SC 13D

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

CORNELL COMPANIES, INC.

(Name of Issuer)

Common Stock, $0.001 par value

(Title of Class of Securities)

219141108

(CUSIP Number)

Wynnefield Partners Small Cap Value, L.P. 450 Seventh Avenue, Suite 509 New York, New York 10123 Attention: Mr. Nelson Obus	NS Advisors, LLC 274 Riverside Avenue, Westport, Connecticut 06880 Attention: Mr. Andrew R. Jones	Ruff Fund Management, LLC 748 Perinton Hills Office Park Fairport, NY  14450 Attention: Mr. Charles W. Ruff
Copy to: Jeffrey S. Tullman, Esq. Kane Kessler, P.C. 1350 Avenue of the Americas, 26th Floor New York, New York 10019 (212) 541-6222

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

December 6, 2006

(Date of Event which requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box  o.

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Wynnefield Partners Small Cap Value, L.P. 13-3688497
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 380,400 (See Item 5)
		8	SHARED VOTING POWER 0 (See Item 5)
		9	SOLE DISPOSITIVE POWER 380,400 (See Item 5)
		10	SHARED DISPOSITIVE POWER 0 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 380,400 (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*  o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.7%
14	TYPE OF REPORTING PERSON* PN

*SEE INSTRUCTIONS BEFORE FILLING OUT!

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Wynnefield Small Cap Value Offshore Fund, Ltd. (No IRS Identification No.)
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 411,100 (See Item 5)
		8	SHARED VOTING POWER 0 (See Item 5)
		9	SOLE DISPOSITIVE POWER 411,100 (See Item 5)
		10	SHARED DISPOSITIVE POWER 0 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 411,100 (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.9%
14	TYPE OF REPORTING PERSON* CO

*SEE INSTRUCTIONS BEFORE FILLING OUT!

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Wynnefield Partners Small Cap Value L.P. I 13-3953291
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 438,400 (See Item 5)
		8	SHARED VOTING POWER 0 (See Item 5)
		9	SOLE DISPOSITIVE POWER 438,400 (See Item 5)
		10	SHARED DISPOSITIVE POWER 0 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 438,400 (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.1%
14	TYPE OF REPORTING PERSON* PN

*SEE INSTRUCTIONS BEFORE FILLING OUT!

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Channel Partnership II, L.P. 22-3215653
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION New York
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 20,800 (See Item 5)
		8	SHARED VOTING POWER 0 (See Item 5)
		9	SOLE DISPOSITIVE POWER 20,800 (See Item 5)
		10	SHARED DISPOSITIVE POWER 0 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 20,800 (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.2%
14	TYPE OF REPORTING PERSON* PN

*SEE INSTRUCTIONS BEFORE FILLING OUT!

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Wynnefield Capital Management, LLC 13-4018186
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)  (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* N/A
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION New York
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0 (See Item 5)
		8	SHARED VOTING POWER 818,800 (See Item 5)
		9	SOLE DISPOSITIVE POWER 0 (See Item 5)
		10	SHARED DISPOSITIVE POWER 818,800 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 818,800 (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.8%
14	TYPE OF REPORTING PERSON* OO

*SEE INSTRUCTIONS BEFORE FILLING OUT!

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Wynnefield Capital, Inc. 13-3688495
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* N/A
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0 (See Item 5)
		8	SHARED VOTING POWER 411,100 (See Item 5)
		9	SOLE DISPOSITIVE POWER 0 (See Item 5)
		10	SHARED DISPOSITIVE POWER 411,100 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 411,100 (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.9%
14	TYPE OF REPORTING PERSON* CO

*SEE INSTRUCTIONS BEFORE FILLING OUT!

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Nelson Obus
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* N/A
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0 (See Item 5)
		8	SHARED VOTING POWER 1,250,700 (See Item 5)
		9	SOLE DISPOSITIVE POWER 0 (See Item 5)
		10	SHARED DISPOSITIVE POWER 1,250,700 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,250,700 (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.9%
14	TYPE OF REPORTING PERSON* IN

*SEE INSTRUCTIONS BEFORE FILLING OUT!

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Joshua Landes
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* N/A
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0 (See Item 5)
		8	SHARED VOTING POWER 1,229,900 (See Item 5)
		9	SOLE DISPOSITIVE POWER 0 (See Item 5)
		10	SHARED DISPOSITIVE POWER 1,229,900 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,229,900 (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.8%
14	TYPE OF REPORTING PERSON* IN

*SEE INSTRUCTIONS BEFORE FILLING OUT!

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON North Star Partners, L.P. 13-3863788
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* W/C
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 380,634 (See Item 5)
		8	SHARED VOTING POWER 0 (See Item 5)
		9	SOLE DISPOSITIVE POWER 380,634 (See Item 5)
		10	SHARED DISPOSITIVE POWER 0 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 380,634 (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.7%
14	TYPE OF REPORTING PERSON* PN

*SEE INSTRUCTIONS BEFORE FILLING OUT!

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON North Star Partners II, L.P. 61-1467034
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* W/C
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 329,029 (See Item 5)
		8	SHARED VOTING POWER 0 (See Item 5)
		9	SOLE DISPOSITIVE POWER 329,029 (See Item 5)
		10	SHARED DISPOSITIVE POWER 0 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 329,029 (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.3%
14	TYPE OF REPORTING PERSON* PN

*SEE INSTRUCTIONS BEFORE FILLING OUT!

