A RESEARCH PROPOSAL REGARDING THE EFFECTS OF POLICY DEVELOPMENT ON ASSET FORFEITURE PROGRAMS AND PARTICIPATING AGENCIES

The observations, findings, opinions and point of view stated in this document are those of the authors only and do not necessarily represent the position, policies, or endorsements of the U.S. Department of Treasury and all related agencies, the Department of Justice and all related agencies, the Department of the Interior and all related agencies, the General Accounting Office, the Federal Law Enforcement Training Center, all state and local law enforcement agencies, and Troy State University.

This research product is in partial fulfillment of Criminal Justice 622, Administration of Justice Seminar.

The following is an account of a potential scenario based upon anecdotal contributions from law enforcement personnel.

The U.S. Customs Service ("Customs Service"), Office of Investigations has just assigned a newly promoted Group Supervisor to a manager's position in a drug task force operating at a large international airport. The supervisor has just returned from a luncheon hosted by the Customs Service in which several state and local law enforcement agencies were presented government checks for their participation in the Customs asset sharing program. During the luncheon the local United States Attorney and the Customs Service Assistant Commissioner (Investigations) praised the virtues of asset sharing and interagency cooperation.

Later, the new supervisor attends a meeting with the Assistant Commissioner and other local supervisors. The purpose of the meeting is to review the drug strategy plan for the international airport and associated objectives including productivity indicators. During the meeting, the Assistant Commissioner informs the supervisors of the Secretary of the Treasury's decision to use $5 million of the year-end surplus of the Treasury Forfeiture Fund to purchase new vehicles and other investigative equipment for the agency.

The Assistant Commissioner comments on how the new vehicles will be given to those Customs Service offices whose productivity is reflective of established goals with regard to asset forfeiture. The Assistant Commissioner reminds everyone of the importance of asset forfeiture and how the Customs Service has benefitted. The Assistant Commissioner ends the meeting by congratulating one of the local offices on its productivity and informs the Special Agent-in-Charge that the office can expect to receive many of the new cars.

Six months later, the supervisor is reviewing the task force statistics. The data indicates the number of arrests and the amount of drugs seized has slightly increased, but the amount of assets seized has decreased significantly. The supervisor considers his own upcoming annual performance appraisal and recalls the significance of asset forfeitures mentioned by the Assistant Commissioner.

Later, a senior Special Agent (S/A) briefs the supervisor on an ongoing criminal investigation. The S/A informs the supervisor of recent developments in the investigation and the potential for a controlled delivery of a large shipment of cocaine. (A controlled delivery is an investigative tool used to identify other co-conspirators.) The S/A explains that investigative techniques have identified most of the members of the organization and that the particular shipment is believed to be greater than one-hundred fifty kilograms of cocaine. The supervisor reviews the case and commends the S/A on the case's potential to dismantle and disrupt a large scale smuggling organization. However, with regard to the potential of seizing assets, the S/A informs the supervisor that smuggling organizations are becoming more sophisticated and no assets can be attributed to organizational members.

Coincidentally, a second Special Agent (S/A) briefs the supervisor on recent developments in another criminal investigation. The S/A states the targeted individual is a small-scale, unsophisticated smuggler since the amount is only five kilograms of cocaine. Additionally, the target's lack of experience is confirmed by the fact he has exposed his home, his family business (commercial real estate) and his wife's automobile to forfeiture.

The supervisor is now faced with a dilemma. There are only enough manpower resources available to carry one of the two criminal investigations to fruition. Which case will the supervisor choose? Will the mission of the Customs Service, the dismantling and disruption of smuggling organizations, prevail; or will the supervisor's pending performance appraisal and the recent decline in asset forfeitures affect his decision?

In the decision making process, the investigation of the small-scale smuggler receives a higher priority in recognition of the asset forfeiture program policy. It becomes a priority because of the potential to seize a residence, a business and a vehicle. The investigation involving one hundred fifty kilograms of cocaine will end with an interdiction of the contraband and no further investigative leads will be developed.

This fictitious scenario brings to light many policy issue questions. We propose an important policy research question in view of the above theoretical scenario. The question is: Whether or not law enforcement agencies are becoming dependent on asset forfeiture and losing sight of their primary mission statements?

