The Slow Death of a Prison Profiteer: How Activism Brought Securus to the Brink

By Dana Floberg and Morgan Duckett / The Appeal

Last week, the nation’s largest prison and jail telecom corporation, Securus, effectively defaulted on more than a billion dollars of debt. After decades of preying on incarcerated people and their loved ones with exploitative call rates and other predatory practices that have driven millions of families into debt, Securus is being crushed under the weight of its own. In March, the company’s creditors gave the corporation an eight-month extension to pay up, urging its sale to a new owner to stave off an otherwise imminent bankruptcy. 

Securus is one of two corporations that dominate roughly 80 percent of the U.S. prison telecom industry, forming an effective duopoly that thrives on the captive markets found inside the nation’s lockups. Both companies are owned by private-equity firms: Securus, by Platinum Equity, and ViaPath (previously Global Tel Link), by American Securities.

The slow death of the largest player in this space is not accidental. It follows six years of intense advocacy to expose the vulnerability of the prison telecom industry’s business model on both ethical and economic grounds. Organizers have waged a strategic war against Securus, educating investors and the public about the company’s predatory practices while successfully advocating for legislation and regulation to rein them in.

With Platinum now on the hook to pay $1.3 billion of Securus debt this year following a series of failed attempts to refinance, bankruptcy seems inevitable. The company’s failure would represent a remarkable victory for advocates—and a potential beginning of the end for the prison telecom industry as we know it.

A Predatory Business Model

Together, Securus and ViaPath contract with 43 state prison systems and over 800 county jails. Their dominance of the market allows them to routinely charge incarcerated people and their families egregious rates for rudimentary communications services: A 15-minute phone call can run as high as $8.25; a 25-minute video call up to $15; and basic emails as much as $0.50, or more with attachments. On top of this, telecom companies are raking in new revenue with digital tablets that offer media, including movies, songs, and games, at prices far above market rate.

The nature of agreements between these telecom providers and correctional agencies often further incentivizes the financial exploitation of the incarcerated, creating profit-sharing kickback schemes that provide prisons and jails with a portion of sales revenue. As a result, many agencies award contracts to the vendor with the highest commission, which often translates to the highest prices.

Facing extreme costs and abysmal or nonexistent wages, incarcerated people must often turn to their families to help pay for communication services. Families routinely face an impossible choice between accepting a call from a loved one inside and paying their bills. Many fall into debt due to these costs, and some are forced to cut contact entirely. The collapse of these bonds harms incarcerated people, their families and children, and society as a whole, with research consistently showing that family contact is critical for successful reentry upon release. 

For years, corporations like Securus and ViaPath faced little scrutiny as they used this model to generate billions of dollars in revenue. More recently, however, these predatory practices have proven less viable. Despite raking in roughly $700 million in revenues annually, Securus has been in the red for the last few years due in part to huge interest payments on debt taken out by Platinum Equity upon acquiring the corporation, as well as management fees it must pay the firm. ViaPath is facing a similar strain under massive debts that will begin coming due in 2025.

Interrupting Business as Usual

Securus was initially formed in 2004 after the merger of two smaller correctional telecom corporations. The company changed private equity hands several times before Platinum Equity acquired it in 2017. Platinum took out over a billion dollars in debt to put in the winning bid for Securus—a model that is typical for private equity buyouts. Today, Securus has racked up a total of $1.6 billion in debt. While the private equity structure shields Securus from the scrutiny applied to publicly traded corporations, this debt is publicly traded and provides insight into its financial health.    

Debt is priced relative to dollar, or par. Debt priced at 100 cents or more suggests lenders are confident that the corporation is doing well, can make interest payments, and will repay every dollar it borrowed. Anything lower indicates the opposite. During the first two years of Platinum Equity’s ownership, Securus’ debt value was steady at par.

Things started to change in 2018 when a coalition led by the New York-based advocacy organization Worth Rises passed first-of-its-kind legislation in New York City to make jail calls free. In 2020, local advocates did the same in San Francisco. In 2021, Connecticut became the first state to pass legislation making prison and jail communication free. These early victories sent a powerful message to the industry: the exploitative status quo upon which Securus’ profits depended was beginning to crumble.   

