cause of action calls on doj ig to audit forfeiture programs
TRANSCRIPT
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7/26/2019 Cause of Action Calls on DOJ IG to Audit Forfeiture Programs
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VIA CERTIFIED MAIL
Michael
E
Horowitz, Esq.
Inspector General
cmrcAUSE
-
0
ACTION
Advocates for Government Accountability
A 501 c) 3) Nonprofit Corporation
January 29, 2015
U.S. Department
of
Justice
Office of the Inspector General
950 Pennsylvania Avenue, N.W.,
Suite 4706
Washington, D.C. 20530-0001
Re: Request for Audit
or
Review
Dear Inspector General Horowitz:
Cause of Action is a nonprofit, nonpartisan government oversight group that protects
economic liberty by promoting executive branch transparency. We write to request that the
Office oflnspector General ( OIG ) initiate an audit or review
of
the Department
of
Justice's
( DOJ ) forfeiture programs.
Introduction
As you are well aware, on January 16, 2015, Attorney General Eric Holder issued an
order titled Prohibition on Certain Federal Adoptions of Seizures by State and Local Law
Enforcement Agencies, (the Order ) prohibiting federal agencies from taking property seized
by state or local law enforcement under state law (except for property that directly relates to
public safety concerns, including firearms, ammunition, explosives and property associated with
child pornography) and then forfeiting it under federal law using a practice known as
adoption.
1
State and local authorities can retain up to 80 percent of the proceeds stemming
from such adoptions.
2
Also, state and local law enforcement agencies that participate in joint
investigations with DOJ s law enforcement agencies can receive a portion
of
the proceeds
of
1
Press Release, U.S. Dep't of Justice, Office of Pub. Affairs, Attorney General Prohibits Federal Agency Adoptions
of
Assets Seized by State
nd
Local Law Enforcement Agencies Except Where Need to Protect Public Safety (Jan.
16, 2015), available at http://www.justice.gov/opa/pr/attomey-general-prohibits-federal-agency-adoptions-assets
seized-state-and-local-law (the Press Release ). The Order 's prohibition on federal agency adoption includes, but
is
not limited to, seizures by state or local law enforcement
of
vehicles, valuables, cash and other monetary
instruments.
2
See
U.S. Dep t of Justice, Criminal Div., Asset Forfeiture and Money Laundering Section,
Guide to Equitable
Sharing for State and Local Law Enforcement Agencies
(2009),
available at
http://www.justice.gov/usao/ri/projects/esguidelines.pdf (the Guides ).
C a u s e O f A c t i o n
:
1919
Pennsylvania Ave, NW
Suite 650
Washington
DC
2 6
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Mr. Michael E. Horowitz
January 29, 2015
Page 2
forfeited assets resulting from these investigations in the form of cash or property through
DOJ s
"equitable sharing" program.
3
The Order has been praised as a "major reform" of federal asset forfeiture policy.
4
The
Washington Post
described it as "the most sweeping check on police power to confiscate
personal property since the seizures began three decades ago as part of the war
on
drugs. "
5
Even
the Attorney General's critics have hailed the order, with Senator Charles E. Grassley (R-IA)
stating, "[w]e're going to have a fairer justice system because
of
it[.]"
6
While the Order purports to safeguard civil liberties by ending federal adoption, it
actually does not have a significant impact
on
the government's overall use of asset forfeitures.
7
In the analysis that follows, we show that the majority of asset forfeitures involve administrative
forfeitures, which the Order does not restrict. Therefore, if the DOJ in fact believes that
inappropriate asset forfeitures pose systemic risks to our civil liberties, then your office should
immediately audit or review the entire Asset Forfeiture Program.
Discussion
A. The Order fails to address the majority o federal seizures which occur
administratively and not through civil or criminal forfeiture.
DOJ s
authority to conduct asset forfeitures is generally derived from 18 U.S.C. 981
(civil forfeiture), 18 U.S.C. 982 (criminal forfeiture), and 19 U.S.C. 1607 (administrative
forfeiture).