In order to understand the potential problems of asset forfeiture, one must understand the government budget process. The budget process of the United States government provides the framework in which public decisions concerning resource allocation and the management of programs is made.

The budget process has three main phases. In the first phase, the executive branch formulates a budget and the President transmits it to Congress. During this phase agencies submit proposals to operate specific individual programs to the Office of Management and Budget (OMB). In the second phase, Congress approves the President's budget by providing budgetary authority to incur obligations. This often includes specific restrictions or limits on appropriated funds for an agency, program, or activity. In the third phase, the executive branch through OMB, apportions or distributes financial resources to the branches, departments, agencies and bureaus in order for them to conduct their operations.

The total budget for a specific program or activity may have been included in the budget for only one agency. In this case a "parent" agency (e.g., the Department of Treasury is the parent agency of the Customs Service) is granted authority to allocate specific funds from their budget account to the budget accounts of other agencies who share in the administration of that program or activity. However, Congressional actions limit the total obligations for the program, the parent agency and those which may be shared with other agencies.

Through its authority to pass laws and with good intent to provide law enforcement agencies with tools to effectively fight organized crime and narcotics traffickers, Congress enacted asset forfeiture laws, specifically Title 21, United States Code, Section 881.

Historically, asset forfeiture has been in existence for hundreds of years. In Biblical history there are examples of confiscated and forfeited property resulting from harmful activities. These forfeitures were independent of any criminal action against the person who was charged with the activity.

Modern day proceedings relating to the seizure and forfeiture of property or objects are known as in rem (against property) forfeiture. In rem forfeitures operate under civil law as opposed to in personam (against persons) which involves criminal law. The modern day concept of asset forfeiture is an evolution from English common law where these in rem forfeitures were known as the law of deodand based on a concept known as attainder.⁽¹⁾

In England, this early method of attainder worked in situations where upon being sentenced to death, traitors and felons forfeited all their property to the Crown. Similar criminal forfeiture laws existed in the United States until 1790, when they were abolished by the first Congress after the American Revolution. England followed suit in 1870 and virtually all criminal asset forfeiture legislation was not utilized for almost two hundred years. The remission of criminal forfeiture was primarily caused by the abuse of the law for political gains. Civil forfeiture against property continued unobstructed in the more traditional uses such as enforcing customs laws and even today is often referred to as a "relic of medieval English practices" by some.⁽²⁾

While asset forfeiture provisions in the United States have been available to law enforcement for more than 200 years, the laws were infrequently used until the early 1980s. During the early 1980s, the number and value of seizures relating to drug traffickers and organized crime figures steadily increased as law enforcement agencies began to rely on asset forfeiture as a means of fighting crimes.⁽³⁾ In 1982, the General Accounting Office reported both the Department of Justice (DOJ) and the Customs Service as being delinquent in the care of seized property resulting in a loss of revenue. In the mid-1980s, it was reported that millions of dollars of seized cash were sitting idle in evidence vaults, preventing economic benefit and increased administrative costs. In 1984, the Comprehensive Crime Control Act established asset forfeiture funds in the DOJ and the Customs Service to pay forfeiture-related expenses. The Act of 1984⁽⁴⁾ expanded the federal government's seizure authority and established funds to manage and dispose of seized and forfeited assets so that agencies were no longer penalized for employing this powerful law enforcement tool. (Prior to this act, agencies were not appropriated funds to manage and dispose of seized property.)

The resulting asset forfeiture programs were intended to:

(1) punish and deter criminal activity by depriving criminals of property used or acquired through illegal activities and (2) make seized property available as assets to strengthen law enforcement.⁽⁵⁾

Recently, asset forfeiture laws, specifically Title 18, U.S.C., Sections 1956 and 1957, have been expanded to cover crimes associated with money laundering and offenses related to financial institutions.

