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Young man working at Children's Village
7.26.02
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ANNOUNCER: You're watching NOW with Bill Moyers. With contributions from NPR news. This week on NOW...

MOYERS: What are two million Americans doing in off shore tax havens?

MAN: Live for one.

MOYERS: And why did the bankers fight so hard to stop the clean up the dirty money?

KEN RIJOCK: It's the golden cow. They will ensure that in one way or another, it will survive.

MOYERS: And why are these kids having trouble finding safe havens?

NAN DALE, DIRECTOR, CHILDREN'S VILLAGE: His mother was in prison. Here's another child, his mother threw hot grease at him.

MOYERS: NOW makes a visit to foster care's last resort.




MOYERS: Welcome to NOW.

We have two stories tonight that take us beyond the headlines about Wall Street and Washington.

They take us to opposite poles of the American experience.

Our first story is about privilege, and its abuses.

Our second is about pain, and its prevalence among the young.

Opposite poles, indeed, but they raise a singular question about America: what kind of country do we want this to be?

NOW producer Brian Myers prepared our first report.

DANIEL BULLOCK (IN CONGRESSIONAL HEARING): Now I realize there is a price to be paid for being an American. It’s called filling out a tax return, making sure it’s correct, and sending it in.

BILL MOYERS: Daniel Bullock learned that the hard way. His recent appearance before a Congressional panel investigating tax cheating was a brief respite from his normal routine these days—sitting in a federal prison in Atwater, California.

BULLOCK: People still believe, even though the law’s been around this way for a hundred years. "Hey, it’s my money that I earned with my labor, and I ought to be able to keep it."

MOYERS: Bullock was an successful orthopedic surgeon—even doing a stint as the senior physician for the U.S. Olympic cycling team, treating patients like Lance Armstrong. But, after a dispute with the IRS over some back taxes, he went looking for a way to hide the income he earned from his medical practice.

BULLOCK: I believe the lure to be, as it is for all people, and that is, a little bit of greed.

MOYERS: A friend introduced bullock to this man — Lonnie Crockett. Crockett is what’s known as a tax scheme promoter, someone who claims he can save you money by manipulating tax law.

Crockett told Bullock he could get out of paying income taxes. Part of the plan? Launder his earnings thru an off-shore bank account.

BULLOCK: What ended up being done was unlawfully evading taxes by sending money that should have been taxed in the United States off-shore and then bringing back.

DENNIS CRAWFORD, ACTING CHIEF IRS CRIMINAL INVESTIGATIONS: Basically, they take the money they’ve earned out of their left pocket with their left hand, it goes off-shore and it comes back into the right hand, they put it in their right hand pocket and spend it as they so choose.

MOYERS: The law is clear-using an off-shore bank account to hide income from the IRS is illegal. But, says the IRS, the use of such schemes is an epidemic. As many as two million Americans — most of them with incomes in the top 1% — may be hiding money overseas. The estimated cost to the U.S. Treasury? $70 billion a year.

Here's the IRS list of so-called "tax havens" — countries with banking secrecy laws that help tax cheaters hide their money from the prying eyes of law enforcement. It reads like a list of popular vacation destinations at your local travel agent. Antigua, The Bahamas, The Cayman Islands, Hong Kong, Panama, and Switzerland make the list, just to name a few. The Federal Reserve estimates that Americans have $800 billion in accounts in the Cayman Islands alone. Not all of that money is there illegally, but it's assumed that much of it is.

CRAWFORD: Many of our tax evasion schemes have an off-shore component because it makes it difficult for us to follow the paper trail. We believe those are the most egregious of tax evaders in some respects, because they’ve made our job very, very difficult.

MOYERS: So how is it that people like bullock send their money off-shore, and then get it back? In his case, he gave his money to the tax scheme promoter, Lonnie Crockett. Crockett put the money in an account here in America and then began a series of wire transfers.

BENJAMIN WAGNER, PROSECUTOR, DEPARTMENT OF JUSTICE: He would then route the money sort of around the loop, through foreign accounts and back in a sort of serpentine fashion back to a separate account, and in that fashion, it would be very difficult to follow the money. The money would wind up back in the control of the client who sent it, minus a fee of course, and then be free for them to use without having paid any taxes on it.

MOYERS: Bullock, and two friends, were able to move millions of dollars that way. But plain old cash smuggling — simply carrying money overseas — also remains a popular way to get money off-shore. That way, there's no record of wire transfers.

IRS AGENT (ON TAPE): You got $100,000 in here, and they’re $10,000 bundles.

MOYERS: You're listening to an undercover recording of a sting operation. At a diner in California's Central Valley, an IRS agent is meeting with a promoter of tax evasion schemes. This promoter often moves cash.

AGENT: I think we're all working towards the same thing here, and that's what's important.

MOYERS: The undercover agent is posing as the owner of a chain of fast food restaurants who wants to send money off-shore. Fast food generates a lot cash. The promoter has a name for the service he's selling...

PROMOTER (ON TAPE): I call it one word, 'Freedom.'

AGENT: There you go.

PROMOTER: There is a man who said without financial freedom, there is no freedom. If we've got an Internal Revenue Service, a Federal Reserve, there will be no freedom.

MOYERS: And at the deal's completion in the parking lot, where the hand off occurs, the agent and promoter even share a lighter moment.

AGENT: Given to Wayne, February 1st, as a donation to further the cause of freedom.

PROMOTER: Isn't that what it's for?

MOYERS: That promoter, his name is Wayne Anderson, was eventually arrested and convicted. The government estimates that his operation shipped $50 million off-shore before getting caught.

