By Anna B. Mercury
Once again, Dallas Liam is our investment guru. A self-made billionaire, chairman of the Prisons For America LLC., you can get his up-to-the-minute advice on Twitter.
The French novelist Honoré de Balzac observed, “Behind every great fortune, there is a crime.” Dallas Liam shows that behind his fortune were thousands of crimes. I once again had the pleasure of interviewing him, and this time he was even more candid and informative.
[read my previous interview Invest in Private Prisons and Get Tough on Crime]
Dallas, True or false, Crime is harnessable energy that creates wealth?
With private prisons, crime literally pays. I love this business model.
What model?
The school-to-prison pipeline has made me incredibly rich.
How about nursery-to-prison?
I’m like a professional sports agent but in a different way. I ride my G-Wagon through bad parts of town and look at young kids. 1/3 of every kid I look at in the hood will end up in my prison.
Statistics are statistics.
The goal is to increase the lifetime value of every prisoner that goes through our four walls.
How did you get into this? Is it a family business?
My great great-granddaddy was a large plantation owner in South Carolina. This is a picture of the house he lived in. He operated a massive cotton farm. The house doesn’t exist anymore. But we built a state of an art prison on the land.
Way to pivot. He would be very proud right now.
One thousand beds generate $100k per day in revenues and $40k per day in operating income. No taxes, as depreciation is high. Tell me when anti-Bellum slavery worked so well.
Would you say slavery was more profitable than the prison system on an inflation-adjusted basis?
They used to coddle the slaves.
When you make a wish, do you wish crime to reduce, or do you want it to increase?
Increase.
Are you negotiating with judges to be hard on crime? It would let you win more.
Always.
Could you walk us through a sample investment?
This old country prison just went up for sale. It would require a lot of capital expenditures and sweat equity but has a lot of upsides if done right.
Total beds 1,000. Cost $15 million or $15,000 per bed. Working prisons are selling for $200-300k per bed these days. Lots of potential upsides if rehabbed right.
The total capital cost needed of $55 million to rehab properly. After capital expenditure spend per bed of $70,000 gives me a large margin of safety. Throw another $20m on top just in case, and we are under $90k per bed all in.
How long would it take to renovate?
It takes around 16 months to get the prison rebuilt and up to 80% capacity. At 60% capacity, I’m breakeven.
Downsides?
I would be taking on potential environmental liabilities. Not a big issue right now, but if my prisoners get asbestos poisoning, I’ll need to create a sinking fund later in time to deal with those liabilities. It could add another $1,000 per head per month in cost.
There are a lot of shark lawyers out there looking for class action lawsuits.
Not too worried about asbestos liabilities. If my prisoners get it, I’ll deal with the extra costs. It won’t bankrupt me, just add additional operating costs later down the road – 15 years from now.
This is in Tennessee? Their revival of Clinton era policies of no early releases would guarantee revenue flow as you build occupancy.
Early release programs pose increased risk and volatility to earnings. I am looking at states that guarantee user commitment.
Any incremental crime will flood right into this prison. Right now, they are shipping criminals across the state. It will save money at the state level and fill a need immediately.
I watched a max security prison documentary where the warden was bragging that the meal budget for prisoners was about the same per head as what it cost to feed dogs. I thought, wow, what are you running? A Hilton? Dog food is really expensive.
I reward my prison Warden’s bonuses if they can keep their meal budget per person lower than the cost of feeding a dog.
What traits do you find in your best wardens?
Hire the best wardens you can find. They are the ones running the prisons. Wardens are the most important hire. Pay them well and give them fat bonuses for keeping your commodity behind bars. If they ask for more guns and guards, give them it. These guys are key!
How do you combat inflation at your prisons?
We have started to buy old expired food from Walmart at an extreme discount. Profit margins are soaring right now. When people zig, I zag.
If I may suggest, perhaps fence in an area with some trees. Put some bird feeders out there. Give the inmates some slingshots and let them hunt/gather their food.
We already got the total cost per prisoner down to $1.75.
Could you show the readers a few sample meals?
Breakfast was cornbread and two hardboiled eggs.
Lunchtime at my prison in South Alabama today
As an investor, I might be concerned about the sausage size. Cut the sausage in half and one piece of bread.
I’m not an animal
They’re not going to get 5-course dinners.
Peanut butter and jelly and chicken.
It’s all about calories.
Protein too.
