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UNITED STATES
DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA v. WALTER ANDERSON, aka Mark Roth, Defendant.
Criminal
No. 05-66 (PLF)
WALTER ANDERSON'S SECOND BRIEF IN SUPPORT OF RECONSIDERATION OF HIS MOTION
TO IMPOSE CONDITIONS OF RELEASE
Defendant Walter
Anderson submits the following additional brief in response to the Court's
March 16, 2005 Order concerning conditions of release:
INTRODUCTION
The initial detention
hearings in this case demonstrate just how wrong an
impression or finding can be and how a wrong result can occur when prosecutors
are
allowed to create a record that is inaccurate. Mr. Anderson has spent
more than two
months in jail -- despite the fact that he has not been convicted of any
crime -- based
largely on the untested words of prosecutors who accuse him of being a
flight risk. The
finding that the Magistrate Judge and this Court made concerning risk
of flight came
largely from "facts" that were presented by the govemnent. Now
that there has been
time to investigate the prosecutors' claims, a much clearer record can
be presented which
should in itself give the Court grounds to review the pre-trial detention
orders in this
matter.
Some of the government's
claims seem to have been exaggerations or innocent
mistakes. It does appear, however, that on other occasions, the government's
misstatements to the Court had to be intentional because records in the
government's
possession clearly demonstrate the opposite of what was presented to the
Court. Fair
play by the government in detention hearings is of the utmost importance
not only
because a presumptively innocent person's liberty is at stake, but also
because there is a
great risk of error due to the fast pace of the proceedings and defense
counsels' limited
opportunity to prepare. The government has a long head start in investigating
its case and
preparing for an arrest and in presenting its side of the record. Often.
as in this case, a
defendant responds to seek his freedom back with very little time. The
lack of parity
between the government and the defense was particularly great in the initial
proceedings
in this case. The government evidently had secretly planned to seek pretrial
detention of
Mr. Anderson for more than two years.' The government's attorneys are
too experienced not to know such pre-trial detention in a complicated
white collar case with millions of documents impairs an accused's ability
to defend himself. Yet, that was their tactic and they have been successful
thus far, at least in part, based on the creation of an inaccurate record.
By contrast, while
Mr. Anderson and his counsel were well aware that an indictment would
be forthcoming at some point, they were not aware that the government
would make the unusual demand for pretrial detention in this white collar
case. Conversations between his then counsel and the government did not
reflect this intent, and Mr. Anderson's actions, such as submitting to
a pre-indictment interview with Pre-Trial Services, underscored his belief
(and desire) that he could remain free to fight the allegations against
him. When the arrest was orchestrated (and leaked to the press), defense
counsel had only a limited amount of time to investigate the government's
claims and only a limited opportunity to confer with Mr. Anderson, who
had been arrested and
was being bounced between various penal institutions in the greater Washington
area, before having to respond.
With the benefit
of this additional period of time to investigate the government's
accusations, a much more accurate record can be made. Mr. Anderson can
show that the
government never met its burden of proving that Mr. Anderson poses "a
serious risk" of
flight, 18 U.S.C. 5 3 142(f)(2)(B), or of proving that there are no set
of conditions that
would "reasonably assure" Mr. Anderson's presence at trial.
ARGUMENT
I. –
MR. ANDERSON IS NOT A FLIGHT RISK
While Mr. Anderson
has accomplished a great deal in his life, he has not -- as the
government has suggested -- become a master of disguise or developed an
irresistible
charm that would cause women around the world to risk criminal prosecution
to do his
bidding. Nor is Mr. Anderson the wealthy man the government portrays him
to be.
There is no question that the strategic investments in the telecommunications
industry
made by the companies Mr. Anderson managed created hundreds of millions
of dollars in
revenue for these companies and benefited Mr. Anderson, who as an officer
of two of
those companies, earned a salary and stock options commiserate with his
position there.
But there also is no doubt that much of this great fortune vanished when
the
telecornmunications market crumbled. Mr. Anderson no longer is a man of
great means,
and he certainly is not a man who is well-suited to live life on the run
being able to hide
from the U.S. government and its allies. In fact, for Mr. Anderson to
succeed at the only
work he knows and have any basis to produce income, he must collaborate
with a large
number of individuals, professionals, corporations, legal advisors and
accounting
professionals. Furthermore, while not married with children, he is a man
with strong ties
to the con~munity who needs his family and lifelong-friends now more than
ever.
A. –
The Government Has Misrepresented Mr. Anderson's Wealth
1.
Mr. Anderson And The Companies He Formed Lost Their
Fortunes
The government
misrepresented the facts when it advised the Court that Mr.
Anderson and the companies he formed earned more than $450 million and
then
suggested those funds were available because very little of that money
could be
accounted for. The government knows all too well that most of that money
was lost
almost as fast as it was made. The companies that Mr. Anderson formed
and managed,
accumulated great wealth. As with a number of such companies, that wealth
was
invested and then reinvested in the companies and others in the telecommunications
industry. The companies made a fortune riding the telecommunications
wave up. and
then lost virtually everything when that wave came crashing down. The
great earnings
that occurred were, for the most part, reinvested and so were vulnerable
when the
downturn occurred.
