Towns start pulling back on private probation firms

Americans like to think the days of the debtors' prison are long gone, but recent cases highlighted by the Southern Poverty Law Center and the ACLU have highlighted how some of those injustices are still very much alive.

Private probation companies -- for-profit businesses that handle fines and probation for local courts -- have mushroomed in the last two decades as municipalities turned to them to reduce costs. But because these firms make their money by taking on their own fees, they operate on an "offender-funded" model that advocacy groups say leads to exploitation and abuse.

The issue was brought to light earlier this year when the Southern Poverty Law Center sued a private probation firm, Judicial Correction Services, and the city of Clanton, Alabama, alleging racketeering and extortion. Clanton decided to end its contract with JCS, telling the SPLC it wasn't aware of the abuses alleged by the lawsuit, SPLC deputy legal director Sam Brooke told CBS MoneyWatch.

"After we saw Clanton cancel, we said, 'Look, JCS is working with 100 other towns. Let's reach out to them,'" Brooke recalled. "We sent out letters in June, and so far we've heard from 54 towns that they have canceled their contracts."

About 50 towns in Alabama are still believed to have contracts with JCS, Brooke said. The advocacy group has also sent out letters to 30 other Alabama towns that have contracts with similar private probation firms.

The letters, addressed to the mayor of each town, allege that "pay-only probation schemes provided by JCS are unconstitutional and illegal for a number of reasons." They add, "Clanton decided to terminate its contract with JCS when it became fully aware of JCS's actions."

In an email to CBS MoneyWatch, JCS said: "We are not at liberty to discuss the specific aspects of the litigation, however we can say that we feel the allegations against JCS are without merit, and that we operate within the confines of public contracts between our company and municipal court systems throughout the State of Alabama. We provide a transparent service to municipalities that lack resources for enforcing court fines and probationary obligations. We act at the court's discretion and that is where our role begins and ends."

The SPLC's lawsuit recounts the experience of Roxanne Reynolds, who couldn't pay her fines from traffic tickets in Clanton, a central Alabama town of about 9,000 people. As a result, she was placed on "pay-only" probation, which required her to leave her job once per month to visit JCS to pay $145. Each installment included a $40 payment to JCS, which lengthened the time she would need to pay off the fine as well as deepening her financial hole.

Reynolds, who was diagnosed with multiple sclerosis, fell behind on her payments and was threatened with jail by a JCS employee. She eventually paid off her debt after spending four days in jail and making 15 months of payments.

"When she went to JCS and said, 'I'm not working right now'" because of medical issues, Brooke noted, the probation company allegedly responded, "'Everyone has medical problems. You need to figure out ways to pay the money.'" Brooke added: "That is where they crossed the line. They knew full well you can't incarcerate someone because they can't afford to pay."

Jailing people who are unable to pay court fines violates a U.S. Supreme Court ruling from 1983 that prohibits incarcerating those who are too poor to pay their legal debts. Judges just first consider a person's ability to pay the fine, as well as alternatives to imprisonment or other efforts to acquire the money.

Because for-profit probation companies add their own fees to the original fines, people who are already struggling financially can end up finding the penalties insurmountable. It also sets up a system where middle-class and wealthy Americans deal with a significantly different judicial system than the poor.

For those who can write a $200 check for a traffic fine, the system is relatively simple. But for those who can't come up with the money, the system becomes a series of additional fees, monthly appointments at the probation company and even threats of imprisonment. A $200 ticket can end up costing a poor person $400.

"The system is split into a two-tiered system of justice," Brooke said. "Money means you will be treated differently in the justice system."

Thirteen states rely on for-profit probation companies such as JCS, according to the ACLU. More than 1,000 courts using private companies sentence hundreds of thousands of Americans to probation each year, Human Rights Watch said last year.

"Anytime you infuse a profit motive into the idea of collecting money [for court fines], you run the risk of abusive practices," Brooke said. "You have these companies that are purportedly acting as a neutral party. They shouldn't have a financial incentive in whether people make payments."