CLC v. FEC (GEO)

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At a Glance

This case is a challenge to the FEC’s delay in enforcing federal campaign finance law against GEO Group, one of America’s largest private prison companies, which illegally made $225,000 in contributions to a super PAC supporting then-candidate Donald Trump in 2016.

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About this Case

In August 2016, the Obama administration announced that it would be phasing out federal private prison contracts like those held by GEO. The announcement sent GEO’s stocks tumbling. The next day, GEO contributed $100,000 to the pro-Trump super PAC Rebuilding America Now, and it made another $125,000 contribution just one week before the election. At the time, Mike Pence was telling donors that giving to the super PAC was “one of the best ways to stop Hillary Clinton and help elect Donald Trump our next president!” After Trump won, GEO gave $250,000 to the Trump Inaugural Committee.

GEO did not have to wait long to see its investment start to pay off. On Feb. 23, 2017, during his second full week on the job, Attorney General Jeff Sessions issued a one-paragraph memo reversing the Obama administration’s private prison phase-out, instead ordering officials to continue using for-profit facilities for federal inmates.

In April 2017, the Trump Administration awarded GEO a $110 million, 10-year federal contract to build and administer a new 1,000-bed immigration detention center in Texas. GEO expects $44 million a year in revenue from the facility. GEO also has enjoyed a soaring stock price; its stock shot up 21 percent the day after Trump won, and has continued to grow since then.

CLC filed an FEC complaint, which alleges that the contributions — made through a wholly-owned subsidiary, GEO Corrections Holdings, Inc. — violated the ban on federal contractors giving money in federal elections. This law has been in place for 75 years to protect the integrity of the contracting process.

CLC filed this case against the FEC on January 10, 2018 in the U.S. District Court for the District of Columbia after waiting more than a year for the FEC to resolve this complaint. CLC hopes the lawsuit will compel the FEC to act. 

There is recent precedent for the FEC taking action against government contractors for giving to super PACs. In September 2017, the FEC responded to a CLC complaint and found that the Massachusetts-based Suffolk Construction Company violated campaign finance law by making two $100,000 donations to a Hillary Clinton-affiliated super PAC in 2015. That company agreed to pay a $34,000 fine.

The reason that federal contractors have been barred from making contributions for the past 75 years is to prevent pay-to-play in the contracting process. Public officials are supposed to make contracting decisions based on what is best for the public, not based on who spent the most money getting them elected. GEO Group’s illegal donations have the appearance of a pay-to-play: since Trump was elected with GEO’s backing, the company has reaped enormous political and financial benefits, including a new $110 million taxpayer-funded contract.

The FEC is critical to the enforcement of the contractor contribution ban and in preventing pay-to-play politics. It is incumbent upon the FEC to enforce the longstanding federal contribution ban and take action against GEO Group to deter future violations. Without the contractor ban, the government contracting process becomes an obvious way for officials to reward friends and political donors.

In a separate but related case, CLC filed a lawsuit on June 15, 2017 seeking to compel the Department of Justice (DOJ) to disclose requested records that would gather information about how DOJ reached its conclusion to rescind official policy to phase-out the use of private prisons in the administration’s contracting process. Almost nine months later, the public still has not seen any documents that show how DOJ reached its decision to change course on its private prison policy.

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