This action might not be possible to undo. Are you sure you want to continue?
For Release on Delivery Expected at 9:30 a.m. Monday April 24, 1989
Statement of Gene L. Dodaro General Management Issues General Government Division Before the Subcommittee on Crime, Committee on the Judiciary House of Representatives
SUMMARYOF STATEMENT The House Subcommittee on Crime asked GAO to identify opportunities to save time and money in the forfeiture and disposal process for assets seized from criminals. Forfeited cash and the proceeds from sales of forfeited property are used to help finance Justice's and Customs' seizure programs and provide additional funds to combat the drug problem and meet other federal needs. GAO identified several areas where action should be taken: Time could be saved if all uncontested cash seizures were forfeited administratively. At the end of 1988 about $400 Cash seizures million was undergoing forfeiture proceedings. However, in 89 over $100,000 must be forfeited judicially. no one claimed ownership of the percent of such forfeitures, of our money. Changing the law, along with implementation other recommendations, could shorten processing time from an Due process rights are not average of 13 months to 4 months. affected because contested seizures would continue to be resolved judicially.
Forfeited cash was not always promptly transferred from the holding accounts to the Asset Forfeiture Funds, where it can Of the $120.9 million in closed cases reviewed, $83 be spent. million (69 percent) was not transferred within 30 days of forfeiture. We judgementally used 30 days because it is a more than reasonable period to make a cash transfer between two Treasury accounts. The Attorney General and the Secretary of the Treasury should ensure that all cash is transferred to an Asset Forfeiture Fund within 30 days of a forfeiture order and within 7 days if the amount is above $100,000 because large amounts deserve priority. Agency officials agree these are desirable timeframes. Disposal of forfeited real estate continues to be timeconsuming and often unprofitable for the agencies. For example,~twelve properties in Florida with an initial value of $33.4 million realized $2.5 million, or 7 cents on the dollar. Justice personnel were not complyi,ng with agency pre-seizure planning requirements to find out through a title search how much equity the defendant had in the property and through appraisal how much the property was worth. Also, the title industry is reluctant to insure these properties. As a result, seized real properties are held for long periods of time. Where the defendant has low or nonexistent forfeitable interest in a property, Justice should establish a quick release policy to return the property to innocent co-owners or lienholders. Finally, the law should be changed to assure the title industry that the government guarantees clear title for
and Members of the Subcommittee: to be here today to discuss of Justice's our review processing if forfeitures of of
We are pleased Custom Service's seized request. could individuals' assets,
and the Department which was undertaken without rights.
at the Subcommittee's adversely affecting
The Subcommittee be processed faster due process
asked us to determine
A BILLION the government to take property, without forfeiture such as .
Forfeiture including cash, compensating can be handled
law allows that the owner.
has been illegally
used or acquired or less, agencies
In cases of $100,000 by the seizing
the Drug Enforcement Generally, cars, boats, this
and Customs Service. cases involving
is used on smaller types of property
such as jewelry all real Attorney are handled request
For amounts above $100,000 the cases are handled judicially cases or other Also,
by U.S. $100,000 involved
offices judicially it.
and the courts.
when the defendant
Identifying, traffickers federal Control
seizing, and organized to curb
and forfeiting crime figures such crime.
of drug of
has become a key part
The Comprehensive Crime
efforts Act of
and established and disposal of
Funds to finance assets.
The volume of cars, boats, importance managing
estate, the in properly Today, of
and airplanes of good internal
has increased controls seized
and disposing is a $1.1 since
and forfeited operation inventories
the program 3,200 million. percent
an increase were $33
Both the. Customs and Justice to finance custody liens program expenses and disposal and mortgages related with of seized
Funds are used in the care, payments for proceeds agencies are that of assets,
such as those and forfeited
and purchases to asset
of evidence/awards Forfeiture
information also shared
participated Funds not various with finance
in the seizures. used for program operations are used to finance enforcement. of its Justice, to
such as drug used part and for
Fund profits U.S. Attorney the prosecution
Customs is required of $15 million
by law to transfer at year-end into the
where the money can be used for
Additional is included
revenue in appendix
and expenditure I.