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Circle T Explorer Master Limited 02-0744122
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* W/C
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Bermuda
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 24,895 (See Item 5)
		8	SHARED VOTING POWER 0 (See Item 5)
		9	SOLE DISPOSITIVE POWER 24,895 (See Item 5)
		10	SHARED DISPOSITIVE POWER 0 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 24,895 (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.2%
14	TYPE OF REPORTING PERSON* CO

*SEE INSTRUCTIONS BEFORE FILLING OUT!

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON NS Advisors, LLC 03-0439233
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* N/A
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Connecticut
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0 (See Item 5)
		8	SHARED VOTING POWER 734,558 (See Item 5)
		9	SOLE DISPOSITIVE POWER 0 (See Item 5)
		10	SHARED DISPOSITIVE POWER 734,558 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 734,558 (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.2%
14	TYPE OF REPORTING PERSON* 00

*SEE INSTRUCTIONS BEFORE FILLING OUT!

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Andrew R. Jones
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* N/A
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0 (See Item 5)
		8	SHARED VOTING POWER 734,558 (See Item 5)
		9	SOLE DISPOSITIVE POWER 0 (See Item 5)
		10	SHARED DISPOSITIVE POWER 734,558 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 734,558 (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.2%
14	TYPE OF REPORTING PERSON* IN

*SEE INSTRUCTIONS BEFORE FILLING OUT!

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Insight Investments, LP 16-1577303
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* W/C
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 335,100 (See Item 5)
		8	SHARED VOTING POWER 0 (See Item 5)
		9	SOLE DISPOSITIVE POWER 335,100 (See Item 5)
		10	SHARED DISPOSITIVE POWER 0 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 335,100 (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.4%
14	TYPE OF REPORTING PERSON* PN

*SEE INSTRUCTIONS BEFORE FILLING OUT!

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Ruff Fund Management, LLC 20-3649670
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* N/A
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION New York
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0 (See Item 5)
		8	SHARED VOTING POWER 335,100 (See Item 5)
		9	SOLE DISPOSITIVE POWER 0 (See Item 5)
		10	SHARED DISPOSITIVE POWER 335,100 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 335,100 (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.4%
14	TYPE OF REPORTING PERSON* OO

*SEE INSTRUCTIONS BEFORE FILLING OUT!

1	NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Charles W. Ruff
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS* N/A
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0 (See Item 5)
		8	SHARED VOTING POWER 335,100 (See Item 5)
		9	SOLE DISPOSITIVE POWER 0 (See Item 5)
		10	SHARED DISPOSITIVE POWER 335,100 (See Item 5)
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 335,100 (See Item 5)
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.4%
14	TYPE OF REPORTING PERSON* IN

*SEE INSTRUCTIONS BEFORE FILLING OUT!

Item 1. Security and Issuer.

This Schedule 13D (“Statement”) relates to shares of common stock, par value $0.001 (the “Common Shares”), of Cornell Companies, Inc. (the “Issuer”), whose principal executive offices are located at 1700 West Loop South, Suite 1500, Houston, Texas 77027.

Item 2. Identity and Background.

This Statement is filed by the Wynnefield Reporting Persons, the North Star Reporting Persons, and the Insight Reporting Persons (each as defined below and collectively, the “Reporting Persons”).

None of the Wynnefield Reporting Persons, North Star Reporting Persons nor the Insight Reporting Persons have any agreements or understandings between them relating to the acquisition, disposition, holding or voting of the Common Shares held by them and each expressly disclaims beneficial ownership for all purposes of the Common Shares held by the others. The Reporting Persons have filed this Statement solely because they may be deemed to be a “group” for purposes of Regulation 13D-G under the Act as a result of their agreement to send the Letter (as described in Item 4 below) to the Board of Directors (the “Board”) of the Issuer, however, the Wynnefield Reporting Persons, North Star Reporting Persons and the Insight Reporting Persons each disclaim membership in a “group” with the other Reporting Persons.

(1) Wynnefield Reporting Persons.

(a), (b), (c) and (f). The “Wynnefield Reporting Persons” are Wynnefield Partners Small Cap Value, L.P. (“Wynnefield Partners”), Wynnefield Small Cap Value Offshore Fund, Ltd. (“Wynnefield Offshore”), Wynnefield Partners Small Cap Value, L.P. I (“Wynnefield Partners I”), Channel Partnership II L.P. (“Channel”), Wynnefield Capital Management, LLC (“WCM”), Wynnefield Capital, Inc. (“WCI”), Nelson Obus and Joshua Landes. The Wynnefield Reporting Persons are each separate and distinct entities with different beneficial owners (whether designated as limited partners or stockholders).

Wynnefield Partners and Wynnefield Partners I are each private investment companies organized as Delaware limited partnerships. WCM, a New York limited liability company, is the general partner of Wynnefield Partners and Wynnefield Partners I. Nelson Obus and Joshua Landes are the co-managing members of WCM and the principal executive officers of WCI, a private investment company organized under the laws of the Cayman Islands, the investment manager of Wynnefield Offshore. Nelson Obus is the general partner of Channel, a private investment company organized as a Delaware limited partnership. Nelson Obus and Joshua Landes are both citizens of the United States.

