Presumed Guilty: Caught in the American Gulag

As Americans joyously celebrate the holiday season, a man sits alone in a cold cell in the Washington, DC jail. The room is filthy, with a plain cot, a thin blanket, and no pillow. Upon arrival, he was denied toiletries, linens, or even toilet paper itself. The guards sneeringly suggested he “make a shopping list."

With winter here, there is no heat, and temperatures drop to near freezing at night. The guards dress warmly, yet the prisoner is not allowed heavier garments, or an extra blanket. His jail-issue clothes provide little protection from the cold. He keeps warm as best he can by stuffing newspapers underneath them. He is continually shivering.

His health has suffered. His dietary needs, prescribed for a heart ailment, are not being met. A handwritten sheet detailing his requirements was returned to him because there were numbers on it, and therefore, his keepers claimed, he was writing in code. The previous summer he contracted a severe respiratory infection that went untreated for weeks. He has lost significant weight.

His only writing paper is the back pages of old legal documents. He’s not allowed any personal items on the walls. Incoming mail is often lost or delayed. Outgoing mail often disappears or is very late in arriving. It is difficult to obtain stamps. When a friend tried to send some in a personal letter, they were confiscated, and he was warned that this action could be logged as an “escape attempt."

Documents pertaining to his case were taken away and stored, for “safe keeping." Books that friends attempted to send him were often returned, unopened. There are frequent random searches of his room, and letters or articles he had been in the process of writing are confiscated.

He cannot use the telephone on any regular schedule, and the rare call he can make is limited to ten minutes duration, and is monitored.

Visitations are difficult. Though he is accused of a “white collar” offense, he is nonetheless treated like a dangerous violent criminal, led to and from the visitation room in shackles and leg irons. Conversations consist of yelling back and forth through inch-thick glass, as the speakerphone rarely works, making it difficult to communicate with attorneys or family. There is no privacy. Visitors themselves are often subject to humiliating harassment by guards before being allowed entry – if they are.

This almost seems like “One day in the life of Ivan Denisovich," but this is America – this is the daily existence of former telecom executive and venture investor Walter Anderson, 52, awaiting trial on twelve counts of federal and district tax evasion, for which he was arrested February 28th.

It would be only natural for Walt to take this treatment personally. But, according to a prominent Denver-area defense attorney I spoke with about his case, Anderson’s plight is actually not “personal” at all. It’s the situation that every person accused of a crime, and cannot make bail, endures while awaiting trial in the United States today.

Anderson has been in the Segregation unit since he was discovered with a contraband cell phone on October 20th. Prosecutors convinced the warden that he now, by virtue of this new offense, has become an “escape risk," and should be kept isolated indefinitely “for his own protection."

Anderson is in his 10th month of captivity, as the judge in the case declared him a flight risk. His case has been described as the “largest tax evasion case in history," but the “flight risk” argument was not about the tax case, but rather about the books he reads – some of which you may own. It’s about maps of foreign countries he’s visited being found in his condo – you may have similar maps in your study, if you’ve ever travelled outside the US in your life.

The entire Walt Anderson case has become this bizarre, Kafka-esque nightmare, and, when reading transcripts of the hearings, one questions if we’re even in the same country anymore.

Walt Anderson has never engaged in fraud, or physically harmed another human being; nor has he ever threatened to do so. While prosecutors claim he made lots of money, stashed it offshore in a web of holding companies, and never paid taxes, he should not be considered a “threat” to the safety and security of Americans.

Prosecutors claimed that if Anderson was allowed to go free on bond, he’ll immediately bolt to a lush offshore exile, where all his ill-gotten gains are stashed, and live out his life free from American Justice. Except, the only evidence they have for this assertion is that they found books in his condo on creating new identities and living underground lifestyles. No actual hard evidence of hidden cash, or assets that he could liquidate, has been found. Anderson’s lawyers tried to explain how he technically lost most of the money earned in the telecoms back in the 90’s as soon as he made it. Through his offshore holding companies and investment firms he put tens of millions into other telecoms, and space companies that were his personal passions. All this money was lost via business failures and the general collapse of the telecom market. But the Feds wouldn’t listen, and after nearly six years of “investigation," coming up empty, they can’t afford to back down now.

Walt is not a “tax protester." While he is openly no friend to Leviathan, Anderson remains adamant in his assertion that everything he did to avoid US and District taxes was absolutely legal and fully transparent – all he wants is a fair chance to prove his case in court. But to achieve that, Anderson faces an uphill battle reminiscent of the Myth of Sisyphus.

To even hope to compete with prosecutors on a level field, Anderson will need a host of Expert Witnesses and Forensic Accountants. The pre-trial “discovery” process will involve sending investigators overseas, to take depositions from business associates and bankers. Walt also needs the freedom to hire the best legal help he can find, and be able to work with them in sorting through the 100,000+ pages of documents needed to craft his defense.

