predatory phone rates discourage regular telephone contact with stable family members and others in the community.

There have been other studies through the years showing how important family ties are to keeping people from returning to prison and it also shows how this system hurts the public in general, while others are enriching themselves.

The ball is now in the FCC's camp to eliminate these commissions across the board and make sure that there isn't more price gouging of prisoners' families. John Dannenberg, whose painstaking PLN study clearly shows the problems with the current system, told me in an interview that neither "the prison system nor the phone companies have a conscience, only greed." A quick look at the chart he prepared shows how this system of greed and kickback commissions has been ripping off prisoner families for years and discouraged many of them from contacting their loved ones to keep them in their "family" persona and not condemn the prisoners to identifying with their "prison" persona the rest of their lives. They suffer from this system and we all suffer when there is more crime and expense in imprisoning these people year after year. Changing this system could be one big step in lowering our prison population and put us on the road of not being the No. 1 jailor in the world. But there are entrenched money interests in the phone companies and the prisons, public and private, to keep the current system intact. They will fight any changes that promise to stop the money flow despite the misery it causes. It will be vital to see if the FCC is up to the task to stop these practices nationwide.

Dina Rasor

Dina Rasor is an investigator, journalist and author. Rasor has been fighting waste while working for transparency and accountability in government for three decades. In 1981, Rasor founded the Project on Military Procurement (now called the Project on Government Oversight, or POGO) to serve as a nonprofit, nonpartisan watchdog over military and related government spending. Rasor's most recent book, "Betraying Our Troops: The Destructive Results of Privatizing War," chronicles first-hand accounts of the devastating consequences of privatized war support for troops and the overall war effort in Iraq. She also founded the Bauman & Rasor Group that helps whistleblowers file lawsuits under the federal qui tam False Claims act and has been involved in cases which have returned over $100 million back to the US Treasury.


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Prisoners' Families Are Paying for State Prison Kickbacks in Order to Phone Their Loved Ones

Thursday, 24 May 2012 10:42 By Dina Rasor, Truthout | Solutions

Calling from prison(Image: Jared Rodriguez / Truthout)Recently, I was speaking to a former prisoner on the effect of prison on his life. He told me that when you are in prison and then out of prison, you have two lives, or two personas. Outside of prison, you have your family and close friends and an investment in the rest of society. Inside prison, you have your fellow inmates in groups or gangs and the prison guards. He said that the more that you can keep contact with the outside world, the better chance you have to keep straight and not identify with and return to the prison world.

Prisoners only have two legitimate ways to keep in contact with their families, letters and phone calls. Letters just require stamps, but phone calls are more complicated as prisoners have to use the prison phone system and call their relatives and loved ones collect. This means that the burden of paying for calls to the family rests with the families themselves, and can be a monetary burden for even a 15-minute call. The newsletter, Prison Legal News (PLN), in April 2011 published an exhaustive study in April of this year showing that, in many states, not only do the phone companies charge outrageous rates to the families, but the highest rates are with states that require the phone company to give them large "commissions" (read kickbacks), based on the gross revenue of prisoners' phone calls, in order to secure the exclusive contract with the facility. The study, done by John Dannenberg, who has degrees in engineering and mathematics and is a former prisoner himself, rips open this state/prison phone company formula that lays a huge cost burden on prisoner families and the prisoners themselves.

In this time where having many phone companies on the open market has led to much lower rates, including unlimited long distance calls, the US prison system has exclusive contracts with a few phone companies. The Federal Communications Commission (FCC) does not allow this type of phone monopoly on the open market, but does allow it for prisoner phone systems. They also allow the states to extract large commissions for the right to the exclusive contracts. The companies, to make sure that their profits are secure despite the large state commissions, jack up the rates for prisoners' families who often don't have the resources to pay such high rates.

This is not a small amount of business across the country. Since the US has the largest prison population in the world, PLN has found that these kickback commissions generate "more than $152 million per year nationwide for state prison systems alone, the commissions dwarf all other considerations and are a controlling factor when awarding prison phone contracts." This means that prisoners' families have to shell out that amount every year to try to keep the vital contact with the loved ones so that these states and phone companies can keep their cash flow high.

Prison and Money flag(Image: Nick Lawson)PLN painstakingly gathered the data of contracts, Requests for Proposals (RFP), and other data for 2007-2008 to find out just how widespread the problem was in the state prison systems. They published a chart in their April 2011 issue that shows the rates and which states charge commissions etc. The chart, which is attached here, is a depressing sight. They found that Louisiana and Alaska actually mention in their RFPs that the size of the commission to the state is the deciding factor for phone companies in their bids instead of the lowest rates possible for their prisoners' families.

The average state commission was 42 percent, but some reached as high as 60 percent of the money from the phone calls. According to PLN, the "kickbacks are not controlled by state or federal regulatory agencies and the only limit on the maximum rate for prison phone calls is the top rate permitted by such agencies or the phone service contract itself. Some of states claim that these commissions go to a prisoner welfare fund that is supposed to help prisoners. Based on my many years of investigative federal and state bureaucracies, some of the biggest abuses of money in funds comes from money that has been generated by the government, but is not appropriated money from the legislators. This type of money often is diverted to other uses with very little oversight, and once a bureaucracy gets this type of income, they are loath to give it up.

A Federal Communications Law Journal laid out the pernicious incentives that this system has created: "In the prison context, the state contracts with a private entity and the private entity provides services to the prisoners and also to the state.... Due to the perverse financial incentives and political climate surrounding the prisons and prisoners, however, neither the state nor the private entity acts in the best interests of the consumers in particular or of the society in general." One can expect the phone companies to do everything inside and perhaps outside the law to maximize their profits, but many of the state prison systems are colluding with these companies to keep their commissions high.

