37,000 People Owe the Government More Than $646 Million : Many Convicts Haven’t Paid U.S. Fines, and Probably Will Never Do So

WASHINGTON â€”  More than eight years after he was sentenced for bribery and conspiracy in the Abscam scandal, former Rep.Michael J. (Ozzie) Myers (D-Pa.) has yet to pay a penny of the $20,000 fine a federal judge imposed to punish him.

And the Justice Department has not exactly hounded him for the money.

When he left prison in 1985, Myers fell into a void, as far as the government was concerned. He disappeared from the view of federal prosecutors, his file banished to dusty archives in Bayonne, N.J. Government lawyers said they could not go after him because they did not know where he lived.

Myers--who returned from jail to the same Philadelphia neighborhood he had represented in Congress--works in a family-owned bar these days. He declared in a recent interview that he is “close to being a pauper.� As to the fine? “If I am not pursued over a debt . . . . I am not in a rush to pay anything.�

Others Have Not Paid

Myers has plenty of company in the ranks of those who have not paid the fines imposed: former U.S. Sen. Harrison A. (Pete) Williams Jr. (D-N.J.), who was fined $50,000 after his Abscam conviction; former Manhattan investment banker Dennis Levine, who has been challenging his $362,000 fine for securities fraud in the appeals courts, and Mary Treadwell, the once-powerful head of the defunct Youth Pride program in Washington, whose $40,000 fine for conspiracy to defraud the federal government was suspended four years after it was imposed.

More than 37,000 people convicted of federal crimes and sentenced to pay fines or restitution--including hundreds in the Washington area--owe the government more than $646 million, according to Justice Department figures. Some of the debts date back 20 years.

It is a system in disarray, in which millions of dollars in unrealistic fines languish on the books with little expectation that they will be paid; in which four arms of the lumbering criminal justice system work to impose fines, collect them and pursue those who do not pay; in which one arm often does not know what the others are doing.

Poor Records of Payments

At times, the system cannot keep track of who has paid and who has not. People who pay sometimes are listed among the non-payers, but no action is taken against them, the Washington Post found in a random survey. Some pay in such small installments that their debts appear unlikely to be paid off for many years, if ever.

“Most experienced judges . . . have learned over the years that most of the fines they impose are never collected,� said U.S. Circuit Judge Edward R. Becker of Philadelphia.

“These laws on big fines look real good coming out of a legislative office, in the Congressional Record or on the news: ‘We are getting tough on crime,’ � said Al Havenstrite, chief of the federal probation office in Dallas. “But . . . most people are ruined (financially) by the time they are caught . . . . It may look real good that they are slapped with a big fine, but it’s no punishment if you can’t collect it.�

Criminal-justice officials acknowledge the problems but assert that they are moving on several fronts to step up enforcement. This month, the Justice Department will initiate an incentive program, forgiving interest and penalties for those who pay in 60 days.

At times, instead of collecting a debt, the system simply forgives it.

Blessing of Judge

Treadwell, former wife of D.C. Mayor Marion Barry, has not paid any of the $40,000 fine--all with the blessing of the federal judge who sentenced her.

Last year, U.S. District Judge John Garrett Penn ruled that Treadwell, who now holds a $37,000-a-year job with the D.C. Parole Board, was financially unable to make the payments. Noting her other outstanding debts, he suspended the fine, imposed in 1984, until and unless she is able to pay it.

Last month, Treadwell--who served about 18 months for conviction of conspiracy to defraud--was asked whether she would ever pay the fine. “I would like to think I could handle any obligation I have,� she replied.

But to William D. Pease, the former federal prosecutor responsible for her conviction, this punishment about-face had an Alice-in-Wonderland quality. “At some point people have to wonder about the viability of a system that one day says this is the appropriate punishment for the crime and later on--whether out of boredom, fatigue or lack of interest--says: ‘Oh well, that was four years ago. We won’t worry about it anymore,’ � Pease said.

Revamping of System

Criminal-justice officials are working to revamp the collection system, with plans to tighten coordination, move to a national computer collection system and seek uniform federal laws to cut through a labyrinth of state collection statutes, said the Justice Department’s Katherine Deoudes, associate director of financial litigation for the Executive Office of U.S. Attorneys.

During the last fiscal year, the nation’s 93 U.S. attorney’s offices collected about $125 million in fines and restitution, according to Justice statistics. However, in the first nine months of this fiscal year, federal judges piled on another $331 million.

Collection of the growing debt is left to about 430 employees around the nation who are responsible for those obligations and others--everything from student to agricultural loans--a total debt now approaching $2 billion. Once paid, the fines go to the federal Crime Victim Fund to be parceled out to programs around the nation.

Many prosecutors said the war on crime has to take precedence over the war on debts. “Collection of fines is not high on your list of priorities when you’re running nine people short,� said U.S. Atty. Breckinridge L. Willcox of Baltimore. “If you can’t prosecute cases you ought to prosecute, then clearly you don’t have enough (resources) to go after deadbeat debtors.�

Took $50,000 in Cash

Few cases are more telling of the system’s inadequacies than that of Myers, the Abscam convict. He was found guilty in 1981 after jurors in Brooklyn watched an FBI videotape of him taking an envelope containing $50,000 in cash from an undercover FBI agent posing as the middleman for a phony Arab sheik.