8
Civil forfeitures result when the government files a court action against property
(in
rem). Criminal forfeitures result from the criminal prosecution of a person (in personam). The
government must "indict" the property used or derived from a crime and
if
the jury finds the
property forfeitable, then the court issues an order of forfeiture.
9
However, "administrative
forfeitures," an
in rem
action through which the government takes property without judicial
involvement,
1
are used most often.
3
21 U.S.C. 881(e)(l)(A) and (e)(3), and 18 U.S.C. 981(e)(2) each authorize the Attorney General to share
federally forfeited property with participating state and local law enforcement agencies.
4
Charlotte Alter,
Feds Limit aw that Lets Cops Seize Your Stuff, TIME
(Jan. 16, 2015),
available at
http://time.com/3 672140/civil-forfeiture-assets-ho Ider/.
5
Robert
O
Harrow Jr., Sari Horwitz, Steven Rich,
Holder Limits Seized-Asset Sharing Process That Split
Billions with Local, State Police, WASH. POST (Jan. 16, 2015), available at
http://www.washingtonpost.com/investigations/ho der-ends-seized-asset-sharing-process-that-sp lit-bi lions-with
local-state-police/2015/01/16/0e7ca058-99d4-11 e4-bcfb-059ec7a93ddc_story.html
6
Id
7
See, e.g.
Radley Balko,
How much civil asset fo1feiture will Holder s new policy actually prevent?
WASH. POST
(Jan. 20, 2015),
available
athttp://www.washingtonpost.com/news/the-watch/wp/2015/01/20/how-much-civil-asset
forfeiture-will-holders-new-policy-actually-prevent/.
8
U.S.
Dep t of
Justice, Types of Federal Forfeiture, (December 2014),
available at
http://www.justice.gov/jmd/afp/07federalforfeiture/
9
Id
1 Id
11
See infra note
21.
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Mr. Michael E. Horowitz
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Through administrative forfeiture, and without judicial involvement,
12
the government
may seize monetary instruments; conveyances used to import, transport or store a controlled
substance; and other property with a value of up to $500,000.
13
Maximum Administrative
Forfeiture
Thresholds
Monetary Instruments
(e.g., cash, checks, stocks,
bonds) Unlimited
Value
Hauling Conveyances
(e.g., vehicles, vessels, and aircraft
Unlimited
Value
used
to transport
illegal
drugs)
Other
Property
(e.g., bank accounts, jewelry, etc.) $500,000 or less
As noted, the law concerning administrative forfeitures is in stark contrast to the law governing
civil or criminal forfeitures, which, respectively, require either a civil complaint or criminal
indictment, both of which must be filed in court.
14
The adoption and equitable sharing programs apply to civil, criminal and administrative
forfeitures.
15
By its own terms, the Order is limited to adoptions. Public records, however,
reflect that adoptions are the least-used method of asset forfeiture in
DOJ s
Asset Forfeiture
Program.
16
According to a 2012 report from the Government Accountability Office ( GAO ), [i]n
2003, adoptions made up about
23
percent
of
all equitable sharing payments, while in 2010,
adoptions made up about 17 percent of all equitable sharing payments.
17
Therefore,
GAO s
study suggests the Order's focus on adoptions may ignore the areas where the most significant
civil liberties violations occur. According to DOJ as more states have established their own
forfeiture laws, they may rely less on DOJ to adopt forfeiture cases and may instead pursue
12
19
U.S.C.
1607.
13
Guides, supra note 2 at 8.
14
18 u s c 981, 982.
15
Guides, supra note 2 at 1.
16
The DOJ Administrative Forfeiture Program includes the Asset Forfeiture and Money Laundering Section;
Bureau
of
Alcohol Tobacco and Firearms; Drug Enforcement Agency; Federal Bureau oflnvestigation;
U.S.
