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Judge rejects Larry Nassar’s bid to keep prison money, orders it turned over to his victims

Larry Nassar sits with attorney Matt Newburg during his sentencing hearing in 2018. (Carlos Osorio/AP)

A federal judge on Thursday ordered Larry Nassar, the former USA Gymnastics doctor convicted of sexually abusing girls in his care, to turn over money in his prison account to his victims, rejecting his argument that he should be allowed to keep it because he has followed Bureau of Prisons’ policy in paying less than 1 percent of the restitution he owes.

Prosecutors filed court papers last month to seize about $2,000 in Nassar’s Bureau of Prisons account, noting that the prison system has collected $100 a year in restitution ­— or $8.33 a month — over a 3½-year period in which he spent more than $10,000 on himself.

Acting as his own lawyer, Nassar wrote in the court filing that the government “may not like the fact that Mr. Nassar is only paying the ‘minimum’ amount required, [but] the fact still remains that Mr. Nassar is in full compliance with the program.”

U.S. District Court Judge Janet T. Neff said while it may be true Nassar has followed the Bureau of Prisons’ rules and paid the minimum, he still owes his victims much more, and signed a court order forcing the agency to turn over the money in his account — $2,041.57 as of late last month.

“Because [the] Defendant has received substantial non-exempt funds in his inmate trust account since incarceration, he was required by law to notify the Court and the United States Attorney and to apply those funds to the restitution that he still owed,” Neff wrote.

A Bureau of Prisons spokesman declined to comment.

Larry Nassar has spent thousands of dollars on himself in prison while paying his victims little

Nassar owes more than $60,000 in court judgments to various victims.

The case is a stark example of what critics say is a Bureau of Prisons banking system that fails to hold convicted criminals accountable to their victims, and poses security risks by letting inmates shelter unlimited amounts of money in their accounts. About two dozen inmates have prison account balances of more than $100,000 each, according to people familiar with the program who spoke on the condition of anonymity to discuss nonpublic aspects of the program.

The Washington Post reported Wednesday that the total value of federal prisoner accounts has grown by $50 million already this year to more than $140 million, largely due to government stimulus checks issued to millions of Americans during the coronavirus pandemic.

Federal prisoner accounts have grown by $50 million this year

Current and former law enforcement officials have criticized the Bureau of Prisons’ oversight of the accounts, saying they shortchange victims but also pose security risks, pointing to a case in South Carolina in which a federal inmate used a $2,000 check issued by the agency to cover a down payment on a murder-for-hire plot that was intercepted by an FBI task force.

In his court filing Thursday, Nassar said that with the exception of two stimulus checks totaling $2,000, all of the money in his prison account has come as gifts from other people and should not count as a material change in his financial circumstances that would require him to pay more to his victims.

Nassar wrote that he does not have a job in prison, and if the government wants him to pay more to his victims, officials should “have the BOP prison industry system pay a living wage to inmates that would allow inmates to make reasonable payments towards restitution.”

Nassar, who is being held at a high-security prison in central Florida, is serving the equivalent of a life sentence on state abuse and federal child pornography charges that make up one of the most egregious serial sex-abuse cases in recent memory. His victims say law enforcement and USA Gymnastics repeatedly failed to stop Nassar from abusing children, and a lawyer for many of Nassar’s victims has criticized the Justice Department for letting Nassar shirk the payments he owes.

Nassar’s victims say the Bureau of Prisons’ handling of his money isn’t the first time the Justice Department has failed them. A recent inspector general report harshly criticized the FBI for failing to properly investigate the Nassar allegations when they first surfaced, and said FBI officials lied to internal investigators when confronted with those failures.

Court records show Nassar still owes $834 in the Eaton County, Mich., case in which he pleaded guilty to charges of abusing children, as well as about $5,000 in a special assessment in his federal case. Court filings say Nassar also has not paid any of the $57,488.52 he was ordered to give five of his victims in the federal child pornography case, who are identified only as Child 10, Child 11, Child 28, Child 29 and Child 30.

Since The Post began reporting on the prison accounts issue in June, lawmakers have demanded answers from the Bureau of Prisons, but have not received any.