oversight

Asset Forfeiture: Legislation Needed to Improve Cash Processing and Financial Reporting

Published by the Government Accountability Office on 1990-06-19.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                                           I


           \                                                                   10
                         United   States   General   Accounting   Office

;        ‘GAO
                         Report to Congressional Committees                    . 3
                         and Subcommittees



C

-1
.
.‘:
.:
         June 1990
                         ASSETFORFEITURE
    :’
                         Legislation Needed to
                         Improve Cash
                         Processing and
                     c   F’inancial Reporting _’
United States
General Accounting  Office
Washington, D.C. 20548

General Government    Division

B-240015

June 19,199O

The Honorable John Glenn
Chairman, Committee on Governmental
  Affairs
United States Senate

The Honorable Joseph R. Biden, Jr.
Chairman, Committee on Judiciary
United States Senate

The Honorable Lloyd Rentsen
Chairman, Committee on Finance
United States Senate

The Honorable John Conyers, Jr.
Chairman, Committee on Government
  Operations
House of Representatives

The Honorable Jack Brooks
Chairman, Committee on Judiciary
House of Representatives

The Honorable Dan Rostenkowski
Chairman, Committee on Ways and Means
House of Representatives

The Honorable William J. Hughes
Chairman, Subcommittee on Crime
Committee on Judiciary
House of Representatives

The Honorable J.J. Pickle
Chairman, Subcommittee on Oversight
Committee on Ways and Means
House of Representatives

This report is one of a series we will be issuing to address various
aspects of the Department of Justice’s and the U.S. Customs Service’s
asset forfeiture programs. The Comptroller General has designated the
asset forfeiture programs as 1 of 14 high-risk areas warranting special
audit effort. Both programs deal with hundreds of millions of dollars of



Page 4                                         GAO/GGD-90-94   Asset Fmfeiture
                         B-240016




                         Requiring uncontested cash seizures over $100,000 to be forfeited judi-
                         cially adds an unnecessary burden on the district courts and contributes
                         to inefficient use of US. Attorney resources. Changing the law to permit
                         administrative forfeiture of all uncontested cash seizures, regardless of
                         amount, would have multiple benefits. It would reduce the court
                         system’s burden, permit more efficient use of attorney resources, and
                         allow millions of dollars to be put to use sooner by the government
                         without affecting individual due process rights. H.R. 1594, currently
                         pending before Congress, contains a provision allowing Justice and Cus-
                         toms to administratively forfeit all uncontested cash seizures regardless
                         of amount. Contested seizures would continue to be resolved judicially.

                         Another cash management issue needing attention is the long-standing
                         problem of agencies unnecessarily holding seized cash for evidence pur-
                         poses. Both Justice and Customs established policies to minimize the
                         unnecessary holding of cash as evidence. While the situation is much
                         improved from earlier years, the problem remains. Justice and Customs
                         need to do a better job of insuring that seized cash is not held unnecessa-
                         rily for evidence purposes in order to maximize the economic benefits to
                         the government and minimize the risks associated with holding cash.

                         Stronger financial information and internal controls are also needed to
                         adequately and accurately assess program performance. Currently,
                         neither Congress nor the agencies have a clear picture of whether the
                         government is making or losing money on the management and sale of
                         seized assets. The asset forfeiture funds have been in operation for 6
                         years, but the agencies have never produced a full set of audited finan-
                         cial statements even though the programs have been designated by their
                         agencies as highly vulnerable to fraud, waste, and mismanagement. Stat-
                         utorily requiring a full set of annually audited financial statements
                         would significantly strengthen internal controls and improve the infor-
                         mation available for effective oversight by both Congress and the
                         affected agencies. H.R. 1594 establishes such a requirement for
                         Customs.


                          Our objectives were to (1) determine if seized cash could be forfeited
Objectives, Scope, and    faster and thereby put to use sooner and (2) assess the adequacy of
Methodology               Justice’s and Customs’ forfeiture fund financial reporting.

                          Our audit work concentrated on those locations where Justice and Cus-
                          toms seize the most property-Florida,  California, Texas, and New
                          York. Work included interviewing knowledgeable Justice and Customs


                          Page 3                                           GAO/GGD90-94   Asset Forfeiture
                       B240016




                       because contested cases would continue to be resolved judtiially. Both
                       Justice and Customs have endorsed the proposal, and H.R. 1594, which
                       is currently pending before Congress, contains a provision to implement
                       this recommendation.