It made great
headlines for the government to tell the Court only the half of the
story about how Mr. Anderson and the companies he managed "generated
more than
$450 million in income through buying and selling telecommunications
companies and
other investments,"(2) without also telling the other half of the
story about how much of
that great fortune was lost. When the overall telecommunications market
collapsed,
capital markets lost more than $2 trillion in value. See, e.g., Robert
E. Litan, The
Telecommunications Crash: What To Do Now?, at
http://www.brookings.edu/cornrn/policybriefs/pb112.htm
(Dec. 2002). The value of
many once high-flying stocks fell to zero, including many that Anderson
managed. This
occurred in many of the companies with which Mr. Anderson was associated.
While this is
not the place to provide the Court with a full accounting of how
$400-plus million was made and lost over the past decade, identifying
just a handful of
unfortunate transactions easily demonstrates how quickly the assets
of the companies
managed by Mr. Anderson disappeared.
Many of the
venture capital holding companies that Mr. Anderson managed
suffered enormous losses by investing in companies that lost all of
their value by
becoming bankrupt or otherwise becoming non-viable. The most significant
losses in the
funds managed by Mr. Anderson (principally Gold & Appel) are the
losses associated
with the investments in the following companies:
Company
Name -----------------------------------------
Amount Lost
The companies Mr. Anderson managed also had substantial losses from
investments in companies that did not go bankrupt. For example, those
companies lost anadditional $70 million of investments in Covista(9)
(CVST NASDAQ) and U.S.
Wats/Capsule Cornrnunications(10) (formerly CAPS NASDAQ). In addition,
this
cumulative loss of more than $340,000,000 does not
include the loss of several million
more dollars in legal fees, accounting fees and other substantial transaction
costs. Other
investments in privately held corporations still owned by the Foundation
Mr. Anderson
manages have lost substantial value, which is difficult to value as
the stock is not traded.
The government,
of course, has all the corporate records for these companies, including
brokerage records, SEC and HSR filings, and financial statements. While
dissecting corporate financial records can be complicated in some cases,
the substantial losses identified above are so glaring they literally
leap off the pages. Indeed, the numbers provided above were possible
simply by doing the math from publicly available sources. After spending
five and a half years investigating these transactions, the government
surely understood that the vast majority of these assets have been lost.
Nevertheless, by explaining that hundreds of millions of dollars were
made, without explaining that hundreds of millions of dollars were later
lost, the government has constructed a misimpression that has been reported
by the media as if true and has certainly provided the background to
the government's inaccurate assertion that Mr. Anderson or the organizations
that he manages have hundreds of millions of dollars available for him
to live as a fugitive, pay people to hide him, pay people who put up
property to secure his release, post unlimited bonds himself, etc,
2.
The Government Misstated Facts About The So-called Swiss Bank Accounts
To The Court
To support its
assertions that Mr. Anderson has the means to flee and can do so
successfully, the government has made much of its claim that Mr. Anderson
has "access
to an unknown number of foreign bank accounts" that would "make
it very easy for him
to flee and remain abroad indefinitely." (Gov't. Det. Mot. at 1
1 .) Again, in no brief or
exhibit did the government substantiate this claim. Indeed, on its face,
the statement
contradicts other statements the government has made -- Mr. Anderson
has some great
fortune in foreign bank accounts, despite the fact that the very existence
of such accounts is "unknown" even after the government has
investigated Mr. Anderson for more than five and a half years. Significantly,
the only substantial foreign bank account the government has identified
as an example of Mr. Anderson having the mcans to flee are Swiss bank
accounts the government suggests hold $20 million.
Assistant U.S.
Attorney Susan Menzer stated that there is a great deal of money
the United States has been "unable to trace," and specifically
explained:
Twenty
million dollars went to two bank accounts in
Switzerland that we have attempted to seek the cooperation
of the Swiss government. The Swiss government made us
provide Mr. Anderson with our request and to give him any
procedural rights that he was due before the information
was released. Afterwards, the Swiss government refused to
provide us with the information. . . . we've never been
notified what's happened to the $20 million that went to
Switzerland.
(2128105 Hrng.
at 25 (statement of Ms. Menzer).) Ms. Menzer further advised the Court:
"We have made numerous requests of the Swiss authorities, we have
been unable to have the Swiss authorities disclose the identity of the
account holder." (313105 Hrng. at 7 (statement of Ms. Menzer).)
In its initial motion for detention, the Government made the same claims
and emphasized that "[t]o date, the Swiss government refuses to
provide the records." (Gov't Mot. for Detention at 12 n.5.)
To put it bluntly,
Ms. Menzer either was misinformed herself or misinformed the
Court. Long before the hearings in this case, the government provided
Swiss authorities
with Mr. Anderson's name, the names of all known so-called aliases,
and all companies
Mr. Anderson managed. The Swiss government responded to our government's
request
that no funds exist in those names. (Ex. A.) Indeed, the Swiss government
actually
identified the EU national who had owned the bank account by name. That
person has
been deposed recently by Ms. Kelly and Agent Kutz."
