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Public Enemy Number No. $1

Seven years ago, the Colorado legislature passed a law designed to put the bite on convicted criminals. The concept was sterling: to force lawbreakers who had money to reimburse the state or the county for the cost of their incarceration. In theory, such a bill would offset the cost of probation supervision, defray the skyrocketing expense of building prisons and housing inmates, and leave the state more money to spend on such luxuries as, say, higher education.

In practice, the law has been a bust.
During the first five years the law was in effect, the state failed to collect a penny from its prisoners. And that isn't the worst of it: When staff time and court costs are figured into the mix, Colorado taxpayers actually lost money on the deal.

Two years ago, when legislators were informed that they were tossing cash into a black hole, they repealed the law, rewrote it and enacted a similar bill that was supposed to make it easier and less expensive to collect money from lawbreakers.

That effort, too, has proven to be a flop. And separate efforts to collect from county-jail prisoners and juvenile offenders haven't fared much better.

Today Colorado's prison system is home to a Cherry Hills Village stockbroker and the heir to a Denver department-store fortune. But those men aren't paying their way in the penal system--and neither, apparently, is anyone else. In fact, despite the legislative mandate, officials in Colorado's criminal-justice system have no record of any state prisoners making a payment under the law.

The reason is simple: Prisoners as a rule don't have much money, and those few who do can be quite adept at holding on to it.

Even so, one state legislator wants to widen the net and try to collect even more money from inmates, this time by charging prisoners a "use fee" for operating their television sets, hair dryers and other electric appliances. It's an effort that is leading critics to wonder: How much is fiscal conservatism going to cost the state this time?

The State Prison Inmate Care and Custody Reimbursement Act of 1989 was carried in the House of Representatives by Phil Pankey, a Republican from Denver's southern suburbs who made a career in accounting and built a political reputation as a penny-pincher. The Senate sponsor was Bill Owens, an Aurora Republican who now serves as the state treasurer.

The effort was a copycat bill, based on a law that had been successful elsewhere. "I think I had read that the state of Michigan passed similar legislation and that they'd recovered a million [dollars] or more over a period of years," Pankey recalls. "So I introduced the legislation." (Michigan, in fact, has been extremely successful in collecting reimbursements: According to a spokesman for the Michigan Attorney General's office, the state collected more than $2.5 million between 1990 and mid-1996--and that total doesn't include the amount that local governments have collected from county jail inmates.)

"The original premise was pretty simple," Owens says. "For the state to pay all the costs for all felons assumes that all of them are indigent. And the fact is that in some cases, felons have significant assets.

"Say we have a millionaire with lots of money," Owens continues. "Why are we paying for his room and board when he harmed society in the first place?"

With the cost of housing a prisoner pegged at roughly $40,000 per year, Pankey thought the bill would pass easily. But it proved to be a hard sell. Politicians and the public go through cycles over how to best deal with criminal-justice issues, says Owens. Back in 1989, when he was trying to get the bill passed, Colorado had moved from what Owens calls a "toss-them-in-jail-and-throw-away-the-key" attitude to a "we're-imprisoning-too-many-people-let's-understand-the-social-pathologies" mode.

Some of the debate about the Pankey/Owens bill revolved around whether an inmate's family should be made to suffer because of the prison costs incurred by a wayward relative. "I remember that more liberal [representatives] brought up the fact that an inmate might have a wife out there with children, or a husband and children, and that they would need the money to take care of the family," Pankey says. "And I didn't want to take food out of kids' mouths, either."

So it was decided that state reimbursement would take a backseat to providing support for a spouse and/or dependent children. Inmates' restitution to victims was also given priority, as was the inmates' need for six months' worth of funds to tide them over following their release from prison.

Although Owens recalls "a lot of 'no' votes," the bill was passed and the law took effect July 1, 1989. It was made retroactive, meaning any offender who was then in prison or in a county jail and who had sufficient assets was to be liable for the cost of his room and board. Probationers were to pay the cost of their supervision.

 

At least, that's how it was supposed to work. But there were some major problems: The state attorney general's office--which was charged with investigating inmates' assets and filing suit to recover the monies--didn't want to do it. Pankey complains that the Department of Corrections wasn't intent on cooperating, either. And even had those agencies been enthusiastic, the legislature didn't provide them with any money or personnel to do the job.

"You would think that as expensive as it is to keep these prisoners--we can never appropriate enough for cells and staff--that the Department of Corrections would make a genuine effort to recover this money," Pankey says. "The more they collect, the better the opportunities for various employees overall."