                       Thus far, Justice and Customs have been only partially successful in
Agencies Continue to   identifying and depositing seized cash not needed for evidence. Failure
Unnecessarily Hold     to promptly identify and deposit seized cash not needed for evidence
Seized Cash for        prevents the government from obtaining economic benefits from the idle
                       cash and increases the risks associated with handling, storing,
Evidence               accounting for, and safeguarding the cash. In 1987 Justice and Customs
                       established policies designed to minimize the unnecessary holding of
                       cash. Although the situation has much improved because of the new pol-
                       icies, problems remain.

                       Both Justice and Customs policies stress the need to promptly identify
                       and deposit into their Treasury holding accounts all seized cash not
                       needed as evidence. Basically, this process is to be done within 60 days
                       of seizure. Decisions to hold for evidence amounts of less than $5,000
                       reside with U.S. Attorneys. Decisions to hold amounts of $5,000 or more
                       require Department of Justice headquarters approval. Agency policies
                       discourage retaining seized cash for evidence unless it is absolutely crit-
                       ical to the case. These policies take into account the fact that photo-
                       graphs or videotapes can be used as substitutes for seized cash. Reasons
                       used to justify retention of seized cash include unique packaging, finger-
                       prints, and narcotic residue.

                       Justice’s policy also points out that cash, unlike other assets seized by
                       the government (e.g. real property, conveyances), is a fungible item, and
                       this fact allows the government more flexibility in its decision whether
                       to hold it for evidence. For example, a decision to return seized cash to
                       its owner following case dismissal requires only that a like amount of
                       cash be returned-not     the actual cash seized. Therefore, given the agen-
                       cies’ policies and the fact that cash is a fungible item, it seems reason-
                       able to expect that most cash would normally be deposited in the
                       agencies’ holding accounts.

                       We asked Justice and Customs how much seized cash was being held as
                       evidence in February 1990. We learned that both agencies were still
                       unnecessarily holding substantial amounts. Customs, for example, was
                       holding about $36 million nationwide. About $31 million of this amount
                       involved seizures of $5,000 or more that had been on hand for more


                        Page 5                                          GAO/GGD99-94   Asset Forfeiture
    B-240015




    Both agencies have identified their seized property programs as highly
    vulnerable to fraud, waste, and abuse, and have acknowledged that sig-
    nificant internal control weaknesses plague these programs. Both agen-
    cies have embarked upon ambitious efforts to correct these problems. A
    key part of any effort would be to have integrated, sound financial sys-
    tems in place that can produce accurate, timely, and comprehensive
    financial statements capable of audit verification. The successful prepa-
    ration of financial statements on an annual basis would help provide a
    clear picture of Justice’s and Customs’ financial condition and the
    results of their operations.

    In its 1989 Financial Integrity Act report to the President and Congress,
    Justice said its seized property program had material weaknesses that
    included

. inadequate systems for tracking inventories,
. insufficient internal controls, and
. a lack of adequate periodic program and functional audits.

    At Customs, key management weaknesses included

. insufficient data to effectively manage inventories,
. inadequate physical inventories, and
l an absence of regular financial audits.

     These fundamental problems exist for a number of reasons. First, the
     seized property program must compete for limited resources with other
     enforcement programs within Justice and Customs. Second, both agen-
     cies acknowledge that they lack property management expertise. Third,
     both agencies acknowledge that there has not been effective headquar-
     ters oversight. The bottom line is that neither agency has a good way of
     measuring the effectiveness or efficiency of its operations.

     To address these problems, Justice and Customs have begun efforts to
     (1) redesign their seized property data systems, (2) provide more prop-
     erty management training to field operations, and (3) increase their
     headquarters oversight. In addition, both Justice and Customs have
     recently initiated efforts to prepare a set of financial statements for
     their forfeiture programs. We have assisted these agencies by helping
     them develop pro forma financial statements (see app. I). We and pro-
     gram managers from both agencies agree that these statements can help
     these agencies to



     Page 7                                          GAO/GGBSO-94   Asset Forfeiture
                        B-240015




                        To ensure compliance with existing cash management policies, we also
Recommendation to       recommend that the Attorney General and the Secretary of the Treasury
the Department of       aggressively monitor t,he holding of seized cash for evidence purposes to
Justice the             insure that cash is not being held without adequate justification. This
                        can be accomplished by routinely following-up with the seizing agencies
Department of the       and U.S. Attorney offices t,o determine if the reasons for initially holding
Treasury                seized cash as evidence remain valid and that the required approvals
                        have been obtained.