Benjamin Wagner is a prosecutor for the Department of Justice. He handled the Wayne Anderson case. He also had a hand in putting Daniel Bullock in jail. He says that tax cheats, like Bullock, increasingly fit a pattern.

WAGNER: They were people who either owned their own businesses, people who had a small practice, a lot of professional type people who were dentists, doctors, architects, consultants, people like that who had some degree of control over the way they steered their income.

MOYERS: The reason is simple, says Wagner. Unlike salaried workers, whose employers withhold taxes from their paychecks, professionals and small business owners report their own income to the government. In other words, the IRS has only their word for how much money they make. That make's it easy to skim money to send off-shore.

BOB MCINTYRE, CITIZENS FOR TAX JUSTICE: We have a mandatory tax system that works really well, and we have a voluntary one that works terrible.

MOYERS: Bob McIntyre runs Citizens for Tax Justice, a liberal watchdog group that studies tax revenues. He says leaving it up to small business owners to report their own income is one reason cheating is so widespread.

MCINTYRE: Small business people are supposed to file honestly and they don't. So voluntary doesn't work too well.

WAGNER: The vast majority of taxpayers are honest, good Americans who play by the rules. But it's surprising and shocking at the numbers of people, and people that you would think would know better, who are involved in these schemes.

MOYERS: But Wagner told us, simple greed alone can't explain why so many people like Daniel Bullock are now breaking the law. The urge to cheat on taxes is as old as...taxes. Nowadays, though, it's encouraged by marketing, advertising, and technology. All of which puts the once underground world of secret off-shore banking within easy reach of people who have the money...and the urge.

CRAWFORD: There definitely has been an increase in these schemes. And the Web has been a way for them to reach more individuals and really to promote and advertise their tax scam and scheme packages.

MOYERS: The IRS has identified many companies, and their Web sites, which it suspects of promoting tax evasion. Along with the smaller promoters, are the names of some of the world's biggest banks, names like Barclays, HSBC, and the Royal Bank of Canada. The IRS says they offer services that may enable tax evasion.

CRAWFORD: It's broad, and it indicates that a lot of the tax paying public have access to those accounts and are, in fact, being pursued to spend their money to buy a scheme like that.

MOYERS: This marketing of off-shore accounts directly to the public by banks isn't the only thing that worries the IRS. It's thought that big accounting firms also sell a whole array of questionable tax avoidance schemes to the wealthy.

MCINTYRE: The fault is, of course, for the tax evaders, but also the accounting firms. I mean, this stuff wouldn't happen unless you had advisors willing to do it. You know, the Mafia had lawyers and the rich people have accountants.

MOYERS: According to the IRS, the suspicious services are packaged under the banner of "Wealth Protection," or "Private Banking," and they promise "anonymity." But the one hook that always appears is an offer for a debit or ATM card — usually a Visa or Mastercard — which allows the user to withdraw the money from his account any time, anywhere in the world.

WAGNER: Using debit cards drawn on off-shore banks is a hugely popular way of repatriating tax evasion funds.

MOYERS: Where once it might take a series of wire transfers for a tax cheat to get his money back, now it's as simple as walking into the local bank.

WAGNER: The beauty of the debit card is you don't need any of that stuff. You have a card, and you can walk into an ATM and you have your money like that. So it's a very easy way of getting your money like that.

MOYERS: These debit cards also provide another benefit. Because the card is issued by an off-shore bank, there's no record of the transactions in a bank office here in the U.S. And what if the IRS tries to get the records from the bank off-shore?

CRAWFORD: By definition, it's going to be in a tax haven country with bank secrecy laws, or else there would not really be a reason to do it. They want to get it in a location where it's difficult for us to find it and to unravel their scheme.

MOYERS: Tax haven countries, he says, won't cooperate with the IRS.

CRAWFORD: If the money came from a tax evasion scheme, and not from some other illegal activity, then they simply refuse to share the records with us for tax purposes.

MOYERS: The IRS believes that what's called 'transparency' — breaking down this wall of secrecy and getting access to banking records in tax haven countries — would go along way to ending off-shore tax evasion. But tax haven nations have refused to play ball. So in the late nineties the united states joined with other industrial nations to try and crack down on offshore tax havens.

MCINTYRE: The United States and the European countries worked in the second half of the Clinton administration to try to crack down on some of the secrecy laws of these tax havens which facilitates the tax evasion by saying, 'Look, if you don't shape up, we are going to impose some sanctions on you.'

MOYERS: Thirty countries in all…members of the Organization for Economic Cooperation and Development, or OECD, thought they had a plan to get rid of dirty money. It involved transparency — forcing tax havens to start sharing bank and other information about suspicious accounts. It was a united front — until, suddenly, the Bush administration pulled out and the campaign came to a screeching halt. . .

A coalition of conservative think tanks and bankers had got to the White House. The agreement, they argued, would mean Americans wouldn't be free to take advantage of lower tax rates elsewhere in the world. Some powerful Republican politicians weighed in.

In this letter to Treasury Secretary Paul O'Neill, House Majority Leader Dick Armey says the agreement's stated goal of reducing tax evasion is a "red herring," and is an effort to establish, "a global tax police."

House Majority Whip Tom Delay also wrote Secretary O'Neill. He said the agreement and others like it are, "assaults on financial privacy."

The conservative think tank The Heritage Foundation also lobbied the administration. It said the agreement would be hypocritical, and would prevent foreigners from investing their money strongly in the United States — itself a very big tax haven.

DAN MITCHELL, SENIOR FELLOW, THE HERITAGE FOUNDATION: If you're a foreigner, you can invest your money in the U.S. and by and large, earn income tax free and not have it reported to our home government. And this has been a successful strategy for the American economy.

