This seventh patent expands our Secure Prison Cell Phone Solutions™ intellectual property portfolio and further expands our position as the prime innovator  in the prison mobile device space by leveraging the security, efficiency and decentralization offered by blockchain technology.

The claims in this latest patent are directed toward managing commissary transactions using blockchain and smart contracts, for token management supported by a blockchain and for the enforcement of regulations in a controlled environment. This patent adds to the intellectual property foundation of Aisto®, our new blockchain powered inmate mobile device solution.

In general, there are quite a few benefits for the financial services industry to be achieved by using distributed ledger technologies (blockchain). This is also true for the financial systems used by detainees in correctional facilities to purchase services such as voice and video calls as well as goods offered in the commissary. Blockchain can address many of the problems currently experienced by inmates, their families and prison administrators using the current prison “banking systems.”

Banking systems used in prisons and correctional facilities have very little accountability. The lack of transparency excludes prison officials from seeing how inmates use their money outside the commissary. This lack of visibility also keeps all parties from becoming aware of discrepancies that may occur when funds are transferred, taken, or stolen.

Blockchain provides increased transparency among parties and as such improved reporting and monitoring by prison administration. Another key feature of blockchain is that any data recorded is immutable. Any data that is recorded on a blockchain can be tracked in real-time, leaving a very detailed audit trail. As such, it eliminates error handling and reconciliation, while providing the means to enforce rules and identifying and acting on policy violations.

The most commonly heard complaints about existing correctional prison financial networks are their lack of efficiency and lengthy delays when transferring funds into inmates’ accounts. Even when credit and debit cards are used to complete transactions, it can take hours or even days before the inmate has access to the funds. The account funding steps involved in using Green Dot cards are time consuming. Green Dot cards, for example, involve purchasing an actual card at a store. Money is placed on the card and then transferred into the inmate’s commissary account. Not only does each transaction (bank deposits / transfers and withdrawals) require a fee, there is also a fee every time the card is “reloaded.”

With Blockchain, settlements become user-optimised, which will save a significant amount of time and money, for both parties involved. Blockchain will remove the impact of processing friction and cost, as transactions settle instantly. The power of eliminating intermediaries is the ability to lower transaction costs and take back control from powerful financial intermediaries. Inmates and their families will benefit enormously as a result.

Combined with smart contracts, a self-executing contract containing the terms and conditions between the parties to the transactions, to regulate and execute inmate transactions extends the blockchain’s utility from simply record keeping to automatically implementing terms of multi-party agreements. An example would be the terms, rules, cost and scheduling of a video call between an inmate and his family.

With a shared database running a blockchain, the smart contracts are executed based on matching of terms and are validated by other parties instantaneously and without the need of an intermediary. This technology can enforce rules, regulations and ensure compliance while facilitating friction-less transactions.

Brian Byrne, Managing Partner of meshIP, LLC commented, “With this seventh patent, we continue to leverage the blockchain to create an integrated, end-to-end, blockchain powered services and financial system within correctional facilities. Combined with our first blockchain patent, this latest patent protects the intellectual property necessary to tie together the previously discreet domains of prison commissary providers, correctional banking systems, and the inmate communications services providers.”

Update (12/1/20): The patent (US10,855,838) was issued today by the United States Patent Office. You can view the patent here: Seventh meshDETECT patent

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As states continue to deal with unprecedented fiscal strain, most are taking steps to reduce their inmate populations and costs while protecting public safety and holding offenders accountable. In the current fiscal climate, states are increasingly forced to do more with less and make difficult decisions about competing priorities. The National Conference of State Legislatures recently reported that corrections and public safety spending were above budgeted levels in seven states, including Alaska, where corrections spending exceed the state’s $258 million corrections budget by $9 million.

While funds to manage expensive prison systems have lessened, so too have resources for services such as treatment for substance abuse and mental health. For example, Minnesota lawmakers recently considered a significant reduction of funding for a model in-prison treatment program that has been shown to reduce recidivism by 25 percent. Thus, the viability of alternatives to incarceration programs and reentry services may be compromised in the current environment.

One out of every one hundred adults in America is incarcerated, a total population of approximately 2.3 million. By contrast, according to a report published in The Economist, the number of imprisoned adults in America in 1970 was only one out of every 400. The United States has 5% of the world’s population, but 23% of the world’s reported prisoners. It is not clear, however, that these high rates of imprisonment are leading to safer communities. One study by two professors at Purdue University and Rutgers University has estimated that were we to increase incarceration by another ten percent, the subsequent reduction in crime would be only 0.5%. The state of Florida provides a useful example. Over the past thirteen years, the proportion of prisoners who were incarcerated for committing non-violent crimes rose by 189%. By contrast, the proportion of inmates who committed violent crimes dropped by 28%. For this benefit, Americans are paying dearly – between $18,000 and $50,000 per prisoner per year depending upon the state. The nation is also reaching a point where it simply does not have the capacity for so much incarceration. In 2009, the number of federal inmates rose by 3.4%, and federal prisons are now 60% over capacity. (Source)

