Category: Equitable sharing

The March 2017 report from the Justice Department’s Office of the Inspector General — Review of the Department’s Oversight of Cash Seizure and Forfeiture Activities — sounds like a snoozer but drops quite a few fact bombs. How did the news media miss this when it came out a few weeks ago?

The report’s mind-numbingly boring prose was a clever way to slip it in under the radar, but just as you’re about to nod off you trip on a fact bomb and you have to do a double take and reread the passage. There are some pretty amazing things in it.

1. The DOJ doesn’t keep statistics that could prove whether asset forfeiture deters criminal activity

“The Department asserts that asset forfeiture is an effective law enforcement tool that dismantles criminal organizations by removing the proceeds of crime used to perpetuate criminal activity…. However, we found that although Department investigative components have the authority to and do forfeit cash from individuals without charging these individuals with a crime, they do not collect data to measure, among other factors, how often seizures and forfeitures advance or relate to criminal investigations. Without fully evaluating the relationship between seizures and law enforcement efforts, the Department cannot effectively assess whether asset forfeiture is being appropriately used and it risks creating the impression that its law enforcement officers prioritize generating forfeiture revenue over dismantling criminal organizations.” OIG Report p. 16.

“[W]ithout evaluating data more systemically, it is impossible for the Department to determine (1) whether seizures benefit law enforcement efforts, such as advancing criminal investigations and deterring future criminal activity, or (2) the extent to which seizures may present potential risks to civil liberties.” OIG Report pp. ii-iii.

The OIG was particularly concerned about the DOJ’s lack of automated statistics linking forfeited assets to particular criminal investigations and prosecutors. Without this information, it is impossible to determine the percentage of forfeiture seizures for which no one was prosecuted for a crime. There are challenges to gathering that data into a database, as the OIG recognized. For example, there may be an arrest and prosecution of someone associated with the seized property by a different sovereign — the state vs. the US government. It would be hard to gather that information, but without it — “particularly for those seizures and forfeitures that occur without judicial involvement, the Department cannot effectively oversee its asset seizure and forfeiture activities to ensure these activities sufficiently benefit law enforcement’s efforts to dismantle criminal organizations and do not present significant risks to civil liberties.” OIG Report p. 17.

2.  Random stops in airports and on highways “present risks to civil liberties”

Civil libertarians and forfeiture reformers have long known that roadside forfeiture traps and airport profile stops use racial profiling to target the most vulnerable population because they are more easily intimidated into submission and often lack the funds to fight back. We just know this because we see how frequently the police target minorities and how lame the cops’ excuses are for making the stop. It’s kind of surprising when you hear the Justice Department’s Office of Inspector General recognize that. You have to read their words carefully to understand that, though, because they talk in code.

They call these random stops in airports and on highways “cold consent encounters.” Sounds like a new Ben & Jerry’s flavor!

The report doesn’t really define cold consent encounters, but you can figure it out from the context — “cash seizures that… appeared to have occurred without a court-issued warrant and without the presence of narcotics….” Generally they occur in “airports, parcel distribution centers, train stations, and bus terminals, or as a result of a highway interdiction or traffic stop.” OIG Report p. iii. They have a likelihood of being “susceptible to racial profiling.” A cold consent encounter can occur in two ways “an agent approaches an individual based on no particular behavior by the individual” or “an agent approaches an individual based on the officer’s perception that the person is exhibiting characteristics indicative of a drug crime without any independent predicating information.” OIG Report p. 2.

The report concluded that “… the DEA did not use data sufficiently to assess whether cold consent encounters were conducted in an unbiased or effective manner. This was a concern because seizures resulting from these encounters can be random or triggered by an individual’s behavior rather than foreknowledge of the individual’s involvement in criminal activity; thus, such seizures can present risks to civil liberties.” OIG Report p. 2. The OIG made the surprising conclusion that “the DEA had not collected sufficient data on cold consent encounters to assess whether they are conducted in an unbiased or effective manner” and that the DEA failed to ensure “that training and operational requirements were clearly established and communicated to the interdiction task force members who conduct these encounters or that all group members had attended the DEA’s interdiction training.” OIG Report pp. 2-3.

Because the agencies did not keep the data, the OIG conducted a “judgmental sample of 100 DEA cash seizures.”  These were not strictly random samples, but were selected based on criteria that made them suspect — no warrant and no drugs or other evidence of criminal behavior. Of that 100, 85 occured during “interdiction operations” (forfeiture traps) at airports, parcel distribution centers, train stations, bus terminals.and in highway stops. The OIG found that “all but 6 of the 85″ seizures” — in other words, 79 out of 85 — “were initiated on the observations and immediate judgment of DEA agents and task force officers absent any preexisting intelligence of a specific drug crime (the remaining six were based on preexisting intelligence).”

From that sample of 100 “the DEA could verify that only 44 of the 100 seizures, and only 29 of the 85 interdiction seizures, had (1) advanced or been related to ongoing investigations, (2) resulted in the initiation of new investigations, (3) led to arrests, or (4) led to prosecutions. When seizure and administrative forfeitures do not ultimately advance an investigation or prosecution, law enforcement creates the appearance, and risks the reality, that it is more interested in seizing and forfeiting cash than advancing an investigation or prosecution.” OIG Report p. iii.