MOYERS: Mitchell says if the U.S. forces other countries to share financial records, Americans would have to abide by the same rules, and with that, all those foreign investors would pull their money out of America.

Pamela Olson says the Bush administration agrees with many of those criticisms of the OECD agreement — she's the Acting Assistant Secretary of the Treasury for Tax Policy. But, she says, although the us has pulled out of the OECD effort, Washington does intend to press for agreements on transparency - on getting countries to share information — one tax haven at a time.

PAMELA OLSON, ACTING ASSISTANT SECRETARY OF THE TREASURY FOR TAX POLICY: I think what we did was to strip off the parts of the project that were objectionable and that allowed the project to focus on what was really important. And what was really important was getting agreements with Caribbean countries and other tax haven countries to information exchange and transparency.

MOYERS: The U.S. has signed transparency agreements with several tax haven nations, but they don't take effect until 2004. Critics say this gives everybody — governments, tax cheats and their accountants — plenty of time to figure out other ways to foil the revenue agents.

KEN RIJOCK: Oh yes, from now on we're going to be fine. We'll tell you what you want. Meanwhile, I guarantee you that there are going to be many tax professionals in that jurisdiction who will be constructing alternative methods where by you still won't be able to get what you want.

MOYERS: When Ken Rijock talks about the underworld of tax havens, he knows wherein he speaks. The Caribbean was his second home.

RIJOCK: When I was involved in money laundering activities, I would sit out in one of these tax haven restaurants, having done my illicit work, I used to wonder when are the Marines going to land? When are they going to close these institutions?

MOYERS: Rijock was once a big time money launderer, hiding millions on behalf of his clients. Now, he advises law enforcement agencies. The economies of these tax haven countries, he says, have made dirty money a growth industry.

RIJOCK: What the off-shore laws allow is the creation of an entire class of financial service professionals. It's the golden cow. They will ensure that in one way or another, it will survive.

MOYERS: What's needed, he says, is tough prosecution.

RIJOCK: The only way the tax havens will go away tomorrow is if our government finally decides to arrest the presidents of those tax haven banks, try them in federal court in Miami, and close them down.

MOYERS: Rijock says, until there is real reform, the clever people will keep laughing all the way to the off-shore bank.

AGENT: Given to Wayne, February 1st as a donation to 'Freedom.'

PROMOTER: Isn't that what it's for? (BIG LAUGH)




MOYERS: A wonderful thing, freedom. I, too, confess to loving freedom more than taxes, which puts me squarely in the majority. But the last time I looked, freedom wasn't cheap. Purchased in blood, it requires taxes to sustain - the common defense, domestic tranquility, the general welfare; you find it right there in the constitution. The problem is, if you skip out on paying your share of living in a free society, the rest of us have to make up the difference. That makes me mad.

My granddaughter Nancy found the words for it the other day when her two older brothers decided to go out and exercise their freedom instead of cleaning up the playroom with her. "It's not fair," she said. Case closed. This applies as well to those corporate tax havens we told you about last week. We heard from a lot of you after that report. Here are excerpts from some of your letters:

"Very little attention is given to the fact that the higher the taxes on a corporation, the lower the profit, and the less job opportunities they can offer to an educated, trained worker like myself. [could cut the rest] When I have worked for big corporations I had to pay income tax, so did by bosses, and so did the owners."-Dave Bills

MOYERS: But Clare Worthing was much less sympathetic....

"If the names of the corporations that are avoiding the payment of taxes by using such questionable "dodges" were printed for all to see, I bet I wouldn't be the only one to stop purchasing their products. And they would get THAT message fast." --Claire Worthing

MOYERS: And there was this response from Dan Eckham:

"I believe it's misguided to expect capital to attend to something as abstract as civic duty. Capital follows its own interests. It's up to the public, through the apparatus of government, to make sure…corporations serve the public interest at the same time as they feed themselves." --Dan Eckham

MOYERS: Barbara Ray suggested positive reinforcement:

"I think the nation would greatly benefit if the President and Congress would annually hold an honors banquet for the 100 individuals and 100 corporations who paid the most taxes in the past year. This event would offer publicity, honor, access and influence to those who actually do the most for the common good through generous payment of taxes…"--Barbara Ray

MOYERS: And then there was this, from a viewer with the e-mail name barryj:

"Let's get real. We all have tax breaks. I live in a house and deduct my home mortgage interest. Does that make me un-American? No. That's human nature." -- Barry J

BILL MOYERS: Maybe so. But with all due respect, barryj, I think that begs the question — off shore tax havens mean you have to pay for what I can hide. This is what puzzles me about patriots who pledge allegiance to the flag - one nation under God...All that...And turn around to defend tax havens as a God-given right.

TIME magazine blew the cover of this in a brilliant expose last fall by Donald Bartlett and James Steele. Looking into why the Bush administration queered the international effort to clean up dirty money, they found that it wasn't just ideologues who pressed their case on the President; it was influential bankers — including some of the President's banking friends from Texas. It had nothing to do with principle and everything to do with profit; they didn't want to lose any lucrative business from people evading taxes or law.

As for fairness, well, you may want to know that the Internal Revenue Service has been cutting back on audits of people earning over one hundred thousand dollars. Those audits hit an all-time low last year, while audits of people at the low end of the totem poll increased by almost 50%.




ANNOUNCER: Now a look at stories coming up on NPR radio this weekend.

SCOTT SIMON: I'm Scott Simon, join us on the radio tomorrow morning, for Weekend Edition from NPR news.