The legislation mandated that proceeds be shared with state and local law enforcement agencies that participated in drug related investigations. The statute also mandated that shared assets with state and local law enforcement agencies go directly into law enforcement accounts rather than into general funds, education funds, or other state mandated depositories. As seized property management programs matured, the DOJ and Department of Treasury's property inventories from seized assets increased substantially from $33 million in 1979 to almost $2 billion in 1994.⁽⁶⁾ In fiscal year (FY) 1998, the President requested $16 billion to fund drug control efforts. This figure represents a six-fold increase in federal drug spending since FY 1985, when drug resources totaled $2.7 billion. These funds are destined to support the National Drug Control Strategy which is more commonly known as the "War on Drugs."⁽⁷⁾ In the early days of the "War on Drugs", seizures occurred as a natural consequence of law enforcement efforts. However, as the stakes got bigger and forfeitures totaled in the billions of dollars, what was once viewed as a by-product appeared to become the end-product of drug law enforcement. Agency managers quickly learned that shared assets could greatly enhance their agency's discretionary budgets. It is suspected the Customs Service and most other federal, state, and local law enforcement agencies may have focused their efforts on the enforcement of drug laws because of the financial gain arising from this activity.

To illustrate how law enforcement may have become dependent on asset forfeiture, the Customs Service will be used as an illustrative law enforcement agency. It is important to note, however, a large number of other federal agencies, as well as state and local agencies, participate in asset forfeiture. The Customs Service was chosen for this research proposal paper because of its involvement in the war on drugs and its successful asset forfeiture program. In fiscal year 1995, the Customs Service seized more than 50 percent of all drugs confiscated by federal agencies. Also, the Customs Service assisted in the seizure of an additional 13 percent of total drugs seized nationally.⁽⁸⁾ The Customs Service was also chosen for the purpose of this proposed research paper because of the evolution of the Customs Forfeiture Fund into the Treasury Forfeiture Fund in October 1992. Prior to this change, all monies remaining in the Customs Forfeiture Fund at the end of the fiscal year were deposited in the General Appropriations Fund. A significant result of the Treasury Department Appropriations Act, P.L. 102-393, permits the Secretary of the Treasury to use surpluses remaining in the fund for any law enforcement activity of a federal agency.

Created in 1789, the Customs Service is one of the oldest federal law enforcement agencies still in existence, whose primary mission was to collect revenue through tariffs. Over time, the Customs Service mission has evolved to include ". . . ensuring that all goods and persons entering or exiting the United States do so in accordance with all U.S. laws and regulations."⁽⁹⁾ The agency has been able to do this by upholding its traditional mission outlined in the Tariff Act of 1930. The mission was threefold: to assess and collect Customs duties on imported merchandise; to prevent fraud and smuggling; and to control carriers, persons and articles entering and departing the United States.⁽¹⁰⁾

In 1987, the Customs Service was designated as the lead agency for narcotics interdiction by the newly created National Drug Policy Board.⁽¹¹⁾ The Customs Service's new mission has evolved toward the goal to disrupt, disorganize and dismantle criminal organizations. Additionally, the Customs Service now enlists the assistance of state and local law enforcement agencies to stem the tide of narcotics coming into the country. It brings with it the important tool of asset sharing or equitable sharing of seized assets with state and local agencies. In fiscal year 1997, the Customs Service distributed to state and local law enforcement agencies equitable sharing in the amount of $46.2 million.⁽¹²⁾

The Customs Service mission is to collect revenue and to protect, secure and defend our international borders. The agency has adjusted itself to using asset forfeiture as a law enforcement tool. The Customs Service formed asset identification and removal groups dedicated to the seizure of illicit proceeds. Asset forfeiture programs were intended to punish and deter criminal activity by depriving criminals of property used or acquired through illegal activities and make seized property available to strengthen law enforcement activities.

