Monday, October 17, 2016

Homeland Security to Review Use of Private Prisons

photograph courtesy of Bob Jagendorf/wikimedia commons
On the heels of the United States Department of Justice announcing that it will end future use of private for-profit prisons based on the failure of these prisons to deliver promised efficiencies and safe conditions, the Department of Homeland Security has recently announced that it too will review its use of private prisons.  With Homeland Security using private prison facilities as immigration detention centers, the profit motive for private prisons has inspired a wave of crimmigration laws in recent years.  Once again, this review is bad news for private for-profit prison giants Corrections Corporation of America (CCA) and the the GEO Group as federal contracts for prisoner warehousing is a large part of their business and profit model.

According to the Wall Street Journal: "The Department of Homeland Security will review whether private prison operators will continue to run immigration and customs enforcement’s immigration detention centers, the latest sign that the federal government is turning away from using these private contractors.  The move comes 11 days after the Justice Department said it planned to eventually stop using private facilities and operators to house federal prisoners.  Homeland Security Secretary Jeh Johnson said Monday that he directed an internal council to determine whether the use of private immigration detention centers should be eliminated."

As federal contracts have increasingly made up a larger and larger portion of the GEO Group and CCA's revenue, a future finding by Homeland Security that it will end its reliance on private prison facilities would be a devastating blow to those companies and shareholders that seek to profit off of the incarceration business.  Again, according to the Wall Street Journal:  "Since 2001, GEO and Corrections Corp. have become increasingly reliant on federal government revenue to drive results. In 2015, just over half of Corrections’ revenue came from various federal government agencies. For GEO, that figure was 45%." 

Stock prices for both companies dropped (even further) on the news of the Homeland Security review.

Thursday, October 13, 2016

Trump Treason?

For example, recently more allegations that Trump committed serious crimes surfaced. Newsweek ran a story by renown investigative journalist Kurt Eichenwald that Trump violated the US embargo against Cuba in the 1990s, as shown in its cover, above. Given ever increasing findings and allegations of pervasive legal violations throughout Trump's adulthood, these new allegations threatened the political viability of Trump's candidacy. At a certain point even Trump faces political extinction for unlawful wrongdoing. In any event, apparently the Russians concluded it could hurt Trump's chances and they hacked Newsweek
According to author Kurt Eichenwald: "Hackers attacked, took site down. Lots of IP addresses involved. Main ones from Russia." We cannot know for certain if Russia is behind this cyber attack. However, the FBI already announced that it is investigating a number of attempts to hack into state election systems and it is looking into "what mischief is Russia up to in connection with our elections." Further, according to Time:  "[the] U.S. intelligence community has 'high confidence' that Russian intelligence services were in fact responsible" for the DNC hack earlier in the summer. Finally, the intelligence agencies apparently briefed Trump on this fact and yet he insists on deflecting responsibility from Putin and Russia. Russia has a long history of interfering with elections in other nations. Even GOP senators privy to classified information now openly proclaim that Russia is directly attacking our democracy and trying to hack the election on behalf of Trump.

The entire (16 agencies) US Intelligence Community says:
The U.S. Intelligence Community (USIC) is confident that the Russian Government directed the recent compromises of e-mails from US persons and institutions, including from US political organizations. . . .These thefts and disclosures are intended to interfere with the US election process. Such activity is not new to Moscow—the Russians have used similar tactics and techniques across Europe and Eurasia, for example, to influence public opinion there. We believe, based on the scope and sensitivity of these efforts, that only Russia's senior-most officials could have authorized these activities.
In other words: our top intelligence agencies consisting of patriotic Americans of all political stripes is outing Vladimir Putin for trying to corrupt our democracy and hack our presidential election. In fact, a key Putin ally today stated that if America does not vote Trump we face nuclear war. This is a serious threat to our democracy and an act of war, pure and simple.

And Donald Trump, for mysterious reasons, seems to be taking the Russian sideFor the first time in history, a candidate for the White House appears to flirt with possible treasonous behavior under federal law (as well as possible violations of other national security laws), by helping to cover-up these attacks. Indeed, he seemingly parrots Russian propaganda.

