Private Prison Giants GEO And CCA Accused of “False and Misleading Statements”

The companies are under fire for hiding the truth about its business from investors.

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Update, 8/29/2016, 2:38 p.m. EST: On Friday, August 26, a similar shareholder lawsuit was filed by investors in GEO Group, the United States’ largest private prison company. It alleges that the company failed to disclose risks of losing its federal contract due to a lack of adequate safety standards.

A shareholder class-action lawsuit was filed Wednesday against Corrections Corporation of America, a private prison company that was the subject of a recent Mother Jones investigation. Last week, the Department of Justice announced it would work to end its private prison contracts.

The shareholders allege that CCA and its executive officers made false or misleading statements that put the business in jeopardy, charging that CCA failed to disclose to its investors that “facilities lacked adequate safety and security standards and were less efficient at offering correctional services than the Federal Bureau of Prisons” and that “consequently, the U.S. Department of Justice (‘DOJ’) was unlikely to renew and/or extend its contracts.”

The complaint notes Deputy Attorney Sally Yates’s announcement on August 18 that the DOJ would work to stop contracting with private prisons. That decision came a week after the DOJ inspector general released a report showing lacking safety and security in private prisons, and seven weeks after a Mother Jones investigation drew national attention to CCA’s operation of a facility in Louisiana. On the day of the DOJ announcement, CCA’s stock value fell more than 35 percent.

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We didn't know what to expect when we told you we needed to raise $400,000 before our fiscal year closed on June 30, and we're thrilled to report that our incredible community of readers contributed some $415,000 to help us keep charging as hard as we can during this crazy year.

You just sent an incredible message: that quality journalism doesn't have to answer to advertisers, billionaires, or hedge funds; that newsrooms can eke out an existence thanks primarily to the generosity of its readers. That's so powerful. Especially during what's been called a "media extinction event" when those looking to make a profit from the news pull back, the Mother Jones community steps in.

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