News Release ~ 05/25/2003

Halfway Houses Less of an Option in White-Collar Crime

The Justice Department has slashed access to the alternative penal facilities, causing dozens of people to serve rest of their terms in prison. 

By Richard B. Schmitt

Los Angeles Times Staff Writer

Washington, DC (May 25, 2003) --

WASHINGTON -- The Justice Department''s two-year crackdown on corporate crime has snared a number of high-flying executives for cheating investors out of billions of dollars.

Then there''s Shawna Lyn Culter, check forger.

In March 2002, Culter, 40, was sentenced to a year in prison for pocketing stolen checks. A judge recommended she serve her time in a halfway house, where she appeared to make progress -- volunteering at her church, working part time at a library and saving money toward court-ordered restitution.

But a few months later, the Justice Department decided to put new limits on the time people can spend in halfway houses, responding to criticism that its Bureau of Prisons had been coddling "white-collar" defendants. On Dec. 23, officials sent letters to several dozen previously sentenced inmates, including Culter, telling them to pack their bags for prison.

As the Justice Department pursues crime on Wall Street and in the corporate boardroom, relatively few people have been charged and -- despite made-for-TV arrests -- fewer have been sentenced to jail.

The halfway house limits are nonetheless having an effect -- but on people who hardly qualify as tycoons.

Triggered by an anecdote about a supposedly slack sentence given to a West Virginia dentist, the halfway house limits already have threatened to uproot at least 132 inmates, including a disproportionate number of women, and will affect hundreds, if not thousands, of people sentenced in the future.

The policy has been challenged in dozens of cases across the country.

In Culter''s case, a transfer to prison was blocked only after a court-appointed lawyer persuaded a judge that Culter

-- who had been sexually abused by her father as a child and suffered from bipolar disorder -- was likely to fare poorly in prison.

"Indeed, all indications were that petitioner had begun the process of turning her life around," according to a ruling by U.S. District Judge Ellen Segal Huvelle. In light of the fact that Culter had begun a course of regular medication and weekly counseling, in addition to her work and volunteer activities, the Justice Department''s policy change was "entirely irrational," the judge said.

Susan Gilbride, a single mother of four, was not so lucky.

She had been living in a halfway house in Scranton, Pa., seven months into a one-year sentence for her role in a credit card scam. After getting her letter from the Justice Department in December, Gilbride also filed a lawsuit to block the transfer. But a federal judge decided that the policy change was not illegal.

So in February, she was ordered to the Federal Correctional Institution in Danbury, Conn. She lost her job at a Holiday Inn, which had allowed her to start repaying $3,400 in court-ordered restitution. And a bank foreclosed on the house she had recently purchased.

She left her children, ages 6, 7 and 10, with her 72-year-old mother and with friends. She also has a 20-year-old daughter. She hasn''t seen them in four months.

"I got a job. I bought a house. I was getting my life back together. I was with my kids every day," Gilbride said in a telephone interview from the Danbury prison, where she earns 12 cents an hour working in the prison kitchen.

Now, "I have to do it all over again," she said. "I feel it is like punishment on top of punishment."

But at the Justice Department, officials argued that the old policy violated the law.

"The [Bureau of Prisons''] current placement practices run the risk of eroding public confidence in the federal judicial system," Deputy Atty. Gen. Larry Thompson wrote in a Dec. 16 letter to Kathleen Hawk Sawyer, then director of federal prisons, ordering the change. "White collar criminals are no less deserving of incarceration ... than conventional offenders."

The new rules ensure that defendants will get jail time by prohibiting judges from sentencing them directly to halfway houses. They also put a ceiling on the time that can be served in halfway houses -- 10% of the sentence.

The idea: make white-collar offenders think twice before engaging in criminal conduct. "Indeed, such individuals are often better educated and more rational than other criminals and are thus more likely to weigh the risks of possible courses of action against the anticipated rewards of behavior," Thompson wrote.

To critics, the policy change is, at best, based on a false premise about who resides in halfway houses, and at worst, a cynical attempt to make the administration seem tough on corporate crooks.

The vast majority of halfway house residents are "of the distinctly grimy collared variety," said U.S. District Judge Michael Ponsor of Springfield, Mass. He said they include "bottom-echelon drug mules" and "single mothers struggling on welfare."

"To jettison even the possibility of a sentence of imprisonment to community corrections -- for anyone, ever -- is the ultimate act of tossing out the proverbial baby with the bath water," the judge said in one of the lawsuits filed against the policy.

Besides the effect on criminal defendants, the change also signals harder times for nonprofit groups that operate halfway houses, which rely on federal contracts.

In the five months since the policy was changed, the number of residents at Louisville, Ky.-based Dismas Charities Inc., which operates halfway houses in seven states, has declined by about 120 people, according to Raymond Weis, the company''s chief executive.

Federal prison officials say the total number of people in halfway houses nationally was 6,194 in March, down about 4% from a year earlier.

Dismas, one of the nation''s largest halfway house operators, sued the government in March, alleging that Justice Department authorities violated federal procedures in adopting the new rule.

