L. Neil Smith's
Number 349, January 8, 2006

Two Thousand Six. Golly!

Presumed Guilty: Caught in the American Gulag
by Thomas Andrew Olson

Exclusive to TLE

In Building D of the Control Detention Facility in Washington, DC, a man sits alone in a cold, "total segregation" cell. His room has been categorized as "filthy", with a plain cot, no pillow, and a single thin blanket. When first placed there he was denied basic toiletries, clean linens, or even toilet paper itself. The guards sneeringly suggested he "make a shopping list".

As winter is now here, keeping warm is a challenge in the aging building. As there is no heat, the temperature can drop to near freezing at night, yet the prisoner is not allowed a heavier garment, jacket, or even an extra blanket. All the guards wear warm jackets and long heavy pants. By contrast, the prisoner's clothes are synthetic, loose fitting, and provide little protection from the cold. He keeps warm as best he can by stuffing newspapers under his clothes. Visitors describe him as "shivering all the time".

His health has deteriorated. Over this last summer, when the air conditioning failed, and temperatures soared as high as 130 degrees, he contracted a severe respiratory infection that went untreated for weeks—until he was virtually in need of hospitalization. His dietary needs, prescribed by a physician for a heart ailment, are not being met. A handwritten spreadsheet detailing his nutritional requirements was returned to him because—get this—there were numbers on it, and therefore, his keepers claimed, he was writing in code. He has lost weight, and he wasn't a large man to begin with.

He has nothing on which to write, other than the back of a page of an outdated legal document. He's not allowed to keep personal items such as photos of loved ones taped to his wall. Legal and personal mail is often lost or delayed. Outgoing mail often disappears or is very late in arriving. While the commissary sells stamps, his orders would be blocked, sometimes for weeks. When a friend tried to send some stamps 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 legal case were taken away and stored, for "safe keeping". Books that friends attempted to send him were returned to Amazon.com, unopened, on an average of five out of six times, even though according to facility rules, books can be sent to prisoners so long as they are shipped directly from the seller, which they were. There are frequent random searches of his room, and letters or articles he had been in the process of writing are sometimes confiscated.

Mail addressed to him either disappears, or arrives two months late. He can't be certain that legal papers he sends out will be received in a timely fashion, if at all. 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 have become difficult, as he is no longer part of the general population. Though he has not been accused of aggressive acts against persons or property, and has not been convicted of any crime at all, he is nonetheless treated like a dangerous violent criminal, led to and from the visitation room, a small cage with inch-thick glass, in shackles and leg irons. Conversations consist of yelling back and forth through the glass, as the speaker system rarely works, making it difficult to communicate with attorneys or his family. There is no privacy, as other inmates are just outside, awaiting their own turn within the cage. Visitors themselves are often subject to humiliating harassment by guards before being allowed in. It's difficult enough for attorneys—friends and family, a nightmare. Reporters? Forget it.

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, who is awaiting trial on twelve counts of Federal and District tax evasion, for which he was arrested February 28th.

In such a situation it would be easy to believe—as Walt does—that such treatment is being directed at him 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, which is the real outrage. It's the situation that every person accused of a crime, and either cannot make bail or is deemed a flight risk, endures while awaiting trial in the United States today—in every State, District, and Territorial possession.

Anderson began his incarceration in the minimum-security wing for more or less "white collar" offenders. He has been in Segregation since he was discovered in possession of a contraband cell phone on October 20th. Although he did not "own" the phone, and he shared it with at least ten other inmates, Federal prosecutors convinced the warden that he now, by virtue of this offense, has become an "escape risk", and should be kept isolated indefinitely "for his own protection".

Anderson is completing his 10th month of captivity, as prosecutors convinced the judge in the case that he was a "flight risk". His case has been classed as the "largest tax evasion case in history", but his incarceration is not really about the tax case. It's 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, where nothing quite seems real, and, when reading the transcripts of the hearings, one must wonder if we're even in the same country anymore.

How is Walt Anderson a "threat" to American citizens? He has never engaged in fraud against customers, business associates or partners, or his own staff. He is not a violent man, and has never harmed another human being physically, nor threatened to do so. He is deemed a "flight risk" by prosecutors on the claim that he made lots of money, stashed it offshore in a web of holding companies of suspect legality, never paid his taxes, and, if allowed to go free on bond pending trial (like everyone else so accused), he'll bolt for that offshore haven where all his ill-gotten gains are stashed, and live out his life in exile, blithely flipping the bird to American Justice.

Except the only evidence they have for any of this is that they found books in his condo on creating new identities and living underground lifestyles—that's it. No hard evidence of offshore cash, or offshore assets that he could quickly liquidate for cash—in fact, they can't find any money at all—Anderson's lawyers early on explained in excruciating detail how he technically lost most of the money earned in the telecoms back in the 90's almost 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, like Mircorp and Rotary Rocket. All this money was lost via failure of the space companies and the general collapse of the telecom market around the same time as the dot.com collapse. But after nearly six years of "investigation", coming up empty, the Feds can't afford to back down now, so they insist—like with WMDs in Iraq - that piles of un-taxed dollars are out there somewhere, even if they can't find them. So Walt remains in stir.