The business address of the Wynnefield Reporting Persons is 450 Seventh Avenue, Suite 509, New York, New York 10123.

(d) and (e). During the last five years, none of the Wynnefield Reporting Persons have been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(2) North Star Reporting Persons.

(a), (b), (c) and (f). The “North Star Reporting Persons” are North Star Partners, L.P. (“NSP”), North Star Partners II, L.P. (“NSP II”), Circle T. Explorer Master Limited (“Circle”), NS Advisors, LLC (“NSA”) and Andrew R. Jones.

NSP and NSP II are each private investment companies organized as Delaware limited partnerships. Circle is a private investment company organized as a Bermuda limited partnership. NSA, is a private company organized as a Connecticut limited liability company and is the general partner of each of NSP and NSP II as well as the portfolio manager of Circle. Andrew R. Jones is the sole manager of NSA. Andrew R. Jones is a citizen of the United States.

The business address of each of the North Star Reporting Persons is 274 Riverside Avenue, Westport, Connecticut 06880.

(d) and (e). During the last five years, none of the North Star Reporting Persons have been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(3) Insight Reporting Persons.

(a), (b), (c) and (f). The “Insight Reporting Persons” are Ruff Fund Management, LLC (“Ruff Fund”), Insight Investments, LP (“Insight”) and Charles W. Ruff.

Insight is a private investment company organized as a Delaware limited partnership. Ruff Fund is a private company organized as a New York limited liability company and is the general partner of Insight. Charles W. Ruff is the President of Ruff Fund. Charles W. Ruff is a citizen of the United States.

The business address of each of the Insight Reporting Persons is 748 Perinton Hills Office Park, Fairpoint, NY 14450.

(d) and (e). During the last five years, none of the Insight Reporting Persons have been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

Item 3. Source and Amount of Funds or Other Consideration.

(1) Wynnefield Reporting Persons.

The securities reported in this Statement as directly beneficially owned by the Wynnefield Reporting Persons were acquired with funds of approximately $16,436,276.77 (including brokerage commissions). All such funds were provided from the working capital or personal funds of the Wynnefield Reporting Person who directly beneficially owns such securities.

(2) North Star Reporting Persons.

The securities reported in this Statement as directly beneficially owned by the North Star Reporting Persons were acquired with funds of approximately $9,412,418.79 (including brokerage commissions). All such funds were provided from the working capital or personal funds of the North Star Reporting Person who directly beneficially owns such securities.

(3) Insight Reporting Persons.

The securities reported in this Statement as directly beneficially owned by the Insight Reporting Persons were acquired with funds of approximately $4,360,398 (including brokerage commissions). All such funds were provided from the working capital or personal funds of the Insight Reporting Person who directly beneficially owns such securities.

Item 4. Purpose of Transaction.

On October 9, 2006, the Issuer issued a press release announcing that it had entered into an Agreement and Plan of Merger (the "Merger Agreement") with The Veritas Capital Fund III, L.P., a Delaware limited partnership ("Veritas"), under which Veritas will acquire the Issuer. Under the terms of the Merger Agreement, the Issuer’s stockholders will receive $18.25 in cash for each share of common stock they hold (the “Merger Consideration”). On November 13, 2006, the Issuer filed with the Securities and Exchange Commission its preliminary proxy statement (the “Preliminary Proxy”) relating to the merger.

On December 6, 2006, the Reporting Persons, who collectively own approximately 16.5% of the Issuer’s outstanding Common Shares, jointly sent a letter dated December 6, 2006 (the “Letter”) to the Issuer’s Board. The Letter advises the Issuer’s Board that the Reporting Persons each believe the Merger Consideration does not reflect the true value of the Issuer and that the Board has failed in its fiduciary responsibility by recommending that the stockholders of the Issuer vote for the proposed merger. A copy of the Letter is filed herewith and attached hereto as Exhibit 99.1 and incorporated herein by reference. Any descriptions herein of the Letter are qualified in their entirety by reference to the Letter.

The Letter further advises the Issuer’s Board that the Reporting Persons believe that the Preliminary Proxy filed by the Issuer relating to the merger withholds material information that would allow the Issuer’s stockholders to make a more accurate determination of the Issuer’s true fair value. Moreover, the Reporting Persons believe that the Preliminary Proxy reveals an evaluation process conducted by the Board that was flawed and resulted in an acquisition price that is substantially below what the Reporting Persons estimate to be the intrinsic value of the Issuer.

The Letter also advises the Issuer’s Board that based on the Reporting Persons’ belief that the Merger Consideration is inadequate, the Reporting Persons intend to vote against the merger transaction with Veritas.

No Reporting Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D except as set forth in this Schedule 13D. The Reporting Persons intend to review their investment in the Issuer on a continuing basis and may seek to engage in discussions with other stockholders concerning the merger transaction and/or with management and the Board of the Issuer concerning the business, operations or future plans of the Issuer. Depending on various factors including, without limitation, the Issuer's financial position, status of the merger transaction, the price levels of the Common Shares, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, electing to exercise their appraisal rights, purchasing additional Common Shares, selling some or all of their Common Shares, engaging in short selling of or any hedging or similar transaction with respect to the Common Shares, taking any other action with respect to the Issuer or any of its securities in any manner permitted by law or changing their intention with respect to any and all matters referred to in Item 4.

