By Anna B. Mercury
Once again, Dallas Liam is our investment guru. A self-made billionaire, chairman of the Prisons For America LLC., you can get his up-to-the-minute advice on Twitter.
The French novelist Honoré de Balzac observed, “Behind every great fortune, there is a crime.” Dallas Liam shows that behind his fortune were thousands of crimes. I once again had the pleasure of interviewing him, and this time he was even more candid and informative.
[read my previous interview Invest in Private Prisons and Get Tough on Crime]
Dallas, True or false, Crime is harnessable energy that creates wealth?
With private prisons, crime literally pays. I love this business model.
What model?
The school-to-prison pipeline has made me incredibly rich.
How about nursery-to-prison?
I’m like a professional sports agent but in a different way. I ride my G-Wagon through bad parts of town and look at young kids. 1/3 of every kid I look at in the hood will end up in my prison.
Statistics are statistics.
F
The goal is to increase the lifetime value of every prisoner that goes through our four walls.
How did you get into this? Is it a family business?
My great great-granddaddy was a large plantation owner in South Carolina. This is a picture of the house he lived in. He operated a massive cotton farm. The house doesn’t exist anymore. But we built a state of an art prison on the land.
Way to pivot. He would be very proud right now.
One thousand beds generate $100k per day in revenues and $40k per day in operating income. No taxes, as depreciation is high. Tell me when anti-Bellum slavery worked so well.
Would you say slavery was more profitable than the prison system on an inflation-adjusted basis?
They used to coddle the slaves.
When you make a wish, do you wish crime to reduce, or do you want it to increase?
Increase.
Are you negotiating with judges to be hard on crime? It would let you win more.
Always.
Could you walk us through a sample investment?
This old country prison just went up for sale. It would require a lot of capital expenditures and sweat equity but has a lot of upsides if done right.
Total beds 1,000. Cost $15 million or $15,000 per bed. Working prisons are selling for $200-300k per bed these days. Lots of potential upsides if rehabbed right.
The total capital cost needed of $55 million to rehab properly. After capital expenditure spend per bed of $70,000 gives me a large margin of safety. Throw another $20m on top just in case, and we are under $90k per bed all in.
How long would it take to renovate?
It takes around 16 months to get the prison rebuilt and up to 80% capacity. At 60% capacity, I’m breakeven.
Downsides?
I would be taking on potential environmental liabilities. Not a big issue right now, but if my prisoners get asbestos poisoning, I’ll need to create a sinking fund later in time to deal with those liabilities. It could add another $1,000 per head per month in cost.
There are a lot of shark lawyers out there looking for class action lawsuits.
Not too worried about asbestos liabilities. If my prisoners get it, I’ll deal with the extra costs. It won’t bankrupt me, just add additional operating costs later down the road – 15 years from now.
This is in Tennessee? Their revival of Clinton era policies of no early releases would guarantee revenue flow as you build occupancy.
Early release programs pose increased risk and volatility to earnings. I am looking at states that guarantee user commitment.
Any incremental crime will flood right into this prison. Right now, they are shipping criminals across the state. It will save money at the state level and fill a need immediately.
I watched a max security prison documentary where the warden was bragging that the meal budget for prisoners was about the same per head as what it cost to feed dogs. I thought, wow, what are you running? A Hilton? Dog food is really expensive.
I reward my prison Warden’s bonuses if they can keep their meal budget per person lower than the cost of feeding a dog.
What traits do you find in your best wardens?
Hire the best wardens you can find. They are the ones running the prisons. Wardens are the most important hire. Pay them well and give them fat bonuses for keeping your commodity behind bars. If they ask for more guns and guards, give them it. These guys are key!
How do you combat inflation at your prisons?
We have started to buy old expired food from Walmart at an extreme discount. Profit margins are soaring right now. When people zig, I zag.
If I may suggest, perhaps fence in an area with some trees. Put some bird feeders out there. Give the inmates some slingshots and let them hunt/gather their food.