OBJECTIVE, SCOPE, AND METHODOLOGY By letter that The benefits made available
dated if of faster faster
the Subcommittee could are that be forfeited
requested faster. could be
forfeitures to fight (2) through seizure
the drug funds could
at federal, for
and local federal
be made available to Treasury's
programs and (3) growing
General be reduced
Fund Account, in processing
our work on cash and real chart, asset they
shown on the following of the seized represented
the largest property, inventory as
Cash and real billion
Red Property ($305 milliin)
Vehides, boats, planes ($131 million)
We also they take represent judicial cases, districts Middle District
focused than value
our review cases.
on judicial forfeitures
longer larger districts
Our work was done in the five dollar real
the highest cash and/or
in total These
in either were:
and Southern of Florida,
and Southern of California.
and the Central
Our review and forfeiting Treasury) Service, Division, interviewed
involved (Department U.S.
in seizing of the
and the Department (2) Drug Enforcement Executive judges with
of Justice's Administration, Office of U.S.
(3) Criminal Attorneys. We also cases.
and (4) four
We used both to identify and cases all closed
management pending the period judicial data
and forfeiture as of
case records through real property
seizures For detailed
December 15, 1988,
December 15, 1988. and cash seizures districts, extracted
in the five We steps the
we used uniform information
instruments. We selected both
such as dates and amount of value II for
when key processing
were done and type largest cases.
cases by dollar See appendix
and included cases reviewed.
open and closed
MOST CASH CAN BE FORFEITED FASTER As of December 1988, Justice
$362 million account
cash was in a Until used
the money is forfeited Funds, it is essentially federal, to finance
and transferred "frozen" -state, and local
to one of the Forfeiture that is, it cannot
'Another $30 million was either (1) in in financial institutions, (2) heid as proceeding, or (3) a recent seizure in determination as to evidentiary need in 5
interest-bearing accounts evidence for a criminal agency vaults awaiting a a criminal proceeding.
The amounts increased held; in July
of cash undergoing
proceedings million for to $129 million; a total
amount had increased $362 million,
by December, growth of
Our review that judicial forfeiture-at Justice. and
closed takes longer
showed longer 15
administrative and 4 months
at Customs judicial
and Justice while at both
respectively 8 months
forfeitures . .
How Long Does it Take to Forfeit Cash?
. Customa y
Judicial Administrative Justice 2' Judicial Administrative
Number L/ Fiscal / Fiscal years years
1981 through 1988 1986 through 1988
Our review will be forfeited the
shows that judicially
the cash pending no one analysis $123.9
forfeiture forward 1,125 to
even though For example, cases our
contest Justice disclosed About
forfeiture. most of ($101.6 proceeding.
and Customs closed that
the cash had been forfeited million) ($22.3 went through million) of
judicially. a judicial an
proceeding administrative judicially $100,000
and 18 percent
the money was forfeited that cash over
because of the legal must go through a judicial
As shown in the following judicially court. .That forfeited is,
89 percent in a default
of the judgement by the
cash resulted the forfeiture
Most Judicial Cash Forfeitures Were UllWfltested
Contested Amount ($11.2 million)
Amount ($90.4 million)
an average forfeitures,
13 months we believe of to and
to 8 months
administrative to allow
cash seizures In addition courts'
any amount quicker eliminate U.S.
to be forfeited uncontested Offices'
administratively. from district
of most cash seizures, cash seizures workload.
the change would
We discussed judicial agreed affected continue officials should
our proposal Due process
who handle of whom are not cases would agency or more Fund within .
forfeitures with it.
and Justice/Customs in law because judicially. cash seizures into wotld the take
attorneys--all contested Furthermore, of $100,000 Forfeiture steps
by the change to be resolved said
to deposit and they
days of goal.
needed to achieve
GAO RECOMMENDATIONS We recommend that
existing forfeit is:
law to allow uncontested cash
and Justice Specific For Customs, seized
to administratively language revise revise
is monetary 28 U.S.C.
instruments". 524(c) by adding
For Justice, language.
To ensure in a timely Congress that
manner and adequately
we recommend that
amend P.L. forfeiture
6072 and 7364 to require to Congress which include data on are not transferred
uncontested to the
days of seizure.
We recommend that the Treasury -Ensure for that,
the Attorney upon enactment
and the Secretary legislation, for
cash cases over forfeiture
have not had complaints are reviewed
the court forfeiture.
to administrative priority processing cash seizures
of uncontested over $100,000.