On April 1,
2004, the Swiss government responded to a request from the United
States for information concerning those Swiss accounts. (Ex. A.) In
the letter, the Swiss
government explicitly told the United States that there were no accounts
at the Swiss
bank in question held by Mr. Anderson, any of what the government described
as Mr.
Anderson's "aliases," or any of the companies associated with
Mr. Anderson. Instead,
the Swiss authorities explained that the "beneficial owners"
of the accounts in question
are "third parties" who are "residents of Europe."
(Id.) A subsequent letter from the U.S.
Department of Treasury to the Swiss government explains that the Swiss
authorities had
previously identified an EU national by name as the owner of the accounts
in August and
September 2004. (Ex. B (filed under seal).) Moreover, the Swiss government
told the
United States that the money owned by that third party is no longer
in the account and
that the account was closed more than two years ago. (Ex. A.) Nevertheless,
Ms.
Menzer created the misimpression that this money was sitting in the
bank account
waiting to be spent by Mr. Anderson, when she knew the account had been
closed years earlier. (See 2/28/05 Hrng. at 25 (statement of Ms. Menzer);
Gov't Mot, for Detention at 12 n.5.)(12)
Consequently,
the government plainly stated things that its attorneys knew or should
have known were not the case. The government simply misinformed the
Court when it suggested that the Swiss government refused to cooperate
at all with the United
States, when it suggested that the United States had never been notified
of what happened to the money, and when it improperly suggested that
Mr. Anderson was the beneficial owner of these accounts (or has the
funds from them).
Ironically,
the only reason the true facts have come to light is that the Swiss
government became concerned that U.S. officials were misusing the information
the
Swiss Federal Tax Authority provided. Accordingly, the Swiss government
provided Mr. Anderson's counsel with the correspondence to clarify what
had occurred. Had this not occurred, Mr. Anderson could not correct
the misimpression made by the prosecution.
The government
built a great deal of their request for detention on its assertion that
Mr. Anderson had the means to escape and live a fugitive. It is hard
to undo these
misimpressions, but just the beginnings of setting the record straight
should provide the
Court with enough basis to reconsider its this conclusion. Those "numerous"
foreign
bank accounts that the government claims are not numerous at all. The
one that
government has paraded in court has never been owned or accessed by
Mr. Anderson and has been closed for years. The ends of achieving pre-trial
detention with its debilitating effect on Mr. Anderson's ability to
mount the best defense possible do not justify the government making
statements it knows or should know are not true or to cast the facts
it has in a light that leaves a misimpression.
3.
Mr. Anderson No Longer Has $75 Million Invested In Privately Held
Companies
In another instance
of half-truth, the government told the Court: "Between 1995 and
2004, Mr. Anderson invested more than $75 million in privately held
companies.
These companies are still viable and could provide additional means
for Mr. Anderson's
fugitive life." (Gov't Det. Mot. at 12 n.5.) Ms. Menzer also has
advised the Court: "He
has investments in companies worth millions and millions of dollars
that he could sell in
the snap of a finger." (2128105 Hrng. at 58-59.) The government
again neglected to
substantiate its claim. Mr. Anderson can now tell the other half of
the story -- that Mr.
Anderson was acting as a manager of venture capital and making these
investments on
behalf of corporations, rather than himself, and that many of the companies
he invested in have gone bankrupt or no longer are trading. Only six
of the companies in which Mr.
Anderson directed the investments remain viable and those investments
are worth
approximately $1 3 million. (& Ex. C (providing a chart of these
investments).)
The worth and
access to it are two different things. Mr. Anderson does not have any
access to this money. Like most venture capital investments, the investments
are
illiquid and cannot be obtained at the "snap of a finger."
Nor is Mr. Anderson in any
position to liquidate these assets as neither he nor the companies he
manages has a
controlling interest in these companies. Consequently, neither he nor
the companies he
manages could direct the Board of Directors of those entities to liquidate
the assets. They are completely passive investments with no immediate
or short term cash value.
The government
has investigated the companies that the offshore funds managed by Mr.
Anderson had invested in and the government undoubtedly discovered that
more than 95% of these investments was lost due to the bankruptcies
or failed operations. It is
also hard to believe that the government with all of its resources and
agents working on
this case did not understand that the remaining investn-lents are illiquid.
Nevertheless, the government made statements that gave the opposite
impression.
4.
Mr. Anderson Does Not Have Expensive Artwork Abroad
The government
claims that Mr. Anderson sent valuable artwork to a warehouse
in Zurich, Switzerland; that some of the pieces were sold; and that
"[w]hat Mr. Anderson ultimately did with the proceeds is unknown."
(Gov't Det. Mot. at 12-13.) Again, the specter being painted by the
government is of a vast cache of money to support Mr. Anderson as a
fugitive. The government knows precisely what was done with these proceeds.
The government
has the corporate and bank records showing that the art work
belonged to corporations that Mr. Anderson managed, and not to Mr. Anderson
personally. The bank records show that most of the art pieces were liquidated
through
auction or sale. (See Ex.D (excerpt of Gold & Appel's Barclays Bank
account showing
receipt of sales proceeds from auctioneer Christie Manson ("Christie's")).)
