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February 9, 2007
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NOW Transcript - Show 306
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Transcript - February 9, 2007


It's hard to believe standing in the frigid east knowing that we've now passed the mid-point of winter that spring—the season of new beginnings—will actually come this year.

The chance for a fresh start has always been part of the fabric of America. But consider this: a little over a year or so ago, starting over for working Americans in financial trouble got a lot harder. Congress made major changes to bankruptcy laws, after a decade of lobbying from banks and credit card companies that helps boost profits at the banks—but there's a lot of pain on main street, as we found when we went back to Waterbury Connecticut where we first began reporting this story.

Senior correspondent Maria Hinojosa and producer Na Eng have our report.

HINOJOSA: If there was a family living the American dream, it was the McCormacks. They had paid off their house and saved enough to send of their kids to college. For years, they owned a small business—an auto parts manufacturing company in Waterbury, CT. They weren't rich, but they were comfortable.

Then about six years ago, Ron collapsed in his office. Doctors found an aneurism in his brain. The recovery process was long and painful. It took Ron months just to re-learn how to walk and talk. Today doctors tell him his brain functions will never return to normal.

RON McCORMACK: I still have, you know, a short term memory loss. I mean, stuff ten, 15 years ago is no problem. But if you came up to me and gave me a number or said your name, for me to go back to you in five minutes, it doesn't—it doesn't stick.

HINOJOSA: Ron's illness threw the McCormacks into a financial free-fall. Sharon tried to save the business—even using personal credit to pay business expenses and the medical bills not covered by the health insurance they had. The business folded. Sharon took on a full-time job at an ambulance company. But it wasn't long before the McCormack's business and personal debts piled up to more than a half million dollars. In desperation, they went to a bankruptcy attorney.

SHARON McCORMACK: When we applied for that additional monies Ron had had his surgery. Well, we had—if we had hoped he would gone back 100 percent. And he didn't, Gene.

HINOJOSA: Attorney Gene Melchionne has been helping the McCormacks through the process. He sees hundreds of cases like this every year.

MELCHIONNE: It's people holding on for as long as they possibly can and then deciding I can't do it anymore. And then they come in. Always, without exception, people who come in to see me are at the end of their rope. They have tried everything else first.

HINOJOSA: What's leading America's middle class families to turn to bankruptcy for a fresh start? The answer depends on who you ask. The financial industry will say it's reckless spending and the bankruptcy rules had made it much too easy for people to abuse the system.

LIVELY: The real problem is personal accountability and personal responsibility.

HINOJOSA: Randy Lively represented a variety of lending companies that supported bankruptcy reform.

LIVELY: Nine times out of ten, the financial situation they find themselves in has been as consequence of their own actions. It's the rare case where there's an external influence that has caused the problem.

HINOJOSA: But that's not the way everyone see it. Harvard Law Professor Elizabeth Warren has studies the causes of bankruptcy.

WARREN: A broken health care system is bankrupting middle class America.

HINOJOSA: Warren co-authored a study that found nearly half of all bankruptcies filed are the result of a medical problem.

WARREN: Now here's what's really shocking. Three-quarters of those people had health insurance at the onset of the illness that ultimately bankrupted them. So these were people who had jobs, who had played by the rules, who'd done what they thought they were supposed to do. They've gotten health insurance and they discovered a medical problem could turn them upside down financially.

HINOJOSA: According to Warren, divorce and unemployment are common reasons why people file for bankruptcy. And consumer groups say the credit card industry also shares some of the blame, especially when they're mailing out billions of new credit cards every year.

MELCHIONNE: I've been comparing the credit card companies to drug dealers for my clients. They get you hooked on the plastic at a very early age. And they want you there. I think the financial industry really needs to take a look at who they're lending to. And make sound decisions about lending out credit. It's way too easy to get a credit card. My five year old got a credit card for $100,000. An offer. My dog got an offer for a credit card. It's—it's—it's absurd.

HINOJOSA: At the same time that the industry has been handing out easy credit, they've spent almost a decade lobbying Congress for changes to the bankruptcy law to make sure those people pay up.

They had some key allies in Congress.

GRASSLEY: A system where people are not even asked whether they can pay off their debts obviously contributes to the fraying of the moral fiber of America.