We'll try to ride over the peaks and valleys of a volatile economy, we'll remember the spy who defected, Edward Lee Howard.

We'll sing along with the Japanese pop group PuffyAmiYumi.

And we'll look at this new generation of exploitation films.

Come to our Web site, npr.org.



MOYERS: We go now to the other end of the spectrum, to where the political process isn't working the way it works for corporations.

By all accounts foster care is a mess. The number of kids in the system has doubled in the last decade. And hardly a month passes without another headline detailing some abuse or neglect. In fact, the very need for state care testifies to the breakdown of our social contract right down the line.

Family disorders, alcohol and drug addiction, mental illness, the whiplash of poverty. All these create chaos for people without the resources to cope.

A lot of them, including children, keep falling through the cracks. You'll meet some of those kids now - and some valiant people doing their best to help them.

Extraordinary access was given to my colleague at NOW, Kathleen Hughes to report this story.

KATHLEEN HUGHES: This is Children's Village, home to 300 of the most troubled boys you're ever likely to meet.

SHAWN: It' s hard for me to accept the fact of being in confinement. That's what I call this. You know, it's like a jail with no walls and no gates and nothing. So, kind of, it gets to you, 'cause you got to be here against your own will. But you might as well make the best of the situation. You know.

HUGHES: It's called a residential treatment center. But it's more akin to a combination, group foster home, juvenile detention facility and psychiatric hospital. Twenty miles north of New York City, it serves boys as old as 18 and as young as 5.

NAN DALE, DIRECTOR, CHILDREN'S VILLAGE: His mother was in prison. Here's another child, his mother threw hot grease at him.

HUGHES: Nan Dale is the director of Children's Village.

NAN DALE: Repeatedly and sexually abused by his father... Recurring sexual abuse by a neighbor.

HUGHES: She has a case file on every boy here.

NAN DALE: Physical abuse with a belt and a cable wire...beaten on the shin with a frying pan. Large permanent scars.

HUGHES: Their stories suggest why it's so difficult for them in the outside world.

NAN DALE: Obstinate, aggressive, destructive, throws things. Bites other people, bites and shreds his own clothes and bed sheets when angry.

He was in another foster home and another foster home. Five to ten foster homes ... 15 foster homes, and each requesting that he be removed.

HUGHES: In the last decade, as psychiatric hospitals have closed and as other mental health services have been trimmed — more kids with bigger problems are finding their way to places like Children's Village.

This is a rare inside look at the extremely difficult task of healing these troubled kids and preparing them for life on the outside we spent several weeks in the spring following two boys. 16 year old Louis....

LOUIS: The reason I got placed here is because I got into a fight with one of the foster parents.

HUGHES: And Shawn. He' s also 16.

SHAWN: I remember when five years old, probably about as far back as I could remember. I remember me and my dad. I remember my birthday party and stuff like that.

HUGHES: Shawn has been here for nearly eight years — longer than most. Removed from his parents' custody when he was very young, he has little contact with his mother...

SHAWN: I have no respect for her 'cause she never had it for me. I don't look at her as my mother.

HUGHES: And hardly knows his father....

HUGHES (ADDRESSING SHAWN): Do you remember when you stopped seeing your father?

SHAWN: It's not that I stopped. He went to jail.

HUGHES: Shawn lives with 15 other boys in one of 22 houses on the grounds at Children's Village... Each house is supervised at all times by two adults child-care workers.

A nurse comes to distribute medication three times a day....

WORKER CALLING: Sean!

HUGHES: At any given time, about forty percent of the boys here are taking some sort of medication for psychiatric problems.

MAN: Sean, come on.

NURSE: Shawn. Hi, Sean. How are you?

HUGHES: This morning he refuses his meds.

SHAWN: Refuse.

NURSE: Refusing today? You wanna explain? Sump'n goin' on?

SHAWN: No. Just, I been sleepin' in class. That's why I don't wanna take it no more. Because I failed my classes.

NURSE: Because, what?

SHAWN: I failed my classes. I failed four classes.

HUGHES: Shawn has refused before. And at least once, he spun so far out of control he needed to be hospitalized.

SHAWN: I'm on meds. Okay. Try to come and hit me. I will react. I wouldn't react. I would just, like, look at him and then I will think. You know. But if I was off meds, I would react and I would probably punch the kid's lights out. But still, that's no reason put me on medicine. You know what I'm saying?

NURSE: It's really important that you take it on a daily basis, because when you don't take it on a daily basis, uh, you have some peaks and troughs.

NURSE: What do you feel the medication does?

SHAWN: Knocks me out.

NURSE: It knocks you out? Okay. Well, I think it would be a good idea to take this to the team. Okay?

SHAWN: Mm-hm.

NURSE: To the doctor, psychiatrist. You need to talk about it.

SHAWN: I've been taking care of myself since I was little, and I'm continue doing that. So, only me would know ..... only I know what's best for me. Nobody else knows. You know. So, everybody else can just pluck off.

HUGHES: Louis seems to be one of the busiest teenagers here. Most mornings he' s had breakfast and is out the door by the time the 15 other boys in his house are just waking up.

There's barely a program here he's not a part of ... Piano lessons

LOUIS: A lifeguard. I do mountain biking. I rock climb. I go running in the morning. Bang on my chest, if you think I'm perfect.

HUGHES: This morning it's rehearsal for the upcoming performance of the high school play, The Wizard Of Oz.

LOUIS: The Tin Smith. The Tin Smith forgot to give me a heart.

CHORUS: No heart?

LOUIS: No heart (Music).