FORFEITED CASH SHOULD BE TRANSFERRED FASTER After the holding it available forfeiture, accounts for sharing cash should to the Forfeiture with state/local Justice should
from then is
Funds because only law enforcement and Customs take.
and federal on how long
spending. such transfers
As shown in the following closed of administrative and judicial
our examination revealed that of the Justice
the Customs money and 63 percent 9
switched days after
from holding forfeiture.
Lengthy administrative average of
transfer 102 days,
occurred forfeitures. cases
and in took an
Customs cases an average forfeiture was from
of 80 days. to over
For Customs, years
the range forfeiture; or 2.8 years
was from the day of for Justice the
Most Cash Not Transferred to Forfeiture Fund Within 30 Days After Forfeiture
30 days or less ($10.5 million)
More than 30 days ($373 million)
30 days or less ($27.4 miilion)
More than 30
We believe forfeiture
cash should that
promptly have other cases
We judgementally and 30 days for to transfer timeframes
used 7 days for cases under for
reasonable accounts. agreed these
two Treasury cash
Agency officials were reasonable
GAO RECOMMENDATION To ensure forfeitures General -that cash is transferred priority, of timely and large cash receive forfeited account forfeiture. -all other forfeited cash from the holding Funds within 30 days of account forfeiture. to the we recommend that the Attorney . thi Treasury transfer or more from the holding Funds within 7 days of Forfeiture
and the Secretary
cash of $100,000 to the Asset
PROCESSING OF REAL ESTATE SEIZURES NEED TO BE IMPROVED Real estate residences, complex Third-party resolved, under marinas, seizures farms, involving diverse properties such as are more and time-share time condominiums
and require interests and real state
more staff (lienholders properties
than do cash seizures. and co-owners) have to be and then sold title transfer.
must be maintained real property
Real Estate Inventory Increased Substantiallv As with complex backlogs. processing December properties 300 percent Justice's expect
Real Property Grow
cash seizures, of real estate
the number of years. seizures, real
seizures with to the
has grown dramatically nature
has contributed properties
The number of on-hand
undergoing to 1,883 of in these -a are in that
has grown from 209 in October 1988-- an 800 percent also custody. has grown increase. increase.
The value of the official in fiscal seizures
from $76 million all a Customs to double
to $305 million
Virtually However, inventory
10184 Growth from Octobw
10185 1984 to Decombmr
Justice $296.5 as of December 1986 Customs $6.2 million as of December 1988
Problems Identified In Prior GAO Reviews and Actions Taken In earlier the program's First, monitoring property, frequently returned Additionally, Second, forfeited clear defects buyers concerns time, market
was not always the forfeitable
promptly interest. than
identifying had in the Properties
and were being
the amount of equity that held, is, often for longer
the defendant year,
to the defendant unprofitable the title
or released properties
to lienholders. were forfeited. to insure to warrant for any title Because the the
industry The industry
property. title, arising normal13 requiring that is,
wanted Justice reimbursement of the
to guarantee processing insurance
from its need title
to obtain lengthened
a mortgage, processing lowered title
of the title
more documentation, if it
and at worst was sold without
of the property
our last Act
testimony, (Public of high
Congress Law 100-690). value
enacted This property
the 1988 Omnibus law strengthens
2Statements of Gene L. Dodaro on June 23, and September 25, 1987. See appendix III
March 4, 1988; full reference.
by requiring congressional
the reporting reports
in the forfeiture
programs. paid acting for
An additional with forfeiture process to help
$30 million profits these cases.
in personnel provided
resources to U.S. in and
Justice, now allows searches
on one of our earlier for legal services
recommendations, for the title
Finally, the Attorney forfeited the title quickly revenues. real
Justice General property.
is drafting to warrant This
legislation clear title
would allow of
change is designed and permit Justice and thus maximize
to alleviate to sell property forfeiture
industry's at its fair
Real Estate Continue property the Asset
We have updated
work and found continue because
real little to that
Our earlier net proceeds
work had disclosed
most seizures without
were unprofitable or (2)
the case was closed properties
were low or non-existent.
Our current essentially the
work has disclosed same. We examined
the situation cases, with
initial represent as well $1 million million, properties
inventory all as all or
million. (each for
These 69 cases we reviewed valued at were $5.4
in Texas in Florida
in the districts initially properties
or more). 12 cents accounted
Net proceeds on the dollar. for
of the 69 realized.