Eight states have eliminated the commissions in recent years, and looking at those states' phone contracts and rates from the same phone company compared to the states with high commissions tells the story on how these commissions do jack up the rates for the prisoners' families. PLN found that the same phone company, Global Tel*Link (GTL), charged very different phone rates for a state that does not allow these commission kickbacks compared to a state that has a high percentage commission rate:

... GTL charges only $.70 for a local collect call in commission-free Rhode Island. But the company stiffs prisoners' families in Alabama with $2.75 for a local call and charges $4.80 for local calls in Arkansas - no doubt due to GTL's 61.5% and 45% kickbacks in those states respectively. This indicates that GTL can provide lower rates absent the need to pay hefty commissions to the contracting agency. 

A similar drop in rates happened in New York, once they eliminated their commission from the prison phone formula due to pressure from prisoner family groups. From PLN:

Previously, New York had received a commission of 57.5% to 60%, the highest in the nation at the time, which generated $200 million in kickback payments from 1996 to 2007. The no-commission statute went into effect in 2008 and under a new contract with Unisys and VAC, New York prisons now have some of the lowest phone rates in the country - a flat $.048/minute for any time of call (i.e., $.72 per 15-Minute call whether local, intrastate or interstate.) Before banning kickback commissions, New York's prison phone rates were $128 + $.068/minute for all categories of collect calls (i.e.$2:30 per 15 minute call whether local, intrastate or interstate). Thus, after the commissions ended, the rates dropped 68.7% based on a 15-minute collect call. 

Ironically, these exorbitant phone rates have led to another problem - prisoner guards sneaking in private cell phones and charging inmates money to call their families in an illegal, but cheaper way. Several former prisoners that I interviewed admitted that it was a security issue of having prisoners use these cell phones without monitoring it because they could be doing illegal activity on these phones or even planning revenge murders and this cell phone usage should not be tolerated. The State of California just sealed a contract with GTL to put in a screening process to find and block these cell phones as well as provide the phone service for their prisons. GTL has had some success in finding the phones. California claims that the taxpayers are not paying more for this new service and GTL is absorbing the cost. Whether that is true or not, GTL certainly has an incentive to eliminate these illegal cell phones so that the inmates are, once again, stuck with just GTL's phone service and the high prices. Seems like everyone, from the prison guards to the phone companies to the states are making money off the desperate need of prisoners to phone their families.

Just last week, concerned groups got together a press release to urge the FCC to investigate this problem and end the practice of predatory prison phone rates. For years, there have been attempts by lawsuits and state laws to try to stop the commission debacle and high phone rates. The groups came from a wide range of the political spectrum, from the ACLU and the National Association for the Advancement of Colored People (NAACP) to the American Conservative Union and even evangelist Gary Bauer from American Values.

These groups sent a joint letter to the chairman of the FCC and urged the FCC to act on a petition that had been languishing before it since 2003 that would help end these practices. In their letter, they point out that it is "cheaper to call Singapore at 12 cents a minute from a cell phone that it would be to speak to someone in prison in this country." Calling the current system "a moral hazard," they point out how important it is to prisoners to keep their family ties and how that actually helps our society by lowering the number of repeat offenders:

Healthy relationships with their families and other members of the community are the most important factor in prisoners' successful return to their neighborhood. Maintaining the bonds of a family and support network is a very effective way to reduce recidivism among inmates, which is an important national goal. The rate of recidivism is at crisis levels in the U.S.; within three years of being released, 67 percent of ex-prisoners re-offend and 52 percent are re-incarcerated. Americans are paying dearly for this trend. According to Pew Center on the States, state and federal spending on corrections has grown 400 percent over the past 20 years, from about $12 billion to about $60 billion. Yet, predatory phone rates discourage regular telephone contact with stable family members and others in the community.

There have been other studies through the years showing how important family ties are to keeping people from returning to prison and it also shows how this system hurts the public in general, while others are enriching themselves.

The ball is now in the FCC's camp to eliminate these commissions across the board and make sure that there isn't more price gouging of prisoners' families. John Dannenberg, whose painstaking PLN study clearly shows the problems with the current system, told me in an interview that neither "the prison system nor the phone companies have a conscience, only greed." A quick look at the chart he prepared shows how this system of greed and kickback commissions has been ripping off prisoner families for years and discouraged many of them from contacting their loved ones to keep them in their "family" persona and not condemn the prisoners to identifying with their "prison" persona the rest of their lives. They suffer from this system and we all suffer when there is more crime and expense in imprisoning these people year after year. Changing this system could be one big step in lowering our prison population and put us on the road of not being the No. 1 jailor in the world. But there are entrenched money interests in the phone companies and the prisons, public and private, to keep the current system intact. They will fight any changes that promise to stop the money flow despite the misery it causes. It will be vital to see if the FCC is up to the task to stop these practices nationwide.

Dina Rasor

Dina Rasor is an investigator, journalist and author. Rasor has been fighting waste while working for transparency and accountability in government for three decades. In 1981, Rasor founded the Project on Military Procurement (now called the Project on Government Oversight, or POGO) to serve as a nonprofit, nonpartisan watchdog over military and related government spending. Rasor's most recent book, "Betraying Our Troops: The Destructive Results of Privatizing War," chronicles first-hand accounts of the devastating consequences of privatized war support for troops and the overall war effort in Iraq. She also founded the Bauman & Rasor Group that helps whistleblowers file lawsuits under the federal qui tam False Claims act and has been involved in cases which have returned over $100 million back to the US Treasury.


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