We already got the total cost per prisoner down to $1.75.
Could you show the readers a few sample meals?
Breakfast was cornbread and two hardboiled eggs.
Lunchtime at my prison in South Alabama today
As an investor, I might be concerned about the sausage size. Cut the sausage in half and one piece of bread.
I’m not an animal
They’re not going to get 5-course dinners.
Peanut butter and jelly and chicken.
It’s all about calories.
Protein too.
Powdered milk
With the cost of electricity skyrocketing over the past few months, what are you doing to keep your investors happy?
At Prisons For America LLC, we decided to switch to lethal injections from the electric chair when instituting death sentences. This will save a significant amount of costs for our investors.
How much does the average electric chair cost to use, and do larger people take longer to zap?
On our meal plan, they are usually slim when we escort them in.
Is it true that a prisoner about to be executed can have anything he wants within in reason for his last meal?
Don’t forget that those last meals can involve expired food for obvious reasons.
Are there ancillary revenue opportunities?
Here’s the interior of a prison bus I own for a prison I have in Texas. We are paid per mile to transport prisoners from the prison to the courthouse.
How much does the bus cost?
Around $15,000. On a good month, I can generate $10,000 just from these transports.
Motions to adjourn must give you a hard-on.
The Sheriff’s office just took out some marijuana users today. I’m expecting the judge in Berekely to issue a large sentence of up to one year in prison for these drug users, keeping the streets safe and making my investors happy!
Do you operate in California? The governor will just catch and release them back into society. Potentially leaving your business bankrupt. I thought marijuana was legal in California.
This is Berkeley County, West Virginia, not liberal fake news California.
Are you going to inject that weed back into the prison to make extra revenue?
Marijuana is not a legal drug federally.
What do you say to critics who say you are ruining lives over a plant?
A plant? 99% of my prisoners have smoked marijuana before. It is the gateway drug to violence, crime, rape, and murder. Marijuana is a dangerous and deadly drug. Do some research. It helps not just to read liberal CNN every day. People who say this are blinded by the hard amount of marijuana they use daily.
What prison would they go to? Unfortunately, there are no privately owned prisons in WV.
I am shipping them to my prison in Texas. I love this team. This is what my boys confiscated. Hard time incoming for these criminals.
What’s even better is I own the bail bond location near my prison. A huge margin here. You gotta vertically integrate if you want the big bucks.
Any other tips?
I give out stock options in my prison company to almost every judge I work with. This gives the judge incentives to give these criminals harsh sentences and rewards them financially when we do well. People respond to incentives. Remember that as an entrepreneur.
Why not cash in an envelope?
I’m not a criminal.
Can the work release crews also stop by the judge’s home for yard work?
This is a great prison I own. Two thousand beds netting me around $200,000 in revenue per day. Always at 90% occupancy or better. I’m friends with the local judge. He sends all convicts my way. Great guy. Just got drinks with him last night. Partner with people you trust!
I can’t understand why there’s so much hate toward for-profit prisons.
People who complain are jealous losers.
Have you looked into female prisons? They tend to have low operational risks.
I own women prisons. My guards love working at women prisons over men’s for various reasons. One reason is the favors that women prisoners perform on the guards for things like new clothes, blankets, electronics, etc.
By perform, do you mean song and dance routines?
Just the way the system works.
The women’s prison also does not need to hire additional kitchen staff.
Commodity businesses are usually very tough and cyclical. But when you can control the supply of a commodity, you control the risk and the profits. This is why I become best friends with the judges and lawmakers. My commodities are humans. I control them from start to finish. My investors are very happy with the profits and dividends every quarter.
Would you say you provide human storage units?
My favorite prison I own is one located in the heart of rural Texas. We perform capital punishment with prisoners on death row. On average, we are paid $250,000 per euthanization. The cost is only $10,000. Huge margins.
You’re making a lot of money–
Wait until you see the margins on the drug manufacturers and patent holders who make these drugs that euthanize my prisoners.