But under the legislation, any monies brought in through reimbursements first go to cover the cost of the program itself. Actually defraying incarceration costs shows up fourth on the state's priority list. Translation: There simply isn't much payoff for the DOC.

When the bill was still in the discussion stage, Owens says, then-attorney general Duane Woodard "was very critical of it. I don't recall if he outright opposed it or simply failed to help. But they were not of any help."

Woodard, drawing on his background as a former district attorney and legislator (he's now general counsel to U.S. Senator Hank Brown), believed the act would be cumbersome, expensive and unworkable. He still does. "There's a concept in the law--it's called judgment proof," Woodard says from his Washington office. "That means it doesn't do any good for a creditor to go to the time, expense and trouble of filing a lawsuit against a debtor if all you can get is a judgment that you can't collect on."

The vast majority of criminals, Woodard adds, are judgment proof. "So [when the bill was introduced], did I jump up and say, 'Here's something whereby we can really capture a lot of funds for the state treasury?'" he asks. "My answer was no. And it was not something people should ever have thought of as a panacea to bring spiraling inmate costs under control. There was no motherlode there."

Woodard was right. The Colorado corrections system isn't exactly a billionaire boys' club. And even when criminals have money, the state can't always lay claim to it. The legislators could have learned that from Ross Carlson.

On August 18, 1983, sheriff's deputies discovered the bodies of schoolteachers Rod and Marilyn Carlson alongside a dirt road south of Denver. They had each been shot once in the back of the head. The couple's nineteen-year-old son, Ross--who inherited his parents' $300,000 estate--was eventually charged with their deaths.

Ross Carlson then used his parents' money, which was tied up in a trust, to hire two of Denver's top defense lawyers. Walter Gerash and David Savitz argued that, while Carlson did commit the murders, he was not guilty by reason of insanity. The teenager, they said, suffered from multiple personality disorder, and one of his alter egos pulled the trigger. For the next six years, while psychiatrists battled over the truth of Carlson's claims, he resided at the state mental hospital in Pueblo.

The state tried without success to wrest money from the trust to pay for Carlson's hospitalization, says Nell Mitchell, a spokeswoman for the Colorado Mental Health Institute in Pueblo. "I think the legal fees just ate it all up," she says.

In November 1989, just three weeks after a judge ruled him competent to stand trial on murder charges, Carlson died of complications from leukemia. By then he was penniless, all his money having been spent on defense attorneys and court-appointed psychiatrists.

From the beginning, it was clear to lawyers in Duane Woodard's office that seeking money from inmates was like plowing a turnip field in search of blood donors.

Under the 1989 law, all offenders then housed in a prison or other correctional facility were ordered to complete financial reports, making full disclosure of their assets. Probation officers presented similar forms to offenders undergoing pre-sentence investigations. The resulting avalanche of paperwork--"tens of thousands of [pages]," according to one source--was then shoveled over to the attorney general's office, where attorneys were already snowed under with work.

When they found the time (going through the financial forms was not considered a priority), the state attorneys battled eyestrain and ennui looking for listings of assets. For those lawyers who were able to retain a sense of humor about the matter, the inmates' reports provided ample comic relief.

 

Offenders who had yet to be sentenced were generally up front about their income and assets; the more stable they appeared, the more likely they were to receive probation instead of a prison term. And if paying a $30-per-month supervision fee would keep them out of the Big House, they'd almost always ante up.

"But when someone has been sent to prison," assistant attorney general Marleen Langfield told the senate judiciary committee in 1994, "there's no reason for him to want to impress a judge of his financial stability. We are talking about people who lie," she stressed, "and they're self-reporting their assets. You can imagine what happened."

What happened, Langfield told the committee, was that of the first 1,500 inmates who were supposed to fill out the reports, 14 percent of them refused to do so. Eighty percent of them said they had no assets, although one prisoner did report that he owned a pair of beat-up shower shoes and one-tenth of a tube of toothpaste. Only 6 percent of the inmates declared they owned anything of value--and even in that group, the majority represented their personal worth as $200 or less.

Of the remaining inmates who laid claim to more than $200 in assets, most were living at halfway houses, where they were already paying for their room and board. Ten inmates claimed to own cars--though none were exactly luxury models. ("Now I know what happened to all the cars built in the Seventies," Langfield told the committee. "They're owned by inmates.")

