Prison Bankers Exact Fees, Profits From Families

This is the fifth in a series of stories reported jointly by Oklahoma Watch and KGOU Radio. The latest segments from KGOU reporter Kate Carlton Greer can be found at www.kgou.org.

In Oklahoma’s prison system, inmates spend millions of dollars a year from their trust accounts, buying canteen items and paying restitution, fines and other costs.

Much of that money comes from family members. They deposit funds into inmates’ “trust fund accounts” that are part of the Department of Corrections’ offender banking system.

They also pay a price for that giving.

Two private companies that provide banking services in prisons under state contract tack on fees, and family members say those fees, paid over time, are onerous.

The fees for depositing money by Internet or telephone range from about $4 to $12 per transaction, depending on the amount deposited. But the fee can represent anywhere from 3.7 percent to nearly 40 percent of the deposit amount. The fees generate millions of dollars in annual revenue for the vendors.

Ester Holzendorf, a retired Corrections Department employee who now lives in Missouri, said the inmate banking fees make it hard to send money to her grandson, Sean McKinzy, who is serving time in the Dick Conner Correctional Center in Hominy on Tulsa County robbery and assault convictions.

“It costs us every time we send him something,” Holzendorf said. “I sent him $50 and had to pay $6.95 just to get him the money. If we send a money order (by regular mail), it’s cheaper, but the money order goes out of state, then back to Oklahoma.” That can take more than a week, she said.

The money-service companies are Florida-based JPay Inc., which handles most electronic money transfers to inmate trust accounts, and Access Secure Deposits, which is part of the Missouri-based Keefe Group.

In an investigative report in September, the nonprofit Center for Public Integrity reported that JPay is the largest prison banker in the nation, providing money transfers to 1.7 million offenders in 32 states. JPay pulled in more than $50 million in revenue in 2013 and was expected to transfer more than $1 billion in 2014, the center reported.

Corrections Department spokeswoman Terri Watkins said the banking fees are set to cover the vendors’ costs, and the department has pushed the vendors to keep prices low. She said the state has contracts with both JPay and Access “to keep prices competitive.”

“We continue to negotiate a competitive price for the level of service provided,” Watkins wrote in an email to Oklahoma Watch. “JPay posts money orders and government checks for free for our offenders because of this negotiation.”

JPay’s money-order fees weren’t free until last year. The Center for Public Integrity reported in November that because of its investigation, JPay had eliminated money-order charges in three states, including Oklahoma. Access Secure Services still charges a $1 fee, according to the company and an online DOC form.

If you like this story, register to get notices of future Oklahoma Watch content:

New System

The Corrections Department began phasing in a new banking system for offenders in 2009, and companies like JPay and Access were to be efficient gateways for money transfers into inmates’ accounts.

A former Corrections Department official said the outsourcing was needed because the department wanted to get out of the business of handling money.

“You had DOC employees handling large sums of money,” said Greg Sawyer, former chief of business operations for the Department of Corrections. “Going to a private vendor streamlined the process and helped better protect the employee.”

DOC does not get a large cut of the deposits. Figures provided by Watkins indicate that from 2012 to 2014, JPay collected more than $30 million in deposits into inmates’ accounts, and the state received $203,360 in commissions, or less than 1 percent. But that helped offset personnel costs “to manage, problem-solve and reconcile transfers processed through the vendor,” Watkins said.

Need for Money

Many inmates depend heavily on family money to make prison more tolerable.

They buy canteen items such as toothpaste, underwear, pillows, linens, over-the-counter medicines, televisions, radios and snacks. A portion of their trust account can be shifted to a mandatory savings account or used to pay restitution and part of often-steep court costs and fines.

According to recent figures, inmates spend an average of $1,784 apiece out of their trust accounts each year, corrections officials said.

Many inmates and their family members are low-income. Most inmates working in prison can earn no more than $14.35 a month.

To make deposits for inmates, family members and friends have three options: Internet, telephone or mail.

The fees for online deposits range from $3.95 to $10.95 per transaction. The $3.95 applies to deposits from 1 cent to $20; the $10.95 fee applies to deposits from $200.01 to $300. Transferring money by telephone costs $1 more for each deposit range. Families also can go to walk-in retail locations to deposit money, paying fees from $5 to $8.95.

After inmates are released from prison, they receive debit cards holding the value of money left in their trust accounts. But using the card also comes with charges.

According to a DOC purchase order for JPay, the company assesses a $3 activation fee for the debit card and then a $6 monthly service fee starting after 30 days. The firm also charges $5 to replace a card, or $30 for an “expedited card replacement.”

Banking in Jails

Before incarceration in a prison, many offenders are held in a county jail. The inmates, family and friends can deposit money into a canteen account, used to pay for phone calls and make other purchases. As in prison, the banking involves fees.

For example, in Sequoyah County, family members can send funds to inmates via an Indiana-based company, Government Payment Services Inc. The fees are $6.75 for each deposit of $25 to $100 made by telephone and $5.25 for deposits made by Internet. Families also can drop off a money order at the jail for free, said Meredith Long, an employee at the Sequoyah County Sheriff’s Office.

Inmates who are released are given debit cards and charged $4.95 a month. The cards, issued through the vendor EZ Exit/MFunds, include a 99-cent per purchase charge, a 99-cent charge for balance inquiries, a $2.99 charge to withdraw funds from an automated teller machine, a $2 charge to change a personal identification number and a $15 charge to replace a lost or damaged card.

Ken McNair, executive vice president of the Oklahoma Sheriffs’ Association, said such fees help fund general operations in county jails.

“Most county jails are operating on less money (than before),” McNair said.

McNair said county jails are struggling to control costs and find alternative revenue sources after state corrections officials pulled prisoners from the jails.

Cindy Byrd, a deputy state auditor who is involved in state audits of counties and jails, said she believes that debit-card fees for inmates released from jails are akin to “robbery.”

“I talked to one sheriff and expressed my concern and he said, ‘So? They’re convicts,’” Byrd said.

Leaving Money Behind

Despite being issued a debit card on release, many Oklahoma inmates never spend or empty out their accounts.

One reason might be that they lose the card and decide it’s too much of a hassle to replace, especially if their prison or jail savings are small. Others may just neglect to act. Still others may die.

According to the Office of the State Treasurer, funds for more than 4,600 inmates have been turned over to the agency’s unclaimed property division since 2010.
Deputy State Treasurer Tim Allen said that occurs after inmate trust accounts have been dormant for a year. He said those funds totaled $146,440 in 2013 and $38,839 in 2014.

Allen said the inmate’s name and last known address are published in the treasurer’s unclaimed property report.

“At that point, it’s just like any other unclaimed property listing,” he said. “We try to get information out there so they can get their money.”

Correction: An earlier version of this story incorrectly reported that JPay Inc. collected $29 million in transaction fees from 2012 to 2014. The company instead received more than $30 million in deposits for inmates’ accounts during those years.

Reach M. Scott Carter at scarter@oklahomawatch.org.

Donate Today

Support the only statewide investigative reporting publication in Oklahoma. Your contributions to Oklahoma Watch are tax-deductible and will help sustain efforts to produce high-quality, in-depth reports on the most pressing issues facing the state.

If you like this story, register to get notices of future Oklahoma Watch content:

Donate Today

Support our publication