Proponents say shorter stays also threaten the quality of treatment that residents receive. They fear that with the new limits prison officials may decide it is not worth the paperwork to transfer people from prison to a halfway house. "People will go from prison to the street," Weis predicts.

Traditionally, halfway houses have counseled people on everything from how to apply for a job to how to beat a drug habit. Since the 1980s, federal prison officials have also looked to halfway houses as a way of helping to manage the tripling of the federal prison population, and to ease overcrowding in minimum-security facilities.

At a time when the number of people leaving state and federal prisons is soaring -- about 600,000 annually, according to a study released last week by the Sentencing Project, a Washington-based criminal-justice think tank -- halfway houses play a small but important role in helping ex-offenders re-integrate into society, proponents say.

Many of the people affected appear to be down and out.

Federal public defenders in San Diego have three cases where the government is attempting to send halfway house residents to jail, including a man convicted as part of an illegal smuggling scheme who, as part of his sentence, was doing odd jobs for the Border Patrol.

"Our clients were all indigent," said Marnie Ganotis, a federal public defender in San Diego. "Those are the only folks we represent."

The challenge to how halfway houses are used began with the case of Timothy M. Spears, a Charleston, W.Va., dentist, who in January 2001 was sentenced in federal court to 15 months in prison for cheating on his taxes.

U.S. District Judge Joseph Goodwin recommended that Spears serve his time in a halfway house, based in part on the finding that the defendant was one of the few dentists in the state who provided treatment to poor people, and that a prison term would deprive them of care.

The judge said neither side objected to the halfway-house recommendation at a hearing, but a few weeks later, he discovered that the prison bureau was attempting to put the dentist in prison anyway.

After a little investigating, the judge accused a Justice Department tax specialist handling the case of going behind his back. The conduct was "unbecoming and inappropriate" and "smacks of prosecutorial vindictiveness," the judge wrote in a letter to the prison bureau and U.S. Atty. Gen. John Ashcroft.

In Spears'' case, Justice officials backed off, and the dentist fulfilled his sentence at the halfway house.

Still, the case served as something of a wake-up call for the department, which began a broader review of the issue. Eventually, Thompson secured an internal legal opinion finding that the prison bureau was sentencing people to halfway houses for crimes that Congress intended to be punishable in prison only. In effect, the lawyers reasoned, the bureau itself was breaking the law.

That left the Justice Department with little apparent choice. "The prevailing fact is that the law is the law," a department spokesman explained. "DOJ must adhere to the law and enforce it."

But a number of judges have been finding that, by wiping out a well-accepted practice that had been in place for years, the Justice Department itself was acting illegally.

Last week, a U.S. district judge in Los Angeles declared the policy change "invalid," saying the department had used "ambiguous language ... to bolster a legally unsound conclusion." Judge Ponsor of Massachusetts said the government was interested only in the interpretation of the law "that leads to the harshest sentence."

In the case of Culter, the check forger, her arrival at a halfway house was at the end of a trail of bad checks totaling about $10,500.

A native of Cleveland, Okla., Culter moved to Washington after college. She was first arrested in March 1999 for passing a bad check at a hair salon. Later, she pleaded guilty in Virginia to forging several checks stolen from her boyfriend, totaling about $6,000. She received probation because the checks were deposited but never paid.

In late 1999, she was hired as a paid fund-raiser for the Washington-area chapter of the American Liver Foundation. It proved to be a poor match. She set up a secret bank account, where she deposited checks intended for the charity, withdrawing money for personal expenses. Culter also began stealing blank checks from the office of a lawyer in her building, and made an unauthorized charge on his American Express account, ordering an $85 balloon bouquet and singing telegram for her son.

After about four months, she decided to leave the area, which put her in violation of her probation in Virginia. She was ultimately arrested in Colorado, and returned to Virginia, where a court sentenced her to 15 months in jail without the possibility of parole.

Then, shortly after she got out, she was arrested on the federal charges involving the Liver Foundation and the lawyer. She pleaded guilty to "uttering a forged document of an organization," and in March 2002 was sentenced to 12 months'' imprisonment, to be served at Fairview Community Correction Center in Washington.

It wasn''t only Judge Huvelle who thought keeping Culter in the halfway house was better than sending her back to prison.

In a letter to the court, the defendant''s minister, Dean J. Snyder, wrote that Culter had begun mentoring young people in confirmation classes. The library where she worked said she had become "indispensable." A corrections supervisor at the Virginia prison where she served time said he viewed her as a "success" case.

"It would be criminal to have her hard work rewarded by a reassignment to federal prison," Snyder wrote.,1,6658514.story?coll=la%2Dhome%2Dtodays%2Dtimes  

The National Association of Criminal Defense Lawyers is the preeminent organization advancing the mission of the criminal defense bar to ensure justice and due process for persons accused of crime or wrongdoing. A professional bar association founded in 1958, NACDL's approximately 9,000 direct members in 28 countries – and 90 state, provincial and local affiliate organizations totaling up to 40,000 attorneys – include private criminal defense lawyers, public defenders, military defense counsel, law professors and judges committed to preserving fairness and promoting a rational and humane criminal justice system.

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