Only two men declared substantial holdings. One said he had $100,000 put aside. Another said he owned a vineyard in France. Unfortunately for taxpayers, both inmates were lying.

Some of the inmates may indeed have had money and lied about its existence. But that avenue was never explored, because though the attorney general's office was given the latitude to conduct independent investigations into inmate assets, the lack of funding from the legislature made such fishing expeditions highly impractical.

Langfield was assigned to the reimbursement program during its first year. She passed the duty to first assistant attorney general Paul Sanzo in 1990. According to Sanzo, Langfield left him with a memo bluntly explaining that the law wasn't cost-effective.

If an inmate admitted to having money, Sanzo says, the attorney general's office was entitled to petition the district court to recover the costs of keeping him locked up. A guardian--who was to be paid for out of the prisoner's estate--would then be appointed to represent the inmate's interests.

If after a hearing on the matter a judge decided that the inmate had enough money or liquid assets to cover all or part of the cost of incarceration, the judge could order the prisoner to pony up. But before determining the amount that an inmate should pay, the court was to make allowances for any child-support costs, alimony, restitution and as much as six months' living expenses for the inmate.

"Then, assuming they have any money left," Sanzo says, "the court ordered them to pay the cost of care."

So unless an inmate was truly rolling in dough, it didn't appear worth making an effort to collect anything. "If they said they had no cash but that they owned a '72 Ford Pinto," Sanzo says, "it wasn't worth my consideration. Now, if they said they had a 1996 Maserati, I'm going to get interested. But nobody had a Maserati."

Cherry Hills Village stockbroker Michael Brian Gray, however, came close.
Gray nearly killed his estranged wife in March 1990 during a vicious attack in which he beat her with his fists and hit her with a chair. Police claim that Gray--who was infuriated with his wife for changing the locks on their home--stopped the assault only when his three-year-old daughter came into the room. Elizabeth Gray suffered a fractured skull and other injuries. Her husband was charged with attempted murder, burglary and assault.

Months later, after the Arapahoe County District Attorney's office had racked up thousands of dollars in fees for travel expenses and expert witnesses, Gray pleaded guilty to burglary and assault. He was sentenced to ten years in prison and ordered to pay $230 in court-related costs. The prosecutor also recommended that Gray pay $105,000 in restitution, which represented the cost of medical and psychiatric treatment for his wife and two children.

The state attorney general's office believed Michael Gray's assets to be considerable. Besides a pricey home in Cherry Hills Village, Sanzo says, Gray owned a Porsche, paid for through his earnings at the Boettcher and Company brokerage house. He'd hired three defense attorneys to handle his case. And while incarcerated at the Arrowhead Correctional Facility in Canon City, Gray paid a private psychotherapist to provide him with weekly counseling sessions.

 

But even though the attorney general's office hired an investigator to ferret out Gray's assets, the state came up empty yet again. "He had a lot of restitution to pay," Sanzo says, "and as I recall, there was a substantial divorce settlement, too. It may be that there was so much money going to pay that, there was nothing left for the state." Sanzo admits fantasizing about seizing Gray's sports car and driving it around a la actor Don Johnson's character in the TV show Miami Vice. However, the state didn't get Gray's auto, either. John Lizza, a first assistant attorney general assigned to prison issues, says his office still hopes to collect from Gray someday.

In her 1994 presentation to the judiciary committee, Langfield summed up the difficulties of seizing assets from seemingly wealthy criminals. "People who have money are usually pretty darn good at putting it in a place where we can't get at it," she said. For instance, trusts--specifically spendthrift trusts designed to protect assets from an improvident heir--may prohibit creditors from attaching the monies.

That wasn't what Pankey and Owens intended. "There's no reason that a trust shouldn't have to pay the cost of care," Owens says. "If a trustee has oversight of the funds, that trustee should be required to pay."

The attorney general's office never told him about the problem, Pankey grumbles. "If we need to modify the legislation to go after trusts, then we need to do that," he says. "It seems to me that most trusts are set up to pay [the beneficiary's] expenses. And this is a living expense for that particular person."

The federal government, which also has a reimbursement law, has been more efficient in collecting money from offenders. But it also deals with a different breed of prisoner--in particular, bank-fraud artists and other white-collar criminals. On a national level, the feds occasionally run across defendants who are even more flush than that. Former congressman Dan Rostenkowski, who for years served as chairman of the House Ways and Means Committee, is expected to cough up his own room and board after being sentenced to seventeen months in a federal prison for mail fraud.

