Under pressure from activists, L.A. billionaire’s prison telecom announces reforms
A prison telephone company owned by Los Angeles billionaire Tom Gores has brought in a new chief executive and pledged to implement a series of reforms under pressure from criminal justice activists who have targeted the firm and its owner.
Dave Abel, a former IBM executive and PwC partner, has been named chief executive of Securus Technologies, which has been a lightning rod for criticism since Gores’ Beverly Hills private equity firm, Platinum Equity, acquired it for $1.6 billion in 2017. Abel also was named chief executive of Aventiv Technologies, the parent of Securus, created last fall in a corporate reorganization Securus said was meant to accelerate its transformation into a “diversified technology company.”
The activists have accused Securus, based outside Dallas, of charging excessively high rates for calls. Those costs are typically borne by inmates and their families, a population that is disproportionately poor and minority.
Last year, while Platinum was raising money for its latest buyout fund, critics pressured pension funds not to invest, but this month the firm announced it had raised $10 billion — $2 billion over its target.
Abel, who joined Securus as its president last year, said that he took the chief executive posts because the majority of his career involved working with public sector agencies to deploy private-sector technology to “solve big societal problems.” Reforming Securus in an evolving corrections industry qualified as such a challenge.
“Society’s view of corrections has been changing over the last couple of years and is significantly more focused worldwide — but certainly in the United States — on outcomes, on reduction of recidivism and successful reintroduction into society,” he said.
Securus has already negotiated new contracts with corrections agencies that it says has reduced the average cost of a call over the last three years by 30% to 15 cents a minute, and in the case of New York City made them free by transferring the costs to taxpayers. It still has many contracts with rates topping $1 a minute, but a representative said that less than one-tenth of 1% of calling time was charged above that rate in the first half of last year.
In the reform package, Securus is pledging to work with corrections agencies to “broaden rate relief” by targeting the elimination of what it calls “legacy outlier rates.” A 2018 survey by an advocacy group found that 226 of the 250 jails where calls were most expensive had contracts with Securus, with three charging $24.82 for a 15-minute call.
Securus also said it will “build on” a pledge it made last year to offer contracts without so-called site commissions — charges tacked on to the costs of calls that help fund corrections agencies. Activists say commissions transfer the cost of running jails and prison to poor inmates and families.
Securus will offer taxpayer-funded or commission-free contracts to agencies “in every circumstance where it is possible,” but will still offer commissions if that is what corrections agencies want, Abel said. “Our responsibility is to be able to provide our services in any model that a jurisdiction sees as being important or valuable in how they want to manage their corrections business,” he said.
The company is hoping to bring down the overall cost of calls, as well as fees paid, for example, to put money in an inmate account, by reducing its cost structure as well as negotiating lower fees paid to its vendors.
“If I can take costs out of the back office, if I can take costs out of data storage, if I can take costs out of data processing, if I can take costs out of infrastructure — all of these things enable us to be able to lower the cost base,” Abel said. “The degree to which we can develop and deploy tech that enables us to do without third parties we can lower the costs of the transactions.”
Securus served some 3,400 correctional facilities and handed about 240 million calls in 2018, making it the second-largest prison telecom by market share. Its holding company lost $33.4 million on $684 million in revenue that year, according to a preliminary, unaudited financial statement submitted to a state regulator. The prior year it said it earned $67.7 million.
Other elements of the pledged reforms include hiring a third party to produce an annual report on the company’s rates, spending at least $3 million this year on programs to improve prisoners’ reentry into society and to reduce recidivism, and holding quarterly meetings with inmates and families that Abel plans to attend.
“I fully expect that there are areas of these commitments that will go better and areas that won’t go as well. We are going to make mistakes along the way,” he said.
Bianca Tylek, founder of Worth Rises, a New York nonprofit seeking to “dismantle the prison industrial complex,” said she was unimpressed with the company’s pledges and that it could move to unilaterally reduce rates rather than simply offer commission-free contracts and wait years to negotiate them.
“All of their responses start with a common thread, it’s someone or something else’s fault not ours: it’s the government, it’s the third-party vendors, it’s the old technology. But there are plenty of independent actions Securus and Platinum Equity could take to create immediate relief for families, but these would hurt their bottom line,” she said.
Tylek was among the leaders of the campaign to pressure several pension funds from investing in Platinum Equity Capital Partners V. The campaign brought some unwanted publicity to Platinum, leading the Pennsylvania State Employees’ Retirement System to decline to make a $100-million prospective investment in Platinum’s fund. But it did not prevent Platinum from raising its biggest fund yet.
Jim Baker, director of the Private Equity Stakeholder Project, another advocacy group, said that despite the fund’s closure, the “efforts to engage Platinum Equity around its investment in Securus are ongoing.”
“It’s our view, as it has been, that it’s a business Platinum Equity should reform but ultimately get out of. It’s a business that is fundamentally based on extracting money from communities of color and poverty and families facing extremely difficult situations,” he said.
The campaign against Securus follows a longer-running movement by activists to expel private operators from the corrections field.
Gov. Gavin Newsom signed a law in October that banned for-profit prison and immigrant detention facilities in California. Corrections corporation GEO Group has since sued to stop the law from taking effect.
Gores, a high-profile NBA owner credited with helping revitalize Detroit by moving the Pistons downtown from the suburbs, told The Times last fall he was personally committed to overseeing the reform of Securus and offered to meet face-to-face with activists.
No meeting has yet to occur, but Tylek said when one is scheduled she plans to bring formerly incarcerated people and family members of current inmates.