Marshals Service; U.S. Attorney's Office; Asset Forfeiture Management Staff; U.S. Postal Inspection Service; Food
and Drug Administration; U.S. Department of Agriculture, U.S. Department
of
Agriculture Office oflnspector
General; Department
of
State, Bureau of Diplomatic Security; and Defense Criminal and Investigative Services.
See
WEBSITE,
UNITED
STATES DEPARTMENT
OF JUSTICE, ASSET
FORFEITURE PROGRAM, PARTICIPANTS
AND ROLES,
available at http://www.justice.gov/jmd/afp/05participants/index.htm.
17
U.S.
GOV T ACCOUNT
ABILITY OFFICE,
Justice Assets Fo1feiture Fund: Transparency ofBalances nd Controls
over Equitable Sharing Should be Improved REPORT
GA0-12-736 (July 2012)
at
43,
available at
http://www.gao.gov/assets/600/592349.pdf.
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Mr. Michael E. Horowitz
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forfeitures under state law when appropriate.
8
Furthermore, the DOJ has admitted adoptions
accounted for roughly 3 percent
of
the value
of
forfeitures in the Department
of
Justice Asset
Forfeiture Program.
9
B. Adoptions still occur
through
administrative forfeiture
and are
growing
at
an
alarming rate.
Prompted by concerns about civil liberties violations in civil and administrative
forfeitures, Cause
of
Action submitted a Freedom oflnformation Act request to the DOJ on July
2, 2012 seeking relevant records.
20
On August 6, 2012, DOJ produced documents revealing that
18
/d. One possible explanation for the
DOJ s
decision to decrease its use of adoptions while increasing its use of
administrative forfeiture may relate to a program called Operation Choke Point. Under Operation Choke Point,
the DOJ can use warning letters to banks to effectively force those banks to cut lending to money service
businesses and lenders. See Staff Report, U.S. H. Rep., Comm. on Oversight
Gov t
Reform, The Department of
Justice s Operation Choke Point : Illegally Choking OffLegitimate Business? at 6 (May 29, 2014), available at
http://oversight.house.gov/wp-content/uploads/2014/05 /Staff-Report-Operation-Choke-Point1.
pdf
( Operation
Choke Point is having its desired effect -legitimate merchants in legal industries are being choked-off from the
financial system. In a statement to the House Committee on Financial Services, a trade group of licensed money
service businesses and
lenders
submitted recent account termination letters in which the bank explicitly attributed
the termination to Operation Choke Point ). Money service businesses are considered high risk by the DOJ. See
Kelsey Harkness, Meet Four Business Owners Squeezed by Operation Choke Point,
THE DAILY
SIGNAL (Aug. 12,
2014), available at http://dailysignal.com/2014/08/ 12/meet-four-business-owners-squeezed-by-operation-choke
point. Because of Operation Choke Point's success, DOJ may have determined to rely less on traditional asset
forfeiture programs for targeting money service businesses through adoption or equitable sharing.
See
U.S.
Dep t of
Justice, National Asset Forfeiture Strategic Plan, 2008-2012, at 50, available at
http://www.justice.gov/criminal/afmls/pubs/pdf/strategicplan.pdf ( As the law enforcement community has
developed partnerships with the banking industry, criminals and their syndicates have become increasingly reluctant
to place their money in financial institutions where there is greater scrutiny and tracking capabilities. Criminal
organizations are increasingly exploiting the products offered by money service businesses and are laundering
money through legal entities such as casinos, the insurance industry, and automobile dealers. The Program must
work with the Financial Crimes Enforcement Network (FinCEN) and the law enforcement community to develop
policies and regulations that combat new money laundering methods. The Program must also support
implementation of he 2007 National Money Laundering Strategy and initiatives that pursue the forfeiture of monies
involved in bulk cash smuggling ).
In
fact, seizure
of
cash by states under the adoption policy represents the most
common asset seized valued at above 1 million. See U.S.