Of the three
pieces not sold by Christie's, two are currently held by ACG Credit
Company, LLC (980 Madison Ave., New York, NY 1002 1) as a security interest
pursuant to a loan agreement dated November 5, 2004 with Space Incorporated
and the other was sold by ACG with the proceeds wired to Barclays Bank
account. (& Ex. E.) The proceeds from the Christie's and ACG sales
were deposited in corporate bank accounts and the bank records in the
government's possession show that the money was spent on corporate endeavors.
Consequently, Mr. Anderson does not have access to valuable art assets
that could be sold and he has not received the proceeds from the art
sales identified by the government.
5.
Mr. Anderson Does Not Own A House In Spain or Water Rights In Brazil
In suggesting
that Mr. Anderson has substantial assets abroad that he could live off
of, the government claims he owns valuable water rights in Brazil and
a house in Spain. While the government does not appreciate the distinction
between Mr. Anderson
and the companies he has formed, the water rights and house in Spain
are corporate assets and not his personal assets. He does not have the
right or ability to sell them "with a snap of his finger"
and then get the proceeds as a way to live as a fugitive. In addition,
water rights(13) and real estate are hardly liquid assets. Moreover,
as the government has found these assets, it is not as if they can be
disposed of without notice.
6.
Mr. Anderson Has No Money In Safety Deposit Boxes Abroad
Another of the
headline inducing claims made by the government was to suggest
that there was a safety deposit boxes here or abroad and that must contain
money. (&
x, 3/10/05 Hrng. at 43.) As to the one deposit box for which the government
attorney
waved a deposit key in dramatic fashion in court, Chadbourne & Parke's
London office
has retrieved the contents of the safety deposit box, and has provided
an affidavit
confirming that it did not contain cash or other valuables. (Ex. F (Affidavit
of T.
Khutsoane).) Again, it turns out that the drama hyped by the government
and reality are
two very different things.
B.
Mr. Anderson Respects The Authority Of The Court
The government
then supported its claim for detention by contending that Mr. Anderson
would not obey an order. by this Court for conditions of release. They
argued that he has disregarded court orders in that past. After investigating
each claim with prior
counsel and the records in those proceedings and reviewing the pertinent
records, it is
clear that there is no merit to these claims.
1.
Mr. Anderson Did Not Ignore A Court Order From Judge Bates
Ms. Menzer has
told the Court that Mr. Anderson is "not going to listen to the
Court. He hasn't listened to Judges for years, including Judge Bates
in this courthouse."
(2/28/05 Hrng. at 10.) She has said: "When Judge Bates ordered
him to say who is Gold & Appel, he wouldn't do it." (Id. at
58.)
Neither we,
nor Mr. Anderson's prior counsel, have been able to identify any
instance where Mr. Anderson has ignored an order from Judge Bates or
any other judge. In particular, we have not been able to identify any
instance where Judge Bates ordered Mr. Anderson to identify who owns
or controls Gold & Appel or where Judge Bates issued any order to
Mr. Anderson whatsoever. Had Mr. Anderson ignored a court order, we
would expect that the court would hold Mr. Anderson in contempt, but
Mr. Anderson has not been held in contempt by Judge Bates or any other
judge.
2.
Mr. Anderson Has Not Ignored Grand Jury Subpoenas
The government
also charges that "Mr. Anderson was served with numerous grand
jury subpoenas seeking the production of corporate records for several
entities . . . .He did not comply." (Gov't Det. Mot. at 18.) It
is an awful tactic of the government to
support a request for detention by using a person's decision to fight
the breadth or
privileges involved in a subpoena as an example of his failing to obey
a court order. The
prosecutors know all too well that Mr. Anderson was following the advice
of counsel in
not producing all documents called for by the subpoenas. Once the Court
ruled that some additional categories of documents needed to be produced,
they were produced. It is not a sign of bad faith, but of good judgment
that Mr. Anderson deferred to the legal advice of his lawyers on legal
matters. While the prosecution may be frustrated that Mr. Anderson did
not immediately comply with all they requested in the form of grand
jury subpoenas, Mr. Anderson did inmediately comply with the directions
from the Court as to what had to be produced.
3.
Mr. Anderson Did Not Lie To Chief Judge Hogan
Ms. Menzer told
the Court: "When he told Judge Hogan, when he was supposed
to be before the grand jury [to provide a handwriting exemplar], that
he was traveling in
London, the government has submitted evidence that he was in the British
Virgin
Islands." (2/28/05 Hrng. at 58.) The government is greatly distorting
what had occurred.
Ms. Menzer had
contacted Tony Fitch, Mr. Anderson's attorney at the time, about
scheduling a handwriting exemplar, and Mr. Fitch fully cooperated in
trying to set a date
and provided her with several dates and also informed her of the schedule
when Mr.
Anderson would be out of the country and unavailable. (Here Mr. Anderson
knew that
government wanted him in the grand jury and he came back to the U.S.
in any event).
