The news is shocking and raises some serious ethical questions, because one of the chief architects of America's immigration policies now stands to profit from the same child-imprisonment policies he helped install.
The Miami Herald reported this week the camp's operators just got a cushy new $341 million federal contract to run the facility. As the center — already the largest of its kind in the nation — expands to hold as many as 3,200 children, it's worth taking a look back at Kelly's ties to the business.
1. Kelly worked for a firm called DC Capital Partners — until the Intercept called him out on it in 2017. Via the Intercept:
John F. Kelly, the retired Marine Corps general nominated by Donald Trump to be secretary of Homeland Security, did not disclose his position as a vice chairman at a lobbying firm called the Spectrum Group on his federal ethics forms made public this week.
The failure to disclose the position may run afoul of federal law requiring Senate-confirmed nominees to reveal potential conflicts of interest to the lawmakers and the public.
“He came on as a vice chairman in the end of last year,” said Esther Lofgren, the vice president of the Spectrum Group, when reached for comment.
Asked for details regarding Kelly’s work at the firm, including his compensation and client roster, Lofgren said she had been consumed with meetings surrounding Kelly’s confirmation hearings, which began on Tuesday, and that she would follow up by email. She did not respond to any further requests for comment. The Intercept could not reach Kelly by phone, and he did not return an email requesting clarification over the issue.
An official from the Trump transition team guiding Kelly’s nomination, who said he did not have permission to speak on the record, said the retired general did not list his lobby job with the Spectrum Group because “the Spectrum Group is affiliated with DC Capital Partners,” a private equity firm that retained Kelly in April of last year and that owns a controlling stake in the Spectrum Group. The official said Kelly has not received any payments from the Spectrum Group. “Every intention we had was to be as fully transparent as possible,” the official said.
The Spectrum Group, however, is a “completely separate company,” according to Kasey Dezelick, the executive assistant at DC Capital Partners. Business registration records show that the two firms are distinct entities. And they are not remotely in the same line of business. DC Capital Partners, which Kelly listed, focuses on “equity investments in middle market companies that provide differentiated and innovative service.” The Spectrum Group, which Kelly did not list, specializes in lobbying and government affairs.
In a call organized by the Trump transition official, T. Gail Dady, a partner at DC Capital Partners, said that Kelly “had agreed to come on board as vice chairman and help out” at the Spectrum Group. “That was late in the fall and so that never actually happened… There was no contract signed and he received no compensation other than, you know, having a couple of meetings and initially agreeing that this was something he would do… It didn’t come to fruition, if they hadn’t nominated him and stolen him away from me, then yeah, it would have moved forward.”
In his disclosure form published this week, Kelly listed $37,500 of income from DC Capital Partners in the period since April 2016, labeling it “Fees, Member Board of Directors.” There is no mention of Spectrum Group on the form or in his ethics letter.
Office of Government Ethics rules require nominees to list all organization positions and memberships, even if they are uncompensated. There are exceptions for “honorific” positions, but Kelly’s position at the Spectrum Group is advertised as a business position and his association with the firm was clearly being used to generate client interest in the firm.
2. After Kelly left the company, DC Capital bought Comprehensive Health Services, the contractor at the Homestead camp, and merged Comprehensive Health into a new venture, Caliburn International:
The Trump administration's family-separation and child-immigrant-detention policies have forced innocent children into horrid, inhumane conditions and, in some cases, have violated international law.
But housing immigrant children has been extremely lucrative for the private contractors running detention facilities. In fact, one Florida company operating at the Homestead Temporary Shelter for Undocumented Children is making so much money off detained kids that it's part of a planned $100 million initial public offering, according to SEC filings reviewed by New Times.
That firm is Comprehensive Health Services, one of the main contractors running Homestead's migrant camp. Comprehensive Health, which was founded in 1975 and is based in Cape Canaveral, holds a federal contract for work at the camp that could be worth as much as $200 million this year. But last year, a larger corporation, Caliburn International LLC, bought Comprehensive Health, and now Caliburn is angling to go public on Wall Street and rake in cash.
