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Rosenbaum case pegged to clemency bid

- The Washington Times - Monday, December 15, 2008

Before pleading guilty in what authorities called the biggest personal tax evasion case in U.S. history, telecommunications executive Walter C. Anderson found himself in solitary confinement in a part of the D.C. Jail that inmates call "the hole."

Once in control of companies worth hundreds of millions of dollars, Anderson was housed in a windowless cell near inmates accused of some of the most violent crimes in the District. Among them was Percy Jordan, one of two men arrested in the January 2006 beating death in Washington of New York Times journalist David Rosenbaum.

What Anderson heard Jordan say, and what he did with the information, is among the main focal points of a 32-page petition sent earlier this month to the Justice Department seeking a commutation of Anderson's sentence.

The application includes previously undisclosed information about Anderson's cooperation in the Rosenbaum case, one of the city's highest profile crimes in years. The Washington Times obtained a copy of the application from Thomas A. Olson, a supporter of Anderson's who helped prepare the petition.

Justice Department spokeswoman Laura Sweeney said officials have received the application and that it's being processed, but she declined to comment further.

Anderson, now serving a nine-year sentence in a federal prison, talked several times with detectives investigating the Rosenbaum case. He also gave secret testimony before a federal grand jury about incriminating statements he said he overheard from Jordan.

"In these conversations, Jordan expressed no remorse whatsoever for the death of Mr. Rosenbaum," states Anderson's application, which goes on to question whether Anderson should have received a break at sentencing for his help in the case.

The U.S. attorney's office declined to comment. While prosecutors in the tax case questioned Anderson's motivations for providing information, an assistant U.S. attorney who handled the Rosenbaum case called Anderson's information credible, according to transcripts and court records obtained by The Times.

'Outraged'

At a March 20, 2007, hearing in Anderson's tax case, which was closed to the public, the homicide prosecutor said she ultimately decided to have Anderson testify before a grand jury, according to transcripts.

"I can tell you that I did credit his information. I thought it was highly corroborated," assistant U.S. Attorney Amanda Haines told U.S. District Judge Paul Friedman during the hearing. "We tracked down the jail records and saw where he was housed. And he was very clear ... that he was seeking nothing, but that he was morally outraged and very concerned about what Mr. Jordan might do if he got back out on the street."

When he first talked about the Rosenbaum case, Anderson also "made it clear that he did not trust the government and had no desire to be our jailhouse informant, but that he was very, very upset and morally outraged about the Rosenbaum murder," Miss Haines said in her testimony.

A committee within the U.S. attorney's office that votes on whether to recommend sentencing reductions, often based on a defendant's cooperation, decided against doing so for Anderson, according to court records.

Assistant U.S. Attorney Steven Durham testified in a closed hearing before Judge Friedman that Anderson's cooperation "did not rise to the level of substantial assistance under the U.S. sentencing guidelines."

"Mr. Anderson at the end of the day was treated fairly," Mr. Durham said.

Though he appeared before a grand jury, Anderson was not called to testify in Jordan's trial.

Jordan's cousin and co-defendant, Michael Hamlin, ultimately pleaded guilty to murder and testified against Jordan, who was later convicted and sentenced to 65 years in prison. Hamlin was sentenced to 26 years.

Mr. Durham testified that prosecutors saw no connection between Anderson's testimony before the grand jury and Hamlin's guilty plea.

Anderson disagrees. The application says he "took considerable risk while doing this while still being held in the Washington, D.C., Jail, within reach of associates of these individuals."

Clemency chances vary

Legal said it's not clear whether Anderson's information about the Rosenbaum case will help in his bid for clemency.

Douglas A. Berman, an Ohio State University law professor and clemency specialist, said Anderson's application does go beyond many of the standard arguments by white-collar defendants, who often argue they can earn more money to pay fines by working rather than sitting in prison.

"It's not a generic suggestion ... it's a very interesting case," Mr. Berman said of the application. "It's a last opportunity for the most politically accountable government official to do all or nothing at his choice, so you never know what is going to happen."

But Dan Kobil, a law professor at Capital University in Ohio, said Anderson faces long odds in securing a commutation from President Bush: "President Bush is the stingiest pardoning president in history," he said, saying few of the thousands of commutation applications are approved.

He said the chances for Anderson are especially tough if he hasn't paid restitution.

Authorities say Anderson, who has spent millions of dollars to fund private space exploration ventures, including once backing efforts to lease the Mir space station, evaded paying taxes through a complex network of offshore corporations that earned at least $450 million from 1995 to 1999.

Anderson got his start in telecommunications in the 1980s when the industry was being deregulated. He was arrested by federal authorities in February 2005 at Washington Dulles International Airport moments after arriving from London.

In sentencing papers, prosecutors called Anderson "a brilliant visionary in the business world" but also a "tax cheat."

"In reality, defendant simply loathed taxes," they argued, adding that Anderson spent $30 million to lease the Mir space station from Russia with money that should have gone to the U.S. and D.C. treasuries to pay for teacher salaries, public health and other "collective goals" of citizens.

Anderson disputes the account and, since his plea, he has argued in the clemency petition that he pleaded guilty partly because he couldn't prepare for trial inside the D.C. Jail, which he described as "hellhole with daily sleep deprivation and other tortures."

Authorities deemed Anderson a flight risk, and a judge ordered him held in the jail while awaiting trial. They also say he was found with a cell phone while in jail. Much of Anderson's clemency request relates to conditions inside the D.C. Jail.

Anderson said he's now at a minimum-security camp operated by the U.S. Bureau of Prisons.

"My main battle now is with boredom," he wrote in response to questions from The Times. "When I left the D.C. Jail, I could barely walk and could not run at all." He said that spending 10 years in federal prison would be easier than the 2 1/2 years he spent in the D.C. Jail, adding that "federal prison's no picnic either."

Anderson filed an appeal to overturn his sentence, but the U.S. Court of Appeals for the D.C. Circuit denied the challenge last month, quoting the sentencing judge as saying: "This offense is serious. [Anderson] may be the largest tax evader in the history of the country. If not, he's close."

Still unresolved is how much restitution Anderson will have to pay.

Tax bill

For more than a year after Anderson's sentencing, prosecutors sought to make him to pay more than $200 million to the Internal Revenue Service.

The government's difficulties began in March 2007 when Judge Friedman sentenced Anderson to pay the D.C. government $22.8 million in restitution, but declined to order restitution totaling more than $200 million to the IRS.

Judge Friedman said he couldn't order restitution to the IRS because prosecutors cited the wrong statute in crafting the plea deal.

While upholding Anderson's prison sentence, the appeals court last month overturned the restitution ruling, saying Judge Friedman could indeed make Anderson pay the IRS. The issue now goes back to the judge. Anderson's clemency application does not seek to a reduction in the amount of his restitution.

Prosecutors hailed the appeals court ruling last month.

"Justice in this case requires not only a prison term, but also full restitution, which the court's ruling now permits," said Nathan J. Hochman, assistant attorney general of the Justice Department's tax division.

Writing from prison, Anderson said he doesn't have the money to pay back the IRS anyway.

"I now have a substantial negative net worth," he said.

"The appeal on the sentencing reduction is over. ... I lost," he said. "The court also gave the government the right to get restitution to the federal tax liability due. This is meaningless since I never had the funds upon which the government is claiming tax liability is due."

But prosecutors argued in sentencing papers that Anderson, "based upon his successful history as a venture capitalist," has future earnings capabilities on which Judge Friedman can rely in ordering full restitution.