                                               -
                        We did not obtain written comments on this report. However, we dis-
                        cussed the report with Justice and Customs officials and have incorpo-
                        rated their comments where appropriate. Agency officials agreed with
                        the recommendations contained in the report.

                        We are sending copies of this report to the Attorney General; Secretary,
                        Depart,ment of the Treasury; and the Commissioner, U.S. Customs Ser-
                        vice. We will provide copies to other parties upon request.

                        Major contributors to this report are listed in appendix II. If you have
                        questions about this report, please call me on 275-8387.




                        .J. William Gadsby
                    /
                        Director, Federal Management
                            Issues




                         Page 9                                           GAO/GGD-90-94   Asset Forfeiture
Page 11   GAO/GGD-90-94   Asset Forfeiture
                        Appendix I
                        Pro Forma Financial   Statements




r                             ASSET FORFEITURE FUND
                             STATEMENT OF OPERATIONS
                        FOR THE YEARS ENDED SEPTEMBER 30
                                  (in thousands)

    REVENUES                                                          199x
    Forfeited     Cash
    Sales of Forfeited      Property,  Net (Note 3)
    Assets Retained for Agencies Use
       State and Local Agencies
       Foreign Governments
       Federal Agencies
    Interest    Income
    Investment     Income
    Fines and Penalties       in Lieu of Forfeiture
    Recovery of Returned Asset Management Costs
    Miscellaneous      Income
    Total Operating    Income
      Less - Refunds
    Net Operating   Income
    EXPENSES
    Asset Management Expenses
      Property     Management and Maintenance              Expenses
      Contractor/Selling        Expenses
      Theft,     Loss, and Damage
      Evidence Storage and Destruction
    Case Related Expenses
       Legal Advertising       Expense
      Other Expenses
    Program Management Expenses
      Automated Data Processing
       Training    and Printing
       Specialized     Contract   Services
    Miscellaneous                                                     --
    Total    Expenses                                                 -      -
    Excess    of Revenues   over   Expenses                           --




                         Page 13                                                 GAO/GGD-90-94   Asset Forfeiture
                     Appendix I
                     Pm Forma Financial   Statements




                         ASSET FORFEITURE FUND
               STATEMENT OF CHANGES IN FINANCIAL POSITION
                               (Cash Basis)
                    FOR THE YEARS ENDED SEPTEMBER 30
                             (in thousands)


                                                              --199x   199x
SOURCESOF CASH
Excess of Revenues over Expenses
Items Not Affecting        Cash:
   Allowance     for Theft,    Loss, and Damages
   Decrease (increase)       in Accounts
     Receivable
   Decrease (increase)       in Interest      Receivable
   Increase     (decrease)   in Accounts Payable
   Increase     (decrease)   in Liens Payable
   Increase     (decrease)   in Taxes Payable
   Increase     (decrease)   in Distributions       Payable
   Increase     (decrease)   in Refunds Payable
                                                              --
Total   Sources    of Cash
USES OF CASH
Distributions
 State/Local  Agencies
 Foreign Governments
 Federal Agencies
Total   Cash Distributed                                      --
Total   Uses of Cash
Cash Retained      in Fund                                    --
CASH - beginning      of the    year                          --
CASH - end of the       year
                                                              --




                      Page 15                                                 GAO/GGD9&94   Asset Forfeiture
                                                   Appendix I
                                                   Pro Forma Financial    Statements




Asset Forfeiture Fund Schedule of Revenues Over Asset Specific Expenses for the Year Ended September 30,19Xx
(In Thousands)
Revenues                                    Cash Property Investments         Vehicles   Vessels   Aircraft  Other                                  Total
Sales of forfelted property, net Assets retalned
for use by:                                             xxx              xx             xx           xx        xx           xx          xx          xxx
   state and local agencies                                   X            X                           X         X            X           X               X
   foreign governments                                        X            X                           X         X            X           X               X
   federal agencies                                           X            X                           X         X            X           X               X
Interest Income                                               X                                                                                           X
Investment Income                                                                           X
                                                                                                                                              __-
 Recovery of returned asset management costs                  X           X                 X         X           X             X         X               X
 Miscellaneous income                                                     X                 X         X           X             X         X               X
______
 Fines
 ~-__ and penalties                                                       X                 X         X        ~-.X             X         X               X
Total operating income                                  xxx              xx             xx      ___--xx        xx           xx          xx           xxx
less refunds                                                                                    __---__--                                 X             X
Net ooeratina income                                    xxx              xx             xx           xx        xx           xx          xx           xxx