Nevertheless, Ms. Menzer had the grand jury issue a subpoena for the
handwriting
exemplar on a specific date that Mr. Fitch had told Ms. Menzer that
Mr. Anderson would be out of the country. It was Ms. Menzer's scheduling
of the handwriting exemplar in apparent bad faith, on a date when she
knew Mr. Anderson would be unavailable, that triggered the hearing before
Chief Judge Hogan. Mr. Fitch explained the situation to the Court, but
he did not know Mr. Anderson's entire itinerary. He knew that Mr. Anderson
was going to London and he mentioned that fact. The only issue that
was relevant at the hearing was that Mr. Anderson was out of the country
and the government knew that wouId be the case when it subpoenaed him.
Mr. Anderson never asked Mr. Fitch to tell the Court he was in London.
Mr. Fitch simply misspoke because he was unfamiliar with Mr. Anderson's
entire itinerary.
It also is important
to reiterate that Mr. Anderson did not have this conversation
with Judge Hogan. The discussion was between Mr. Fitch and Judge Hogan.
The
government is grossly distorting the truth in suggesting that Mr. Anderson
lied to Judge
Hogan because Mr. Fitch made a misstatement on an immaterial point by
not disclosing
that the British Virgin Islands was also part of Mr. Anderson itinerary,
as well as London.
C.
Mr. Anderson Has Not Planned An Escape
In claiming
that Mr. Anderson is a flight risk, it is telling that the government
has
acknowledged that Mr. Anderson was well aware that he was under investigation,
but has no evidence that Mr. Anderson had made any plans to flee. The
government does not even suggest where they think Mr. Anderson was planning
to flee to or how. Instead, they can document that Mr. Anderson had
left the country and returned more than 40 times even after he knew
that he was under investigation. He was so certain that he was going
to be indicted that he met with Pretrial Services before he was ever
indicted to streamline the process, but yet he never attempted to flee.
His prior attorney, Tony Fitch, assured him he would be indicted, as
did his subsequent attorney, John Moustakas. Mr. Anderson plainly had
every reason to believe an indictment was imininent, but again and again,
he left the country only to return. This is perhaps the strongest evidence
that Mr. Anderson is no flight risk. The Court should recall that Mr.
Anderson was arrested when he was coming back to the country,
not leaving it.
1.
Mr. Anderson Should Not Be Punished Because of His Reading Habits
The government
makes much of the fact that Mr. Anderson has several books
relating to false identification, living as a fugitive and structuring
foreign corporations.
The Court should not infer that Mr. Anderson was preparing to live as
a fugitive merely
because he had these books.
Mr. Anderson
is a voracious reader who often reads a book a day. As the
government is well aware, he has an enormous library in his house. Ever
since he was a
child Mr. Anderson has been fascinated by stories about outlaws like
Jesse James, Jewish families that lived underground to avoid Nazi persecution
in World War II, Nazis who fled to Latin America after the war, and
others who have had to live underground. The claim that he has books
on these subjects makes him a likely fugitive is no better than stating
that a person who reads books about murders is training to be a killer.
Murder novels and real crime books on real murder cases are among the
best selling works in America. It really was a stretch to paint Mr.
Anderson as a likely fugitive based on his book collection (including
the counter-culture books of the 1960's) in light of his having turned
into a mainstream businessperson with interests in mainstream industries,
becoming a strong advocate of corporate responsibility and a constant
resident in the United States.
Mr. Anderson
is a man who has lived an exemplary life. Mr. Anderson has never
run away from challenges or problems and has been a responsible leader
for-profit and
not-for-profit organizations for over thirty years. The books the government
has seized
describe life as a fugitive in stark terms. Those people walk away from
everything they
had before and cannot work any job of a higher station than busboy for
fear of drawing
attention to themselves. Mr. Anderson is ill-suited to live a life of
poverty or to begin a
new career as a manual laborer at his age.
The books concerning
fake identification and structuring foreign corporations
interest Mr. Anderson for many of the same reasons, as well as others.
He is interested in how people who have chosen to live underground do
what they do and understand how such people get by day-to-day is understandably
intriguing.
He also is very
concerned about his privacy and the threat of identity theft. Mr.
Anderson wants to understand how people steal another person's identity,
so that he can prevent his own fiom being stolen. His concerns about
life in the information age and
privacy guide much of his personal and professional dealings.
Similarly, Mr.
Anderson wants to understand the games people can play with
foreign corporations because Mr. Anderson does not want to be victimized
by those who play such games. He is an international businessrnan, who
has done business with a number of foreign persons and entities. Mr.
Anderson wants to understand how he could get hurt by people who operate
out of certain jurisdictions so he can guard against them. In addition,
Mr. Anderson has set up a number of foreign corporations himself and
wants to make sure that he is up to date on how to set them up and is
operating them correctly and legally.
2.
Mr. Anderson Does Not Have False Travel Documents
Ms. Menzer has
repeatedly claimed that Mr. Anderson "has many United States
passports, as well as other jurisdictions." (2/28/05 Hrng. at 17.)
She claims he has "fake passports." (Id. at 18.) As we have
clarified before, Mr. Anderson has only one valid
passport. He has held onto his old, cancelled for sentimental reasons,
like many Americans do. There is nothing illegal about retaining them,
and because they
have clipped comers signifying that they have been canceled, he cannot
travel on them.