Wow – did they just admitt policing for profit is rampant?

3.  Task forces and the local cops that seize property under the federal adoption program are not adequately trained in federal law

“We also found that the Department’s investigative components do not require their state and local task force officers to receive training on federal asset seizure and forfeiture laws and component seizure policies prior to conducting federal seizures. As a result, state and local task force officers, who wield the same authorities to make seizures as the Department’s Special Agents, may not have received training on these topics beyond what is included in their respective law enforcement academy curriculum.” OIG Report p. iii-iv.

4.  Eric Holder’s order limiting federal adoption had a significant financial impact

Federal Adoption, and the wider “Equitable Sharing” program are big money makers for state and local cops. According to the DOJ, its Equitable Sharing program has paid over $6 billion to state and local cops since fiscal year 2000. OIG Report p. 1. [Since this report was issued in early 2017, it probably relied on data through the end of fiscal year 2016. See 2016 audit of annual report https://oig.justice.gov/reports/2016/a1706.pdf]

The OIG studied the effect of former Attorney General Eric Holder’s order limiting federal adoption of state seizures and concluded that “the elimination of most adoptions contributed to a reduction in the annual number of DEA cash seizures by over half and the annual value of DEA cash seizures by more than a third.” OIG Report p. iv. [Note: that doesn’t mean that property was necessarily given back to the owner — the cops may have used their own state laws to forfeit it.]  Holder’s limitation on federal adoption especially reduced the forfeiture income in two states where the cops used federal adoption to get around state laws that “placed limitations on state forfeiture.” OIG Report p. iv. [It did not say which states those were, but I suspect one of them is California where the cops have to get a conviction to forfeit some property.]

The OIG was concerned about the Holder policy’s loophole for joint task forces because “seizures derived from joint interdiction operations may not always advance a federal criminal investigation or lead to a prosecution.” OIG Report p. iv. However, the OIG said the agencies believe the funds from federal adoptions “foster cooperation among all levels of law enforcement by enabling them to contribute personnel to federally led task forces and joint investigations,” which it portrays as a laudable goal.

5.  DEA cash seizures overwhelmingly result in forfeiture

“Of the DEA’s 80,141 cash seizures that occurred between FYs 2007 and 2016, a claim or a petition was filed for 15,867 (20 percent). Of these 15,867 seizures with a related claim or petition, 6,232 (39 percent) resulted in a full or partial return. The DEA also returned part or all of an additional 492 cash seizures for which it had not received a claim or a petition.

“Overall, the DEA returned all or part of 6,724 cash seizures, or 8 percent of the seizures it made, between FYs 2007 and 2016. In terms of value, we also found that the DEA returned approximately $153 million of its cash seizures, while approximately $3.8 billion was forfeited and deposited into the Department’s Assets Forfeiture Fund.” OIG Report p. 14.

6.  Administrative forfeiture makes up the majority of forfeitures

The OIG analyzed data from the Justice Department’s Consolidated Asset Tracking System (“CATS”) and found that between fiscal years 2007 and 2016, three federal agencies (ATF, DEA and FBI) “forfeited 77 percent of the number and 23 percent of the value of all assets through the administrative process.” Translated into plain English, that means 77% of property seizures were obtained through administrative forfeiture, but administrative forfeitures account for only 23% of the total revenue from property forfeiture.

The report attributed the huge variation in the percentages to a few really, really large civil forfeitures that skewed the data, giving the example of one asset worth $7.2 billion from the Bernie Madoff case. It overlooked the fact that a statute limits administrative forfeitures to seizures of property worth $500,000 or less. Larger value seizures have to commence with the judicial civil forfeiture process.

7.  Some forfeiture revenue is “returned to crime victims”

“According to the [Justice] Department, it has returned more than $4 billion in forfeited funds to crime victims since fiscal year (FY) 2000.” OIG Report p. 1. This is $2 billion less than the amount paid out to state and local law enforcement under the Equitable Sharing program.

The nonchalant way the government describes this practice of “returning” forfeiture revenue to crime victims hides the fact that many of these cases involved crime victims whose money it was in the first place. The DOJ has raked in some really big bucks from the collosal Ponzi schemes that were exposed when the 2008 recession caused them to crash. In a true Ponzi scheme, such as Madoff’s and Thomas Petters,’ money from later investors were used to pay off earlier investors. There was valuable commodity being bought and sold, and no profit generating activity of any kind. The Ponzi schemer was merely robbing Peter to pay Paul. So when the DOJ seized and forfeited billions in each of these schemes, in reality they were seizing and forfeiting the victims’ money. Yes, the seized property was the proceeds of crime and therefore subject to forfeiture, but it is still the victims’ money. They are not punishing the criminal defendant by taking the money which he never had a right to in the first place; they are only punishing the victims who were defrauded.

My point is, the government has no right to brag about returning $4 billion in forfeited property to crime victims — it was the victims’ money. What the report doesn’t say is that, even in crimes where the seized money really belongs to victims, the government keeps some of the seized money for itself, and shares some of it with state and local police or other federal agencies that assisted with the case. The victims get what is left, if anything.

Unfortunately the OIG report was just too tedious to finish reading. I started skimming at about page 8 and stopped reading at all on page 18 (out of 40 pages). If you read the rest of the OIG report and find something juicy, please email me.