Two judges pleaded guilty to a kickback scheme that sent hundreds, maybe thousands of kids to privately run juvenile lockups for minor offenses.
Details here: http://www.thetimes-tribune.com/articles/2009/01/27/news/sc_times_trib.20090127.a.pg1.tt27judgesmain_s1.2261119_top2.txt
I'm very wary of "privatizing" core governmental functions, including incarceration. I don't think the state should delegate police, fire, prison or military functions to private entities. No one should be in a position to profit from exercising power over other people.