Powdered milk
With the cost of electricity skyrocketing over the past few months, what are you doing to keep your investors happy?
At Prisons For America LLC, we decided to switch to lethal injections from the electric chair when instituting death sentences. This will save a significant amount of costs for our investors.
How much does the average electric chair cost to use, and do larger people take longer to zap?
On our meal plan, they are usually slim when we escort them in.
Is it true that a prisoner about to be executed can have anything he wants within in reason for his last meal?
Don’t forget that those last meals can involve expired food for obvious reasons.
Are there ancillary revenue opportunities?
Here’s the interior of a prison bus I own for a prison I have in Texas. We are paid per mile to transport prisoners from the prison to the courthouse.
How much does the bus cost?
Around $15,000. On a good month, I can generate $10,000 just from these transports.
Motions to adjourn must give you a hard-on.
The Sheriff’s office just took out some marijuana users today. I’m expecting the judge in Berekely to issue a large sentence of up to one year in prison for these drug users, keeping the streets safe and making my investors happy!
Do you operate in California? The governor will just catch and release them back into society. Potentially leaving your business bankrupt. I thought marijuana was legal in California.
This is Berkeley County, West Virginia, not liberal fake news California.
Are you going to inject that weed back into the prison to make extra revenue?
Marijuana is not a legal drug federally.
What do you say to critics who say you are ruining lives over a plant?
A plant? 99% of my prisoners have smoked marijuana before. It is the gateway drug to violence, crime, rape, and murder. Marijuana is a dangerous and deadly drug. Do some research. It helps not just to read liberal CNN every day. People who say this are blinded by the hard amount of marijuana they use daily.
What prison would they go to? Unfortunately, there are no privately owned prisons in WV.
I am shipping them to my prison in Texas. I love this team. This is what my boys confiscated. Hard time incoming for these criminals.
What’s even better is I own the bail bond location near my prison. A huge margin here. You gotta vertically integrate if you want the big bucks.
Any other tips?
I give out stock options in my prison company to almost every judge I work with. This gives the judge incentives to give these criminals harsh sentences and rewards them financially when we do well. People respond to incentives. Remember that as an entrepreneur.
Why not cash in an envelope?
I’m not a criminal.
Can the work release crews also stop by the judge’s home for yard work?
This is a great prison I own. Two thousand beds netting me around $200,000 in revenue per day. Always at 90% occupancy or better. I’m friends with the local judge. He sends all convicts my way. Great guy. Just got drinks with him last night. Partner with people you trust!
I can’t understand why there’s so much hate toward for-profit prisons.
People who complain are jealous losers.
Have you looked into female prisons? They tend to have low operational risks.
I own women prisons. My guards love working at women prisons over men’s for various reasons. One reason is the favors that women prisoners perform on the guards for things like new clothes, blankets, electronics, etc.
By perform, do you mean song and dance routines?
Just the way the system works.
The women’s prison also does not need to hire additional kitchen staff.
Commodity businesses are usually very tough and cyclical. But when you can control the supply of a commodity, you control the risk and the profits. This is why I become best friends with the judges and lawmakers. My commodities are humans. I control them from start to finish. My investors are very happy with the profits and dividends every quarter.
Would you say you provide human storage units?
My favorite prison I own is one located in the heart of rural Texas. We perform capital punishment with prisoners on death row. On average, we are paid $250,000 per euthanization. The cost is only $10,000. Huge margins.
You’re making a lot of money–
Wait until you see the margins on the drug manufacturers and patent holders who make these drugs that euthanize my prisoners.
The drugs for that are too expensive. No one would probably know if you swapped them out for Round-Up and vodka.
The amount of auditing that goes into capital punishment is very slim to none. I’ll just leave that there.
Did it really cost $10k to do a lethal injection?
Do you want to know how much propofol and potassium cost?
What do you say to those who think your business is profiting from human pain and suffering?
Have fun staying poor.
What would you say to someone who wants to be a prison investor?
Do you have the balls to lobby judges and defund schools, so crime continues to be a good business model? Only a select few are built like me. If you want to make real money, you gotta do the stuff no one wants to do. Sweaty, hard, blue-collar work. It took me eight years to hit my first million and buy my first prison. I worked as a guard and made it to the top. It wasn’t pretty. I stayed up countless nights making sure the systems I bought worked. Sweat, blood, and equity.
For more good wealth-building advice on prison investing, see prison1investor. He knows what he’s talking about.