The government
also has claimed that he had a passport from British Guyana and
that he appears to have traveled on it: "They're his passport here
from British Guyana
with Mr. Andersons picture, and it actually reflects . . that he traveled
or someone
traveled on this passport." (2/28/05 Hrng. at 18). As we have explained
before, and as
should have been obvious to the government, this is a camouflage passport
used by
American citizens in the event they are kidnapped or being held by terrorists.
British
Guyana has not existed as a country for decades and all of the "stamps"
in the back of the passport are printed (not stamped) and are from fictitious
places. Despite the assertion by the government to the contrary, no
one has ever traveled or could ever travel with the passport. No
country would let anyone travel on such a document. There were no false
documents in Mr. Anderson's possession that could have been used for
international travel.
D.
Mr. Anderson Has Strong Ties To The Community
The government
has repeatedly charged that "there is nothing, nothing in the U.S.
to keep him here," (2/28/05 Hmg. at 25) and that "[o]ther
than his Mother and
Stepfather, Anderson has no family tie to the community." (3/10/05
Hmg. at 18.) This
too is incorrect.
Mr. Anderson
is, of course, very close to his aging and infirm mother and
stepfather who live in Annandale, Virginia, but they are hardly the
only ties Mr.
Anderson has to the community. Mr. Anderson grew up here and has lived
here all his
life. Despite having seen the world and having had the money and choice
to live
anywhere he would have liked, Mr. Anderson chose to stay in Washington,
D.C. This is
the only home he has ever known. Also ironic is the fact that the longest
Mr. Anderson
has been away from a home in Washington in 24 years is his current detention.
Mr. Anderson
did not grow up with any brothers or sisters, but his family was
very close-knit and he has six first cousins who are like siblings to
him. He is very close
to their spouses and 12 children as well. Mr. Anderson also remains
very close to his
aunt, Abigail Almer who is very ill and often hospitalized. All of Mr.
Anderson's family
live in the United States and he sees his aunt and his cousins each
at least two to three
times a year. And many of Mr. Anderson's closest friends also live in
Washington, D.C.
(See Ex. G (chart of Mr. Anderson's friends and family).). Mr.
Anderson would not walk away from the family and friends he has made
over the lifetime he has spent in
Washington, D.C.
The Court should
be reassured that the people who are closest to him have every
assurance that Mr. Anderson is not a flight risk. In ths regard, his
parents; his cousins,
Judy and Tom Lallier; and his close friend, Jim Kenefick, have such
great confidence in
Mr. Anderson that they are willing to post their homes as bond. There
can be no better
example of a person's ties to the community and no 5etter security than
when people
other than the defendant will put themselves at risk to assure his presence.
The value of
these homes (which is not insubstantial) is irrelevant; it is the fact
that these people would
be willing to lose the homes in which they live if Mr. Anderson was
to flee. This is
compelling proof that he is not a risk of flight, and it is compelling
security for a court to
use to assure someone's appearance.
II.
– MR. ANDERSON HAS A STRONG DEFENSE TO THE GOVERNMENT'S CASE AGAINST
HIM
Although this
is not the place for a mini-trial on the merits of the case, it is important
for the Court to understand that the case against Mr. Anderson is not
one-sided and is certainly not as strong as the government suggests. The
government's case against Mr. Anderson is based on the false premise that
there is no difference between Mr. Anderson and some of the companies
that he managed and so he failed to report as income a great deal of the
companies' funds. But the evidence will show that the corporations were
validly established and maintained their corporate distinction from Mr.
Anderson. Mr. Anderson did not own the corporations, but merely managed
their assets. There will be issues of the advice of professionals and
a great deal more to make this a real case with real issues to be decided.
The charges are indeed serious, but he is anxious
to defend himself and has numerous defenses to put forward.
III. –
CONDITIONS OF RELEASE CAN BE IMPOSED TO ASSURE MR.
ANDERSON'S APPEARANCE AT TRIAL
Based on this
better understanding of the facts, we believe it should be clear to the
Court that Mr. Anderson does not pose a "serious risk" of flight.
18 U.S.C. §
3142(f)(2)(A). The accurate record actually supports Pre-Trial Service's
first conclusion
to release him on his own recognizance, subject to the usual conditions.
Notwithstanding
the fact that he has been detained, there is every reason to release him
now without resort
to the house arrest model that has been proposed. This Court actually
should consider
this type of release. Nevertheless, a misimpression of Mr. Anderson has
occurred and he
understands he has to change it and that takes time. So, if it takes time
to accomplish a
complete revision of the misimpression, there are conditions that have
been suggested
and that can be imposed that more than provide a basis for his release.
In its March 16,2005
Order, the Court made observations about deficiencies it
found in the proposal that was made at the time. Mr. Anderson and his
counsel have now
gone back to review each of the conditions suggested, obtained guidance
from the leading
security experts in the field and have been able to address each of the
Court's concern.