HINOJOSA: Iowa Senator Chuck Grassley was a major champion of the bill...

GRASSLEY: There's two basic principles in this legislation. One, if you're entitled to a fresh start, that's been a principle of bankruptcy for 100 years. We preserve that. But for the first time, we're telling people that if you got the ability to repay some of your debt, you're not gonna get off scot-free.

HINOJOSA: The financial industry has spent tens of millions of dollars lobbying Congress. And in the spring of 2005, their efforts paid off. Congress overwhelmingly passed and the President signed what was called Bankruptcy Abuse Prevention and Consumer Protection Act.

BUSH: (April 20, 2005) If someone does not pay his or her debts, the rest of society ends up paying them. In recent years, too many people have abused the bankruptcy laws.

HINOJOSA: It's been over a year now since the tougher bankruptcy law went into effect, and many Americans are starting to feel the difference.

The number of people filing for bankruptcy has gone down dramatically, from 1.6 million filers before the law to about half a million filers now.

At a committee hearing last December evaluating the impact of the law, Senator Grassley was pleased with the early results.

GRASSLEY: (Dec. 6, 2006) Based merely on these decreased filing rates, I think it's fair to say that bankruptcy reform has been a success for our economy.

HINOJOSA: Those in the industry applaud the reforms as working "remarkably well." And indeed, the profits the credit card companies reported this last quarter were pretty remarkable. American Express saw a 24% jump. And the credit card division of J.P. Morgan Chase had a 138% increase. One of the reasons cited for the boost: fewer bankruptcy filings.

Melchionne says the big corporations may be better off from the changes, but he doesn't know anybody else who is.

MELCHIONNE: There is no benefit to any American in the United States—as a result of this law. The big myth that was—bandied about when they were passing it was that every American in the United States would get a check for $400 as a result of the savings from their reduction in bankruptcy. I still haven't gotten my check.

And I don't know anybody who's gotten a check for $400. And I don't see the savings anywhere, except in the credit card company's pocket.

HINOJOSA: In fact, with the new law, it now costs a lot more to file for bankruptcy. There's more paper work, higher legal fees, mandatory credit counseling. Some of those in debt simply don't have the money to file.

And there are signs that some American families are in big economic trouble. Foreclosure rates have shot way up. More than 1.2 million foreclosures were reported last year, up 42% from the year before.

MELCHIONNE: What I've seen—typically, is that clients—are letting their houses go through foreclosure because they think they can't file. They don't have the money necessary to file the bankruptcy because fees and costs have gone up so much.

HINOJOSA: And it's not just the higher filing costs. The new law makes it much tougher on those who do file to completely wipe away their debts. Even after filing, many will still be paying off a significant amount of their debt for years to come.

Take the case of Ron and Sharon... Two years since our last report, their bankruptcy filing is now pending. If approved, it will help them get rid of most of their biggest debt burdens. Still, they will take on a steep mortgage—one that they'll be paying off for decades—in order to keep the home they had already paid off once before free and clear.

Sharon is grateful for the relief bankruptcy protection will offer them. But she was disappointed the law passed. She says the last thing a desperate family needs from Washington are more hurdles.

SHARON MCCORMACK: When you do apply and you go through this process, you don't want to have to be—having all these other things thrown at you. And—and at least there is an option for us. Because I don't know what else we would do.

RON MCCORMACK: I live day by day. And—I—I just worry about my grandchildren. How's it going to be for them.

HINOJOSA: The McCormacks are still in the negotiating process with the banks. In fact, they have another court date next week. This whole experience has changed Ron's view of how America works.

RON MCCORMACK: Well, in my opinion, there is no middle class. You're either poor or you're rich, that's it.

BRANCACCIO: You can find more on the changes in the bankruptcy law, and hear more in an exclusive interview with Elizabeth Warren over on our website. is the jumping off place for that.

Speaking of getting another chance at a fresh start. Fewer people had longer odds of that happening than Anthony Graves.

When I first met Graves, he was on death row in Texas...condemned in a multiple murder case by the testimony of a single witness ... one who later said he'd been lying.

Now, Graves is getting a second chance to prove he's innocent. But it is Graves' journey through the court system that has raised so many questions about how we impose the ultimate penalty.