The drugs for that are too expensive. No one would probably know if you swapped them out for Round-Up and vodka.
The amount of auditing that goes into capital punishment is very slim to none. I’ll just leave that there.
Did it really cost $10k to do a lethal injection?
Do you want to know how much propofol and potassium cost?
What do you say to those who think your business is profiting from human pain and suffering?
Have fun staying poor.
What would you say to someone who wants to be a prison investor?
Do you have the balls to lobby judges and defund schools, so crime continues to be a good business model? Only a select few are built like me. If you want to make real money, you gotta do the stuff no one wants to do. Sweaty, hard, blue-collar work. It took me eight years to hit my first million and buy my first prison. I worked as a guard and made it to the top. It wasn’t pretty. I stayed up countless nights making sure the systems I bought worked. Sweat, blood, and equity.
For more good wealth-building advice on prison investing, see prison1investor. He knows what he’s talking about.
Sick and twisted.
What’s your policy for dropping soap in the shower?
Prisoners have it too good. I’m not a bleeding heart liberal a-hole.
These fuckers would rape your wife and kidnap your children if they could.
Thank God someone has the balls to warehouse these Human pieces of shit.
You know this guy makes a lot of sense. Nobody made these criminals break the law. What’s wrong with him making money off of it?
Are you available to act as a consultant? New York wants to close Rikers Island in favor of smaller community-based prisons. This is an ideal opportunity to cash in on these worthless drug addicts!
There are loads of available former schools that can be rehabbed into local prisons. This is money for the taking for people like you and me!
To Anna Mercury:
Look into Pennsylvania’s “Kids for Cash” scandal!
America’s judges are black robed shysters who would sell children into slavery! Shadow State 1958
Kids for cash scandal
The “kids for cash” scandal centered on judicial kickbacks to two judges at the Luzerne County Court of Common Pleas in Wilkes-Barre, Pennsylvania.[1] In 2008, judges Michael Conahan and Mark Ciavarella were convicted of accepting money in return for imposing harsh adjudications on juveniles to increase occupancy at the PA Child Care for-profit detention centers.[2]
Ciavarella disposed thousands of children to extended stays in youth centers for offenses as trivial as mocking an assistant principal on Myspace or trespassing in a vacant building.[3] After a judge rejected an initial plea agreement in 2009,[4][5] a federal grand jury returned a 48-count indictment.[6] In 2010, Conahan pleaded guilty to one count of racketeering conspiracy and was sentenced to 17.5 years in federal prison.[7] Ciavarella opted to go to trial the following year. He was convicted on 12 of 39 counts and sentenced to 28 years in federal prison.[8]
In the wake of the scandal, the Supreme Court of Pennsylvania overturned hundreds of adjudications of delinquency in Luzerne County.[9] The Juvenile Law Center filed a class action lawsuit against the judges and numerous other parties,[10] and the Pennsylvania state legislature created a commission to investigate juvenile justice problems in the county.[11]
Contents
1 Investigations
2 Charges and pleas
3 Criminal verdicts and sentences
4 Victim lawsuits
5 Interbranch Commission on Juvenile Justice
6 In popular culture
7 See also
8 References
9 External links
Investigations
Pennsylvania’s Judicial Conduct Board received four complaints about Michael Conahan between 2004 and 2008, but later admitted it failed to investigate any of them, nor had it sought documentation regarding the cases involved.[12] The FBI was tipped off about Conahan and nepotism in the county courts in 2006.[13] An additional investigation into improper sentencing in Luzerne County began in early 2007 as a result of requests for assistance from several youths received by the Philadelphia-based Juvenile Law Center. Attorneys from the Center determined that several hundred cases were tried without the defendants receiving proper counsel. In April 2008, the Center petitioned the Pennsylvania Supreme Court seeking relief for alleged violation of the youths’ civil rights. The application of relief was later denied, then reconsidered in January 2009 when corruption charges against both Conahan and Mark Ciavarella surfaced.[14]
