Securities Class Action Complaint Against CoreCivic Upheld
NASHVILLE, Tenn. — CoreCivic Inc., the Nashville-based private prison provider presently facing various federal lawsuits over the operation of a private contract detention facility in Leavenworth, Kan., is facing additional scrutiny and a securities class action complaint from some of its investors.
The complaint, filed on March 13, 2017, contends that CoreCivic (formerly Corrections Corporation of America or CCA) allegedly violated of the Securities Exchange Act of 1934 by engaging in a scheme to defraud investors by falsely representing that the outsourcing of correctional services to CCA resulted in improved correctional services for government agencies and that CCA’s facilities were operated in accordance with applicable policies and procedures. Among the agencies listed is the Federal Bureau of Prisons (BOP).
According to shareholder rights law firm Robbins Arroyo LLP, which is investigating whether certain officers and directors of CoreCivic breached their fiduciary duties to shareholders, BOP had uncovered and notified CCA of numerous violations of BOP policies, including understaffing and underqualified staff and failure to provide adequate healthcare to its inmates.
On Dec. 18, the Hon. Aleta A. Trauger, of the U.S. District Court for the Middle District of Tennessee, Nashville Division, denied CoreCivic’s motion to dismiss in Grae v. Corrections Corporation of America.
The Tennessee Middle District Court also received a civil rights complaint filing on Dec. 28 on behalf of plaintiff Cae Aguilera, which names CoreCivic and the Trousdale Turner Correctional Center, a private prison for men located in Hartsville, Tenn. The facility is operated under contract with the Tennessee Department of Corrections by CoreCivic.
Meanwhile, the private prison provider also faces federal lawsuits over the operation of Leavenworth Detention Center (LDC), in Leavenworth, Kan. The suits allege employment discrimination and spying on communications among other issues including understaffing and “triple bunking detainees.”
CoreCivic operates facilities and employs 13,000 employees nationwide. It was founded in 1983 as Corrections Corporation of America and rebranded as CoreCivic in late 2016. By 2016, the company was the second largest private corrections company in the nation. CoreCivic manages more than 65 state and federal correctional and detention facilities in 19 states (including the District of Columbia) across the country representing a capacity of 90,000 beds.