On February 5, 1996, the House of Delegates of the American Bar Association (ABA) approved a statement of 13 principles regarding Asset Forfeiture, which served as recommendations embodied in the proposed Asset Forfeiture Act of 1996. The Department of Justice endorsed the ABA's statement of principles which requested that Congress continue civil and criminal forfeiture to deter and diminish the capacity of the criminal to commit future criminal acts.⁽¹³⁾

Achieving the goals of agency missions cannot be accomplished without funding. In February 1997, President Clinton identified critical funding priorities to implement the National Drug Control Strategy goals and objectives. To support the goals of protecting our borders and addressing foreign and domestic sources of drugs, the President requested $16 billion to fund drug control efforts for fiscal year (FY) 1998. This represents an increase of $818 million over FY 1997. The Customs Service requested $641 million in drug-related funding for FY 1998, of which $564 million supports interdiction efforts.⁽¹⁴⁾

The Treasury Forfeiture Fund (TFF) was established by the Treasury Department Appropriations Act, P.L. 102-393, as a special fund. Special funds consist of separate receipt and expenditure accounts. The TFF has two accounts for paying fund expenses: a permanent indefinite and an annual appropriation. At the end of each fiscal year, $50 million is reserved for future operations. One-half of the amount in excess of $50 million goes to the Special Forfeiture Fund and the other half of the excess unobligated balance is available to the Secretary of the Treasury for any law enforcement purpose, without any fiscal year limitation. The total fiscal year 1998 drug control budget request for the Treasury Forfeiture Fund is $155 million. During the past several years, both the Department of Justice and the Department of Treasury have shared over $1.8 billion in forfeited property and cash with over 3,000 state and local law enforcement agencies.⁽¹⁵⁾

State and local law enforcement agencies seeking to supplement their departmental budgets are using asset forfeiture as a means to attain this goal. Consider the following example:

A county sheriff continually faces problems in regard to his department's budget. The county's tax commissioners allocate a budget which only provides for two deputies on duty during a twelve-hour shift. This particular county is the poorest in the state and has the highest crime rate. The deputies are paid $6.00 an hour. In need of additional deputies and equipment, the sheriff attends an asset forfeiture seminar and sees asset forfeiture as a means to supplement the department's budget. One deputy is assigned to the interstate to target drug couriers. Since the assignment, the department has seized $20,000 in drug assets and money. The additional money allowed the sheriff to purchase a drug dog. The purchase of the drug dog resulted in over $700,000 in cash and property seized. As a result, more deputies were hired, more dogs were purchased and salaries were raised without any additional cost to the taxpayers of the county. In order to support the new deputies and pay for the new equipment, it becomes imperative for the department to rely more heavily on asset forfeiture.

These state and local agencies, once reliant upon federal agencies to share assets with them, are initiating their own asset forfeiture programs. Since 1990, many states have passed legislation which incorporates asset forfeiture procedures into their law enforcement operating policies. The purpose of this legislation was to eliminate the need for federal agencies' participation in asset seizures and the associated significant administrative costs. As of 1991, 43 states have passed legislation creating asset forfeiture programs.

As portrayed in the opening scenario involving the supervisor faced with the dilemma of which investigation to pursue, it has become apparent there are strong influences on the dependence of additional funds through asset forfeiture. With the Secretary of Treasury's discretionary use of the Treasury Forfeiture Fund for law enforcement purposes, federal agencies have the potential of becoming less focused on their primary mission of making arrests and getting convictions. As a general policy research question, have federal agencies made seizures their primary mission?

Asset forfeiture may have also played a major role in state and local law enforcement. We proposition that a relevant research question is whether or not federal, state and local agencies are using asset forfeiture as a means of supplementing their appropriated budgets. We hypothesize that money from seizures, and not necessarily convictions, enhance law enforcement agencies' manpower and equipment. Has the objectivity of law enforcement been lost with their dependence on asset forfeiture?

This is a timely policy research issue in recognition of legislation pending before the 105th session of Congress. A bipartisan asset forfeiture reform act is pending before the U.S. House of Representatives, Committee on the Judiciary. The Committee on the Judiciary is considering whether or not "... civil asset forfeiture laws are sometimes being used in terribly unjust ways, depriving innocent citizens of their property without basic due process."⁽¹⁶⁾

In summary, does the money from asset forfeiture cloud law enforcement agencies' ability to focus on their primary mission and/or has this money created an atmosphere whereby objectivity has been lost as a result of the dependence on asset forfeiture?

As noted throughout this paper, the impact of asset forfeiture legislation for law enforcement agencies' missions and budgets has raised many public policy research questions. Areas which invite policy research are:

1. Has the Federal budget process been compromised by asset forfeiture?

2. Without asset forfeiture, are law enforcement agency budgets adequate to meet and fulfill the agency's primary mission?