HUGHES: Louis hopes his participation in all these extra-curriculars will convince his counselors that he's stable enough to achieve a goal he's set for himself-to leave Children's Village for a less restrictive setting.

LOUIS: My long-time goal would be independent living, and my short-time goal would be group home. So, I was up for adoption but not anymore because of my age. I mean, no one really wants a 16-year-old going on 17-year-old to get adopted. I mean.

HUGHES: Louis has been here for nearly a year and a half. Before that he traveled a long road — he lived with several foster families and says he spent time in at least one psychiatric hospital. Children's Village is the last hope. If it doesn't help him, there are consequences not just for Louis, but for society.

NAN DALE: If I were spending the public's money and I were to triage who are the young people today who are most likely to become a ward of the state as adults. Most likely to live a life of misery and anguish. Most likely to be in the criminal justice system and cost society a lot of dollars in the future, it would be the kids who are in residential treatment centers.

LOUIS: (Sings "If I Only Had A Heart") (Applause)

HUGHES: Louis has little memory of his biological family.

LOUIS: When I was six, I was taken away from them. So, their rights were terminated, and my father went elsewhere, and from what I understand, my mother's somewhere in the Bronx. So, you know, I don't have contact with her, and I really don't know what she looks like. But there's ... it's life .

HUGHES: Louis takes piano lessons at he public high school here. Children's Village also has a middle and an elementary school. All the schools have small, special ed classes tailored to the individual needs of the students.

SANDY STRANG, PRINCIPAL, CHILDREN'S VILLAGE HIGH SCHOOL: They deserve to be exposed to all these things, because a lot of children aren't going to go on to college, and this is their education for the rest of their life.

HUGHES: Sandy Strang is the principal of the high school.

SANDY STRANG: We're gonna send them out in the world, and we have to give them, you know, just all the things that we all should have that we've read.

HUGHES: Louis is one of a handful of students who have the potential to go onto higher education. That doesn't mean he doesn't belong here, at least for now.

SANDY STRANG: The kids that look better on the surface are often the most disturbed kids. And when they go off, they're the most frightening. The ones that curse are often probably the more put together kids because they just kind of let it off in that minute curse word.

HUGHES (ADDRESSING STRANG): And the ones who are holding it back ...

SANDY STRANG: Back. They're the ones who are really frightening when they lose it. And they have ... they just ... you know, they're almost afraid to ever let their emotions out. So, they're bottling them all up all the time.

HUGHES: Some of the boys are grouped in houses based on their problems. For instance there's a house for those who've been sexually abused and who have become abusers themselves…there's another for boys deemed to have the most extreme emotional or behavioral problems. There's also a new crisis residence, a short term psychiatric hospital where a kid can ride out a storm.

But most of the houses here are for kids like Louis.

NAN DALE: we have become the children's psychiatric hospital of the past. These are children who in prior years would be in long term psychiatric care.

DANIEL MELNICK, Ph.D: People...here everybody had the same impression that which is that he's upstanding young man, which he is, um, and why exactly does he need to be in residential foster care?

And then you look into the history a little bit, and you see that he's had multiple placements, multiple times he's been in other RTCs, and he's been in a number of foster homes. And, uh, things didn't work out. And they seem to not work out in a similar pattern.

HUGHES: Lately, Louis' has developed a pattern of breaking the rules.

HUGHES: His counselors recently discovered that he signed himself out of children's village three Sundays in a row — without permission. When he was confronted, his temper flared so violently he needed to be restrained.

Now, on a Friday afternoon, he's suddenly missing again. He was supposed to be at a meeting with his social worker, Heather Wilson.

DANIEL MELNICK: Is he…?

HEATHER WILSON: No. He was last seen, um, at the Village Store and .....

HUGHES: If he doesn' show up, Louis risks losing the trust of his counselors. That could translate into fewer privileges and maybe an even longer stay at Children's Village.

That's not what Louis wants, and not what the child welfare bureaucracy wants either. It costs about 50,000 dollars per year to care for a kid at a residential treatment center like Children's Village. Education and medical costs run another 50 thousand or more…

Because it's so expensive, there is pressure to get kids out of residential treatment and into less expensive group homes or foster families. But Nan Dale points out: for many that isn't the solution.

NAN DALE: If a kid comes in, because they're severely mentally ill and has attempted suicide repeatedly, has set fires out of his anguish or rage, the question ought to be: Is he still setting fires? Is he still attempting suicide? Is he homicidal? Not: How quickly did I get him out of care. It's not that ... the discharge objective is irrelevant. It's very important. And having kids go to permanent, good homes in as quick a time as possible ought to be the public policy. But it has to be infused with the reality of who these kids are, what their background is, and what they need at this point in their lives.

SHAWN: Everybody on campus, they all know me, like my nickname is the man with many talents...cause I'm just like everywhere everywhere you turn, there goes Shawn, you know?

HUGHES: Two days after meeting with the medical team, Shawn voluntarily went back on his medication. The staff here say the decision demonstrates a growing maturity ... An understanding that he can be in control of his own well-being .. A crucial skill if he's ever to survive on the outside.

SHAWN: I've been doing this since I was five, four , five years old. I was always fascinated with art. Like, I like, um, Vincent Van Gogh. I love Goya. I love all different weird. I like weird type of art. Like, Keith Haring. I love his little characters with the big heads and small bodies and all of that.

HUGHES: Like Louis, Shawn has a goal. He wants to live in a group home in New York city. There he would finish high school and go on to study graphic design.

HUGHES: His counselors say his art has proven to be a valuable part of Shawn's therapy.

