The directive–spelled out in internal memos obtained by NEWSWEEK–is part of a potentially far-reaching new policy designed by Ashcroft’s top aides to insure “real time” in federal prisons for convicted tax evaders, inside traders and other white-collar malefactors.
The Justice directive, signed this week by Deputy Attorney General Larry D. Thompson, orders Kathleen Hawk Sawyer, director of the Bureau of Prisons (BOP), to put an immediate end to a longstanding BOP practice that has allowed hundreds of white-collar felons to avoid spending any time in prison. Instead, BOP has routinely assigned these felons with relatively short prison terms of two years or less to “community corrections centers” or halfway houses in which inmates go to work in the community and go home to visit their families on weekends–privileges not available to inmates in prison.
The new policy move, officials said, is partly intended to strengthen the hands of federal prosecutors in high-priority cases like the Enron and WorldCom scandals. Officials say they are trying to signal to reluctant targets in those cases that they should cooperate with the government–or else. “There’s a clear signal being sent here,” says one department official. “We’re not going to tolerate preferential treatment for rich corporate executives who have broken the law.”
Since the Enron scandal erupted last year, Ashcroft and his top aides have sought to deflect any political damage away from the Bush White House by showing that the Justice Department was prepared to prosecute corporate criminals just as aggressively as drug dealers and terrorists.
Along the way, Justice officials have taken a number of controversial steps, including staging “perp walks” in which prominent corporate executives, such as Enron’s Andrew S. Fastow and Adelphia’s John Rigas, were paraded before TV cameras after being arrested. These and other practices have drawn howls of outrage from corporate defense lawyers who have accused Justice officials of “PR stunts” that trampled on the constitutional rights of their clients.
While not as high profile as the perp walks, the new Justice ban on alternatives to prison may prove far more consequential in the long run, officials say. The BOP’s practice of sending white-collar felons to halfway houses dates back at least 10 years. Officials say it has allowed many relatively affluent, and disproportionately white, convicts to avoid doing prison time–even when their judicially imposed sentences under federal guidelines explicitly called for “imprisonment.”
BOP officials had justified the practice on the grounds that in many cases the assignments to halfway houses were recommended by federal judges and that the inmates in question were invariably first-time offenders who posed no physical threat to the community.
Ashcroft aides say they didn’t learn about the BOP practice until last year when a federal judge in West Virginia wrote Ashcroft a letter about a local dentist who defrauded the government of more than $500,000 in taxes. Despite the dentist’s conviction on a sentence that called for jail time, the man never actually went to prison. The letter from U.S. Judge Joseph Goodwin, a Clinton appointee, triggered an internal review by the Department of Justice’s Office of Legal Counsel. “Our guys were outraged,” says one DOJ official.
The review culminated this week in a sternly worded Dec. 16 directive from Thompson to BOP director Sawyer. Thompson called BOP’s actions “unlawful” and a clear violation of “unambiguous” federal guidelines calling for prison time for white-collar convicts. He ordered prison officials to “immediately” start changing the bureau’s practices–including transferring white-collar convicts currently in halfway houses into prisons. Officials say this will immediately apply to 125 inmates currently in halfway houses–and potentially hundreds more each year, including a number of high-profile defendants facing charges by the DOJ’s corporate-crime task force.
Thompson wrote in his two-and-a-half-page memo that BOP’s “current placement practices run the risk of eroding public confidence in the federal judicial system. White-collar criminals are no less deserving of incarceration … than conventional offenders.”
He also said the BOP’s policy was undercutting “the powerful deterrent effect” that real prison time can have on white-collar criminals, especially given the fact that such individuals “are often better educated and more rational than other criminals and are thus more likely to weigh the risk of possible courses of action against the anticipated rewards of criminal behavior.”
The directive to Sawyer was unusual because it constituted a rare rebuke of a top Justice Department official by a superior. (The BOP is part of the Justice Department.) A spokeswoman for Sawyer declined comment and said the director would not be available for an interview. After receiving Thompson’s memo, Sawyer today issued her own memo to all federal judges notifying them of “a significant procedure change” in its practices of sending inmates requiring imprisonment to community corrections centers (CCCs). “Effective immediately, this practice will no longer be followed,” Sawyer wrote the judges. “The Bureau will not use CCCs as a substitute for imprisonment.”
Officials say they were unable to identify any current inmates who will be immediately affected by the transfer. But one high-profile defendant who is likely to be affected soon, officials said, is David Duke, the former Ku Klux Klan leader and white supremacist who this week pled guilty to mail and tax fraud. Duke was accused by prosecutors of raising thousands of dollars from supporters and then misusing the money for personal investments and gambling trips to Mississippi’s Gulf Coast.
As a result of his guilty plea, Duke, 52, is eligible for a prison term of up to 15 months under federal guidelines. Under BOP’s old policy, that would likely have meant time in a halfway house. Now, officials said, he will almost certainly go to prison. Duke’s lawyer did not return a phone call seeking comment.