3. After criticism from New Times and other groups, Caliburn shelved a plan to go public on the stock market but might one day try again:
After scrutiny from New Times and other major media outlets, Caliburn International — the for-profit investment company that, among other projects, runs the Homestead Temporary Shelter for Unaccompanied Children near Miami — has killed its plans to sell $100 million in shares on the stock market.
"The Company is seeking withdrawal of the Registration Statement because it no longer wishes to conduct a public offering of securities at this time," a letter filed today with the Securities and Exchange Commission reads.
Caliburn issued a media release this morning stating the company nixed plans to go public because of "market" forces. "Due to variability in the equity markets, we are withdrawing our public offering," CEO Jim Van Dusen stated. "Our business continues to grow, and we could potentially return to the public markets in the future."
(Renaissance Capital, a Connecticut firm that tracks initial public offerings, or IPOs, first noted the filing on its website today.)
But Caliburn received national scorn after New Times reported earlier this year that the company was looking to sell stock, in part, on a business model that revolved around detaining as many as 2,350 immigrant and refugee children at a sprawling Miami-Dade compound. Today a group of immigrant-rights activists protested outside the facility and demanded the government stop using for-profit companies to run the center. The facility is the largest of its kind in the United States.
The Homestead shelter is, technically, run by one of Caliburn's subsidiaries, the Cape Canaveral-based Comprehensive Health Services. (It previously paid a $3 million medical fraud settlement to the federal government without admitting wrongdoing.) In 2018, the investment firm DC Capital Partners purchased Comprehensive Health and three other companies to form Caliburn. Notably, DC Capital Partners has significant ties to the federal government. Among many high-level current and former employees, DC Capital employed White House Chief of Staff John Kelly until the Intercept exposed his employment in 2017. After that story was published, Kelly quit the firm. The news raised significant questions about the ways in which current and former government employees profit from federal policies they helped create.
A different story also likely contributed to Caliburn's decisions to withdraw its IPO. Earlier this year, a nonprofit whistleblower firm working with the Daily Beast confirmed that another Caliburn subsidiary, Sallyport Global, was under federal investigation for a massive Iraqi government bribery scheme that allegedly helped pave the way for ISIS to flourish in that country. Through former Iraqi Prime Minister Nouri al-Maliki, Sallyport allegedly offered bribes to government officials in exchange for contracts at Balad Air Base in Iraq. At the time, Comprehensive Health was working as a medical subcontractor at Balad. (Caliburn and Sallyport deny any wrongdoing.)
4. In the meantime, Kelly mysteriously showed up on the grounds of the Homestead camp. Via the Miami Herald:
John Kelly, the former chief of staff for President Donald Trump and the former head of the U.S. Southern Command in Doral, was spotted Thursday at the Homestead temporary shelter for immigrant children.
Protesters saw him entering the property on a golf cart.
The retired Marine Corps general’s unexpected visit to the the facility — which announced this week that it intends to expand and house as many as 3,200 kids at the “temporary” center — was confirmed by the U.S. Department of Health and Human Services. As the only temporary shelter in the country, the Homestead center skirts regulations limiting how long federal authorities can hold immigrant children.
5. It turns out that's because he was about to work with his friends at DC Capital again. Via CBS News:
It wasn't clear why he was there, but Friday, Caliburn International confirmed to CBS News that Kelly had joined its board of directors. Caliburn is the parent company of Comprehensive Health Services, which operates Homestead and three other shelters for unaccompanied migrant children in Texas.
Prior to joining the Trump administration in January 2017, Kelly had been on the board of advisors of DC Capital Partners, an investment firm that now owns Caliburn.
The Caliburn board includes other former high-ranking military personnel, including retired General Anthony C. Zinni, Admiral James G. Stavridis and Rear Admiral Kathleen Martin. The company's portfolio includes work in a variety of defense sectors.
"With four decades of military and humanitarian leadership, in-depth understanding of international affairs and knowledge of current economic drivers around the world, General Kelly is a strong strategic addition to our team," said James Van Dusen, Caliburn's CEO. "Our board remains acutely focused on advising on the safety and welfare of unaccompanied minors who have been entrusted to our care and custody by the Department of Health and Human Services to address a very urgent need in caring for and helping to find appropriate sponsors for these unaccompanied minors."