A pair of reports filed with Congress in recent months say the federal prison system isn’t keeping pace with the influx of inmates. A January 22 report by the Congressional Research Service found that overall “the federal prison system was 39% over its rated capacity in FY2011” and that medium security male facilities are even more crowded – 55 percent over capacity. A General Accounting Office report filed late last year made the reached the same conclusions. However, it also revealed a federal Bureau of Prisons (BOP) “staffing shortage in excess of 3,200.” Those are thousands of jobs that aren’t being filled because of federal budget cuts. (Source)

State taxpayers pay, on average, 14 percent more on prisons than corrections department budgets reflect. the aggregate cost of prisons in FY2010 was $39 billion, $5.4 billion more than their corrections budgets reflected. When all costs are considered, the annual average taxpayer cost in these states was $31,286 per inmate. (Source)

Costing $2 billion annually, the Michigan Department of Corrections continues to take a big bite out of Michigan’s budget. Today, 43,365 prisoners are in the Michigan system. That’s roughly 15 percent fewer than the 51,500 who were in the system in 2006. The MDOC budget for 2006 was about $1.9 billion, roughly $100 million less than the $2 billion Gov. Rick Snyder is recommending for the upcoming fiscal year. Despite fewer prisoners and employees, the budget has increased — mostly because of increased employee costs. (Source)

Budget woes have impacted state corrections departments in large and small ways. For instance, state budget cuts have eliminated the positions of the five individuals who handled the Illinois Department of Corrections canine unit. While the workers landed other jobs within the state’s sprawling prison system, the dogs were let go. (Source)

Today, the government of the city of Philadelphia spends seven cents out of every tax dollar on holding people in its jails. That is more than it spends on any other function besides police and human services and as much as it spends on the streets and health departments combined. Its spending on jails is nearly as high as that of Cook County, Illinois, even though Cook County, which includes the city of Chicago, has more than three times as many residents as Philadelphia. Over the last 10 years, the departmental budget has more than doubled, reaching $240 million in the current fiscal year. That figure, however, understates the true cost of prison operations, as it does not include employee benefits. With benefits, the number is about $290 million. (Source)

The budget challenges impacts counties as well as states. The crisis in jail funding that racked up a $5 million shortfall is sapping the Pierce County, WA budget this year and into 2014. The Pierce County Council is to decide whether to lay off 16 corrections deputies as part of a $3 million cut in the county jail’s budget for 2013. County Executive Pat McCarthy recommends filling the rest of that gap with $2 million from reserves and increased sales tax revenue. At the same meeting, McCarthy will present her proposed budget for 2014. It would add another $2 million from increased property and sales tax dollars to offset the jail’s shortfall for next year. Her new budget isn’t expected to require laying off more corrections deputies next year as long as the jail’s budget is cut this year. The jail’s deficit outlook turned even bleaker last week. Undersheriff Eileen Bisson said the Sheriff’s Department expects jail contract revenue to drop next year by $706,000 more than previously projected. (Source)

The strategy of closing prison facilities to cust costs brings challenges of its own. Governor Quinn’s decision to close Illinois prisons has raised overcrowding problems to epic proportions. It all began In December 2009 when the Associated Press reported that IDOC had released about 2,000 prisoners early through a program called MGT (Mandatory Good Time) Push. At least one inmate released early committed murder after his release. As a result Governor Quinn stopped MGT Push and all other prisoner early release programs. In February 2012, Governor Quinn presented a remedy to Illinois budget issues by closing 14 prisons and juvenile justice facilities. The closings, according to Quinn’s budget office, will result on saving the state nearly $62 million. The Illinois prison system, originally built to handle approximately 33,000 inmates (before closings), is currently housing over 48,000 inmates. The legislature had previously sent Quinn a budget that included enough money to run the prisons and other health facilities, but the governor vetoed that money. In December 2012, an Alexander county judge lifted an injunction which gave the governor the go ahead to begin the prison closures. Unions that represent the prison guards as well as civil liberty watch dog groups stated that the judge disregarded obvious safety concerns that will arise from added overcrowding due to closures. (Source)

To help address these funding shortfalls, prisons can no longer count on federal grant programs. The federal grant funds are shrinking, however. Overall funding for Department of Justice grant programs has dropped by 43 percent since 2010.

As a result, prison systems large and small are looking for new sources of funding. One traditional source of funding has been prison payphone commissions. However, due to a recent FCC decision, this source of funds is expected to shrink, with further cuts expected to come as the FCC targets other calling types beyond the long distance rates targeted in this order.

Increasingly prisons are to offering “optional” services to prisoners and their families such as email service and mp3 players to help generate revenue. Only those who can afford the service will purchase. However, the revenue to the prison can be significant and reoccurring given the ongoing nature of these service offerings. The meshDETECT secure prison cell phone solution is another such optional service that can offered to raise revenue. In addition to reducing the value of contraband cell phones in prison, commission earnings can be an alternative to the burden of imposed fees on those least likely to be able to pay.

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