In the years between Myers’ conviction and his release from jail, the sheet of paper that trips the switch on fine collection never made it down four flights of stairs from one division to another in the U.S. attorney’s office in Brooklyn.

In 1984, when she took over fine collection there, then-Assistant U.S. Atty. Kathleen Haggerty inherited about 5,500 cases, some dating back to Prohibition. At first she could not find the records on any of the eight Abscam defendants, and once she did--after plowing through an old storage room--they did not contain the one thing she needed: the defendants’ addresses.

Fines must be collected in the jurisdiction where the debtor lives, and the address is critical. But it was not even required on the document court clerks filled out after a defendant was sentenced.

Haggerty said she suspected that Myers had gone back home, but the resources of the federal government could not find him.

‘More and More Debts’

“It should not have happened,� said Haggerty, who now helps direct Justice’s national collection effort. “Myers was there, but every day more and more debts were coming through the door.�

Meanwhile, Myers went back to work in his old neighborhood. He was quoted prominently in the local newspaper. He reported to a parole officer in the U.S. courthouse. But no one pressed him for the fine. “Where do I get the money?� Myers joked last month. “Unless they send more of them sheiks to see me. Tell ‘em to leave the body mikes at home.�

Many other debtors do not pay even when prosecutors are able to locate them.

Former Sen. Williams, also convicted of bribery and conspiracy in Abscam in 1981, has not paid his $50,000 fine, according to authorities. Meanwhile, the federal government has paid him nearly $320,000 in pension funds.

In 1987, the U.S. attorney’s office in Newark filed a claim against the estate of Williams’ late mother but still has not collected the money. Under federal laws, they cannot touch his pension, assistant federal prosecutor Vincent Gentile said. Off-limits too is the home in the comfortable suburb of Bedminster, now worth more than $300,000, which Williams’s wife purchased in her name in 1983.

“Sure it bothers me,� Gentile said. “But we’re doing what we can.�

No Payments Received

Williams’ attorney, John D. Arsenault, said his client always has been cooperative, providing prosecutors with the financial information they need. Arsenault said he thought an installment plan had been set up, but a spokesman for the prosecutor’s office said no payments had been received. Efforts to reach Williams were unsuccessful.

Wall Street investment banker Levine, whose arrest set off the insider-trading scandal, has argued that his $362,000 fine should be paid out of the illegal profits he already was forced to surrender to the government. A federal appeals court recently rejected that argument--a claim another trial judge called “almost an affront� to the people Levine defrauded.

For the most part, Justice must rely on the same avenues open to any department store or bank trying to collect a bad debt. In theory, the government could revoke the probation of a criminal debtor and jail him. In practice, it rarely happens.

The problems in the system are not new. The General Accounting Office reported in 1985 that “many offenders did not pay their fines and that others who did pay, did not pay on time.� They checked a random sample of cases from five U.S. attorneys’ offices and found that they “did not have a record of fines imposed� for about 40% of the cases.

Standard Difficult to Meet

Congress has tried to fix the problem several different ways in recent years. In 1987, it handed prosecutors a new weapon to go after deadbeats. But Justice officials say it is so difficult to meet the new law’s standard--proving that a person can pay, but will not--that they know of no case that has been filed.

In its attempts to bring order to the chaos, Congress has passed four laws since 1984 that increased fines, tightened procedures and added penalties for late payments. But it also bounced responsibility for receiving millions of dollars in payments from the federal court clerks’ offices to prosecutors and then back again this year. Meanwhile, federal probation officers oversee payments by offenders they supervise.

Thousands of little receipts and computer printouts fly back and forth among the offices as everyone tries to keep track. “It is a monster program to administer,� Haggerty said.

At times, Justice officials seem to be in the dark too.

In response to questions by a reporter, the U.S. attorney’s office in Washington first said that a Georgetown restaurateur, convicted of fraud, owed $17,000 on his 6-year-old fine. Three days later, the office said he had paid. Still later, the office said it had confused him with another offender.

Six Years of Inaction

The man in question still owed his debt. In the six years since he was sentenced to probation and fined $20,000, the government has taken no action against him. John D. Bates, head of the office’s civil division, said the case appeared “ripe for enforcement . . . . We don’t catch them all, but we’re trying . . . . “

Officials from all sides of the system--judges, probation officers and prosecutors--said unrealistic fines are the system’s greatest villain: Fines imposed on drug dealers who will be in jail for life; fines imposed on high-rollers who will never make big money again; fines imposed for show, and fines imposed without any reliable investigation as to whether the offender can pay.

Dion Kekatos, of the U.S. attorney’s office in Manhattan, pointed to two drug kingpins, sentenced to life in prison and fined $12 million after all their assets had been seized by the government. “We’ll never get any money,� Kekatos said. “It looks like we’re sitting on our duffs.�

And still the fines go on. July: Oliver L. North, fined $150,000 for his attempts to cover up the Iran-Contra scandal. August: former representative Patrick L. Swindall (R-Ga.), fined $30,000 for lying to a federal grand jury. September: two former aides to television evangelist Jim Bakker fined $500,000 each for income tax evasion.

“I don’t know what the great unwashed public believes,� Havenstrite said. “But if they think that large fines can be paid by very many people, then I have some land to sell them in Florida. . . . “