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From NPR News, this is ALL THINGS CONSIDERED. I'm Jacki Lyden. We've heard so much lately about the economy grinding down and unemployment cracking up, but what about a growth industry that might be accelerating too much, the business of incarcerating Americans?

The United States leads the world in incarceration rates. One of every 131 Americans is behind bars. An increasing number of them are held in Supermax prisons, the high-tech, maximum security units that lock inmates into solitary confinement up to 23 hours a day.

In 1984, just one American prison could be described this way. Two decades later, 44 states had such a unit. We'll start today by zooming in on one of those prisons and a man who's been locked up in a Supermax unit for eight years. His name: Ernesto Lira. [POST-BROADCAST CORRECTION: Ernesto Lira is no longer in prison.]

The state of California says he was moved to the isolation unit because he belonged to a prison gang. Lira says that he never did, and he's suing, claiming his civil rights have been violated. Michael Montgomery has the story.

MICHAEL MONTGOMERY: This is not the story of an innocent man railroaded to prison. Ernesto Lira has been in and out of California prisons many times for nonviolent crimes like drug possession and petty theft. Lira's last conviction came when he was on parole and was caught with three grams of methamphetamine. Lira was sentenced to eight years. But when he returned to prison, he was shocked to find himself transferred to a stark isolation unit at Pelican Bay State Prison.

Mr. ERNESTO LIRA (Former Inmate, Pelican Bay State Prison): I always looked ahead and said, hey, well maybe next month or maybe in three months I'll go back and they'll find out this was all a mistake, and they'll kick me out of here.

MONTGOMERY: But that didn't happen. Lira was locked in a windowless, 8-by-10 cell in the prison's Security Housing Unit, or SHU. Here, there were no phone calls, no family visits, no programs of any kind. From isolation, Lira wrote hundreds of journal entries, which he says trace his slide into mental illness. Lira recently read from his prison journal.

Mr. LIRA: (Reading) This isolation is wearing me down. I can't believe I've been in the hole for five years. I believe I'm losing my mind.

Unidentified Man #1: Stand by.

MONTGOMERY: California built the units in the 1980s to isolate violent prison gangs, which were running crime rings behind bars and on the streets, but the state casts a wide net and locks down some inmates for indirect allegations such as associating with other gang members or holding artwork with hidden gang signs.

This is what Ernesto Lira's story is about. The California Department of Corrections and Rehabilitation declined to discuss his case, citing pending litigation, but officials did talk about prison gangs, their violence and secrecy, and why the state needs to lock down some members before they have a chance to strike.

Special Agent Mike Ruff is a department gang expert.

Mr. MIKE RUFF (Gang Expert, California Department of Corrections and Rehabilitation): We're taking a proactive approach to identifying gang members so a particular gang member may not, you know, be able to order an attack on a staff member or maybe even someone in the community, because the gang and the outreach of the gang goes into the community.

MONTGOMERY: But Ernesto Lira insists he was never a member of any gang. Bill Chapman is his attorney.

Mr. BILL CHAPMAN (Attorney): There is a notion that if you're Hispanic, have a Mexican-American last name, and come from Northern or Southern California, there's a presumption to start out with that you are a member of a northern gang or a southern gang.

MONTGOMERY: Chapman's client was originally seeking thousands of dollars in damages, but he dropped those demands in order to bring the case to trial more quickly. He is now only asking to have his gang validation expunged and a ruling that he was wrongfully placed in solitary.

Those demands might seem modest, but observers say Lira's case is important because lawsuits initiated by California inmates almost never make it to a federal court.

Mr. CHARLES CARBONE (Prisoner Rights Attorney): These cases are so rarely given the light of day, they're so rarely examined with any degree of thoroughness.

MONTGOMERY: Charles Carbone is a prisoner rights attorney who's handled dozens of complaints against the California Department of Corrections. Carbone says as far as he's aware, no other case of this kind has made it to a federal trial in recent years. And despite the seemingly narrow scope of the Lira case, Carbone says a ruling in his favor could affect hundreds of California inmates currently locked in solitary.

Mr. CARBONE: This is why the Department of Corrections fights these cases tooth and nail, because of the fear of the slippery slope, the fear that thousands of prisoners are going to file the very next day on the exact same grounds.

MONTGOMERY: In court, state attorneys defended the evidence originally used to validate Ernesto Lira as a gang member: an informant's statement, an incident on a prison yard in which Lira allegedly spoke sharply to another inmate, and a drawing found in his locker that allegedly contained tiny gang symbols.

State experts also claimed Lira's peaceful demeanor and record of good conduct in prison were further evidence of deception inspired by the gang. That's not unheard of, according to Joe McGrath. He's the former warden at Pelican Bay.

Mr. JOE McGRATH (Former Warden, Pelican Bay State Prison): I know plenty of guys who are very involved in prison gangs, and they're respectful to staff, they don't get into any trouble, they don't get behavior reports, and again, they're quietly running their gang activities through clandestine communications.

MONTGOMERY: The state conceded there was no evidence that Lira actually did anything tangible for the gang prior to being locked down. Still, officials repeatedly defended the system that held Lira in solitary as fair and necessary.

But that view is contradicted by an internal study that's been circulating in the California Department of Corrections for more than a year. The report concluded that California's prison gang policy should be overhauled and the Security Housing Units, or SHUs, reformed. The policy proposals were drawn up by a team of national experts led by Brian Parry. He's a former deputy director in the California Department of Corrections.

Mr. BRIAN PARRY (Former Deputy Director, California Department of Corrections and Rehabilitation): We have to make the system as fair as we possibly can. My whole goal through that policy was not just to reduce the exposure to litigation, but was to reduce violence. Put the right people in SHU.

MONTGOMERY: Parry spent more than 30 years working in the California prison system. He now says he's uncomfortable with the kind of indirect evidence used against prisoners like Lira, such as drawings, and he says as many as 70 percent of the inmates in the SHUs were sent there through evidence of this kind.

Parry declined to comment directly on the Lira case, but he says…

Mr. PARRY: Anybody that's falsely identified and ends up in the SHU for a lengthy period of time, you know, that's wrong.

MONTGOMERY: Parry says he wants to bring California in line with national standards by targeting the most disruptive inmates, whether or not they're prison gang members. The state could still isolate inmates but only if they're involved in criminal activity or misconduct and only for fixed terms.

But there's resistance to the plan. Some officials worry that letting possible gang members out of solitary could lead to a spike in violence on regular prison yards. Former Pelican Bay warden Joe McGrath.

Mr. McGRATH: You have to understand that there will be some that are going to use such a program to get back out there to do something that they're being directed to do. That threat is very real.

MONTGOMERY: The proposed reforms are still being debated and are not a part of Ernesto Lira's case. A decision on Lira's lawsuit is expected in the coming days.

Meanwhile, California officials say the proposal to overhaul the way the state deals with prison gangs, which was submitted 15 months ago, is still under review. For NPR News, I'm Michael Montgomery.

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