US

Thousands of federal inmates hold a total of $100million in prison-run debit accounts

Federal inmates use a separate, prison-run banking system that allows them to evade scrutiny and hold large sums of money even though they may owe restitution to victims.

In total, federal inmate accounts hold more than $100million in cash – all of it out of reach of law enforcement officials who say they cannot force incarcerated people to pay what they owe in child support, alimony, or other debts. 

And of the approximately 129,000 people currently in the federal prison system, more than 20 of them have inmate accounts with more than $100,000 each – good for a total of more than $3million.

The claim was made by a person familiar with the banking system run by the federal Bureau of Prisons who spoke to The Washington Post.

DailyMail.com has reached out to the BOP as well as the Department of Justice seeking comment.

According to a recently retired agent with the United States Marshals Service, the prison-run banking system is not subject to the same regulations that govern transactions outside of prison walls.

Federal inmates use a separate, prison-run banking system that allows them to evade scrutiny and hold large sums of money even though they may owe restitution to victims, it has been claimed. The stock photo above shows the exercise yard and inmates at the Federal Correctional Institution building on Terminal Island San Pedro near Los Angeles

That means that criminals can continue to engage in illegal activity from within the prison walls.

‘Inmates are using this banking system to shelter this money,’ former US Marshal Jason Wojdylo told the Post.

‘We have actually discovered the source of deposits in some cases to be from ongoing criminal conduct, and we’ve opened up criminal investigations in some of these instances.’

Wojdylo said that he has for years begged the BOP, an agency run by the Department of Justice, to change its ways.

Federal law enforcement officials often have to go to court in order to force inmates to settle outstanding debts, the Post reported.

According to the Post, inmates who hold significant sums of money in their account often draw from various sources, including 401(k) retirement accounts, and payouts from insurance policies.

New federal inmates prepare to undergo health screenings while being processed at the Val Verde Correctional Facility in Del Rio, Texas in this undated file photo

New federal inmates prepare to undergo health screenings while being processed at the Val Verde Correctional Facility in Del Rio, Texas in this undated file photo

In other cases, however, the sources of funds are less clear.

In 1970, the Nixon administration signed into law the Bank Secrecy Act. It requires banks and other financial institutions to assist the US government in investigating instances of money laundering.

The law requires banks to report any transaction of more than $10,000 in cash so that it can be investigated for suspicious activity.

The BOP, however, is exempt from the law because the agency is not considered a financial institution.

The banking system used by the agency is not subject to the screening mechanism put in place by the Department of Treasury to flag outstanding debts, officials told the Post.

That means white-collar criminals who are incarcerated can potentially engage in illegal activity without having to worry about being scrutinized by any regulatory body.

‘That’s a huge problem if you think about the possibilities – if a white-collar offender gets money while he’s in an institution, that’s better than having it in a bank account in some ways,’ said Dan Eckhart, a lawyer and former federal prosecutor.

‘From a taxpayer point of view, and for law enforcement, that’s a big vulnerability.’

A spokesperson for BOP told the Post that the agency ‘recognizes the importance of victim compensation and encourages all inmates to meet his or her financial obligations through participation in the Inmate Financial Responsibility Program.’

The spokesperson said the BOP cannot force inmates to comply with court orders to pay child support or alimony.

Instead, it encourages inmates to settle debts through payment plans. Failure to do so could result in loss of privileges, the spokesperson told the Post.

‘Court-ordered obligations such as child support, state restitution, etc., are eligible for collection . . . provided documentation is received from the appropriate court and/or state authorities,’ the spokesperson, Randilee Giamusso, told the Post.

Music mogul Lou Pearlman arrives at the George C. Young federal courthouse in downtown Orlando in July 2007. Pearlman, who died in prison in 2016 after he was convicted of fraud, held $20,000 in a prison-run bank account even though he owed millions to his victims

Music mogul Lou Pearlman arrives at the George C. Young federal courthouse in downtown Orlando in July 2007. Pearlman, who died in prison in 2016 after he was convicted of fraud, held $20,000 in a prison-run bank account even though he owed millions to his victims

The Post, however, reported that internal BOP documents show that the agency does not acknowledge state court orders. It will only comply with federal orders to seize inmates’ money.

In 2007, Lou Pearlman, the former manager of boy bands ‘N Sync and the Backstreet Boys, was indicted by the federal government for fraud.

He was sentenced to several years behind bars and ordered to pay millions of dollars in restitution.

While incarcerated, however, he maintained a prison-run bank account that held more than $20,000.

In 2015, the US Marshals Service seized the money. The next year, Pearlman died.

While there are a select few federal inmates who hold large sums of cash, most prisoner accounts contain modest amounts that are used to buy snacks and other goods in the commissary.

Prisoners also use money to make a limited number of phone calls or send a limited number of emails.

Inmates in the federal system can also send up to $100 per day or have the government issue US Treasury checks from their prison accounts. 


Source link

Related Articles

Back to top button