The FBI and the IRS also investigated Conahan and Ciavarella, although the exact dates and scope of these federal investigations were not made public.[15] Part of the investigation was revealed to have occurred during disciplinary hearings over the conduct of another former Luzerne County judge, Ann H. Lokuta.[16] Lokuta was brought before the Judicial Conduct Board in November 2006 to answer charges of using court workers to do her personal bidding, openly displaying bias against some attorneys arguing before her, and publicly berating staff to cause mental distress.[17] The board ruled against Lokuta in November 2008, and she was removed from the bench. During the course of the hearings, Lokuta charged that Conahan was behind a conspiracy to have her removed.[18] She aided the federal investigation into the “kids for cash” scheme prior to the Conduct Board’s ruling, and a stay order was issued in March 2009 by the Pennsylvania Supreme Court in light of the ongoing investigations, halting Lokuta’s removal and the special election that was to be held to replace her.[19] During the Lokuta hearing, Conahan testified that there were no social relationships amongst the county judges. However, Judge Michael Toole, who was later convicted of case fixing,[clarification needed] as well as another judge, had each stayed at a Florida condo jointly owned by Conahan and Ciavarella.[13]
The Pennsylvania Supreme Court decided to uphold Lokuta’s removal from the bench in January 2011, finding she had received a fair trial, regardless of Conahan’s testimony. It also ordered the expungements of the records of 2,401 of those juveniles who were affected.[20][21]
Charges and pleas
A statement from the U.S. Attorney’s Office for the Middle District of Pennsylvania outlined the charges against the two judges on January 26, 2009. The charges outlined in the information[22] described actions between 2000 and 2007 by both judges to assist in the construction and population of private juvenile facilities operated by the two Pennsylvania Child Care companies, acting in an official capacity in favor of the private facilities over the facility operated by Luzerne County.[15]
The U.S. Attorney charged that in 2002 Conahan, who at the time was President Judge of the court, used his authority to remove funding for the county-operated facility. The judges were alleged to have received “millions of dollars” in payments for the completion of a binding agreement between the court and the private facilities, co-owned by attorney Robert Powell, to use their services and the subsequent closing of the county facility.[4] The methods used to conceal the payments involved several parties and transactions which resulted in allegations of tax evasion against the two. Ciavarella and Conahan were also charged with “Ordering juveniles to be sent to these facilities in which the judges had a financial interest even when Juvenile Probation Officers did not recommend placement,” according to the statement.[4]
Original, negotiated plea agreements called for both judges to serve up to seven years in prison, pay fines and restitution, and accept responsibility for the crimes.[1] However, on July 30, 2009, Judge Edwin M. Kosik of Federal District Court in nearby Scranton rejected the plea agreement, citing “post-guilty plea conduct and expressions from the defendants” that he ruled did not satisfy the terms of the agreement. Kosik wrote that Conahan and Ciavarella continued to deny their crimes even in the face of overwhelming evidence, and therefore did not merit sentences that were well below federal sentencing guidelines.[23][5] Attorneys for the two judges brought a motion requesting reconsideration of the judge’s rejection of the plea agreement.[24] The motion was denied on August 24, 2009, and Ciavarella and Conahan subsequently withdrew their guilty pleas, an action which eventually resulted in a jury trial for Ciavarella and additional charges against the former judges.[25]
Following the plea withdrawals, on September 9, 2009, a federal grand jury in Harrisburg, Pennsylvania returned a 48-count indictment[26] against Ciavarella and Conahan including racketeering, fraud, money laundering, extortion, bribery, and federal tax violations. Both judges were arraigned on the charges on September 15, 2009.[27][28] Ciavarella and Conahan entered pleas of not guilty on all counts and remained free on $1 million in bail, despite federal prosecutors’ contentions that their bail should be raised. Prosecutors argued the judges’ bail should have been higher, since they faced the possibility of substantially more prison time and there had been evidence of attempts made to shield assets.[29]