Obviously, only a jury can convict Trump of any crime, and thus far the Department of Justice refrains from any type of public criminal investigation. Nevertheless, the disturbing facts emerging this past few weeks raise serious questions of just what is going in this election as a result of the Trump "bromance" with Vladimir Putin.
18 USC section 2381 defines treason as follows:
Whoever, owing allegiance to the United States, levies war against them or adheres to their enemies, giving them aid and comfort within the United States or elsewhere, is guilty of treason and shall suffer death, or shall be imprisoned not less than five years and fined under this title but not less than $10,000; and shall be incapable of holding any office under the United States.
The courts long ago applied this provision to aiding "enemies" even without a formal declaration of war, during the Civil War. Still, in order to be an enemy, there must be "open hostility" with the United States. So, Russia may or may not be an enemy for purposes of this statute, but the hacking of our democracy seems openly hostile to me. That could suffice in the eyes of the law given the manifest and grave dangers cyber-warfare may pose. And, during WWII, the statute was applied to seemingly innocuous conduct such serving as a broadcaster of enemy propaganda

Trump's misconduct could constitute "aid and comfort." First, Trump actually invited the Russians to hack Hillary emails. Second, he seems intent on spreading Russian disinformation to cover up Putin's hacks. If Trump continues to invite hacking against his political opponents, and assist in misleading the voting public regarding the source of these cyber-attacks, then he is aiding in such attacks and violates the above statute.  Professor Laurence Tribe at Harvard Law articulated this view even before the recent evidence of increasing hacking attempts emanating from Russia. Treason is no joking matter, and it carries the death penalty because loyalty to the US is the least demand made upon a US citizen.

Why is Donald so over-the-top pro-Russian? Even his own VP candidate, Mike Pence disagrees with his extreme pro-Russian views. It seems the only thing constant about Trump's campaign is its unfailing support for all things Putin and Russian.

In the end, perhaps this is a political question rather than a criminal matter. Nevertheless, the American people deserve an explanation and all should withhold their votes from Trump until one is forthcoming. He needs to fully disclose all elements of his relationship with Russia and its oligarchs. Until then it could not be clearer that a vote for Trump is a vote for Vladimir Putin, and his neo-imperial agenda to restore the Soviet Empire.

Trump is simply determined to help Putin however and wherever possible, and Putin seems willing to do whatever takes to elect Trump. Why?

Saturday, September 24, 2016


Earlier this month, I warned about the possibility of non-transparent influence of Russian oligarchs and Russian dictator Vladimir Putin on Donald Trump under Citizens United. I argued that Trump could easily benefit from money flowing from Russia into his pockets and allow Russian militarism to run amok. This post focuses on that concern as well as our failure to secure our elections from computer hacking as I proposed in this law review article. The fear is that Trump will further the geopolitical ambitions of Vladimir Putin to the great detriment of long term US interests. A former CIA Director views Trump in precisely the same light, as do many mainstream conservative Republicans, as manifest here, and in the above image, from here. A Trump victory poses the unprecedented threat that a dictator could seize control of American foreign policy and politically defeat our armed forces that otherwise cannot be defeated.

Recent news spotlights the heightening of that concern.

First, media outlets reported yesterday that the US intelligence community is probing whether Trump foreign policy adviser Carter Page (a former Moscow-based investment banker with investments in Gazprom) already opened discussions about lifting US-led sanctions with high level Russian agents and officials. This sort of tampering with US foreign policy on behalf of a dictator by a presidential campaign stands without precedent in US political history. Worse, the Trump effort appears to seek the patronage of Putin's vast arsenal of dirty political tricks, including his hacking capabilities (discussed further below). Of course, Trump has long called on the US to ally itself with Russian efforts to maintain its client state in Syria.

Second, earlier this week, ABC News reported its investigative findings into Trump's Russian business ties. They uncovered "hundreds of millions of dollars" flowing from Russian business interests into the coffers of Trump, Inc. Trump benefits directly from these Russian business ties through sales concessions paid to him as a result of Russian purchases of Trump-sponsored properties. ABC News also found that many Russian oligarchs frequently furnish investment capital for Trump business. Russian business leaders openly admit to these connections:
"The level of business amounts to hundreds of millions of dollars -- what he received as a result of interaction with Russian businessmen. They were happy to invest with him, and they were happy to work with Donald Trump."
Donald Trump, Jr., also openly admitted to these same links in 2008: "Russians make up a pretty disproportionate cross-section of a lot of our assets. We see a lot of money pouring in from Russia." At this point, it is beyond dispute that Trump has major business ties with Russian business interests. These findings directly support conservative columnist George Will's position that Trump refuses to produce his tax returns because they would reveal unflattering ties with Russia.

