Detroit Pistons owner about to squeeze fans in a new way, buying Securus
by Wendy Sawyer, May 18, 2017
Detroit Pistons owner Tom Gores has styled himself a hometown hero in Michigan, but his company’s current bid to acquire prison telecom company Securus Technologies suggests he cares far more about profits than he does people.
“It’s really Tom’s idea that [the Pistons] are a great platform, they’re a community asset and, with that, requires us to be socially responsible…. It’s about inspiring our youth, unifying our community, and improving the lives of others.” – Arn Tellem, vice chairman of Palace Sports & Entertainment (owned by Platinum Equity)
If Gores is trying to improve lives, Securus is the wrong investment. As the second-largest prison and jail telecom company in the country, it is arguably one of the most exploitative companies profiting from mass incarceration. It’s certainly among the worst of the bunch for the people forced to use their ever-expanding array of criminal-justice-related “services.” (See sidebar)
Securus exploits the need for incarcerated people and families to maintain contact, charging extremely high rates and fees for phone calls. Some of the money goes back to the prison or jail in the form of commissions, so the incentive for Securus and the facilities is to charge as much as possible. In Michigan, that means a 15-minute in-state call can cost families over $22. In response to objections, rival company GTL has lowered rates in Michigan state prisons to about 20 cents per minute, but Securus continues to charge over $1 per minute.
And who are the people paying Securus those high rates and fees? Family and friends, many of whom are low-income and people of color – and the same community members whom Mr. Gores supports through his charitable endeavors. A Detroit sports fan or concert-goer might question the sincerity of Mr. Gores’ philanthropic efforts when the outrageous fees they pay Securus end up lining his pockets.
— Lee G. Petro (@LeeGPetro) May 17, 2017
So why is Gores’ private equity firm, Platinum Equity LLC, interested in Securus, when its exploitative practices are well-documented and bound to invite criticism? Platinum is either ignorant of the company’s exploitative business model (unlikely) or it sees an opportunity too good to pass up.
Over the past 10 years, Securus has expanded its business to avoid pesky regulations that might restrict exploitative practices, and the current political climate may reward this strategy. Between 2007 and 2015 the company shifted from 100% regulated businesses to 65% deregulated businesses within the expansive world of “user-funded” criminal justice services, like telemedicine, commissary, probation and parole supervision, and GPS monitoring.
Securus’ remaining regulated business, its large phone provider service, may also be shielded from federal oversight under the new FCC chair, Ajit Pai. The FCC’s recent change in leadership ended the government agency’s willingness to defend the caps it placed on prison phone calls in 2015. That change improved the odds that prison phone calls will continue to yield steady profits for people and companies willing to ignore the impact on the people forced to pay obscene rates and fees.
By investing in Securus, Tom Gores’ Platinum Equity joins the ranks of those companies that care about social responsibility – only when it does not affect their bottom line.