Item 5. Interest in Securities of the Issuer.

The Reporting Persons may be deemed to beneficially own collectively an aggregate of 2,320,358 of the Common Shares, representing 16.5% of the 14,062,898 outstanding Common Shares (the percentage of shares owned being based upon 14,062,898 Common Shares outstanding on October 31, 2006, as set forth in the Issuer’s most recent report on Form 10-Q for the period ended September 30, 2006, filed with the Securities and Exchange Commission on November 9, 2006). The Wynnefield Reporting Persons, the North Star Reporting Persons, and the Insight Reporting Persons each expressly disclaims beneficial ownership for all purposes of the Common Shares held by each of the other Reporting Persons.

(1) Wynnefield Reporting Persons.

(a) - (c) As of December 6, 2006, the Wynnefield Reporting Persons beneficially owned in the aggregate 1,250,700 Common Shares, constituting approximately 8.9% of the outstanding shares of Common Stock (the percentage of shares owned being based upon 14,062,898 Common Shares outstanding on October 31, 2006, as set forth in the Issuer’s most recent report on Form 10-Q for the period ended September 30, 2006, filed with the Securities and Exchange Commission on November 9, 2006). The following table sets forth certain information with respect to Common Shares directly beneficially owned by the Wynnefield Reporting Persons listed below:

Name	Number of Shares	Percentage of Outstanding Shares
Wynnefield Partners *	380,400	2.7%
Wynnefield Partners I *	438,400	3.1%
Wynnefield Offshore **	411,100	2.9%
Channel ***	20,800	0.2%

* WCM has an indirect beneficial ownership interest in these Common Shares.

** WCI has an indirect beneficial ownership interest in these Common Shares.

*** Mr. Obus has an indirect beneficial ownership interest in these Common Shares.

WCM is the sole general partner of the Wynnefield Partners and Wynnefield Partners I and, accordingly, may be deemed to be the indirect beneficial owner (as that term is defined under Rule 13d-3 under the Exchange Act) of the Common Shares that Wynnefield Partners and Wynnefield Partners I beneficially own. WCM, as the sole general partner of Wynnefield Partners and Wynnefield Partners, has the sole power to direct the voting and disposition of the Common Shares that Wynnefield Partners and Wynnefield Partners I beneficially own. Messrs. Obus and Landes are the co-managing members of WCM and, accordingly, each of Messrs. Obus and Landes may be deemed to be the indirect beneficial owner (as that term is defined under Rule 13d-3 under the Exchange Act) of the Common Shares that WCM may be deemed to beneficially own.

Each of Messrs. Obus and Landes, as a co-managing member of WCM, shares with the other the power to direct the voting and disposition of the Common Shares that WCM may be deemed to beneficially own. WCI is the sole investment manager of Wynnefield Offshore and, accordingly, may be deemed to be the indirect beneficial owner (as that term is defined under Rule 13d-3 under the Exchange Act) of the Common Shares that Wynnefield Offshore beneficially owns.

WCI as the sole investment manager of Wynnefield Offshore, has the sole power to direct the voting and disposition of the Common Shares that Wynnefield Offshore beneficially owns. Messrs. Obus and Landes are executive officers of WCI and, accordingly, each of Messrs. Obus and Landes may be deemed to be the indirect beneficial owner (as that term is defined under Rule 13d-3 under the Exchange Act) of the Common Shares that WCI may be deemed to beneficially own. Each of Messrs. Obus and Landes, as executive officers of WCI, shares with the other the power to direct the voting and disposition of the Common Shares that WCI may be deemed to beneficially own.

Mr. Obus is the general partner of Channel and accordingly, Mr. Obus may be deemed to be the indirect beneficial owner (as that term is defined under Rule 13d-3 under the Exchange Act) of the Common Shares that Channel may be deemed to beneficially own. Mr. Obus, as the general partner of Channel, has the sole power to direct the voting and disposition of the Common Shares beneficially owned by Channel.

Beneficial ownership of the Common Shares shown on the cover pages of and set forth elsewhere in this Statement for each member of the Wynnefield Reporting Persons assumes that they have not formed a group for purposes of Section 13(d)(3) under the Exchange Act, and Rule 13d-5(b)(1) promulgated thereunder. If the members of the Wynnefield Reporting Persons were deemed to have formed a group for purposes of Section 13(d)(3) and Rule 13d-5(b)(1), the group would be deemed to own beneficially (and may be deemed to have shared voting and dispositive power over) 1,161,900 Common Shares, constituting approximately 8.3% of the outstanding Common Shares (the percentage of shares owned being based upon 14,062,898 Common Shares outstanding on October 31, 2006, as set forth in the Issuer’s most recent report on Form 10-Q for the period ended September 30, 2006, filed with the Securities and Exchange Commission on November 9, 2006).

The filing of this Statement and any future amendment by the Wynnefield Reporting Persons, and the inclusion of information herein and therein with respect to WCM, WCI and Messrs. Obus and Landes, shall not be considered an admission that any of such persons, for the purpose of Section 16(b) of the Exchange Act, are the beneficial owners of any shares in which such persons do not have a pecuniary interest. Each of WCM, WCI and Messrs. Obus and Landes disclaims any beneficial ownership of the shares covered by this Statement.