Third, high level US Congressional leaders, from both parties, with access to classified material, recently warned that Russia appears poised to hack American democracy itself to get Trump into office. Vice-Chair of the Senate Intelligence Committee, Senator Dianne Feinstein, and the Ranking Member of the House Intelligence Committee, Adam Schiff, released the following joint statement:
"Based on briefings we have received, we have concluded that the Russian intelligence agencies are making a serious and concerted effort to influence the U.S. election. At the least, this effort is intended to sow doubt about the security of our election and may well be intended to influence the outcomes of the election. We can see no other rationale for the behavior of the Russians."
In short, the axis of interests between Trump and Putin now poses an unprecedented external threat to the security of the US and its citizens. Even in the Election of 1940, which I previously identified as the last concerted effort by a dictator, Adolph Hitler, to interfere with American politics, Hitler had neither the capabilities nor brazenness to pull off what Putin and Trump appear to be doing: the subversion of US democracy and defense capabilities in the service of a dictator.


Friday, September 23, 2016

Corporate Justice

Hot off the presses, a new coursebook for law school classrooms entitled "Corporate Justice" has just been released by the Carolina Academic Press authored by blog contributors Todd J. Clark and andré douglas pond cummings.  This coursebook offers an alternative approach to traditional Corporate Law courses.

“Corporate justice” refers to a shared responsibility, even a moral obligation, between corporate decision makers, shareholders, external organizational constituencies, and society to ensure that the corporate decision making process is fair, civil, responsible, and just. More than that, corporate justice requires that corporations do no harm in their pursuit of profits and that shareholders as well as society in general have an affirmative responsibility to facilitate this pursuit. Corporate justice expects that founders, stakeholders, and executives in a business will honor human potential and eschew profits when such derive from unfairness, inequality, danger, and damage. This book explores each of these themes in depth, providing an insight practically non-existent in corporate law textbooks and treatises available today.

The book is available at the Carolina Academic Press site.

Saturday, September 3, 2016

Trump, Putin, Hitler & Citizens United

The election of 1940 functioned as a referendum on US participation in WWII and the willingness of the US to defend western democracy as well as capitalism itself. FDR staked out a powerful anti-Hitler position. The rather farsighted measures he implemented to assure US survival prior to that fateful election include: 1) the Two Ocean Navy Act, the largest naval procurement act in US history which assured US naval dominance throughout the war and was signed into law on July 19, 1940; 2) the first peacetime conscription act which FDR signed into law on September 16, 1940;  and 3) agreeing in September of 1940 to trade 50 old navy destroyers to Great Britain (already at war and suffering daily bombing from the Luftwaffe)  in exchange for bases around the world. Hitler had no doubt that FDR was a foe to be reckoned with.

Image result for 1940 election amid a stormConsequently, Hitler possessed a strong incentive to try to influence the election of 1940 and history proves he did exactly that. William Shirer reported from Berlin at the time that the Nazis "ardently wished" that the GOP would triumph in the election of 1940 giving them time to overrun Europe before America could reverse the tide as they did in 1918. Due in part to recent books on the topic, we now know that Nazi operatives in the US solicited Hitler's government to fund ads in the New York Times to persuade American voters to stay out of the European conflict that was at full boil after the invasion of Poland in September 1939. Such ads ultimately appeared in the Times during the GOP convention in June of 1940. Further, Nazi Germany funneled $160,000 ($2.7 million in 2016 dollars) to defeat pro-Roosevelt democrats and to stop Roosevelt himself at the Democratic convention through William Rhodes Davis. Fortunately, Hitler's effort to defeat Roosevelt in the election of 1940 failed and the US once again destroyed the irrational autocrats of Europe.