Karla Murthy produced our report.

BRANCACCIO: Once convicts land behind these fences on death row in Texas, they tend to stay until execution. But now one man—who has always maintained his innocence—could get a chance at freedom.

GRAVES: It is hard to prove you're innocent. If you're actually innocent, it is very hard

BRANCACCIO: Anthony Graves had been on death row for 12 years, convicted for brutal murders. But there was no physical evidence linking him to the crime scene—no DNA, no smoking gun. Instead, the prosecution relied on a single eye-witness—a man who later said he lied on the stand about Graves' involvement.

GRAVES: If you find out information later on in your case, and you try to present it, there are all kinds of technicalities to stop the courts from reviewing it. And this is your life.

BRANCACCIO: After six appeals Graves has now been granted a new trial. And for Graves, that's very good news, indeed. But how is it that this man spent 12 years of his life, awaiting execution, on what now appears to many as extraordinarily thin evidence. It's a case that raises uncomfortable questions about the standards we use to impose the ultimate penalty.

It began here. 1992, Summerville, Texas. In a house that used to sit on this lot. Six members of the Davis family were murdered. A grandmother, a teenager and four other children. The victims' bodies covered in gasoline and set on fire.

At the funeral, a man named Robert Carter showed up with burns all over his face. He was arrested and confessed to the crime. But the police believed he must have had an accomplice and they pressed him for another name: he gave them 'Anthony Graves.'

GREENWOOD: The State only had one witness to place him at the scene of the crime without any addition forensic evidence to link Anthony there, yet they stake this entire prosecution on an admitted liar.

BRANCACCIO: Roy greenwood had been trying to get Graves' off death row for nine years. He says carter had a strong motive to lie about Anthony Graves.

Carter's wife, " Cookie", was also considered a suspect in the murders. Carter would only testify against Graves if he was not questioned about his wife.

GREENWOOD: the only way he could protect his wife, Cookie, was to name somebody else as being a participant with him in the murders. In order to protect Cookie, he named Anthony.

BRANCACCIO: But after Graves conviction, carter did something surprising... he took it all back.

GREENWOOD: Anthony Graves is innocent, because the only person, Robert Carter, who said he was guilty, has recanted, taken back, admitted that all of those statements were lies,

BRANCACCIO: Carter told just about anyone who'd listen that Anthony Graves is innocent. He even said it on video for one of Anthony Graves' appeals.

CARTER on Video: "Anthony Graves did not have any part in the murders and was not present before, during or after I committed the multiple murders at the Davis home..."

BRANCACCIO: But at the time, carter had not been cross examined—a procedural misstep that prevented the courts from entering any of carter's recanted statements as evidence for Graves' appeal.

GREENWOOD: And even when Robert Carter was executed—on the day of his execution, before the press and God and everybody, his last statements before he was executed by the state of Texas were Anthony Graves didn't do it.

SEBESTA: There's no way I can sleep at night if I thought that Graves was innocent.

BRANCACCIO: Charles Sebesta was the district attorney who prosecuted Anthony Graves. Sebesta says that carter was telling the truth when he testified against Graves. And, he says, it was more than carter's testimony that convinced the jury.

SEBESTA: You could not take Robert Carter's testimony alone and build a case on that solely. I think you have other evidence that's supportive

BRANCACCIO: Sebesta says—not one piece of evidence alone would have led to Graves conviction—but taken together, he had a strong case.

At the trial, Sebesta had people testify that they overheard conversations in prison that incriminated Graves, and although no weapons were recovered, Sebesta showed the jury a copy of the alleged weapon that Graves was known to own.

SEBESTA: We presented them as a case and are comfortable with uh with what the jury found.

CASSAREZ: There is no fingerprint evidence, there's no forensic evidence, there's no DNA, there's no blood-stained clothing. There are not even any murder weapons. There's no physical evidence at all.

BRANCACCIO: Nicole Casarez is a lawyer and a journalism professor at the University of St. Thomas in Houston and has been following Graves case for years. Casarez is alarmed that Graves was convicted on what to her feels like thin evidence.