While advocates continued to organize, the industry was still largely preoccupied with pursuing a strategy of growth through acquisition. In 2018, Securus sought to acquire ICSolutions, the third-largest player in the prison telecom market. But Worth Rises and national partners contested the deal, arguing to the Federal Communications Commission (FCC) that the merger would harm incarcerated people by reducing competition. If approved, the merger would have further consolidated the industry, putting roughly 90 percent of the market under Securus and ViaPath’s control. The FCC agreed in April 2019, leading Securus and ICSolutions to abandon the deal. 

The next step for advocates was to convince major investors to ditch Platinum Equity over its ties to Securus. In meetings over the next six months, they explained that Platinum’s investment in the prison telecom giant presented substantial reputational and financial risks, especially as policymakers and regulators turned their attention to the industry. The strategy paid off. In September, the Pennsylvania State Employees’ Retirement System denied Platinum Equity a $150 million investment, citing the extensive negative press surrounding Securus.

In the wake of this campaign, Securus’ debt dropped to distressed levels as low as 47 cents on the dollar. The corporation still had its contracts and enough cash flow to stay in business, but investors were showing little confidence that it would survive long enough to pay back its debts.

No Easy Exits

The COVID-19 pandemic rescued Securus, at least temporarily. With prisons and jails across the country locking down and banning visits, skyrocketing call volume and expanded digital tablet programs provided new fuel to the industry. While families struggled to stay healthy, financially afloat, and connected, Securus notched a 10 percent increase in revenue year-over-year from 2019 to 2020, significantly higher than the year before. Its debt pricing reflected this grim success, bouncing back to more than 90 cents on the dollar. 

Advocates refused to back down, this time targeting Platinum Equity founder and CEO Tom Gores. In the fall of 2020, Worth Rises and the racial justice organization Color of Change called for his removal from the prestigious, mostly-billionaire board of the Los Angeles County Museum of Art over his ties to Securus. Hundreds of artists, curators, and collectors joined the campaign, and in less than a month, Gores was forced to resign. Two months later, Worth Rises took out a full-page ad in the sports section of the New York Times calling on the NBA to force Gores to sell the Detroit Pistons. 

Platinum Equity and Gores were desperate to offload Securus and saw the company’s pandemic-boosted financials as an opportunity to do so profitably. They planned to sell Securus to a special purpose acquisition company (SPAC), a public shell corporation formed solely to acquire and take a private corporation public without the scrutiny of an initial public offering.

With broad mandates, SPAC investors pony up millions without knowing much about what they’re buying. Advocates quickly moved to change that, informing the SPAC’s management and investors that the sale would make them the not-so-proud shareholders of an ethically bankrupt and financially unstable prison profiteer. In late 2022, the deal failed, forcing Platinum back to the drawing board.

“After endlessly pillaging impacted communities, we did not want Platinum to walk out the winner,” said Bianca Tylek, the executive director at Worth Rises. “They refused real change for years, so now, we weren’t going to allow them any easy exits.”

The deal’s collapse came as expiring prison restrictions and successful prison telecom regulations began to cut into the industry’s pandemic windfalls. In September 2022, California passed a bill to make calls free in state prisons. By the fall of 2023, Colorado and Minnesota had also mandated free phone calls for people in prison, and Massachusetts had become the first state to make all prison communication free in both prisons and local jails.

Around the same time, a decades-long fight in Congress finally led to the passage of the Martha Wright-Reed Just and Reasonable Communications Act. The legislation—named after Martha Wright-Reed, who first filed an FCC petition to reduce the price of prison calls so that she could stay in touch with her incarcerated grandson—secured the FCC’s authority to regulate rates for in-state calls from correctional facilities, which make up 80% of all prison and jail calls, and granted it regulatory authority over video calls for the first time.

The enactment of that legislation sent Securus’ debt prices tumbling once more.

The Looming Debt Wall

With its debt prices sinking, Securus faced newfound urgency: $1.3 billion in debt was set to come due in 2024. Hundreds of millions more would follow in 2025. In May 2023, Platinum Equity announced a plan to go to the public debt market to refinance Securus’ debt with new bonds. As a show of confidence for investors, Platinum promised to inject another $400 million of equity into Securus. 

