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 restitutions to victims, it is alleged.
Of the approximately 129,000 people currently in the federal prison system, more than 20 have inmate bills worth more than $100,000 each — for a total of more than $3 million.
In total, federal inmates’ bills contain more than $100 million in cash — all beyond the reach of law enforcement officers who say they can’t force inmates to pay what they owe in child support, alimony or other debts.
The claim was filed by a person familiar with the Federal Bureau of Prisons’ banking system, who spoke to: The Washington Post.
DailyMail.com has reached out to the BOP and the Department of Justice to request comment.
According to a recently retired agent with the United States Marshals Service, the prison’s banking system is not subject to the same rules that apply to transactions outside the 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 restitutions to victims, it is alleged. The stock photo above shows the training ground and inmates at the Federal Correctional Institution building on Terminal Island San Pedro near Los Angeles
This means that criminals can continue to engage in illegal activities from within the prison walls.
“Inmates are using this banking system to protect this money,” former US Marshal Jason Wojdylo told the Post.
“In some cases we have found that the source of deposits comes from ongoing criminal behavior, and in some of these cases we have launched criminal investigations.”
Wojdylo said he has for years begged the BOP, an agency run by the Justice Department, to change its way of working.
Federal law enforcement officers often have to go to court to force inmates to settle outstanding debts, the Post reported.
According to the Post, inmates who have significant sums of money in their accounts often draw from a variety of sources, including 401(k) retirement accounts and insurance policy payouts.
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 funding sources are less clear.
In 1970, the Nixon administration signed the Bank Secrecy Act. It requires banks and other financial institutions to assist the US government in investigating money laundering cases.
The law requires banks to report any transaction over $10,000 in cash so that it can be investigated for suspicious activity.
However, the BOP 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 Treasury Department to flag outstanding debt, officials told the Post.
That means white-collar criminals in prison may engage in illegal activities without worrying about being monitored by a regulatory body.
“That’s a huge problem when you think about the possibilities — if a white-collar criminal gets money while in an institution, that’s in some ways better than having it in a bank account,” said Dan Eckhart, a lawyer and former federal prosecutor. . .
“From a taxpayer’s point of view, and for law enforcement, that’s a major vulnerability.”
A BOP spokesperson told the Post that the agency “recognizes the importance of victim compensation and encourages all inmates to meet their financial obligations by participating in the Inmate Financial Responsibility Program.”
The spokesman said the BOP cannot force detainees 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.
‘Legal obligations such as child support, state restitution, etc. are eligible for collection. . . provided documentation is received from the appropriate court and/or state authorities,” 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 being convicted of fraud, had $20,000 in a prison bank account, even though he owed millions to his victims
However, The Post reported that internal BOP documents show that the agency does not recognize the state’s court orders. It will only comply with federal orders to seize money from prisoners.
In 2007, Lou Pearlman, the former manager of boy bands ‘N Sync and the Backstreet Boys, was charged with fraud by the federal government.
He was sentenced to several years behind bars and ordered to pay millions of dollars in restitution.
While he was in prison, however, he had a prison-run bank account with over $20,000.
In 2015, the US Marshals Service confiscated the money. The following year, Pearlman died.
While there are a select few federal inmates who have large sums of cash, most inmate bills contain modest amounts used to purchase snacks and other goods in the commissioners.
Inmates 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 a day or have the government issue U.S. Treasury checks from their prison accounts.