Asset specific expences
Property management and maintenance                           X         X                  X          X
                                                                                                               __-X             X         X           xx
Contractor/selllnq _ expenses                                           X                  X          X     -__ X               X         X           xx
Theft, loss, and damages                                                 X                 X          X           X             X         X           xx
                                                                                       ---_______
Evidence storage and destructIon                                        X                  X          X           X             X         X           xx
                                                                     .____~.           ~.                      __-__-..-__.--
Total asset soecific exoenses                              X              X              X            X         X            X           X             xx
Revenues over asset specific expenses                   xxx              xx             xx           xx        xx           xx          xx           xxx




                                                    Page 17                                                      GAO/GGD9&94        Asset Forfeiture
Appendix II

Major Contributors to This Report


                        John Stahl, Assistant Director
General Government      *JamesBlack, Advisor
Division, Washington,   Roger Lively, Assignment Manager
D.C.             -      Shirley Bates, Evaluator


                        Donald Wurtz, Special Assistant to the Assistant
Accounting and             Comptroller General
Financial Management    -Judith Czarsty, Evaluator-in-Charge
Division, Washington,
D.C.

                        Shellee Soliday, Site Senior
Atlanta Regional
Office

                        Aleta Hancock, Evaluator
Los Angeles Regional
Office




(246004)                Page 18                                            GAO/GGD90-94   Asset Forfeiture
                       Appendix 1
                       Pro Forma Financial     Statements




NOTES     TO ASSET      FORPEITUPX       FUND    PRO-FOWA             BINAUCIAL      STATNNNNTS


1. Organization          and Purpose
Background      information          on agency,          the     forfeiture        act,   and fund
capitalization.
2. Summary of Significant                Accounting            Policies
   -   distribution      of    net proceeds,
   -   distribution      of    forfeited  assets               out of the         fund,
   -   interest     income,
   -   investments,
   -   reimbursement      of    other        agencies,
   -   seized cash and         assets.
3. Table      Showing      the Derivation            of Net Sales
   Sales     of Forfeited Property
   Less:      Liens
              Fair Market Value Adjustment     on Disposal
              Net Sales of Forfeited   Property


 Total      cash     (no netting      of equity          sharing).
5. Overall         Note on Expenses
   Disclose       any significant    contractor     relationship     and
   responsibilities.           When multiple    contractors      are used,                     suggest
   including       a small schedule indicating         expenses related                        to each
   of the contractors.
6. Accounts          Receivable
7. Table      Showing
       Distributions      of Excess          Revenues          over   Expenses       --   including
       equipping     conveyances.
       Agencies                               Cash                            Non-cash
   State/local
   Federal
   Foreign
 8. Contingencies
 9. Reconciliation           to Budget




                        Page 16                                                                 GAO/GGD90-94   Asset Forfeiture
               Appendix I
               Pm Forma Financial   Statements




DISTRIBUTION   OF EXCESS OF REVENUES OVER EXPENSES
   Transfers    to State and Local Agencies
   Transfers    to Foreign Governments
   Transfers    to Federal Agencies
          Total Distributions                    --
Increase     (Decrease)    in Fund Balance       --
Beginning     Fund Balance                       --
Ending   Fund Balance                            --




               Page14                                 GAO/GGIWO-94AssetForfeiture
Appendix I

Pro Forma Financial Statements



                                            ASSET FORFEITURE FUND
                                       STATEMENT OF FINANCIAL POSITION
                                      FOR THE YEARS ENDED SEPTEMBER 30
                                                (in thousands)
                                                                      199x   m
             ASSETS
             Forfeited    Cash-
                Held in Treasury
                In Commercial Banks
                Other Cash
             Accounts Receivable
             Interest    Receivable
             Forfeited    Property    -
               Real Property
                Investments
                Vehicles
                Vessels
                Aircraft
                Other                                                 --
             Total Forfeited       Property
             Less -
                Allowance    for Theft,     Loss and Damages
                Allowance    for Fair Market Value Adjustment
                   on Disposal
               Total     Assets
             LIABILITIES
             Accounts Payable - Contractor
             Liens Payable
             Taxes Payable
             Accounts Payable - Other
             Deferred Revenue from Forfeited    Assets
             Distributions   Payable to State and Local
                Agencies
             Distributions   Payable to Foreign Governments
             Distributions   Payable to Federal Agencies
             Refunds Payable                                          --
             Total Liabilities
             Contingencies           (See Note 8)
             FUND BALANCE
             Total     Liabilities      and Fund Balance              --