Robert Powell, an attorney and co-owner of the two juvenile facilities at the heart of the scandal, pleaded guilty on July 1, 2009, to failing to report a felony and being an accessory to tax evasion conspiracy, in connection with $770,000 in kickbacks he paid to Ciavarella and Conahan in exchange for facilitating the development of his juvenile detention centers.[30][31][32] The Pennsylvania Supreme Court temporarily suspended Powell’s law license on September 1, citing his criminal conviction.[33]
Robert Mericle, the prominent real estate developer who built the two juvenile facilities, pleaded guilty on September 3, 2009, to failing to disclose a felony. Mericle had failed to tell a grand jury he had paid $2.1 million to Ciavarella and Conahan as a finder’s fee. As part of his plea, Mericle agreed to pay $2.15 million to fund local children’s health and welfare programs. Mericle faced up to three years in prison and a $250,000 maximum fine.[34][31][35][36] Mericle was released from federal custody in 2015 after serving a one-year sentence.[37]
Sandra Brulo, the former Deputy Director of Forensic Services for the Luzerne County Juvenile Probation Office, agreed to plead guilty in March 2009 to federal obstruction of justice. Those charges stemmed from actions Brulo took after she became aware she had been named in the federal civil action. Brulo backdated her recommendation of a placement she made concerning a juvenile defendant in September 2007, and changed her original recommendation of placement to probation.[38]
Criminal verdicts and sentences
On February 18, 2011, following a trial, a federal jury convicted Ciavarella on 12 of the 39 remaining counts he faced including racketeering, a crime in which prosecutors said the former judge used children “as pawns to enrich himself.” In convicting Ciavarella of racketeering, the jury agreed with prosecutors that he and Conahan had taken an illegal payment of nearly $1 million from a youth center’s builder, then hid the money.[39]
The panel of six men and six women also found Ciavarella guilty of “honest services mail fraud” and of being a tax cheat, for failing to list that money and more on his annual public financial-disclosure forms and on four years of tax returns. In addition, they found him guilty of conspiring to launder money. The jurors acquitted Ciavarella of extortion and bribery in connection with $1.9 million that prosecutors said the judges extracted from the builder and owner of two youth centers, including allegations that Ciavarella shared the proceeds of FedEx boxes that were stuffed with tens of thousands of dollars in cash.
Following Ciavarella’s conviction, he and his lawyer appeared on the steps of the courthouse to give an impromptu press conference. The press conference was interrupted by Sandy Fonzo, whose son Edward Kenzakoski committed suicide in June 2010 after Ciavarella adjudicated him to placement, despite Kenzakoski’s first-time offender status.[40]
On August 11, 2011, Ciavarella was sentenced to 28 years in federal prison as a result of his conviction.[41] He is currently being held at the Federal Correctional Institution, Ashland, a low-security federal prison in eastern Kentucky.[42] He is scheduled for release in 2035, when he will be 85 years old.[43] Ciavarella appealed his conviction to the Third Circuit and it was rejected on July 25, 2013.[44]
However, Ciavarella has continued to appeal, contending that the Supreme Court’s decision in the case of ex-Governor of Virginia Robert McDonnell narrowed the scope of the honest services fraud statute.[45] On January 9, 2018, federal judge Christopher C. Conner threw out Ciavarella’s convictions for racketeering, conspiracy to commit racketeering, and conspiracy to commit money laundering. Conner upheld Ciavarella’s contention that his attorneys failed to raise statute of limitations claims on those charges. He ordered a new trial on those counts, but allowed the honest services fraud convictions to stand.[46]
On September 23, 2011, Conahan was sentenced to 17 and a half years in federal prison after pleading guilty to one count of racketeering conspiracy. Due to coronavirus concerns, he was released from prison in June 2020, six years early. [47]