But all this costs lots of money – and therein lies the rub, and a crowning example of what the Feds will do to get a conviction, particularly if their case may not be airtight:

(1) To start, Justice and the IRS lied through their teeth concerning their intentions. Anderson had known he was under investigation more than two years before his arrest. His understanding, as conveyed by his attorneys, was that he would turn himself in at Pre-Trial Services and immediately be released, on recognizance or bond, as is the norm in tax cases. He would surrender his passport and go about his business of preparing his case. Instead, prosecutors arranged a media circus at the airport, and hauled Walt off in chains as he disembarked a flight from London (coming into the US, not attempting to leave it, by the way – something he had done 40 times during that two-year period).

(2) Next, prosecutors spun a web of circumstantial evidence convincing the judge that he was a flight risk, including dramatic (but later proved unsubstantiated) tales of safe deposit boxes stuffed with cash in London and Switzerland, a home in Spain, and especially those pesky, suspicious books about forging new identities, along with maps of foreign countries. They even tried to claim he had a false passport, but that was also later proven to be nonsense.

(3) Negotiations on “conditions for release” fell apart. In considering house arrest, prosecutors asked that one of the most high-priced security agencies available be engaged. Anderson was expected to bear the costs personally, at $180,000 per month. Even if he was able to pay, prosecutors then reversed themselves, insisting it still wasn’t enough, as though Anderson was some sort of super-James-Bond character, who could jimmy the electronic bracelet with a paper clip, leap out a third-story window, land on his feet, and jump into a waiting Aston-Martin and speed off to safety – all in thirty seconds or less, when the guards weren’t looking.

(4) But Walt couldn’t make that deal, because at the same time, the Feds were already sticking their fingers in his business. The IRS has allegedly worked with creditors to block a bankruptcy sale of assets for a firm in which Anderson had a stake – his share of the proceeds, Anderson claims, would have paid for both the “security” services and his legal defense. But when the sale was blocked, he could no longer pay his attorneys, who asked to be removed from the case. Walt was then forced to claim indigence, and request a Public Defender. It has also been reported that personal assets have been seized by the IRS, and are being liquidated for pennies on the dollar. The purpose of this, it has been argued, is to render Anderson penniless and ruined. If this bears out, the picture becomes clear – collecting taxes is not the goal in the Anderson case. It is simply to nail Anderson by any way possible, and thus set an extreme example for others. Anderson is far more valuable to the IRS as the poster boy for bad behavior, that they can trot out every tax season for the next 20 years.

(5) Finally, of course, is Anderson’s physical and psychological “torture” in the detention facility itself. When he finally goes to trial, he will physically “look guilty” to a jury totally ignorant of what actually goes on in those facilities. His battle will only get worse.

If the Feds can prevent Anderson from adequately defending himself, the better chance they have of overwhelming a jury into convicting him.

The outrageousness of all this is exceeded only by its hypocrisy. O.J. Simpson and Robert Blake were allowed to pay their lawyers from personal assets. Those involved in the Enron, WorldCom and Tyco scandals all ran around free – for three years, in some cases – before even being indicted.

Although a lifelong resident of the DC area, Anderson never sought to “buy influence” on Capitol Hill. Because of that, he may be considered an easy target, as opposed to a Ken Lay, Richard Scrushy, or Bernard Ebbers.

The Anderson case has chilling portents for liberty in two distinct areas:

– The fact that someone merely accused of a white-collar offense, with no prior criminal background, can be held indefinitely solely on the basis of the books they read. If allowed to stand, it isn’t a big stretch to assume that next they’ll begin to scrutinize all people who own certain books, whether suspected of a crime or not, like in the film Minority Report. (“Mr. Olson, you bought books two years ago entitled ‘How to Be Invisible‘ and ‘Where to Stash Your Cash – Legally‘, ergo you must be planning some sort of high crime and intend to flee the country. We have to arrest you on suspicion, and investigate further.”)

– The other main goal of this case is to intimidate high-net-worth individuals and corporations from operating offshore, even in completely legal ways – stay home and pay up. And if you’re already offshore – “we’re coming for you."

The ACLU has been completely MIA on this. At least five different ACLU offices have been contacted by an associate, concerning the Anderson case. In each attempt, staffers either “blew off” the caller, or simply failed to return recorded calls.

In contrast to the official propaganda, Walter Anderson should be held up by all freedom-loving Americans as the highest example for prosecutorial abuse – slammed by corrupt officials for the sole purpose of career advancement, as happens every day in thousands of other cases, involving citizens of more modest means whose names we’ll never know.

The abusive conditions in the jail system – again, where people are held who are merely accused, not convicted of any crimes – needs to be exposed and reformed. Officials in those institutions, who care so little for proper maintenance of infrastructure or the health of the inmates, should be removed from their posts and charged with human rights abuses under both the US Constitution and all international agreements and treaties to which the US is a signatory.

Dr. Walter Block, in his landmark book Defending the Undefendable makes the case for many human activities our culture deems sordid or unacceptable. However he fails to mention one other “undefendable” person in his book – the tax evader, for such a person serves a valued function as a lightning rod for egregious behavior by government officials, allowing them to show their true colors as violators of human rights, human dignity, and civil liberties. Perhaps an updated version will one day include this.

Trial for Walt Anderson has been set for early May, 2006. You may send him a holiday greeting here.

December 24, 2005