"But even in the federal system," Woodard points out, "there's not a lot of Rostenkowskis."

Marleen Langfield complained about the reimbursement legislation for years. And in May 1994, someone finally listened. In her address to the judiciary committee that year, Langfield told legislators that in five years, the attorney general's office had collected nothing and that to her knowledge, the office had not filed a single suit to recover funds.

After listening to Langfield, state senator Dottie Wham, a Republican from Denver, says she decided that the reimbursement law "was almost a moot point, simply because the assets were not there." But rather than junk the law altogether, the legislature approved a new, streamlined version of the reimbursement act drafted by Langfield.

In the new bill (and in subsequent amendments to the state's sentencing code), most of the burden for enforcing the law was shifted from the attorney general's office to the sentencing courts. Since the state probation department takes down financial information about offenders as part of the pre-sentence reports provided to judges, it was decided that the judges should be the ones to order any payments.

Under the new system, the attorney general's office doesn't get involved unless state officials learn of a falsification of, or change in, an inmate's financial status. If it's discovered that the offender lied about his estate, or if he came into money after his sentence was imposed, the attorney general's office is supposed to go after the cash.

That's just what happened to Larry Sponsel.
Now serving a forty-year stretch for aggravated robbery, Sponsel isn't the kind of rich sophisticate who has money salted away in the Cayman Islands or in a Swiss bank account. In fact, he had so little money that in the spring of 1995, he was being dunned for approximately $800 from two creditors, one of which was the Swiss Colony cheese company.

But that same spring, Sponsel's ship came in. More precisely, a check for $46,000 came in. The money was what was left of a railroad pension willed to Sponsel by his father. When mailroom workers at the Limon prison discovered the check, Department of Corrections officials notified the attorney general's office, and the check was held for safekeeping.

Sponsel didn't appreciate having his money confiscated. Three months after his check arrived, he filed suit in federal court, seeking its return. The law, Sponsel claimed, specifically excluded federal benefits of any kind from being attached by the state government. And his father's pension money, administered by the Railroad Retirement Board, was a federal payment.

 

The DOC and the attorney general's office waited ten months before agreeing that Sponsel had been right all along. They surrendered the check to him in March of this year. Sponsel's suit, however, wasn't dismissed until this past July, after a federal judge turned down the inmate's request for attorneys' fees (he'd represented himself in the proceedings), as well as interest and monetary damages for "emotional distress."

Colorado judicial officials have recently begun looking into the circumstances of another prisoner who might have the wherewithal to pay for a portion of his bed and breakfast. But that case may pose its own problems. The 24-year-old man, an inmate in the San Carlos prison for the chronically mentally ill, reportedly receives $1,000 each month as the result of a successful lawsuit--a suit he won because he was sexually abused as a child.

Since the legislature's 1994 revision of the law, a few efforts at collecting money have been undertaken by the state's district courts. But the amount received has been negligible, especially when compared to the state judicial department's $100 million annual budget. Ed Zimny, the state's director of court services, says Colorado's 22 district courts may have taken in as much as $50,000 under the law. His department hasn't tracked the exact figure, he says, and isn't likely to unless the amount becomes significant. "I guess you can tell we were not overly excited when the [law was passed] and so many other things had to be paid off first," says Zimny.

Enthusiasm has also been in short supply at the state's largest county jail. Division chief Fred Oliva of the Denver Sheriff's Department says that, apart from payments made by work-release inmates--$7-per-day fees that cover the cost of supervising them outside the jail but don't cover the cost of incarceration--he's unaware of any money at all being collected from county prisoners in Denver. When contacted for comment, Denver District Court Chief Judge Connie Peterson refers questions to the attorney general's office--which hasn't had primary jurisdiction over the law for the past two years. Denver County Court Chief Judge Andrew Armatas says he's unaware of any fees being collected from offenders processed through his court.

Some of the blame for the state's continuing failure to collect money from prisoners can be chalked up to the lack of state workers with enough time to conduct financial background checks on offenders. Denver probation officers, for example, take financial statements from offenders as part of their pre-sentence investigations. But they depend on offenders to self-report--and to do so truthfully. If the offender has a job, the probation officer might require the person to submit a paycheck stub as verification, but other than that, the overworked officers have no time to act as financial sleuths.

In fact, the probation department sometimes depends on the public defender's office to do its legwork. "We don't duplicate the effort," says a probation official who asks that his name not be used. "If [the offender] had a public defender and an affidavit attesting to their indigence, then we go with that."