Dep t
ofJustice, FY 2013 Seized Property Inventory
Valued Over One Million Dollars
as
of September 20, 2013,
available at
http://www.justice.gov/jmd/afp/02fundreport/2013affr/report7.htm. Recent statements by FinCEN reflect the degree
to which Operation Choke Point is the primary mechanism for the federal government's targeting money service
businesses - not civil, criminal, or even administrative forfeitures. See FinCEN Statement, FinCEN Statement on
Providing Banking Services to Money Services Business, (Nov. 10, 2014), available at
http://www.fincen.gov/news_room/nr/pd'20141110. pdf.
19
Jacob Sullum, Policing for
profit
seizes onward, N.Y. POST (Jan 20, 2015), available at
http://nypost.com/2015/01 /20/policing-for-profit-seizes-onward/
20
See
Letter from Cause
of
Action to Karen McFadden, FOIA Contact, Justice Mgmt. Div., U.S.
Dep t
of Justice
(July 2, 2012), available at http://causeofaction.org/assets/uploads/2014/10/2012-7-2-DOJ-JMD-FOIA-Request-re
Asset-Forfeiture-Program.pdf
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Mr. Michael
E
Horowitz
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administrative forfeitures constitute the vast majority
of
all asset forfeitures, are increasing, and
are the government's preferred form
of
asset forfeiture.
21
Critically, although the Order states that it applies prospectively to all federal
adoptions,
DOJ s
own guidelines suggest that, in practice, the reality
is
otherwise:
A
Guide
to
Equitable Sharing for State and Local Law Enforcement gencies
applies only to the sharing
of
assets that were seized by Department of Justice
investigative agencies and federal agencies participating in the Department
of
Justice Asset Forfeiture Program and that were forfeited judicially or
administratively to the United States by the United States Attorney's Offices or
Forfeiture Program participants.
22
Documents produced to Cause of Action show, in just the first seven months
of
2012,
DOJ reported nearly 10,000 administrative forfeiture cases while the same period reflected not
even 3,300 cases between civil and criminal forfeitures combined:
23
FORFEITURE SUMMARY REPORT BY FORFEITURE TYPE
Forfeiture Activity BelwHn 1/112007 and
713 12 12
D1ll
11 of
uly 30
20t2
FlacaJ Year: 2012
Admlnlslrative
9.808
20 300
:
o
0
CMUJudlcial
1,010
e 773
453 . 964
Criminal
2.281
~ ~ 8
886
~
- -
2012 Total1:
13 099
40,757.
1 319
3 234
..
.
-
Furthermore, records reviewed by Cause of Action reflect that since 2007, administrative
forfeitures have been steadily increasing every year:
4
21
See
Letter from Robert Marca, Deputy Director, U.S. Dep't
of
Justice, Asset Management Forfeiture Staf f to
Cause of Action, (Aug. 6, 2012), available at http://causeofaction.org/assets/uploads/2014/10/2012-8-6-DOJ-JMD
Production-2526319.pdf (the Marca Letter ).
22
Guides, supra note 2 at 1 (emphasis added) .
23
Marca Letter, supra note 21.
24 Id
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Mr. Michael E. Horowitz
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FORFEITURE SUMMARY REPORT BY FORFEITURE TYPE
Forfeiture Activity Between 111/2007 and 7130/2012
Fiscal Year: 2007
AdmlnlttraUve
7 541
CiviUJudlcisl
Criminal
1 ?76
2007 Totals 10 179
Fiscal Year:
2008
AdmlnlslraUve
-
..
.
Clvll/Judlclal
Criminal
2008 Totals
Fiscal Year: 2009
AdmlnlstraUve
CivillJudiclal
Criminal
2009 Totals
Fiscal Year: 2010
Administrative
ClvlllJudlclal
Criminal
1 384
2 168
12 801
10 447
1 487
2 820
14 554
9 421
1 371
2 819
36 624
1 777
4 043
42 444
2 ~ ~ 2 2 ;
2 990
6 143
33 oss
31 728
4 281
8 713
44 722
34 054
3 472
7 881
Data aa
of July 30 2012
0
367
497
864
_
o
383
759
1 142
0
526
888
1 394
o.