This Nazi effort in 1940 counsels us today to exercise vigilance over the possible foreign influence over our elections and democracy. Unfortunately, the Supreme Court essentially gave all money--domestic or foreign--the green light to subvert American democracy in the Citizens United decision which today figures as a major Achilles heel in our national defense. Justice Kennedy basically invited any foreign autocrat to spend unlimited funds (through domestically domiciled corporations) to defeat our nation, which even Vladimir Putin admits cannot be defeated on the battlefield.

As a direct result of Justice Kennedy's decision to throw his weight behind big money we now need to fear foreign threats as never before. Autocrats like Putin no doubt understand that Justice Kennedy's ruling allows foreign dictators to use Citizens United to turn the Constitution into a suicide pact. They simply funnel their cash through a US corporation that does not coordinate with a candidate's campaign and they can spend unlimited funds to install a friendly government in Washington DC. Justice Stevens predicted all of this in his dissent in Citizens United highlighting that the majority's opinion in Citizens United opened the door to foreign controlled corporations.

This issue of opening the door for foreign enemies to influence US elections has not gone away since Citizens United. Federal Election Commissioner Ann Ravel tried earlier this month to cut back foreign election influence. She states that foreign influence over our elections poses a threat that was unthinkable a decade ago. 

Which brings us to the strange and unprecedented relationship between Presidential nominee Donald Trump and Vladimir Putin. According to the Washington Post (banned from press credentials by the Trump Campaign):
"The overwhelming consensus among American political and national security leaders has held that Putin is a pariah who disregards human rights and has violated international norms in seeking to regain influence and territory in the former Soviet bloc. In 2012, one year before Trump brought his beauty pageant to Moscow, then-Republican presidential nominee Mitt Romney called Russia the United States’ top geopolitical threat — an assessment that has only gained currency since then."

Trump has deep ties with Russia. His son Eric Trump admitted that Russian money has flooded into Trump investments: "Russians make up a pretty disproportionate cross-section of a lot of our assets. We see a lot of money pouring in from Russia." On the issue of Russia's military aggressions into the Crimea and the Ukraine, Trump simply parrots the Kremlin's party line. Trump has been castigated by GOP leaders as well as others for weakening NATO in accordance with the very high priority that Russia has to divide the western allies. Conservative columnist George Will suspects that if Trump released his tax returns (like all other Presidential candidates) they would show even more financial connections to Putin. A former CIA Director suspects that Trump is already acting as an unwitting Russian agent.

Despite Putin's nasty conduct Trump has curried his favor just as he has with other dictators. Indeed, North Korea has officially endorsed Trump for president. Trump reportedly has directly solicited foreign campaign contributions.

Trump's candidacy thus poses a serious national security threat to the US without precedent. Hopefully, American citizens will disregard all super-PAC spending in favor of Trump for the simple reason that it could all be funded through foreign dictators that wish us ill, and seek to destroy America's traditional role as opponent of autocrats and dictators. If money pours into this election in favor of Trump it is likely to be from some foreign dictator.

Thursday, August 18, 2016

Department of Justice Will End its Use of Private Prisons

The United States Department of Justice announced today that it no longer intends to house federal inmates in private, for-profit prisons.  The DOJ cited its own study finding that private prisons "simply do not provide the same level of correctional services, programs, and resources; they do not save substantially on costs; and as noted in a recent report by the Department's Office of Inspector General, they do not maintain the same level of safety and security."  In a memo released by Deputy Attorney General Sally Q. Yates, federal prison officials were directed to no longer renew contracts with private prison corporations, like the Corrections Corporation of America and the GEO Group, or to significantly reduce the scope of the contract with the end-goal of eliminating federal use of private prison facilities.  According to Deputy Yates' release:  "Today, I sent a memo to the Acting Director of the Bureau of Prisons directing that, as each private prison contract reaches the end of its term, the bureau should either decline to renew that contract or substantially reduce its scope in a manner consistent with law and the overall decline of the bureau’s inmate population.  This is the first step in the process of reducing—and ultimately ending—our use of privately operated prisons."