                                       page12                                    GAO/GGD-99-94   Asset Forfeiture
Contents


Letter
Appendix I                                                                                         12
Pro Forma Financial
Statements
Appendix II             General Government Division, Washington, D.C.                              18
Major Contributors to   Accounting and Financial Management Division,                              18
                             Washington, D.C.
This Report             Atlanta Regional Office                                                    18
                        Los Angeles Regional Office                                                18




                        Page 10                                     GAO/GGD-SO-94   Asset Forfeiture
                             B249915




                     l more accurately report forfeiture program results by facilitating a full
                       disclosure of their asset management and disposal activities,
                     . more accurately determine the cost effectiveness of the asset manage-
                       ment and disposal strategies, and
                     l limit Justice’s and Customs’ exposure to fraud, waste, and
                       mismanagement.

                             While the current *Justice and Customs seized property program man-
                             agers seem committed to preparing these statements, fixing their cur-
                             rent data systems will require a long-term commitment. Indeed, the time
                             required could likely exceed the tenure of the current seized property
                             program managers. Congress can help ensure continuity of effort by
                             requiring a set of annually audited financial statements. H.R. 1594,
                             which is currently pending before Congress, establishes such a require-
                             ment for Customs.

                                                 _________~
                             Both Justice and Customs have administrative actions underway to cor-
Conclusions                  rect, within their authority, the serious, long-standing cash management
                             and financial reporting problems faced by t,hese programs. However,
                             legislative actions are needed to further improve the effectiveness of
                             these programs.

                                                   __________~
                             We recommend that, Congress
Recommendations to
Congress                 .   amend 28 IJSC. 524(c) to require that the Justice annual forfeiture
                             fund report to Congress include a complete set of audited financial state-
                             ments prepared in a manner consistent with the requirements of the
                             Comptroller General and
                         l   amend 19 IJSC. 1613b to require that the Customs annual forfeiture
                             fund report to Congress include a complete set of audited financial state-
                             ments prepared in a manner consistent with the requirements of the
                             Comptroller General.




                              Page a                                         GAO/GGtWO-94   Asset Forfeiture
                    B240015




                    than 60 days. About $19 million of the $31 million was in Miami, New
                    York, and Los Angeles. Our inquiries of Customs officials at these loca-
                    tions showed that much of this money was not necessary for evidence
                    and should have been deposited in the agency’s holding account.
                    Deposits totaling about $8.3 million were made within 2 weeks following
                    our initial inquiries and at least $1.5 million more was deposited during
                    the following 2 weeks.

                    At the time of our inquiries in February 1990, Justice was holding about
                    $35 million nationwide for evidence. Following our inquiries, Justice
                    queried its agencies to determine if any of this money was being held
                    unnecessarily. Justice’s follow-up resulted in the identification and
                    deposit of another $16 million that was being unnecessarily held.

                    On at least two occasions since 1987, Justice has formally reminded its
                    employees of its policy concerning the holding of cash as evidence. Cus-
                    toms has drafted a proposed revision to its seized cash directive that
                    requires more communication between its office and the office of the
                    U.S. Attorney. However, because the problem of unnecessarily holding
                    seized cash as evidence has been recurring, Justice and Customs need to
                    more aggressively monitor the practice of holding cash as evidence to
                    insure that the cash is not being held without adequate justification.
                    This can be accomplished by routinely following-up with the seizing
                    agencies and ITS. Attorney offices to determine if the reasons for ini-
                    tially holding seized cash as evidence remain valid and that the required
                    approvals have been obtained.


                    Justice and Customs are responsible for the control and management of
Audited Financial   their seized property, which, as of December 1989, was estimated to be
Statements Needed   worth $1.4 billion. Operations of this nature and size should be managed
                    on a day-to-day basis through effective and efficient use of business-
                    type financial information flowing from good accounting systems. Reli-
                    able financial information is needed for program managers to make
                    informed decisions and evaluations. In addition, Congress needs the
                    information in its oversight role to have an accurate and complete pic-
                    ture of whether the government is managing its forfeiture program in
                    the most cost effective and efficient manner. However, neither agency
                    has produced a full set of audited financial statements covering forfei-
                    ture program operations.




