Kerry and Kay Danes were incarcerated in separate sections of mixed-sex Phonthong Prison, known as the 'Foreigners Prison', near Vientiane. On Christmas Day, Kay reportedly told her mother by mobile phone: "Mum, I think by tomorrow I'll be dead." In May 2001, the Danes’ Sydney-based lawyer said Kay's psychological condition was deteriorating, and she had developed a bad toothache in need of treatment. However, Kerry was physically and mentally strong. The case against the Danes centred on the transfer of a small fortune ($AUD200,000)  to a Lao bank account in Kay Danes’ name. The transfer occurred about the time authorities alleged that finished and rough-cut sapphires worth millions of dollars disappeared from the office of a mining company that Danes provided security for. Soon after the Danes were detained, fugitive Bernie Jeppesen (GML) claimed that two dubious Australian characters (one notorious for money laundering and the other a disbarred lawyer) known as associates of murdered Melbourne lawyer/conman Max Green) were the main accusers against the Danes. In June 2001, a Lao court convicted both Kerry and Kay Danes of embezzlement, tax evasion and destruction of evidence, sentenced each to seven years imprisonment, and ordered them to pay fines and compensation of $AUD1.1 million. The Australian government intervened on their behalf, and the Danes had served less than a total of ten months in prison when provisionally released on 6 October 2001. Not yet permitted to leave the country, the Danes decamped at the residence of Australian ambassador to Laos, Jonathan Thwaites. Laos authorities returned cash seized from Kay Danes and bank account funds of almost $200,000 ordered frozen at the time of the Danes' arrest. However, it was expected that such monies would be used to pay fines and compensation. In large part due to Laos's strong ties with Australia, coupled with the fact that Kerry Danes was still enlisted as a full-time non-commissioned officer in the Australian Defence Force, the pair received a formal presidential pardon on 6 November 2001, which absolved them of their convictions. According to Australian Minister for Foreign Affairs Alexander Downer, the Danes were advised they were free to leave Laos and welcome to return at any time if they wished. The couple flew back to Australia, and Kerry Danes returned to military service. As a condition of release in October 2001, the Danes agreed to pay the June 2001 court-ordered $AUD1.1 million in fines and compensation in four equal instalments.