This is clearly not good news for CCA, the GEO Group, and other for-profit private prison operators.  The federal government had steadily supplied prisoners to these profit centers for the past decade as mass incarceration overwhelmed good moral and fiscal judgment in the United States.  In fact, CCA and GEO Group stock plunged nearly 40% upon the news today.  CNN reports: "[A]dvocates for prison reform believe this could be the beginning of the end for private prisons. Wall Street appears to agree. The stocks of two of the largest private prison operators fell dramatically after The Washington Post reported the news. Corrections Corporation of America (CXW) lost 40% of its value Thursday. Geo Group (GEO) also slumped about 40%" 

The Street reports:  "Shares of private prison operators have plunged to new lows for the year on steep declines Thursday following the [DOJ's] decision to effectively end contracts with those companies. . . . Neither company [CCA or GEO] figures to weather this storm very easily, as they don't have any significant brand extensions that insulate them from their primary business of providing correctional facilities for the government. In 2015, for instance, 45% of GEO revenue came from the Federal Government. However, these companies also operate state penitentiaries, which should not be directly affected by the DOJ's action."

The Corporate Justice Blog has long maintained that private, for-profit prison corporations are fundamentally immoral as its leaders are perversely incentivized to injure U.S. citizens by lobbying for harsher sentences (three-strikes laws), developing "new" crimes punishable by prison time (AZ SB 1070, crimmigration), providing poorer services to inmates in order to cut costs, and forcing cities and municipalities into signing contracts that guarantee 90% occupancy rates in the private prisons.  Recent research and scholarship indicate that the promised benefits of private prisons, that they are  cheaper, safer, and more efficient, are simply not true.  This research shows that private prisons keep inmates locked-up longer (for same-time sentences), are less safe, and are more costly, each attributable directly to a profit motivation.

Adam Lamparello and I recently published an update on the perverse incentives that motivate private prison executives summing up the research that finds that private, for-profit prisons do not deliver on their promised efficiencies:  Private Prisons and the New Marketplace for Crime.

Friday, August 12, 2016

Trump's New Smoot-Hawley Depression?

I have written extensive legal critiques on the shortcomings of the western model of globalization that the US largely imposed after WWII. Indeed, my book on the lawlessness of the uber-class in the years before the Great Financial Crisis of 2008, Lawless Capitalism, includes an entire chapter called "Rigged Globalization."

That chapter argues that US financial and corporate elites (including the megabankers Trump wishes to free from law and regulation) rigged globalization to maximize profits from low wages world-wide and the use of unsustainable debt to spur consumption even in the face of declining job prospects throughout the developed world due to massive off-shoring of jobs to low wage locales. Globalization was not constructed or implemented with a view towards sustainable economic growth.

The book includes specific innovations to reconstruct globalization in accordance with economic science to vindicate its pro-growth potential to the maximum extent possible. These innovations include empowering all people to freely move to their highest and best use (which would double global GDP) and investing currency reserves into global infrastructure projects which would immediately spur massive global job creation. Globalization can be fixed and can operate to secure rising living standards worldwide.

 Trashing globalization and pursuing protectionist policies such as higher tariffs is not a good idea. In fact, it was done before and led to global economic disaster. In 1930, the GOP-controlled Congress passed the Smoot-Hawley Tariff Act, and GOP President Herbert Hoover signed the Act into law. There is broad agreement among economists that this Act prolonged and deepened the Great Depression by raising tariffs and triggering a global trade war. According to the Economist, global trade collapsed by over 60 percent in the aftermath of Smoot-Hawley as shown in the accompanying chart.

Yet, Donald Trump, ignoring history, consistently built his campaign on the theme of protectionism. He has pledged to slap a 45 percent tariff on Chinese imports and a 35 percent tariff on Mexican imports. We need not rely only upon history to understand the danger of Trump's economic ideas. Mark Zandi (a former economic adviser to the Senator John McCain presidential campaign in 2008) of Moody's projects that Trump's trade policy would lead to a recession, drive up unemployment to 9.5 percent, lead to up to 7 million lost jobs, and increase the national debt by 60 percent. In short, according to Zandi, it is a scenario "any rational person would want to avoid." Zandi is not the only economist that concludes that Trump's idea's would lead to risks from a severe recession to higher prices for consumers.