To the best knowledge of the Wynnefield Reporting Persons, except as described in this Statement, none of the Wynnefield Reporting Persons, any person in control (ultimately or otherwise) of the Wynnefield Reporting Persons, any general partner, executive officer or director thereof, as applicable, beneficially owns any Common Shares, and there have been no transactions in the Common Shares affected during the past 60 days, by the Wynnefield Reporting Persons, any person in control of the Wynnefield Reporting Persons (ultimately or otherwise), or any general partner, executive officer or director thereof, as applicable.

(2) North Star Reporting Persons.

(a) - (c) As of December 6, 2006, the North Star Reporting Persons beneficially owned in the aggregate 734,558 Common Shares, constituting approximately 5.2% of the outstanding shares of Common Stock (the percentage of shares owned being based upon 14,062,898 Common Shares outstanding on October 31, 2006, as set forth in the Issuer’s most recent report on Form 10-Q for the period ended September 30, 2006, filed with the Securities and Exchange Commission on November 9, 2006). The following table sets forth certain information with respect to Common Shares directly beneficially owned by the North Star Reporting Persons listed below:

Name	Number of Shares	Percentage of Outstanding Shares
NSP *	380,634	2.7%
NSP II *	329,029	2.3%
Circle *	24,895	0.2%

* NSA has an indirect beneficial ownership interest in these Common Shares.

NSA is the sole general partner of NSP and NSP II and, accordingly, may be deemed to be the indirect beneficial owner (as that term is defined under Rule 13d-3 under the Exchange Act) of the Common Shares that NSP and NSP II may be deemed to beneficially own. NSA, as the sole general partner of NSP and NSP II, has the sole power to direct the voting and disposition of the Common Shares that NSP and NSP II beneficially own. Mr. Jones is the sole manager of NSA and, accordingly, Mr. Jones may be deemed to be the indirect beneficial owner (as that term is defined under Rule 13d-3 under the Exchange Act) of the Common Shares that NSA may be deemed to beneficially own.

Beneficial ownership of the Common Shares shown on the cover pages of and set forth elsewhere in this Statement for each member of the North Star Reporting Persons assumes that they have not formed a group for purposes of Section 13(d)(3) under the Exchange Act, and Rule 13d-5(b)(1) promulgated thereunder. If the members of the North Star Reporting Persons were deemed to have formed a group for purposes of Section 13(d)(3) and Rule 13d-5(b)(1), the group would be deemed to own beneficially (and may be deemed to have shared voting and dispositive power over) 734,558 Common Shares, constituting approximately 5.2% of the outstanding shares of Common Stock (the percentage of shares owned being based upon 14,062,898 Common Shares outstanding on October 31, 2006, as set forth in the Issuer’s most recent report on Form 10-Q for the period ended September 30, 2006, filed with the Securities and Exchange Commission on November 9, 2006).

The filing of this Statement and any future amendment by the North Star Reporting Persons, and the inclusion of information herein and therein with respect to NSA and Mr. Jones, shall not be considered an admission that any of such persons, for the purpose of Section 16(b) of the Exchange Act, are the beneficial owners of any shares in which such persons do not have a pecuniary interest. Each of NSA and Mr. Jones disclaims any beneficial ownership of the shares covered by this Statement.

To the best knowledge of the North Star Reporting Persons, except as described in this Statement, none of the North Star Reporting Persons, any person in control (ultimately or otherwise) of the North Star Reporting Persons, any general partner, executive officer or director thereof, as applicable, beneficially owns any Common Shares, and there have been no transactions in the Common Shares affected during the past 60 days, by the North Star Reporting Persons, any person in control of the North Star Reporting Persons (ultimately or otherwise), or any general partner, executive officer or director thereof, as applicable.

(3) Insight Reporting Persons.

(a) - (c) As of December 6, 2006, the Insight Reporting Persons beneficially owned in the aggregate 335,100 Common Shares, constituting approximately 2.4% of the outstanding shares of Common Stock (the percentage of shares owned being based upon 14,062,898 Common Shares outstanding on October 31, 2006, as set forth in the Issuer’s most recent report on Form 10-Q for the period ended September 30, 2006, filed with the Securities and Exchange Commission on November 9, 2006). The following table sets forth certain information with respect to Common Shares directly beneficially owned by the Insight Reporting Persons listed below:

Name	Number of Shares	Percentage of Outstanding Shares
Insight*	335,100	2.4%

* Ruff Fund has an indirect beneficial ownership interest in these Common Shares.

The Ruff Fund is the sole general partner of Insight and, accordingly, may be deemed to be the indirect beneficial owner (as that term is defined under Rule 13d-3 under the Exchange Act) of the Common Shares that Insight may be deemed to beneficially own. The Ruff Fund as the sole general partner of Insight, has the sole power to direct the voting and disposition of the Common Shares that Insight may be deemed to beneficially own. Mr. Ruff is the President of the Ruff Fund and, accordingly, Mr. Ruff may be deemed to be the indirect beneficial owner (as that term is defined under Rule 13d-3 under the Exchange Act) of the Common Shares that the Ruff Fund may be deemed to beneficially own.