On November 4, 2011, Powell was sentenced to 18 months in federal prison after pleading guilty to failing to report a felony and being an accessory to tax conspiracy. He was incarcerated at the Federal Prison Camp, Pensacola, a low-security facility in Florida, and was released from a halfway house on April 16, 2013.[48][49][50] On August 10, 2015, a judge approved a $4.75M settlement agreement for Powell, for having paid kickbacks related to the adjudication of at least 2,400 juveniles.[51]
Robert Mericle’s sentencing in connection with his guilty plea for failing to report a felony was delayed pending his anticipated testimony in the bribery trial of former Congressman and Pennsylvania State Senator Raphael Musto. On November 23, 2010, a federal grand jury had issued a six-count indictment against Musto, charging him with accepting more than $28,000 from an unnamed company and individual in exchange for his help in obtaining grants and funding.[52] Musto denied any wrongdoing.[53] After Musto died on April 24, 2014,[54] Mericle was sentenced the next day to one year in prison by Senior District Judge Edwin M. Kosik. Mericle was ordered to pay a $250,000 fine and to report to the Federal Bureau of Prisons on May 14, 2014.[55] He was released on May 29, 2015.[56]
On October 1, 2019, Ciavarella was disbarred on consent from the practice of law by the Commonwealth of Pennsylvania.[57]
Victim lawsuits
Acting under a rarely used power established in 1722 and reserved for extraordinary circumstances, known as “King’s Bench jurisdiction”,[58] the Pennsylvania Supreme Court appointed Senior Judge Arthur Grim of the Berks County Court of Common Pleas as special master to review all juvenile cases handled by Ciavarella on February 11, 2009.[59] He returned with his findings in an interim report dated March 11, 2009. He recommended that all adjudications handed down by Ciavarella from 2003 to 2008 be vacated, and that the affected juveniles’ records be expunged. He concluded that due to Ciavarella’s disregard for the juveniles’ constitutional rights, as well as the kickbacks, no one who appeared before Ciavarella in that period had a truly impartial hearing.[60] On March 26, 2009, the Supreme Court approved Grim’s recommendations and ruled that Ciavarella had violated the constitutional rights of thousands of juveniles, and initially hundreds of juvenile adjudications were ordered overturned.[61][62]
A class action lawsuit was filed by the Juvenile Law Center on behalf of the juveniles who were adjudicated delinquent by Ciavarella despite not being represented by counsel or advised of their rights. Besides naming Ciavarella and Conahan, the suit seeks damages under the civil portion of the Racketeer Influenced and Corrupt Organizations Act (RICO) against the judges’ spouses and business associates, shell companies, youth center officials, and Luzerne County.[63][64] Three other federal lawsuits filed on behalf of the victims have been consolidated with the Juvenile Law Center lawsuit into a master class action.[65] An amended master complaint was filed on August 28, 2009.[66]
In June 2010, an injunction was filed on behalf of PA Child Care, Western PA Child Care, and Mid Atlantic Youth Services, the companies that provided treatment programs at the youth centers, to prevent the ordered destruction of thousands of juvenile records on the grounds the records are needed for the defense’s case.[67]
On July 8, 2013, a three-judge panel of the Third Circuit Court of Appeals ruled in the case of Markel International Insurance Company v. Robert J. Powell, (his business partner) Gregory Zappala, et al., that the insurance company had no obligation to defend or indemnify the individuals or corporations involved, leaving the defendants liable for adverse judgments.[68]
https://en.wikipedia.org/wiki/Kids_for_cash_scandal
Old news.
Thanks for the cut&paste from WIKIPEDIA!
You are magical!
Did you kill anybody this month?
Powerful comparison to slavery. There’s no way out and everything purposefully stacked against “criminals”.
Sickening revelations – there is no mercy. Those in power thrive on money and increased power while sacrificing humanity.
DALLAS
So, you’re saying: Prison is more profitable than ante-bellum slavery!
Can I start a prison in my own home and get commitments from local courts? I’ve got a large basement and I can get 20 beds down there. That would solve my financial problems quickly and I’ve got plenty of guns and friends willing to work as guards for cheap money.
Also, there are some people I’d like to see in jail. Do you have any advice on how I can get them there and keep them there?
Speechless