Each of these is now set forth, with an eye to addressing the Court's
concerns:
1) Mr. Anderson would be released into the custody of Bart Schwartz, former
Chief
of the Criminal Division to the then-U.S. Attorney for the Southern District
of New York,
Rudolph Giuliani, and who has extensive experience in security through
his work at his
firm, Nardello Schwartz & Co. Mr. Schwartz also has experience in
managing a release
such as being proposed in this case. Mr. Schwartz, whose more detailed
plan and resume
are attached as Exhibit H, will post a substantial financial bond and
supervise the
guaranteeing of Mr. Anderson's appearances at trial.
2) Mr. Anderson will be relegated to house arrest and two armed off-duty
law
enforcement officers will be with him at his home, and whenever he travels
with the
permission of the Court, at all times.(14) The officers will be familiar
with the conditions of
release established by the Court and under orders to arrest Mr. Anderson
and notify Mr.
Schwartz if those conditions are violated.(15)
3) Mr. Anderson will have a bracelet attached to his ankle that he cannot
remove that
will sound an alarm is he leaves the home and that incorporates GPS technology
to allow
him to be tracked when he is outside the home. Video and electronic surveillance
also
will be established within the home to verify Mr. Anderson's location
and to detect when
anyone enters or leaves the apartment. Mr. Schwartzad the officers he
retains will be
responsible for monitoring Mr. Anderson.
3)* Mr. Anderson will raise and post up to
a $1,000,000 cash bond.(16)
4) In addition, the following individuals will post their own homes as
surety that
Mr. Anderson will appear for trial and other proceedings:
The financial bond Mr. Anderson will post, along with the commitment of
his
family and friends to post their own homes as security, should be more
than sufficient to
assure the Court that Mr. Anderson has strong ties to the community and
is fully
committed to standing trial. Mr. Anderson has worked too hard and has
accomplished
too much to see his reputation tarnished by the spurious allegations the
government has
made against him and he is eager to refute the charges at trial. (The
first proposed order
attached incorporates these conditions).
In the event the
Court decides that more is required, we have suggested an
extreme set of conditions that goes well beyond what anyone could deem
necessary to
"reasonably assure" Mr. Anderson's presence at trial. (Obviously,
the Court is free to set
conditions that are less onerous.) Those conditions were devised by the
leading security
companies in the world and the leaders in providing home confinement in
the United
States. (The second proposed order attached incorporates these conditions).
In
particular, they have successfully completed similar assignments to ensure
that other
criminal defendants attend their trials in federal court. (See, e.g.
Ex. I (order of the U.S.
District Court in Maryland authorizing similar conditions).) There is
no reason that such
a proposal would not be effective here.
Dated: May 2,2005
Respectfully submitted,
---- /S/ ----
Abbe David Lowell (D.C. Bar No. 35865 1)
Christopher D. Man (D.C. Bar No. 453553)
CHADBOURNE & PARKE LLP
1200 New Hampshire Ave., N. W.
Washington, DC 20036
(202) 974-5600 (Telephone)
(202) 974-5602 (Fax)
CERTIFICATE
OF SERVICE
I hereby certify that on this 2nd day of May, 2005, copies of the foregoing
Walter
Anderson's Second Brief In Support Of Reconsideration Of His Motion To
Impose
Conditions of Release were served by facsimile and ECF to:
Susan B. Menzer
Assistant U.S. Attorney
Fraud and Public Corruption Section
555 4th Street, N.W., Room 5834
Washington, D.C. 20530
Karen Kelly
Trial Attorney
U.S. Department of Justice, Tax Division
600 E. Street, N.W.
Washington, D.C. 20530
---- /S/ ----
Christopher D. Man
1 Ms.
Menzer told the Court that the government has planned to detain Mr. Anderson
for years: "In fact, it's a running joke with Ms. Kelly and I, and
she'll be embarrassed that I tell you that his issue of detention has
been looming in our mind for the past two years. I have done research
on it over and over again for the last two years. It has never been a
question on this side of the courtroom that we were not going to seek
Mr. Anderson's detention." (3/10/05 Hrng. at 32.) By contrast, Mr.
Anderson and his prior counsel believed they had an understanding with
Ms. Menzer that Mr. Anderson would be allowed to voluntarily surrender.
2 The government has not provided a breakdown in any of its briefs or
exhibits to support its claim that more than $450 million was made.
3 World
Access, Inc. (Nasdaq: WAXS) acquired Communication TeleSystems
International d/b/a WorldxChange Communications on Feb. 18, 2000. See
http://www.thedigest.com/113/113-98.html. Subsequently World Access, Inc.
and its
affiliates filed for chapter 11 protection on April 24, 2001 (Bank. N.D.
Ill. Case Nos. 01-
14633,01-14635,01-14637,01-14642,01-14643,01-14645).
4 See
Net-Tel Corporations Inc. bankruptcy proceeding - United Sates Bankruptcy
Court foxhe District of Columbia (Case No. 00-01 77 1 (Chapter 7)).
5 See
http://bankrupt.com/TCREUR~Public/O 10402.mbx.
6 Rotary
Rocket ceased operations on Feb. 2001. See
http://www.globalsecurity.org/space/systems/roton.htm. Rotary Rocket asset
ceased. See
http://www.spaceandtech.com/digest~sd200 1-0 1 Isd200 1-0 1-0 17.shtml.