The corporation’s debt value improved after the announcement, but investor excitement fizzled after Securus failed to secure a refinancing deal even with the sweetener. Banks and lenders, it turned out, were not eager to jump on a toxic prison industry asset that had become the focus of so much negative attention and pressure.

With the clock ticking on Securus’ debt, Worth Rises reached out to credit rating agencies to share information about the state of the prison telecom industry, including the legislative, regulatory, and contract pressures it increasingly faced. In October, S&P Global downgraded Aventiv, Securus’ parent company, to a CCC- credit rating with a negative outlook—a highly speculative, junk bond grade. Analysts explained that the growth of legislation making jail and prison calls free threatened the corporation’s model because “profits could shrink if [Securus] is forced to negotiate with entities that have more negotiating leverage.” 

In November, credit rating agency Moody’s followed suit, downgrading Aventiv to “junk” status. Analysts noted that neither the corporation’s cost-savings efforts—including the firing of nearly 300 employees—nor its revenue expansion efforts had meaningfully changed this outlook.

With less than a year before the first tranche of loans came due, Securus made a last-ditch effort to avoid bankruptcy. The corporation coerced its creditors into a distressed debt exchange to delay its maturity dates and interest payments. The distressed deal gave Securus some immediate relief from its debt obligations but cost Platinum Equity $20 million and sparked last week’s credit ratings downgrade to default. Today, the company’s debt is trading as low as 8 cents on the dollar.

What Comes Next

As financial institutions have soured on Securus, their reasoning has reaffirmed an argument advocates have been making for years.

The success of the prison telecom industry depends entirely on investors, who only recently began to question the ethics of the business, and government complicity from local jails all the way up to Congress. When correctional agencies—rather than incarcerated people and their families—are required to cover costs associated with these services, this predatory scheme collapses, as states finally have an incentive to demand lower prices from their prison telecom vendors. 

And telecom services don’t need to be made entirely free to destabilize the industry’s business model. Any movement to lower exorbitant rates can threaten the bottom line of corporations that have built an empire around price-gouging the incarcerated. In the wake of recent reforms, phone revenues have declined sharply, while sales of new products like digital tablets have not made up the difference. 

All of this spells bad news for cash-strapped Securus and similarly debt-burdened ViaPath. For years, ViaPath’s owner, American Securities, has followed the same playbook as Platinum Equity, including trying and failing to offload ViaPath in a SPAC deal. When it comes time to refinance the company’s debt next year, investors will be even less likely to take a risk on ViaPath if Securus fails to repay its debts later this year.

While much remains uncertain about how Securus or other prison telecom providers will manage the hard road ahead, the destabilization of this industry could have implications for the hundreds of thousands of incarcerated people who are currently forced to rely on these companies to communicate with the outside world.

Advocates note that even if a major provider like Securus were to declare bankruptcy, this would not necessarily lead to a disruption in prison telecom services. Bankruptcy alone would not fully put these corporations out of business, at least not immediately.

Instead, they hope Securus’ downfall would spur a broader reckoning that right-sizes the industry, stopping the growth of prison telecom corporations, reducing their profit margins, and driving private equity and other financiers out. Even modest changes could break the industry’s current stranglehold on prisons and jails, opening the field up to creative new solutions like in-house telecom services or nonprofit providers that can offer the same service at a fraction of the cost. All of this bodes well for future efforts to make prison and jail communication free nationwide. 

Through a yearslong campaign of strategic actions, Worth Rises and its partners have brought the largest correctional telecom operator to the brink of insolvency while exposing the industry’s underlying vulnerability. Many of the corporations that have profited off this predatory business model are private equity-owned, debt-laden, and facing serious financial challenges. Advocates argue that the same tactics that brought Securus down—narrative change, policy campaigns, regulatory efforts, and investor activism—offer a roadmap for tackling exploitative corporate profiteers across the prison industry. 

After decades of exerting nearly unfettered power and influence over carceral policies and practices, the prison industry racket could finally be coming to an end.

“Powerful prison profiteers are upholding mass incarceration so they can take home billions every year, but they are not unstoppable,” said Tylek of Worth Rises. “This is a warning to all those with no scruples about how they make their money: hands off our communities.”

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