3. Are other equally important or more significant criminal investigations being put aside in pursuit of revenue producing criminal investigations?

4. Are asset forfeiture laws being used in unjust ways depriving citizens of their property without basic due process?

5. Are asset forfeiture laws circumventing the intent of Article 1, Section 9 of our Constitution which states, "No money shall be drawn from the Treasury, but in consequence of appropriations made by law?"

1. Scott Clive, "The Early History of Asset Forfeiture," Churchill Report, n.pag., online, Internet, available www.ozemail.com.au/~themis/churchill/20.htm.

2. Henry J. Hyde, Testimony, "Opening Statement of Chairman Hyde," n.pag., online, Internet, available http://commdocs.house.g.. .2848.000/hju42848_0.htm.

3. Laurie E. Ekstrand, Testimony, "Asset Forfeiture - Historical Perspective on Asset Forfeiture Issues," n.pag., GAO/T-GGD-96-40 (United States: March 19, 1996)

4. Comprehensive Crime Control Act, Pub. L. No. 98-473, § 211-39, 98 Stat.1837, 1987(1984).

5. Ekstrand, op. cit.

6. Ekstrand, ibid.

7. U.S., Executive Office of the President, "Message from the Director," n.pag., online, Internet, available http://ncjrs.org/htm/message.htm.

8. U.S. General Accounting Office, "Customs Service: Drug Interdiction Efforts," Briefing report, GAO/GGD-96-189BR (United States: September 26, 1996).

9. U.S. General Accounting Office, ibid.

10. Department of Treasury Publication 534, May 1989, p. 4.

11. Ibid., p. 13.

12. Personal interview, U.S. Department of Treasury, Executive Office for Asset Forfeiture, Washington, D.C., October 1997.

13. U.S. Department of Justice, "ABA Issues Statements of Principles on Asset Forfeiture," Asset Forfeiture News, January/February 1996, pp. 1-2.

14. U.S., Executive Office of the President, op. cit.

15. Ekstrand, op. cit.

16. U.S. Department of Justice, "Legislation: Forfeiture 'Reform' is Coming," Asset Forfeiture News, May/June 1997.

Benson, Bruce L. and David W. Rasmussen. "Predatory Public Finance and the Origins of the War on Drugs, 1984-1989." The Independent Review, Fall 1996.

Ekstrand, Laurie E. Testimony. Asset Forfeiture - Historical Perspective on Asset Forfeiture Issues. GAO/T-GOD-96-40, March 19, 1996. United States.

Hyde, Henry J. Testimony. "Opening Statement of Chairman Hyde."

Online. Internet. Available http://commdocs.house.g. . . 2848.000/hju42848_0.htm.

Personal interview. U.S. Department of Treasury. Executive Office for Asset Forfeiture. Washington, D.C. October 1997.

Scott, Clive. "The Early History of Asset Forfeiture." Churchill Report: n.pag. Online. Internet. Available www.ozemail.com.au/~themis/churchill/20.htm.

United States Code Annotated. St. Paul, MN: West Publishing Company, 1996.

United States. Executive Office of the President. "Message From the Director." Online. Internet. Available http://ncjrs.org/htm/message.htm.

United States. Office of Management and Budget. "The United States Budget in Brief, Fiscal Year 1996." Executive Office of The President. Office of Management and Budget. Washington, D.C.

United States. U.S. Department of Justice. "ABA Issues Statement of Principles on Forfeiture." Asset Forfeiture News, January/February 1996. 1-2.

United States. U.S. Department of Justice. "Legislation: Forfeiture 'Reform' is Coming." Asset Forfeiture News, May/June 1997.

United States. U.S. Department of Treasury. Publication 534. May 1989.

United States. U.S. Government Accounting Office. "Customs Service: Drug Interdiction Efforts." Briefing Report. GAO/GOD-96-189BR, September 26, 1996. United States.

United States. U.S. Government Accounting Office. "Asset Forfeiture Programs Subtitle: High Risk Series 17." GAO/HR-93-17, December 1992. United States.