Beneficial ownership of the Common Shares shown on the cover pages of and set forth elsewhere in this Statement for each member of the Insight Reporting Persons assumes that they have not formed a group for purposes of Section 13(d)(3) under the Exchange Act, and Rule 13d-5(b)(1) promulgated thereunder. If the members of the Insight Reporting Persons were deemed to have formed a group for purposes of Section 13(d)(3) and Rule 13d-5(b)(1), the group would be deemed to own beneficially (and may be deemed to have shared voting and dispositive power over) 335,100 Common Shares, constituting approximately 2.4% of the outstanding shares of Common Stock (the percentage of shares owned being based upon 14,062,898 Common Shares outstanding on October 31, 2006, as set forth in the Issuer’s most recent report on Form 10-Q for the period ended September 30, 2006, filed with the Securities and Exchange Commission on November 9, 2006).

The filing of this Statement and any future amendment by the Insight Reporting Persons, and the inclusion of information herein and therein with respect to Ruff Fund and Mr. Ruff, shall not be considered an admission that any of such persons, for the purpose of Section 16(b) of the Exchange Act, are the beneficial owners of any shares in which such persons do not have a pecuniary interest. Each of the Ruff Fund and Mr. Ruff disclaims any beneficial ownership of the shares covered by this Statement.

To the best knowledge of the Insight Reporting Persons, except as described in this Statement, none of the Insight Reporting Persons, any person in control (ultimately or otherwise) of the Insight Reporting Persons, any general partner, executive officer or director thereof, as applicable, beneficially owns any Common Shares, and there have been no transactions in the Common Shares affected during the past 60 days, by the Insight Reporting Persons, any person in control of the Insight Reporting Persons (ultimately or otherwise), or any general partner, executive officer or director thereof, as applicable.

Item 6.  Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

Each of the Reporting Persons is a party to a Joint Filing Agreement, dated as of December 6, 2006 (the "13D Joint Filing Agreement"), pursuant to which the parties agreed to jointly file this Statement and any and all amendments and supplements thereto with the Securities and Exchange Commission. The 13D Joint Filing Agreement is filed herewith as Exhibit 99.2 and is incorporated herein by reference in its entirety in this response to Item 6.

Except for the agreements described above, to the best knowledge of the Reporting Persons, there are no contracts, arrangements, understandings or relationships (legal or otherwise) between the Reporting Persons, and any other person, with respect to any securities of the Issuer, including, but not limited to, transfer or voting of any of the securities, finder's fees, joint ventures, loan or option agreements, puts or calls, guarantees of profits, divisions of profits or loss, or the giving or withholding of proxies.

Item 7.  Material to be Filed as Exhibits

The following exhibit is filed as part of this 13D:

Exhibit 99.1	Letter to the Board of Directors of Cornell Companies, Inc., dated December 6, 2006
Exhibit 99.2	Joint Filing Agreement

SIGNATURE

After reasonable inquiry and to the best of their knowledge and belief, the undersigned certify that the information set forth in this Statement is true, complete and correct.

Dated: December 6, 2006

WYNNEFIELD PARTNERS SMALL CAP VALUE, L.P.
By:	Wynnefield Capital Management, LLC, its General Partner
By:	/s/ Nelson Obus
	Nelson Obus, Co-Managing Member

WYNNEFIELD PARTNERS SMALL CAP VALUE, L.P. I
By:	Wynnefield Capital Management, LLC, its General Partner
By:	/s/ Nelson Obus
	Nelson Obus, Co-Managing Member

WYNNEFIELD SMALL CAP VALUE OFFSHORE FUND, LTD.
By:	Wynnefield Capital, Inc., its Investment Manager
By:	/s/ Nelson Obus
	Nelson Obus, President

WYNNEFIELD CAPITAL MANAGEMENT, LLC
By:	/s/ Nelson Obus
	Nelson Obus, Co-Managing Member

WYNNEFIELD CAPITAL, INC.
By:	/s/ Nelson Obus
	Nelson Obus, President

CHANNEL PARTNERSHIP II, L.P.
By:	/s/ Nelson Obus
	Nelson Obus, General Partner

/s/ Nelson Obus

Nelson Obus, Individually

/s/ Joshua H. Landes

Joshua H. Landes, Individually

After reasonable inquiry and to the best of their knowledge and belief, the undersigned certify that the information set forth in this Statement is true, complete and correct.

Dated: December 6, 2006

NORTH STAR PARTNERS, L.P.
By:	NS ADVISORS, LLC Its General Partner
By:	/s/ Andrew R. Jones
	Andrew R. Jones, Manager

NORTH STAR PARTNERS II, L.P.
By:	NS ADVISORS, LLC Its General Partner
By:	/s/ Andrew R. Jones
	Andrew R. Jones, Manager

CIRCLE T. EXPLORER MASTER LIMITED
By:	NS ADVISORS, LLC Its Portfolio Manager
By:	/s/ Andrew R. Jones
	Andrew R. Jones, Manager

NS ADVISORS, LLC
By:	/s/ Andrew R. Jones
	Andrew R. Jones, Manager

/s/ Andrew R. Jones

Andrew R. Jones, Individually

After reasonable inquiry and to the best of their knowledge and belief, the undersigned certify that the information set forth in this Statement is true, complete and correct.