The remaining exclusive of
on the dollar--
Real Property Disposals Have Contributed Little to the Asset Forfeiture Funds
Does not it-duds indirect costs borne by agency appropriations sucfi es salaries of attorneys, Marshals, agents, etc. or present value of government financed sales.
Many of even when net properties properties
the properties proceeds
in inventory This is true sells for
periods forfeited as
both as well
the government are released-and effort
eventually either required
to an owner or lienholder. on real property seizures seizures
The amount of can be reduced entering
the number of better pre-seizure
the system through
Real Property Disposals Were in Inventory for Long Periods of Time
1 -I Less Ban 3 months m 3t06moruh.s 6tol2~bu 12 OD24 mon(hs I more &an 24 mend-is
in May 1988 had no defendant
was discovered initiated before
proceedings in February management in inventory. of $4.5
had been 1988--months totaled about costs
As of March
and the property Texas,
was still only
In Tomball, liens was identified which as of
$1.4 million seizure of
million of land.
in The in the
315 acres million, after
property, inventory There property initially December .our
was appraised December
remained seizure. on real
months for the
are several seizures. valued 1988. -= at
low return all
we reviewed or more which illustrates 7.5
were closed the results cents
as of of
The following'chart Net proceeds _ _I
represents - _
on the dollar.
- Why Low Net Proceeds Were Realizsd (Am&ii of Plorfda properties)
forfeited (before asset sharing)
lncfirect OX% and present value of govemement financed sales were not mnsidered in 3% analysis.
In Texas, generally and Dallas on property dollar. net low.
net proceeds We reviewed
to initial cases
in the Houston were realized on the of the netted
Districts. initially However,
Net proceeds valued one property at $12.5
or 23 cents $2.6 million of the
The remaining were released
56 properties to owners or
$323,000, properties, lienholders Fund. Florida economic
or 5 cents and did but
on the dollar. not generate
or 77 percent, contributing
any revenue real
to the Forfeiture were the same as in market due to estate
to the low return
were compounded by a soft in Texas.
Improvements The filing initiates property to U.S. (or review of the
Needed of the civil forfeiture into Office custody policies, reports professional
forfeiture (seized) before U.S.
complaint In most at that
the court the real According is filed
is taken Attorney agent
the complaint Attorney should
investigative (2) obtain
to ascertain appraisals
the legal of the
and (3) obtain such informational tax records. state seizure. that
of the wrongdoers as recorded Marshals also interest mortgage as well he this should Service advised
and state/local before
as agency policies determined
the forfeitable Agency officials
than 60 days after
Despite this worth
common agreement or more.
and importance, we reviewed policies U.S. the seizure the case
was not done before
in the properties with could
The established This which help
pre-seizure by the Assistant preempt
are good but Attorneys of worthless processing the property or a plant
they must be complied
to be effective. properties backlogs for
decision (e.g, etc.).
is made to seize. a "crack" house
law enforcement illegal
Some properties determination interest should third interest could establish parties, because
may be seized a thorough
an equity of the forfeitable We believe so that, when Justice
jeopardize a "quick
the investigation. release" could policy
properties is subsequently
such as lienholders, determined
when the forfeitable to be low or non-existent.
GAO RECOMMENDATIONS We recommend that -enact of Congress to amend civil guarantees process.
forfeiture clear title
law stating upon completion
We recommend the Attorney -Ensure normally filed. defendant jeopardize title that professional
General appraisals a complaint where and title for searches is of would and be
obtained In those
forfeiture analysis seizure
a thorough before
equity/forfeitable an investigation, should
be done within
60 days of seizure.
Consider civil of begin.
the estimated forfeiture be known before
forfeitable so that the judicial
complaints the case will
Establish properties be timely those
whereby forfeitable co-owners of their
encumbered could so interests.
(low or non-existent released to innocent can pursue recovery
interest) or lienholders vested
to key congressional
AGENCY COMMENTSON OUR RECOMMENDATIONS
Justice headquarters officials acknowledge that title
seizure. Also, both
need to be done
and Tampa U.S.
our recommendations. 20
the Miami U.S. cases nationwide)
has the most real
Drug Enforcement Customs Service all possible unless forfeiture not later seizure civil provided Justice clear is our (l)--the title
Administration, and the U.S. parties in seizure a delay than
Federal Marshals should could
Bureau of that be provided adversely
Investigation, a report before affect the should be as to
event, seizure. will of
30 days after said state they
propose authority forfeited
a technical to warrant property. 28 U.S.C. Forfeiture It 524 (C) Fund.
amendment to specifically to subsequent they
purchasers will propose
I would be pleased
to any questions.