486
1 034
. .
0
686
1 ~ 0 9
1 995
0
815
1 676
2 491
0
973
2 389
3 342
0
848
2 804
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Mr. Michael E. Horowitz
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2010 Tolals:
Fiscal Year: 2011
Admln18trauve
Civll/Judlclal
Criminal
2 11 Totals:
13,811
12,750
1,379
3,047
17,176
45,387
39,393
2,545
8,729
50,667
1,620
0
480
1.045
1,525
3,652
1,205
3 807
5 012
Finally, a 2012 report from your office revealed that from 2001-2011 , 70% of all seized
assets were processed as administrative forfeitures:
25
Exhibit
3:
FYs
2001
Through 2011 Seized Assets
t>Y Type of Forfeiture
9
Number of Assets r Asset Value
in millions)
by Type of
Forfeiture by Type of Forfeiture
Administrative Civil Criminal
Adm nlstrative CMI
_
Source: DOJ s Conso
li
dated Assets Tracking System
These data reflect the degree to which inappropriate property seizures may continue, if
not worsen, over time, as the Order neither ends equitable sharing nor addresses the majority
of
asset forfeitures.
26
25
OFFICE OF INSPECTOR GENERAL, U.S. DEP T OF JUSTICE,
Audit of he Drug Enforcement Administration s
Adoptive Seizure Process
nd
Status
of
Related Equitable Sharing Requests,
at 6,
available at
http://www.justice.gov/oig/reports/2012/al240.pdf(while the OIG report focuses on one component of the Asset
Forfeiture Program, Exhibit 3 includes adoptive and joint seizures processed by the DEA and other federal
agencies see id., n.9).
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Mr. Michael E. Horowitz
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C. Asset Forfeiture
Program participant
contractors may pose increasing risks to civil
liberties.
The civil liberties violations caused by inappropriate asset forfeitures may be
symptomatic
of
the harm that results when taxpayer-subsidized entities are incentivized by the
financial payoffs of aggressive state and local police tactics.
Public documents suggest that state and local asset seizures under the adoption program
were facilitated by a federally funded entity, Desert Snow LLC ( Desert Snow ). A September
7 2014
Washington Post
article detailed how Desert Snow, run by former California state
highway patrol officer Joe David, received millions of dollars in federal contracts and grants
from Asset Forfeiture Program participants, including the DOJ and the Department ofHomeland
Security ( DHS ), in order to teach state and local police offices aggressive methods for
highway interdiction.
27
Desert Snow started a private intelligence network for police known as
the Black Asphalt Electronic Network Notification System ( Black Asphalt ), which enabled
more than 25,000 officers and federal authorities throughout the country to share reports about
American motorists, many ofwhom had not been charged with any crimes.
28
The federal government's investment in Desert Snow has been a financial windfall to
state and local police. The
Washington Post
found that the Desert Snow training has helped
fuel a rise in cash seizures in the Justice Department's main asset forfeiture program.
29
According to the
Post,
Desert Snow-trained officers reported taking $427 million during
highway
encounters. Although officials at DOJ and the Drug Enforcement Agency ( DEA )
are reportedly reviewing their use
of
Black Asphalt, records reviewed by the Post continue to
identify officials at DOJ, DEA, OHS, Customs and Border Protection, and Immigration
Customs Enforcement as members
of
Black Asphalt.
Taxpayer subsidies and seized property-funded educational training can be highly
profitable. For example, a brochure
of
Desert Snow's General Services Administration-approved
courses show fees ranging from a few thousand dollars to $145,000 for a three-day workshop.