Even traditional GOP supporters are aghast at the sheer recklessness of Trump's promises. For example, Peter Singer, a financial expert and longstanding GOP donor states: "If he actually . . . gets elected president its close to a guarantee of a global depression, [a] widespread global depression." Former Bush Administration official, Robert Zoellick, calls Trump's trade ideas "foolhardy." He adds that free trade saves the average household $10,000 per year through lower prices on a range goods produced outside the US. In fact, no less than three former US Trade Representatives joined 50 other former GOP officials to reject Trump's candidacy and terming his proposals "most reckless."

In sum, economic science and theory, history, and expert opinion all align on Trump's trade proposals: they are dangerous, reckless, and ill-informed.

Tuesday, August 9, 2016

Trump Wants to "Dismantle" Dodd-Frank and Re-ignite the Great Financial Crisis of 2008

Understandably, GOP presidential nominee Donald Trump and the rump of the GOP still standing behind his "bigotedcampaign (in the words of former  and current GOP representatives) do not want to talk about the accompanying chart at right. They claim the USA economy is "ruined." The chart at right proves them wrong and proves that President Obama can rightly claim that the US economy is the "envy of the world."

President Obama is not the only one making this claim. The Economist termed the US economy the "lonely locomotive" of growth in a world mired in stagnation. The OECD reckons that since 2008 the US economy is 11 percent larger, while the Eurozone and Japan have grown by a small fraction of this number. The out-performance of the US economy under President Obama is a reality-based fact!

Further, with respect to the crucial question of job growth, President Obama's policies led to more than 14 million new jobs since the depths of the crisis of 2008. Even a cursory look at job growth in the USA since the Bush Administration (see chart below) proves that the GOP led the economy to the greatest job destruction in modern history. According to the Wall Street Journal, George W. Bush had the worst job creation record since WWII. President Obama quickly turned around the massive job losses he inherited, and has now presided over 70 straight months of job growth.

And, the most recent jobs report from the US Department of Labor is perhaps one of the best yet. Wages were up. The employment ratio was up. The US is now creating more jobs than at any other time since the last Clinton years.

Certainly, more job growth would be better, particularly for the middle class. Inequality is also a major barrier to continued economic growth. Economic weakness across the world further hinders US export growth. Global growth in turn would lead to more impressive job growth.These topics warrant separate posts, for another day.

The key point for this post is that after a devastating economic collapse in  2008, after 8 years of GOP control, the US economy has achieved the most impressive economic recovery among developed nations. The entire developed world suffered a massive heart attack in 2008, and faced a total financial collapse; the US recovered the fastest and has enjoyed the most growth since the crisis.

The charts herein and the facts cited above show beyond dispute that the USA outperformed the entire world after the GOP trashed the economy the last time they controlled the government. After 8 years of GOP leadership, the US economy cratered in 2008, losing over 800,000 jobs per month. It now produces hundreds of thousands of jobs per month, month after month.

What particular policies led to this historic turnaround?

The OECD attributes the US recovery to government policies, including Obama's stimulus bill and financial stability, secured by the Dodd-Frank Act. Indeed, the OECD finds that:

Chart of GDP growthEfforts to raise further capital requirements for large financial institutions, reduce fragmentation among regulators, and introduce macro-prudential tools is justified. In this respect, full implementation of Basel III and the Dodd-Frank Act is critical.

I have previously criticized the Dodd-Frank Act for being incomplete, too weak, and too pro-banker. That is why I agree with Hillary Clinton and the experts at the OECD that it should be fully implemented and expanded. After all, the American economy outperformed the entire developed world after the financial crisis while Dodd-Frank became law and regulators implemented its mandates.

Yet, Trump wants to go the opposite direction. Trump quite clearly wants to "rip up" Dodd-Frank and return to the 2008 pre-Dodd-Frank legal and regulatory reality that spawned the Great Financial Crisis. This is the key difference between Trump and Clinton on the issue of bank regulation according to the Wall Street Journal. Indeed, Trump has already met with congressional leaders to plot the repeal of Dodd-Frank, suggesting that unlike most of his other crazy ideas he is quite serious about returning to the dark days of later 2008.

But given the impressive and successful performance of the US economy after the Great Financial Crisis of 2008, it just makes no sense to return to the same legal and regulatory reality that spawned that crisis. Why even roll the dice? If the gamble goes wrong (as so many Trump gambles do) it could mean mass unemployment like that which occurred prior to the inauguration of President Obama.