SHAWN: This, I always keep this, for no matter what. This, I drew this picture, and, so I could remember my best friend who passed away up here. Supposedly, he committed suicide. He killed himself. So, but I always, every time I look at this picture, it reminds me of him. He is, like, my best of best of friends.

HUGHES: Shawn came here when he was eight years old. By then he says, he'd already spent time in psychiatric care.

That's not unusual at Children's Village. In fact, the number of kids arriving here with such a history has tripled in the last decade.

But whether they've been in psychiatric treatment or not, one thing is certain. The youngest here are often the most disturbed.

NAN DALE: To be under 12 and be in residential treatment, you have to have been experience...such repeated trauma to be exhibiting behavior that is out of the ability of most foster parents to be able to handle.

BOY: Little.

BOY: Little.

TEACHER: What color?

BOY: A little red hen.

TEACHER: And what did she do?

BOY: Plant the seeds.

TEACHER: Not yet.

TEACHER: What did she have? She found a ...

BOY: She found a seed.

TEACHER: A grain.

TEACHER: A grain of?

TEACHER: Wheat.

BOY: A grain of wheat.

TEACHER: Wheat. Very good. Good job

HUGHES: Some of the elementary school children are working right at grade level .... Others have experienced huge gaps in their education and many suffer from neurological and other learning disorders. Still, all are subject to state exams.

JENNIFER SIKORYAK: In just my nine years, I'm not exaggerating when I say, I've had at least five students who have had their parents murdered. The majority of them witnessed it

HUGHES: Jennifer Sikoryak is the head teacher.

JENNIFER SIKORYAK: How are you supposed to focus on state tests and competing with everybody else and say, "Well, gee, this makes my life, whether I pass this test and do well or not."

BOY: Chapter One. Jason's nightmares come to life.

JENNIFER SIKORYAK: You have to keep those things in mind and then just know: How do I help a kid like this?

BOY: Jason lived in a big house on a hill alone because his mother and father died.

JENNIFER SIKORYAK: We explain to them that education's the only thing nobody can ever take away from you. Everything else you can move. Nobody can take your knowledge away from you.

BOY: I wonder when I die who's going to take my place and protect my mom, sisters and family. Who's going to be the big brother of two lovable little sisters? Who's going to bring my family back to together when they fall apart?

HUGHES: The fifth graders have been writing stories since the beginning of the year.

BOY: There was once a boy who had a boxing tournament. It was the last match. Teenage mutant versus punch. .

BOY: He was the fastest puncher on earth

HUGHES: Readings have become a special event.

BOY: That's my hobby, I read and write.

HUGHES: And it's a hobby? That's great. What kind of things do you read?

BOY: I read books, comic books. I read magazines. Signs. Cards. Picture cards. Anything.

BOY: About the author. Deshawn was ... Deshawn has published a lot of children's books about scary monsters. At the age of ten, Deshawn is still writing books. Deshawn enjoys writing, drawing and scary stories.

HUGHES: Deshawn's books are almost famous. He has, what? a wife and two children and a BMW car. What color is your car?

BOY: Blue.

HUGHES: And what's your wife's name?

BOY: I can't tell you that.

JENNIFER SIKORYAK: Sometimes when you're unable to intervene and the time out doesn't work, the students are physically acting out, and they are going to hurt themselves, they're going to hurt someone else, seriously going to destroy property, you know, throwing computers, and it's, when they're at that level, it's severe, and they do need to be held. We try and do it in the room like this.

This is our padded room. We refer to it as our crisis room or time-out room or safe. Even if they hit the wall, if they bang it into it a little, they knock teachers over. I mean, the struggle, you wouldn't think that you, you know, it's a little child. How hard is it to restrain?

The little ones are very difficult to restrain, because they're so wiry. They have a low center of gravity. Quite honestly, the most injuries that happen during a restraint would be a teacher. You end up getting down on the ground. You're still holding him and talking to him.

And that's how, I said, you end up in a position where, more often than not, you're sitting there, and you're basically just holding this child in your lap and rocking him and talking to him and then they'll start crying. And after that, then, what happens is that child, who is just trashing the room, just cursing me every vile way possible and my whole entire family, he sits there, and he cries, "I want my mommy." And then it hits you. And it's just so profound. And you realize that these kids are missing so much. and they're not bad. They're just hurting terribly and don't know what to do about it.

ARON MYERS: I didn't have other options... and I was 13.

HUGHES: Aron Myers, now 31, is an alumnus of Children's Village. With a master's in social work he's returned here to care for children whose stories he knows all too well.

ARON MYERS: I was born, um, cocaine-addicted, and, so, I was an extremely hyper child, you know, Ritalin, the whole nine yards. Both my parents, significant drug-addiction issues, and, you know, lived in ... seen it in my face, you know, and significant mental illness on ... on ... on one side of the family. And, um, you know, to see one of your guardians talking to trees and having to go to school and, you know, one of my parents literally tried to kill themself 18 times before it actually happened.

And I had to live that each time it happened, and, so, again, we're talking about going to school in a neighborhood with kids who knew that last night your mom was on the train tracks or your mom was, you know, trying to jump out of a building. And this is real. And going to school with kids who knew that that was your mother. And riding the school bus and, you know, and, so, naturally, fights happened. And all of a sudden, you become this bad kid…. You know. And, so, schools say that he's not educatable. And then he's in special ed. And you know that he's behind in his schoolwork, behind in grade, when what's really happening her is that there's a response to circumstances.

There he is.

HUGHES: On the afternoon he went missing, Louis did make it back for his appointment with his counselor. Turns out he was only half an hour late, side-tracked on his way back from school. Still, the more he breaks the rules, the longer he may have to stay here.