CASSAREZ: I mean, we're supposed to reserve the death penalty for the worst of the worst. And so you would think that, you know, the state's case needs to be air tight and solid, and not—you know—based on a house of cards.

BRANCACCIO: As part of a class she teaches—Casarez got several of her students to research Graves case.

MEGAN: It started out like a normal case. I mean, we didn't—it's not like we got the file and we said, "Oh my gosh, this guy's innocent." You know, we did the same thing that we did for every other case. We went through the list, then we went through the witnesses. And then, we just started investigating it. And, it just snowballed. .

BRANCACCIO: Casarez and her students spent hundreds of hours looking back into case and have raised significant questions about the evidence pointing to Anthony Graves' guilt.

But any new evidence the students uncover, can not be presented in court unless Graves' got that new trial.

MICHAEL: We're finding out evidence. And, it may not be seen in court. It may never be heard by anyone. But, it might bring to light the fact that there's innocent people on death row.

BRANCACCIO: One aspect of the case that initially stood out to the students was Graves whereabouts the night of the murders. Anthony Graves had an alibi witness. He says he was with his girlfriend, Yolanda Mathis, the entire night.

But the jury would never get to hear Yolanda's story. Right before Yolanda Mathis was supposed to testify, Sebesta let the court know that she was also considered a suspect in the crime.

SEBESTA: I simply stood up and said, Judge, I think it would probably be appropriate to warn Yolanda Mathis of her rights.

GREENWOOD: Well, it had been two years since the crime. And so, all of a sudden, Sabesta's telling the judge, we're going to indict her for being an active participant in this murder. Well, that's just shocking.

CASSAREZ: she said she was paralyzed with fear, and she left the courthouse. Did not testify.

GREENWOOD: It was a bluff! Which worked!

BRANCACCIO: Yolanda Mathis was never brought up on any charges, never questioned further about her supposed involvement in the crime.

In august, 1994, Anthony Graves was convicted and sentenced to death.

Fast forward 12 years... Anthony Graves has had a lot of time to think about the system that put him here...

GRAVES: We have a broken system, man. I don't care if you believe in the death pen—that is your business, that is between you and your God. But surely you can't believe that it's okay, that it's acceptable to start killing innocent people in our country simply because you want to believe in a system that is broken.

BRANCACCIO: At the time I spoke with Graves over a year ago, he was waiting for the ruling on his sixth appeal—what may had been his best and last chance to prove that he deserved a new trial.

GRAVES:—I—I just have a feeling that the judge is going to do the right thing. I have to have that.

BRANCACCIO: There are people who will watch you and say, but he's had full access to the criminal justice system. And justice system still believes that he's guilty. What is the answer to that?

GRAVES: Those are the people that really want us to believe in the criminal justice system. They don't want to believe that the criminal justice system is so fallible that an innocent man can go through a whole appeals process and still be executed.

BRANCACCIO: After 12 years on death row—Anthony Graves got the news. In a unanimous decision—the fifth circuit court of appeals ruled in his favor. It turns out, Charles Sebesta, the prosecutor, never gave the defense information that carter's wife, cookie may have been an active participant in the murders.

The court stated that Sebesta's actions were quote "misleading and a deliberate attempt to avoid disclosure of evidence of cookie's direct involvement."

That is suppression of evidence, and grounds for a new trial.

Just last September, Anthony Graves walked off death row. He was transferred to the county jail, to await his new trial.

Since then, Nicole Casarez, the journalism professor, has joined the team of lawyers working for Graves pro bono. As of today, no trial date has been set.

But for other inmates still on death row, challenges to their convictions are getting tougher. Congress has streamlined what it sees as the endless appeals of death-row cases. In the future, inmates like Anthony Graves' may not get as much time to appeal their case.

CASSAREZ: If we're going to have a death penalty, then there has to be a time when we can actually execute the person who's been convicted. But you can't have both. You can't have finality and perfect justice.

GRAVES: This system was designed by man. We're not infallible. We make mistakes. When a mistake has been made, the—the right thing to do is say there's a mistake made, let's correct it. I want to believe in my criminal justice system. I need to believe in it because if it actually works, then I'm going home.

BRANCACCIO: That's it for NOW. From New York, I'm David Brancaccio. See you next week.

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