Shareholders of Nashville, Tennessee-based Corrections Corporation of America filed a federal class-action lawsuit Wednesday, accusing the company and its executives of making “materially false and misleading” statements.

The lawsuit came on the heels of an announcement last week that the Federal Bureau of Prisons will phase out its contracts with for-profit prison companies, including CCA.

Saguaro Correctional Center CCA Fence CCA mountains Eloy Arizona Razor Wire3
Hawaii awarded a new, three-year contract last month to Nashville, Tennessee-based Corrections Corporation of America to house hundreds of its excess prisoners on the mainland. Cory Lum/Civil Beat

The leading plaintiff of the lawsuit is Nikki Bollinger Grae, who bought 400 shares of CCA’s stock at $32.15 apiece on July 22 — less than a month before the U.S. Justice Department‘s inspector general released a scathing report, which found that for-profit prisons had more safety and security issues than the government-run facilities.

According to the lawsuit, CCA’s shareholders were not informed that “CCA’s facilities lacked adequate safety and security standards and were less efficient at offering correctional services than” the Bureau of Prisons, and, as a result, the Justice Department “was unlikely to renew and/or extend its contracts.”

CCA is the country’s largest for-profit prison company, which signed a new, three-year contract with the Hawaii Department of Public Safety to house up to 1,926 Hawaii prisoners in Arizona.

CCA spokesman Jonathan Burns could not be reached for comment.

About the Author