HEATHER WILSON: I got your note. And I respect you not wanting to talk about it. But what I would like to talk about is why you don't want to talk about it.

LOUIS: I know that I was wrong or whatever for what I did. And I didn't think there was anything else that should happen to talk about.

HEATHER WILSON: Yeah. I mean, I can understand not wanting to talk about something. But sometimes people are afraid to talk about an issue or are just really reluctant to.

LOUIS: Maybe ... maybe it could be that ... that I am scared. Or maybe it could be that ... that, you know, that you're a new social worker.

HUGHES: Historically, Louis has had a hard time trusting anyone. Until he can open up and talk about what ' s really bothering him ... His therapy stalls...

HEATHER WILSON: Constantly, you know, work to gain their trust and to work with them and to show them that you will be a consistent adult role model. When I began here, the first thing just about all the boys said to me was, "When are you leaving? How long are you staying?" Because there's a big turnover for social workers.

HUGHES: The big turnover hurts kids who desperately need a continuous adult presence in their lives...and seldom if ever have had one.

LOUIS: But there's just certain people who have that authority in them to .... to be able to, you know, give me consequences. You know. I'm also able to speak to other people, really not you, because you're new. But, like, other people who I have a good relationship with. You know...

HEATHER WILSON: I know that you're reluctant to come. But as you know, I mean, we've had a couple of times we've met, and you've just said, "I don't have much to talk about." And we meet for ten minutes. And that's okay. But it's important that we see that you start making the effort to come. So, that's what we definitely need to work on. Which you've been doing better at.

LOUIS: Try.

HEATHER WILSON: All we ask.

HUGHES: Each social workers carries an average of 16 to 20 cases. And it's no secret that they have a hard time keeping up.

When the top salary is a scant $35,000 a year, it's hard to hold on to them. In New York state the turnover was 36 percent last year.

NAN DALE: The work-force crisis in this field is going to destroy the potential for us to do what we know what we need to do for these kids.

HUGHES: Most of their funding comes from the government, but Children's Village raises private money to supplement its budget. It uses it to fund innovative programs which have become national models. One is called WAY, which stands for work appreciation for youth. The way program allows boys to earn the right to make money in a variety of jobs — everything from operating a greenhouse to repairing computers to running a snack shop.

NAN DALE: No amount of mental health services that we deliver, no matter how good our clinical work is going to last an hour when they leave here, if they can't hold a job, and if they don't have a good, solid education. Those two things are the most important things we do.

HUGHES: Three afternoons a week Shawn cuts hair at the campus barber shop. He apprentices with a licensed barber. After 1000 hours, he'll be eligible for a New York license.

Louis trains service dogs in the way program. He life-guards and earns 14.00 an hour at a local public pool during the summer.

ARON MYERS: WAY Program is the thing that turned my life around for me, because it said to me that: You have value. Only I had been told so many times that, you know, "What are we going to do with him?" You know. "I can't take this child any longer." That I had internalized that I was bad. And I think that the WAY Program helped me switch that, you know, the focus, you know, I'm not so bad. I can get a job. I can earn money. I can save. I can go to college.

HUGHES: The boys can qualify for a scholarship to vocational school or even college. But . There's more to it than that. WAY continues to track them even after they leave Children's Village.

ARON MYERS: And we have been one of the big advocates of saying that even after you leave us, you know, we're going to follow you for five years or six years and-- and then we call that aftercare.

HUGHES: It worked for Aron Myers. He had a way mentor who stuck by throughout his college years.

ARON MYERS: When I felt like I couldn't make it anymore, I talked to my away counselor. And when I was acting like I wasn't gonna make it anymore, my away counselor found themselves at the school that I was. They even flew all the way out to Buffalo, my away counselor, on three separate occasions to check on me.

HUGHES: It costs Children's Village about 3,000 dollars a year to track a boy who leaves the system. But Myers believes the long-term follow up is worth it.

ARON MYERS: You know, the system would say, "Well, they're 21, and they need to go out and live in the world." Um, however, the most troubled children, um, when they're 21, has to go and navigate the rest of the world, and that's okay. When we realize that the least troubled children in our society don't leave home at 21 and say, "Everything's okay." They call home. They run up the credit-card bill. They flunk out of school. Mommy helps them find a job. Mom ... moms and dads are there, because that's what they're supposed to be.

RAY THOMAS, ASSISTANT DIRECTOR OF THE WAY PROGRAM: I got a call one day. One of the teachers said, "Oh, you guys are over here selling diaries? How can I get some more of those diaries." I'm, like, "What do you mean, diaries?"

HUGHES: Ray Thomas is the assistant director of the WAY program.

RAY THOMAS: Found out that Shawn had went into the employment office when no one was there, took a bunch of the diaries and was over selling them over at the school for three bucks a piece. And, you know, teachers unknowingly, you know, and staff were, you know, buying them up, you know, because Shawn like is a great, you know, salesman and entrepreneur.

And here's some of the items in question. These are some of the diaries. And see, they're ... they're pretty nice. They were donated, uh, through Hallmark, and we had them in the tore, and they were sitting there for a long period of time. And they weren't moving. So, Shawn and those guys took the opportunity. You can see here. They priced them for three bucks. And they actually were selling very well. Like I said, the guys made a lotta money off of them.

So, what I had him do at that particular point was to sit down, write an essay as to why we shouldn't report this to, you know, the authorities, because we want these guys to know that things like that, you know, we will call, you know, the Police Department and, you know, proceed, you know, as need be. So, Shawn came up with a nice little, um, package that he presented to us of how we could sell it to him, and what he would do is give us ten percent of the profits. And what I told him is that ten percent would not do, that it would have to be a 50-50 split. So, it just goes to show you, you know, this guy, like I said, he's an extremely talented kid, and actually had made, I think it was, 40 or 50 bucks in the span of two

SHAWN: Two dollars and ...