7 On
Jan. 4,2005, D. J. Whitehouse and S. Wilson (IP Nos 8699, 8963) have been
appointed joint administrators for telecommunications company
Teleport UK Limited in U.K. See http://bankrupt.com/TCREURRPublic/0501
12.mbx.
8 Mircorp
was wound down after decommissioning of Mir Space Station. See
http://www.reentrynews.corn/Mir/back 1 .html;
http://www.spaceflightnow.codnews/n00 10/03mirl
9 Gold
& Appel and Revision LLC (a subsidiary of Gold & Appel) bought
shares of
Covista (fMa TotalTel) ranging from $27 - $39 per share. See, inter alia
SEC filings
Schedule 13D (from Jan. 6, 1998 to April 6, 1998) at:
http://www.sec.gov/Archives/edgar/datd34497/OOOO950 169-98-000033 .txt
http://www.sec.gov/Archivesledgar/datd34497/000095O 169-98-000074.txt
http://www.sec.gov/Archives/edgar/data~34497/0000950 169-98-000033 .txt
http://www.sec.gov/Archives/edgar/datd34497/0000950 169-98-000227.txt
http://www.sec.gov/Archives/edgar/datd34497/000095O 169-98-000283 .txt
http://www.sec.gov/Archives/edgar/data/34497/000 1026777-98-0000 19.txt
http://www.sec.~ov/Archives/ednar/dataI34497/000 1026777-98-000026.txt
By March 1,2001, Gold & Appel owned 1,241,708 common shares and Revision
LLC owned 1,353,896 Common Shares (total shares being 2,595,604). The
total
purchase price of these shares were over $64,000,000. Of these Common
shares
2,454,661 of these shares were pledged as security interest pursuant to
a loan agreement
with Donald A. Burns. See Schedule 13D (Mar. 1,2001) -
http://www.sec.govlArchivesledgarldatd34497/000 10267770 1000034/000 1026777-0
1 -
000034-0001 .txt. These common shares were then ultimately sold by Burns
for mere
$5,635,403. See unpublished opinion of US Court of Appeals for the Fourth
Circuit No.
03-2162 - Appeal from U.S. District Court for the Eastern District. (CA-02-1326-A).
Gold & Appel and Revision's combined loss for this investment is therefore
around $65
million.
10 Gold
& Appel bought shares of U.S. Wats from Jan. 1997 to Sep. 1999. By
Sep.
1999 or so, Gold & Appel accumulated 12,927,034 Common Shares at prices
ranging
from $1.05 - $1.75. See SEC filing Schedule 13D (Sep. 23, 1999) at
http:/lw\?iw.sec.gov/Archives/edgar/data/862025/0001026777-99-000074.txt.
In a private
transaction all those shares were sold to Henry Luken at 20 cents per
share. See
http://www.sec.gov/Archives/edgar/data~l030949/000 102677701 500047/caps
13d. txt.
Even calculating the full value of Gold & Appel's investment as though
all the shares
were purchased at $1.05 (we have not yet been able to determine the average
price per
share), the investment was at least $13,573,386. The current value of
that investment is
$2,585,407. Consequently, at least another $11 million was lost on this
investment.
11 In
deference to the Swiss government's interest in protecting the privacy
of that
person and that person's rights under Swiss law, we have not identified
that person by
name and have filed documents that identify that person by name under
seal.
12 The
government did not state that people in Europe held this or any other
money
for Mr. Anderson (which is not the case). It told the Court it was unaware
of facts then in
its possession.
13 It
is not clear that anyone would buy the Brazilian water rights. The corporation
that acquired the water rights had planned to turn these water rights
over to Aquarius
Holdings Limited which planned to build a bottled water plant, but no
plant was built and
Aquarius has no intention of building such a plant at this time due to
limited cash flow of
the company. It is doubtful that anyone else is interested in pursuing
such a venture at
this time. While these rights may.someday have a cash value, they remain
worth very
little right now as no buyer appears interested in building a bottled
water facility.
14 Current
law enforcement officers, like those Mr. Schwartz seeks to retain in this
case, already have cleared a background check. In addition, Mr. Schwartz
and the
security companies he turns to, such as Vance, independently review the
background of
each officer and typically only a small percentage of those who apply
meet their
standards. As Mr. Schwartz indicates in his letter, Pretrial Services
is free to conduct
their own background check before they are retained.
15 By
placing the officers within the home, the Condominium Association's
objections to Mr. Anderson's use of the common areas in the hallway is
resolved.
Counsel has reviewed Mr. Anderson's rights under the condominium by-laws
and can
assure the Court the Condominium Association would have no basis for objecting
to Mr.
Anderson installing security equipment in his home or inviting off-duty
law enforcement
officers into his home. Indeed, many other residents have installed security
system and
employed private security that has been stationed both inside their homes
and in the
common areas.
16 This
is an enormous sum of money for Mr. Anderson in his current financial
situation.
Based on the outstanding losses identified above and his current liabilities,
Mr. Anderson
owes more money than he is presently worth.
*This
second "3" was a typo from the original document, and retained
out of a desire to reproduce the document on this web page in its original
form as best possible.
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