Dated: December 6, 2006

INSIGHT INVESTMENTS, L.P.
By:	RUFF FUND MANAGEMENT LLC Its General Partner
By:	/s/ Charles W. Ruff
	Charles W. Ruff, Manager

RUFF FUND MANAGEMENT LLC
By:	/s/ Charles W. Ruff
	Charles W. Ruff, Manager

/s/ Charles W. Ruff

Charles W. Ruff, Individually

EX-99.1

December 6, 2006

VIA FACSIMILE

713-623-2853

The Board of Directors

c/o James E. Hyman, Chairman

Cornell Companies, Inc.

1700 West Loop South

Suite 1500

Houston, TX 77027

Dear Members of the Board:

We together and for the benefit of our clients own over 2.3 million or approximately 16.5% of the outstanding common shares of Cornell Companies, Inc. We are writing to express our opposition to the proposed acquisition of our company by The Veritas Capital Fund III, LP for $18.25 per share. We believe the price does not reflect the true value of our company and that the Directors have failed in their fiduciary responsibility by recommending that the shareholders vote for the transaction.

Like many of your shareholders, we have been awaiting the proxy to see if there was any information therein which would help us understand why you would support an acquisition price that is substantially below what we estimate to be the intrinsic value of the company. After studying the preliminary proxy, we conclude that there is no information included which supports this low price. Moreover, we believe that the evaluation process was flawed and that material information is being withheld that would allow shareholders to make a more accurate determination of fair value.

Flawed Process. The “Background of the Merger” section in the proxy¹ describes the process of contacting potential buyers. What is most striking is that strategic buyers appear to have been treated as second class participants. Strategic buyers were given only half the time to evaluate and react to your initial contact compared to what was given to financial buyers. Also it appears that the strategic buyer who indicated the highest potential price was not pursued because they did not submit a single price or draft merger agreement comments. No reasons for requiring a single price and merger agreement comments were given but it is difficult for us to believe that they would justify abandoning a potential buyer who indicates the highest price. Perhaps the shorter evaluation time is what caused the strategic buyers to not follow your bidding guidelines, but regardless we believe that as fiduciaries you should have tried to develop both of the strategic buyers’ interest. Instead, you moved to exclusive negotiations with one of the financial buyers, and after they dropped out, began exclusive negotiations with the other financial buyer without pursuing the strategic buyers at all. Ironically, it is our belief that strategic buyers would be able to generate large synergies, mostly by eliminating a significant amount of Cornell’s high overhead, and thereby be in a position to pay a better price than financial buyers. And yet instead of actively pursing the potential buyers which would be most likely to pay the highest price, Cornell’s process seems to have actually discriminated against and discouraged them.

¹ Schedule 14A, Cornell Companies, Inc., filed November 13, 2006, pp 16-20.

Lack of Material Information.One of themajor reasons the Board recommends this transaction to the shareholders is your reliance on the fairness opinion provided by Rothschild, Inc. Rothschild, however, states that they completely relied on management’s financial projections and did not independently verify any information used in forming its opinion.² While these purchased opinions are always to be considered with some skepticism, proxy statements of this type typically disclose the financial projections upon which the opinions are based which allows shareholders to make their own judgments about the adequacy of the proposed deal. However in the case of our company, the Board has chosen not to be open with shareholders and share this vital information. We believe that an honest assessment of the financial prospects of Cornell over the next five years would make it clear that the proposed price of $18.25 per share is inadequate. Over the last twelve months, Cornell’s management has been frustratingly secretive about the opportunities in front of our company. We are very disappointed that a Board that purports to be representing the shareholders would allow this secrecy to continue at such a critical time. The owners are faced with an important decision; why would you not want to provide as much information as practicable?

It only takes a passing familiarity with the private corrections industry to know that demand currently outstrips supply and that therefore pricing is moving in an extremely positive direction. While your public competitors are taking full advantage of this environment, Cornell’s management remains vague and circumspect. However, in reviewing the earnings conference calls over the last year, one can glean some idea of what the future holds for Cornell.

For example, on the first quarter conference call held on May 9, 2006, James Hyman made the following comments:

“To date we’ve avoided public discussions of growth. However, that has not meant that we have been inactive in considering growth in each of our divisions. As we start to look to 2007 and beyond, we see opportunities where we can win a share of new business to grow shareholder value.”

“Today, we are actively bidding on selected contracts and feel confident that we can win an attractive share of the demand that the entire industry sees from our federal and state customers.”

² Schedule 14A, Cornell Companies, Inc., filed November 13, 2006, pp 24-25.

“By simply filling capacity at current operating programs, we can double the EBITDA from the [juvenile] division over the next two years.”

“… the EBITDA from the divisional growth efforts will not likely materialize during 2006 …”

“… each of the business lines has huge upside to where they are today.”

“When we run out of opportunities, which I don’t see for quite a while, then we’d have to figure out whether, you know, there are people who are better able to drive the next stage of growth. Today, I think we’re perfectly positioned to do that.”

On subsequent calls Mr. Hyman refused to elaborate on any specific growth opportunities or what the financial impact of previously mentioned opportunities might be.