RAY THOMAS: In ... in 20 minutes. And we had that stuff sitting there in the store for I don't know how many years and couldn't move any of it. And you know, one of the things that, you know, I'm trying to teach Shawn is to use his talents, to, you know, make money.

HUGHES: Staff members like Ray Thomas are always working to make up for the parental guidance most of these kids lack. But there are 170 other boys in the way program-all of whom demand a tremendous amount of attention.

ARON MYERS: What we have not done is made the real investment. We, you know, we come short, and what's interesting is, we know what it takes. I mean, there's tons of studies out there that says, "We know how much staffing is really needed. We know what the quality of social work. We know that social workers should have low case loads, so they could do intensive work. You know. We are a very smart society. And we've done the work.

But we tend to, you know, ignore. We know pay now or pay later.

HUGHES: In recent months, Shawn has been re-united with someone who'd become a complete stranger to him-his father. They meet every other Wednesday.

LOUIS (SHAWN'S FATHER): How you been?

SHAWN: I'm all right. You know. Workin'. I been doin' that little business they gave me finally with our sell. Go around and sell some items.

HUGHES: Shawn's father is 32 years old…he was recently released from Attica State Prison. As part of his parole, he is living in a residential drug treatment center. Both his and Shawn's counselors agreed it would benefit them to get to know one and other.

SHAWN: You know, yeah. See, that picture. That's me when I first came here. You know. I was seven or six. I was ...

LOUIS (SHAWN'S FATHER): Me and his mother. we was parents, was only 14 years old. We wasn't really parents. We was kids having kids. You know. And we didn't know what was responsibilities or none of that. You know. So, actually, it didn't really hurt me or bother me until I started growing up. Started realizing, yo! that's my son out there. You know. Boom.

SHAWN: We don't look at each other like I'm his son. He's my father. He's the adult. We just look at each other as both men.

LOUIS (SHAWN'S FATHER): Now I'm not going to go out till my birthday.

SHAWN: When it's your birthday?

LOUIS (SHAWN'S FATHER): May 11th.

SHAWN: They tell me about the do sun like achieve something so good that before you get to, like, that line, that's when all hell breaks loose. That's when ... you're gonna be tempted. You know.

LOUIS (SHAWN'S FATHER): Well, you don't do ...like so long that when you start succeeding, you scared of that ...scared of success. You know what I'm saying? Then you start falling back. And everything ... once you get to that edge, you just fall right back down. Happened to me a lot.

SHAWN: Happens to me a lot, too, man.

HUGHES: Like Shawn, his father lives under a strict set of rules ...The trip back to his rehab program takes three hours. If he 's late may violate his parole.

LOUIS (SHAWN'S FATHER): One thing that I keep saying to myself is: I understand that I'm Sean's father. But what I don't understand. Why he love me the way he does when I've never been there.

I rather have him see me as a friend. And work our say to father and sonship.

NAN DALE: What keeps me in this field is that it's the most hopeful work I think anywhere. People often ask me, "Isn't this work depressing?" And it is exactly the opposite. that you get to — that kids, to whom so much has been done really do have within them this reservoir of hope, of wanting to — wanting to have their lives different. That's, that's pretty hopeful stuff.

MAN: Good morning, everybody.

And we want you to show a lot of enthusiasm for the staff and for the cast who worked incredibly hard on this every morning. Now, right now, a nice big round of applause for "The Wizard Of Oz." Enjoy yourself (Applause).

HUGHES: For the time-being Louis' hopes of living in a group home have been dashed. His counselors feel he won't be ready to move on until he can be trusted and...He learns to trust others.

Shawn on the other hand, recently got the news he wanted to hear. This fall, after nearly eight years at Children's Village, he will be released to a less restrictive setting-a group foster home. Supervisors there will need to encourage him to take his medication. The best news for Shawn is the local high school has a strong art program.




MOYERS: Earlier this week, President and Mrs. Bush and actor Bruce Willis teamed up at the White House to urge more people to adopt foster children, including older kids.

And the President announced a new web site to match potential parents with foster kids nationwide.

Take a look at it on pbs.Org.

This kind of attention is a good thing, of course, because what these kids need is a safe haven, not a tax haven.

You have to wonder what would happen if the powers that be were as determined to make the system work for America's poorest as they do for America's richest.

But recently the House of Representatives decided against an extra billion dollars for abused and neglected children, then turned around and voted for more than $7 billion in tax cuts to 16 large corporations.

The President's own big tax cut will provide almost half a trillion dollars over this decade to individuals whose incomes average over a million dollars a year.

Half a trillion dollars to just 1% of the population.

It seems the most generous tax haven of all turns out to be right there in the nation's capital.

That's it for NOW. I'm Bill Moyers.

While you head for pbs.org, we'll leave you with the music of Rosemary Clooney, who died a few weeks ago after a long career as one of America's most popular singers.

Here's the last song I heard her sing on NPR's FRESH AIR WITH TERRY GROSS.

Here is "God Bless the Child."

"THEM THAT'S GOT SHALL GET
THEM THAT'S NOT SHALL LOSE
SO THE BIBLE SAYS
AND IT STILL IS NEWS
MAMA MAY HAVE
AND PAPA MAY HAVE
BUT GOD BLESS THE CHILD THAT'S GOT HIS OWN
THAT'S GOT HIS OWN"




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