I Key Financial Asset Forfeiture Data On Program Customs a/ (millions)$10.1 41.4
Receipts: Fiscal Fiscal Fiscal Fiscal Fiscal Year Year Year Year Year
1985 1986 1987
Justice (millions) $27.2
1988 1989 (est.)
Program Related Fiscal Fiscal Fiscal Fiscal . Fiscal Year 1985 Year 1986 Year 1987 Year 1988 Year
$ 2.4 42.8 114.4 160.6
7.5 17.5 8.2
Transfers for other Expenditures U.S. Treasury General $50.9 Fund (FY 1985-1988) Prison Construction $95.4 U.S. Attorneys $30.0 Holding Account as of 12/31/88 Balances
Amounts shared with state/local law enforcement agencies Fiscal Fiscal Fiscal Year 1986 Year 1987 Year 1988
$17.1 46.8 76.7 $4.9 6.2 11.2
a/Receipts and disbursements are understated because Customs gffsets expenses against proceeds before making deposits to the Forfeiture Fund. b/After FY87, Justice was no longer required surpluses to Treasury's General Fund. i-989 ~1~s
dmir,q fiscal ;lezr
II Scope of GAO Asset Department of Justice
Appendix Forfeiture Review and Customs Service
(millions) $86.5 21.4 $107.9
333 36 369
$41.7 39.9 81.6
Total Value # (millions) Cases
1318 62 1380 $128.2 61.3 $189.5
ma/ Indepthb_/ Totals
$ 18.8 102.0 $120.8 -
216 38 254
$ 18.8 107.2 126.0
a/Reviewed files to extract dates when key processing Ether data, such as type and amount of forfeiture. b/Reviewed all Facts of case, documents etc. in case file, discussions with
were done and on
APPENDIX III GAO REPORTS AND TESTIMONIES ON ASSET SEIZURES AND FORFEITURE 1. Statement of Gene L. Dodaro Before the Subcommittee on Federal Spending, Budget and Accounting, United States Senate, Asset Forfeiture Programs: Progress and Problems Statement of Gene L. Dodaro Before the Subcommittee on Crime, House of Representatives, on Asset Forfeiture Actions Underway Programs: Corrective But Additional Improvements Needed Justice and Customs Seized Conveyances: Correction of Previous Conveyance Manaoement Problems Statement of Gene L. Dodaro Before the Subcommittee on Federal Spending, Budget and Accounting, United States Senate, on Real Property Seizure and Disposal Program Improvements Needed Statement of Gene L. Dodaro Before the Subcommittee on Federal Spending, Budget and Accounting, United States Senate, on Asset Forfeiture Funds: Changes Needed to Enhance Congressional Oversight Statement of Gene L. Dodaro Before the Subcommittee on Federal Spending, Budget and Accounting, United States Senate, $ Millions in Seized Cash Can Be Deposited Faster Drug Enforcement Use of Forfeited Administration's Personal Pronertv
GAO/T-GGD-88-41 June 23, 1988
GAO/T-GGD-88-16 March 4, 1988
GAO/GGD-88-30 February 3, 1988 GAO/T-GGD-87-28 September 25, 1987
GAO/T-GGD-87-27 September 25, 1987
GAO/T-GGD-87-7 March 13, 1987
GAO/GGD-87-20 December 10, 1986 Statement April 3, 1986
Statement of Arnold P. Jones Before the Committee on the Budget, United States Senate, On Customs' Management of Seized and Forfeited Cars, Boats, and Planes Improved Management Processes Enhance Justice's ODerations Care and Disposal
GAO/GGD-86-12 March 14, 1986 GAO/PLRD-83-94 JLily 15, 1933 GAO/GGD-81-51 10, 1981 April
10. Better Boats, Benefit
Sho ti1d Sa;ie :Goney md
11. Asset Forfeiture - A Seldom Used Tool -L Combatting in Drug Trafficking
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.