10 Disposition of Forfeited Property
A. Introduction
One of the goals of asset forfeiture is to "rededicate the money from the illegal activity to the public good." 1 In fiscal year 2012, the federal government forfeited almost $5 billion.2 This chapter will review the disposition of property after it has been forfeited and how those proceeds are spent by the federal and state agencies.
B. Federal Distribution
The principal statutory provisions for distribution of civilly forfeited property are found at 21 U.S.C. § 881(e) and 18 U.S.C. § 981(e), and for criminally forfeited property at 21 U.S.C. § 853(h); 18 U.S.C. § 982(b)(1) and 18 U.S.C. § 1963(g). For ease of reference, we will utilize the civil drug forfeiture procedures contained in 21 U.S.C. § 881(e).
The federal government has established two separate funds for the deposit of forfeited proceeds. The Department of Justice Assets Forfeiture Fund is authorized under 28 U.S.C. § 524(c) and the Department of the Treasury Forfeiture Fund at 31 U.S.C. § 9703(a). Federal Homeland Security and Treasury investigative agencies, i.e., U.S. Homeland Security Investigations/Immigration and Customs Enforcement (HSI/ICE), Customs and Border Patrol (CBP), Internal Revenue Service (IRS), U.S. Secret Service (USSS), and U.S. Coast Guard (USCG) participate in the Treasury forfeiture program, and U.S. Department of Justice agencies, i.e., Federal Bureau of Investigation (FBI), Drug Enforcement Administration (DEA), Bureau of Alcohol, Tobacco and Firearms (ATF), U.S. Marshals Service (USMS), U.S. Attorneys Office (USAO), and several other federal agencies, i.e., U.S. Postal Investigations Service (USPIS), U.S. Department of Agriculture Office of the Inspector General (USDA-OIG)) participate in the Justice fund. For this section we will follow the guidelines for the Justice Assets Forfeiture Fund.
When cash is ordered forfeited, it is transferred into the Assets Forfeiture Fund. See 28 U.S.C. § 524(c)(4). Personal property is sold at public sale3 21 U.S.C. § 881(e)(1)(B); United States v. One Star Class Sloop Sailboat, 546 F.3d 26, 37 (1st Cir. 2008) and after deducting the cost of sales, see 21 U.S.C. § 881(e)(2)(A), the net proceeds are deposited into the fund. See 21 U.S.C. § 881(e)(2)(B). In lieu of selling personal property, the federal investigative agency also has the option of retaining the property for law enforcement use, see 21 U.S.C. § 881(e)(1)(A); 18 U.S.C. § 981(e); 19 U.S.C. § 1616a(c)(1)(A); 31 U.S.C. § 9703(h)(1)(A), or transferring it to another federal agency that directly participated in the forfeiture. See 21 U.S.C. § 881(e)(1)(A); 18 U.S.C. § 981(e)(1); 19 U.S.C. § 1616a(c)(1)(B)(i); 31 U.S.C. § 9703(h)(1)(B)(i).
Expenditures from the fund are authorized for costs related to property management, see 28 U.S.C. § 524(c)(1)(A), informant awards, see 28 U.S.C. § 524(c)(1)(B)-(C), payoffs to lienholders and mortgagees, see 28 U.S.C. § 524(c)(1)(D), and investigative expenses. See 28 U.S.C. § 524(c)(1)(I).
Payments from the fund are also authorized for claims of remission and mitigation. See 28 U.S.C. § 524(c)(1)(E). A significant portion of federal forfeiture funds are now returned to victims through the restitution and restoration programs. Between January 2012 and April 2013, payments totaling over $1.5 billion were paid to victims of crime.4
Courts cannot order disbursement of forfeiture funds not authorized under the statute. United States v. Wilkinson, 628 F. Supp. 29, 31 (D. Colo. 1985) (federal income tax liability).
C. Federal Equitable Sharing
Equitable sharing is an important component of the federal forfeiture program and is authorized in numerous federal statutes, including drug forfeiture, see 21 U.S.C. §§ 881(e)(1)(A); & (e)(3), money laundering and fraud offenses, see 18 U.S.C. § 981(e)(2), racketeering, see 18 U.S.C. § 1963(g); and customs offenses. See 19 U.S.C. § 1616a; & 31 U.S.C. §§ 9703(a)(1)(G); & (b)(4).