He can't even reasonably be called a "tax protester", of the likes of Irwin Schiff, Bob Schulz, or Larken Rose. While he has a definite track record of being no friend to the government, Anderson is adamant in his assertion that everything he did to avoid Federal and DC 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 be able to compete with the Justice Department and the IRS on anything even approaching a level field, Anderson will need a host of Expert Witnesses and Forensic Accountants. The pre-trial "discovery" process will involve sending investigators to Europe, the Caribbean, and Latin America, as none of his business associates or bankers in those countries are going to voluntarily take time off and come to the US at their own expense to testify. Ideally, Walt should also be free to hire the best legal help he can find, and have the liberty to work with them in sorting through the 100,000+ pages of documents needed to craft his defense.

All this costs money—and therein lies the rub, and a crowning example of what the Feds will do to get a conviction, particularly when their case is not airtight:

(1) To begin with, the prosecutors at Justice and the IRS lied through their teeth (which should come as no shock). Anderson knew he was under investigation more than two years before his arrest. His lawyers were arranging with the Feds for him to turn himself in at Pre-trial Services, with the understood assumption that he would immediately be released, either on recognizance or on bond, as is the norm in tax cases. He would surrender his passport, go home to his DC condo, and begin preparing his case. Instead, they 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 a judge in the preliminary hearings that he was a flight risk. These arguments were dominated by hyperbolic but unsubstantiated tales of safe deposit boxes stuffed with cash in London and Switzerland, a lavish 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 later proven to be nonsense, along with the alleged safe deposit box in London, which, it was later revealed, contained nothing but corporate and personal papers.

(3) Negotiations on "conditions for release" collapsed. Even in the most extreme cases, suspects so accused can be released under house arrest, ála Martha Stewart, but in Walt's case that wasn't sufficient. One of the most "secure" personal security agencies available was to be assigned to the task of guarding him. To add insult to injury, Anderson was expected to bear the costs of his own home-incarceration, by paying that firm $180,000 per month. Even had Walt agreed to all that, and could afford to pay it, prosecutors insisted it still wasn't enough, as if 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 to speed off to safety—all in thirty seconds or less, when the guards weren't looking.

(4) But Walt couldn't make that deal if he wanted to, because in addition, the IRS and Justice interfered with (i.e., "blocked") a bankruptcy sale of assets for a business in which Anderson had a stake—his share of the proceeds for that sale would have been sufficient to both pay for the "security" services and his legal defense. But when the sale was blocked, he could no longer had cash to pay his attorneys, who immediately asked to be removed from the case. Walt was then forced to claim indigence, and request a Public Defender. That request was ultimately granted—but only in late October, after his waiting the entire summer for a reply from the judge. 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. Even if, by some miracle, he gained an acquittal in court, Federal "reparations" would only be made on the basis of monies collected at the time of sale, not the actual market value of the property seized. So Walt remains screwed, and the feds can still claim a propaganda victory against tax miscreants. It may look as though the IRS is shooting itself in the foot, if the goal is truly to collect back taxes. But it is not—their goal is presumably to nail Anderson any way they can, and thus set an extreme example for others. They intend for Anderson to be their poster boy for bad behavior every tax season for the next 20 years.

(5) Finally, of course, is his physical and psychological treatment in the detention facility itself, as described above, the express purpose of which can only be to break his spirit. 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 uphill battle will only get worse.

The Feds presumably fear their case is not airtight; so if they can prevent Anderson from adequately defending himself, the better chance they will 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.

Anderson, by contrast, never assaulted or ripped off anyone. He's simply accused of not paying his taxes—so one could infer that, to a Fed, tax evasion is more heinous a crime than rape or murder. Taxation is the sustenance of the State itself, and that maw must be fed continuously, be it with money or the blood of innocents. A strong message must be sent: that failure to comply is never to be considered an option.

Although a lifelong resident of the Washington DC area, Anderson has never sought to "buy influence" on Capitol Hill, preferring instead to do good works and achieve for achievement's sake. Because of that, he may be considered an easy target, as opposed to a Ken Lay, Richard Scrushy, or Bernard Ebbers. Bill Gates made the same error in judgement, but in wake of the antitrust suit, came around, as was soon seen golfing with pols.

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

  • The fact that someone only accused, not convicted, of a non-violent 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 something out of the film Minority Report. ("Mr. Olson, you bought a couple of 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 afterward. 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 American Civil Liberties Union has been completely MIA on this. At least five separate ACLU offices have been contacted by an associate, concerning civil liberties violations in the Anderson case. In each attempt, local ACLU staff either blew off the caller, or failed to return repeated calls to an answering machine.

In contrast to the Justice Department, IRS, and big media propaganda, Walter Anderson should instead be held up by all freedom-loving Americans as the poster boy for prosecutorial abuse—slammed by a corrupt official for the sole purpose of career advancement, as happened in the Martha Stewart case, and 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 a case for all sorts of human activities many in our culture deem 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 at all levels, allowing themselves to show their true, corrupt 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 drop him a line here.

Thomas Andrew Olson is a New York-based systems engineer, writer and speaker, whose topics range from technology and the future to politics and policy. He is a part-time webmaster for the site justiceforwalt.com, founder and CEO of colonyfund.com, and has a blog. (He also has pretensions of being "Space Commerce Editor" for TLE, but has owed Ken and Neil a loooonnnggg article for about a year—no excuses.)
Copyright © 2006 by Thomas Andrew Olson, all rights reserved


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