Most Federal Crime Debt Uncollected, GAO Says

Uncollected debts of people convicted of federal crimes have risen more than tenfold during the past decade to $4 billion, with only pennies out of every dollar owed ever obtained, government investigators said Tuesday.

The General Accounting Office said the swelling of uncollected debt resulted from the savings-and-loan financial scandals of the 1980s and from the government’s poor record in monitoring and collection.

The National Fine Center, created by Congress in 1987 to oversee collection efforts, will not be operational until 1996 and in its first phase will not be automated, said the GAO, an investigative wing of Congress.

“We still have an archaic, decentralized, non-system which allows many criminal offenders to escape paying what they owe their victims and the federal government,” Sen. Byron L. Dorgan (D-N.D.) said at a hearing of the Senate Governmental Affairs Committee.

The report said uncollected debts rose from $300 million in 1985 to the approximately $4-billion figure today.

About half of the latter amount is in fines and restitution orders imposed in major financial institution fraud cases between 1988 and the present. Only $49 million has been collected. Of the 50 largest criminal debts, totaling $609 million, only $4 million has been paid.

Henry Wray, GAO director for justice issues, testified that an “inevitable gap” separates amounts owed and collected because federal courts tend to base restitution orders in major financial fraud cases on victim losses rather than the offender’s ability to pay.

Richard Ames of the Administrative Office of the U.S. Courts told the panel that his office was committed to having the National Fine Center running in all 94 jurisdictions nationwide by Sept. 1, 1996.

He acknowledged that the program is more than a year behind schedule because “this project has been much larger, more complex and much more difficult to implement than originally expected.”