The importance of federal equitable sharing to state and local law enforcement agencies cannot be overstated. From 2008 through 2012, federal payments were made to 8,000 agencies amounting to $2.1 billion and in fiscal year 2012 it totaled $447 million.5
The general rules for federal equitable sharing are contained in the U.S. Department of Justice publication, A Guide to Equitable Sharing of Federally Forfeited Property for State and Local Law Enforcement Agencies or Department of Treasury Guide to Equitable Sharing for Foreign Countries and Federal, State, and Local Law Enforcement Agencies. For this section, reference will be restricted to the Department of Justice guidebook.
A state or local law enforcement agency may request participation in the sharing of a federal forfeiture by filing either a Justice Department DAG-71 or Treasury Department TD F 92-22.46 form with the appropriate federal law enforcement agency within 60 days from the date of the seizure. See Guide to Equitable Sharing, at 10. The amount shared will depend on the type of forfeiture. On joint investigations, the share will be based on the degree of direct participation of the agency resulting in the forfeiture. This generally is determined by the hours contributed by the agents involved in the case, but may include additional factors such as 1) whether the agency originated the information that led to the seizure; 2) provided unique or indispensable assistance or; 3) converted a state investigation into a multijurisdictional action by joining forces with federal agencies. See Guide to Equitable Sharing, at 12.
On adoptive forfeitures where all of the pre-seizure activity was conducted by the state or local agency, the federal share generally is 20 percent of the net proceeds. See Guide to Equitable Sharing, at 12. See also Chapter 4, Section B, for more detail on joint investigation versus adoptive forfeiture.
Additionally, the state or local law enforcement agency may request that personal or real property be transferred to it for law enforcement use. See 21 U.S.C. § 881(e)(1)(A); 18 U.S.C. § 981(e)(2); 19 U.S.C. § 1616a(c)(1)(B)(ii); 31 U.S.C. § 9703(h)(1)(B)(ii); Guide to Equitable Sharing, p. 24.
The decision maker who determines the equitable share for each requesting agency depends on the type of forfeiture case and dollar value. The head of the federal investigative agency makes the decision for administrative forfeitures under $1 million. Likewise, for judicial criminal or civil forfeitures under $1 million, the local U.S. Attorney determines the equitable share. Responsibility for decisions involving property valued between $1 million and $5 million has been delegated to the Chief of the Asset Forfeiture and Money Laundering Section, and in all cases over $5 million in value the sharing percentages are approved by the Office of the Deputy Attorney General. See Asset Forfeiture Policy Manual (2012) Appendix C: Equitable Sharing, at 197.
D. Use of Equitably Shared Federal Funds
Equitably shared property is designed to enhance and supplement law enforcement resources. Property awarded must be used in accordance with federal policy guidelines. Failure to comply with the provisions could result in sanctions being imposed against the agency, including disbarment from participation in future sharing, offsets from future sharing to compensate for the impermissible use, civil enforcement, or criminal prosecution. See Guide to Equitable Sharing, at 29; United States v. Kranovich, 244 F. Supp. 2d 1109, 1112 (D. Nev. 2003).
Permissible uses of shared property include activities designed to enhance future investigations, such as to pay overtime, provide law enforcement training, purchase equipment, improve law enforcement facilities, upgrade detention facilities, and conduct drug education awareness programs. See Guide to Equitable Sharing, p. 16-18. Impermissible expenditures include payment of salaries for existing positions, nonlaw enforcement expenses, or extravagant expenditures. See Guide to Equitable Sharing, p. 19-21.
It is a firm rule in the federal program that the sharing is to increase or supplement the resources of the agency and not supplant existing budgetary resources. See Guide to Equitable Sharing, p. 22; Miss. Code Ann. § 41-29185. To insure compliance, the federal Justice and Treasury forfeiture programs require an equitable sharing agreement to be...