In addition to the comments listed above, we believe that there is a substantial list of opportunities to grow the earnings stream and to surface values that are embedded in the company. These items include:

·   Monetization of the $150 million of unencumbered earning real estate that is currently on the balance sheet

·   Proceed with $30 million of low risk, high return capital expansion projects

·   Re-price low margin contracts (i.e. Great Plains) to reflect the current strong pricing environment

·   Repurpose less profitable juvenile facilities for adult applications

·   Sell money losing juvenile facilities

We agree with Mr. Hyman that there is huge upside available for our company. The question is which, if any, of these opportunities were included in the projections given to the potential bidders and to Rothschild? Also what value was attributed to non-earning assets like the pre-paid rent that does not show up on the balance sheet? While the proxy is silent on these important issues, it appears to us that none of these opportunities are reflected in a price of $18.25/share. The December 1st press release which raised earnings guidance for the fourth quarter underscores our concern that management is downplaying the company’s prospects. This makes it two quarters in a row where actual operating results are much better than guidance that was provided just a few months prior.

Over the past two years we have been vocal supporters of Cornell. We supported the replacement of the Board that was achieved last year and we have supported Mr. Hyman’s efforts as he took over management of the company. We have endured write-offs, program closings and a lagging stock price, all because we thought that there was significant value to be realized in the future. Now as the company is about to enter a true growth phase where that value could be realized, we are being asked to hand that value over to a private equity buyer and the management team.

While it may be the case that this is the best price that this particular strategic process could result in, it does not mean it is acceptable. We firmly believe that remaining an independent company poised for growth is a far superior option. As fiduciaries to our investors we simply can not support selling our shares for such an inadequate price and accordingly we will vote against the transaction and will seek appraisal rights should the shareholders approve the deal. We urge the Board to revisit its fiduciary duty to the shareholders and reverse your support of this proposed transaction.

Sincerely,

/s/ Andrew R. Jones

_______________________________________

Andrew R. Jones

Managing Member

NS Advisors, LLC

/s/ Nelson Obus

_______________________________________

Nelson Obus

President

Wynnefield Capital, Inc.

/s/ Charles W. Ruff

_______________________________________

Charles W. Ruff

President

Ruff Fund Management, LLC

EX-99.2

EXHIBIT 99.2

JOINT FILING AGREEMENT

THIS JOINT FILING AGREEMENT (this "Agreement") is made and entered into as of this 6^th day of December, 2006, by and among Wynnefield Partners Small Cap Value, L.P., Wynnefield Partners Small Cap Value, L.P. I, Wynnefield Small Cap Value Offshore Fund, Ltd., Channel Partnership II L.P., Wynnefield Capital Management LLC, Wynnefield Capital Inc., Nelson Obus, Joshua Landes, North Star Partners, L.P., North Star Partners II, L.P., Circle T. Explorer Master Limited, NS Advisors, LLC, Andrew R. Jones, Ruff Fund Management LLC, Insight Investments, LP and Charles W. Ruff.

The parties to this Agreement hereby agree to prepare jointly and file timely (or otherwise to deliver as appropriate) all filings on Schedule 13D and Schedule 13G (the "Filings") required to be filed by them pursuant to Section 13(d) or 13(g) under the Securities Exchange Act of 1934, as amended, with respect to their respective ownership of the Common Stock of Cornell Companies, Inc. that are required to be reported on any Filings. Each party to this Agreement further agrees and covenants to the other parties that it will fully cooperate with such other parties in the preparation and timely filing (and other delivery) of all such Filings.

[signature pages follow]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above.

Wynnefield Partners Small Cap Value, L.P. By: Wynnefield Capital Management LLC, its General Partner By: /s/ Nelson Obus                                      Nelson Obus,Co-Managing Member	Wynnefield Partners Small Cap Value, L.P. I By: Wynnefield Capital Management LLC, its General Partner By: /s/ Nelson Obus                                              Nelson Obus,Co-Managing Member
Wynnefield Small Cap Value Offshore Fund, Ltd. By: Wynnefield Capital, Inc. By: /s/ Nelson Obus                                       Nelson Obus,President	Wynnefield Capital Management, LLC By: /s/ Nelson Obus                                              Nelson Obus,Co-Managing Member
Wynnefield Capital, Inc. By: /s/ Nelson Obus                                        Nelson Obus,President	Channel Partnership II, L.P. By: /s/ Nelson Obus                                              Nelson Obus,General Partner
/s/ Joshua H. Landes                              Joshua H. Landes	/s/ Nelson Obus                                               Nelson Obus

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above.

NORTH STAR PARTNERS, L.P. By; NS ADVISORS, LLC Its General Partner By: /s/ Andrew R. Jones                                                Andrew R. Jones, Manager	NORTH STAR PARTNERS II, L.P. By: NS ADVISORS, LLC         Its General Partner By: /s/ Andrew R. Jones                                      Andrew R. Jones, Manager
CIRCLE T. EXPLORER MASTER LIMITED By: NS ADVISORS, LLC         Its Portfolio Manager By: /s/ Andrew R. Jones                                                 Andrew R. Jones, Manager	NS ADVISORS, LLC By: /s/ Andrew R. Jones                                   Andrew R. Jones, Manager
/s/ Andrew R. Jones                                          Andrew R. Jones

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above.

INSIGHT INVESTMENTS, L.P. By; RUFF FUND MANAGEMENT LLC Its General Partner By: /s/ Charles W. Ruff                                               Charles W. Ruff, Manager	RUFF FUND MANAGEMENT LLC By: /s/ Charles W. Ruff                                               Charles W. Ruff, Manager
/s/ Charles W. Ruff                                               Charles W. Ruff