30
These sources of revenue allowed Joe David, who founded Black Asphalt, to purchase a yacht
26
ln addition to the failure to include administrative forfeitures, other aspects
of
the new policy indicate the very
modest nature
of
these reforms. According to reports, adoption seizures account only for approximately 14%
of
all
equitable sharing, while the overwhelming majority comes from occasions when federal and local authorities are
collaborating on enforcement matters. Such collaborations, however, are exempt from the new policy. See Jacob
Sullum, How the Press Exaggerated Holder s Forfeiture Reform, REASON.COM (Jan. 19, 2015), available at
http://reason.com/blog/2015/01I19/how-the-press-exaggerated-holders-forfei.
27
Robert O'Harrow Jr. Michael Sallah,
Police intelligence targets cash, WASH.
POST (Sept. 7 2014),
available at
http://www.washingtonpost.com/sf/investigative/2014/09/07 police-intelligence-targets-cash/ ( States and localities
also have used homeland security grants and seized cash to pay for classes from Desert Snow and its competitors )
(the O'Harrow Article ) .
s Id
29 .
30
Price List, Desert Snow, LLC, available at http://goo.gl/sve4po .
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Mr. Michael E. Horowitz
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and a condominium in Caho San Lucas, Mexico.
31
In Washington, subsidy addictions are
supported by lobbying habits, so Joe David hired lobbying firm Brandon Associates to further
secure taxpayer dollars for his growing business.
3
And when there is cronyism, corruption persists. In September, 2014, the American Civil
Liberties Union sued Logan County, Oklahoma for access to Black Asphalt, which is now
government-run, after discovering Desert Snow employees were impersonating police officers .
. .
'as
part
of
a scheme with the local district attorney to make traffic stops, seize cash and
property from citizens, and funnel it into local coffers in exchange for a percentage
of
the
profits.
'
33
Reports from USASpending.gov reflect that Desert Snow continues to receive
federal funds, including funding from DOJ.
34
The Asset Forfeiture Program's relationship with
contractors like Desert Snow should be audited and reviewed.
onclusion
In his press statement on the Order, the Attorney General stated, [t]his is the first step in
a comprehensive review that we have launched
of
the federal asset forfeiture program.
35
We
believe a comprehensive review requires the DOJ OIG to examine all relevant program
procurement, implementation, efficiency and costs, including with respect to administrative
forfeitures. Furthermore, as the analysis in footnote
18 of
this letter indicates, we are concerned
that programs like Operation Choke Point will allow DOJ to target certain businesses that were
otherwise pursued under adoption, thereby circumventing the Order and rendering it even less
significant. Finally, we suggest that your office must meaningfully participate in DOJ's
broader
review to ensure objectivity, fairness and accountability.
31
O'Harrow Article, supra note 27.
32
Id. See also U.S. Senate, Lobbying Disclosure Act Database, available at
http://soprweb.senate.gov/index.cfm?event=processSearchCriteria (search Desert Snow under client name ).
33
David Lee,
heriffAccused
of
Keeping Secret Database
COURTHOUSE NEWS SERV. (Sept. 15, 2014),
available at
http://www.courthousenews.com/2014/09/15/71368.htm.
34
USASPENDING.GOV PRIME AWARD SPENDING
DATA available at
http://www.usaspending.gov/explore?tab=By+Prime+Awardee&frompage=contracts&contractorid=859675329&co
ntractomame=DESERT+SNOW+LLC&fiscal_year=all&typeofview=complete (search Desert Snow LLC
in
Contractor ).
35
Press Release,
supra
note
1.
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Mr. Michael
E
Horowitz
January 29 2015
Page
10
Thank you for your attention to this matter.
DANIEL
Z.
EPSTEIN
CAUSE OF ACTION
cc: Attorney General Eric H Holder Jr. U.S. Department o Justice
Senator Charles
E
Grassley Chairman Senate Committee on the Judiciary
Senator Patrick J. Leahy Ranking Member Senate Committee on the Judiciary
Representative Bob Goodlatte Chairman House Committee on the Judiciary
Representative John Conyers Jr. Ranking Member House Committee on the Judiciary