The probation office does track inmate monies paid to funds set up for drug-testing expenses and victims' compensation. But it doesn't keep tabs on how much money, if any, is being taken in for incarceration costs.

In cases where an offender is ordered to serve a term of probation rather than a prison hitch, the probation department watches the dollars. Its officers almost always recommend that their clients pay a $30 monthly supervision cost, and the department has collections investigators to make sure that the money comes in.

But even that process falls short on occasion.
Despite Denver probation officer Dan Carlin's assertion that "everyone" is assessed a supervision fee, it appears that one of his most infamous clients was never ordered to do so.

William "Eddie" Neusteter, whose family once owned a prominent Denver department-store chain, has a checkered past filled with juvenile arrests and abuse of alcohol and drugs. On February 25, 1994, Neusteter was arrested for the armed robbery of a 7-Eleven store at East Sixth Avenue and Josephine Street. He'd used an unloaded gun in the stickup, which may be one reason Denver District Judge Michael Mullins went easy on him and sentenced him to eight years in prison--which he then suspended--and five years' probation.

As a condition of his probation, Neusteter was to hold down a job and was ordered to undergo drug-treatment counseling at Peer I (which Neusteter paid for on his own). He was assessed--and he paid--$325 in court-related costs. But a collections investigator with the probation office confirms that Neusteter was never assessed a supervision fee, even though many other offenders who hold down jobs are ordered to do so.

 

When Neusteter blew his chance at probation by walking away from the drug counseling program, Mullins ordered him to prison to serve out an eight-year sentence. There is no indication in the court file that Neusteter, who was recently transferred to a county jail in Texas due to overcrowding in the Colorado prisons, has been ordered to pay for the cost of his incarceration.

But Mullins did save the state some money. In an unpublicized move this past June, the judge granted Neusteter's request for a sentence reconsideration and shortened the young scion's sentence from eight to seven years.

Pankey and Owens's bill isn't the only method through which the state attempts to recoup the cost of putting people behind bars. Colorado's sentencing laws also contain a provision by which juvenile offenders or their parents can be ordered to pay for the youngster's supervision costs. But that source of funds is rarely drawn upon, either.

The Colorado Department of Social Services has the responsibility for determining cost of care and the ability of parents to pay, says Tim Turley, chief probation officer for Denver's juvenile court. "But 85 percent of them are on AFDC (Aid to Families with Dependent Children), so there's no money. As for detention, that costs $130 a day. You could almost put a kid up at the Brown Palace for that."

The fact that the reimbursement law isn't working irritates Pankey. If state employees would cooperate with one another and the politicians got tougher, it would work, he insists.

"The last time I talked to the DOC about it, they didn't feel it was worthwhile to devote the time to trace the money," Pankey says. "But Michigan sure felt it was worthwhile."

The law has been more than worthwhile for Michigan--it's practically been a bonanza. Not only has the state taken in a yearly average of $300,000 or more from prison inmates since 1990, but the counties are doing well under the program, too. Macomb County alone has collected about $4 million over the past eleven years, a fact that jail officials attribute to work-release prisoners who hold down relatively high-paying jobs in nearby auto plants.

In addition to the availability of better jobs, Michigan's prison population is four times larger than Colorado's. But, just like Colorado, Michigan depends on inmates to self-report their income. And just like Colorado, the state doesn't have enough employees to investigate everyone's assets.

"Maybe we have richer prisoners," jokes Christopher DeWitt of the Michigan Attorney General's office. "As to why Colorado isn't collecting any, that I would leave to other people to explain."

Pankey, meanwhile, is busy mapping out new strategies in his crusade to collect cash from criminals. If he wins re-election in November, for instance, he hopes to float yet another proposal past the legislature.

Pankey's new bill would call for an even more aggressive attempt to recover money from inmates. "Arizona recently passed a bill ordering that inmates who have TVs, hair dryers and stereos have to pay a certain amount every month to pay for the operation of their electrical appliances," he notes.

Pankey wants a similar campaign in Colorado. And he's also thinking about asking his colleagues to send a bill to every adult and juvenile offender incarcerated in the state--even those put behind bars for as little as two or three days. He'd like to include an order placing liens on "every single prisoner that owes the money."

The point, Pankey says, "is to add it up so that crime and irresponsible behavior doesn't pay. I think it will be a real chance for a lot of recovery. And who'd benefit from that? The taxpayers.

"I have no idea if it will work or not," Pankey admits. "But the taxpayers are ready for it.


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