                    Page 6                                          GAO/GGD9094   Asset Forfeihue
                       B-249915




                       officials; examining cash management policies, procedures, and eviden-
                       tiary cash records; and assisting both Customs and Justice program offi-
                       cials in preparing financial statement formats. Our work in the cash
                       area represents the latest in a series of GAO products addressing the need
                       for a legislative change in the way seized cash is processed. Our method-
                       ology for the work relating to processing seized cash centered around a
                       review of 1,125 closed cases totaling $123.9 million. We worked back-
                       wards from cases closed in 1988, reviewing as many cases as time per-
                       mitted. Our work was done in accordance with generally acceptable
                       auditing standards. Views of responsible agency officials were included
                       where appropriate.


                        Because of a legislative requirement, most seized cash has been forfeited
Most Seized Cash Can   judicially even though no one came forward to claim the money.
Be Forfeited Faster     Processing such seizures judicially requires more time and adds unneces-
                       sarily to district courts’ and U.S. Attorney offices’ workloads.

                       Our analysis of the 1,125 cash cases shows that (1) judicial forfeitures
                       take longer than administrative forfeitures and (2) most cash was for-
                       feited judicially even though it was uncontested. Customs’ and Justice’s
                       judicial forfeitures averaged 15 and 12 months, respectively, while
                        administrative forfeitures averaged about 8 months at both agencies.
                       About 82 percent ($101.6 million) of the cash went through a judicial
                       proceeding and 18 percent ($22.3 million) through an administrative
                       proceeding. About 89 percent ($90.4 million) of the judicially forfeited
                       cash was uncontested. These cases were forfeited judicially because of
                       the legal requirement that cash over $100,000 must go through a judicial
                       proceeding.

                       As of December 1989, seized cash represented about 39 percent ($557
                       million) of Justice’s and Customs’ $1.4 billion inventory in seized prop-
                       erty. Unless the law is changed permitting all uncontested cash seizures
                       to be processed administratively, an estimated $406 million will also go
                       through the slower judicial process uncontested.

                       In April 1989 (GAO/T-GGD-89-17) we first recommended that 19 U.S.C.
                        1607(a) be amended to provide for the administrative forfeiture of all
                       uncontested cash seizures. We continue to believe that recommendation
                       needs to be implemented. Changing the law to allow uncontested cash
                       seizures of any amount to be forfeited administratively would result in
                       most seized cash being forfeited faster. This change would decrease dis-
                       trict court workloads without affecting individuals’ due process rights


                       Page 4                                          GAO/GGD-9094   Asset Forfeiture
                   -__________--
                              B-240015




                              seized property annually and have been identified by their agencies as
                              having internal control problems.

                              Specifically, this report addresses the need to enact legislative changes
                              designed to (1) speed up the processing of uncontested seized cash and
                              (2) increase congressional and agency oversight through stronger finan-
                              cial controls and reporting requirements. In addition, we are recom-
                              mending that Justice and Customs more aggressively monitor their
                              controls over seized cash held for evidence purposes.


                              Forfeiture law is an important part of law enforcement strategies for
Background                    combating drug traffickers and organized crime because it allows the
                              government to take property, including cash, that has been illegally used
                              or acquired. In cases of $100,000 or less, forfeiture can be handled
                              administratively by the seizing agencies such as the Drug Enforcement
                              Administration and the U.S. Customs Service. Generally, this proceeding
                              is used on smaller cases involving cars, boats, planes, and other types of
                              property such as jewelry and artwork. For amounts above $100,000 and
                              for all real property, the cases are handled judicially by U.S. Attorney
                              offices and the courts. Also, cases under $100,000 are handled judicially
                              when the defendant or other involved parties request this form of
                              handling.

                              The Comprehensive Crime Control Act of 1984 expanded the govern-
                              ment’s seizure authority and established asset forfeiture funds to
                              finance the management and disposal of seized and forfeited assets. As a
                              result of the expanded authority, Justice and Customs estimate the
                              value of their asset inventories has grown from $33 million in 1979 to
                              $1.4 billion in December 1989.

                              The primary objectives of the forfeiture programs are to (1) reduce the
                              economic power of criminals and their enterprises, (2) improve intergov-
                              ernmental cooperation by sharing proceeds with state and local govern-
                              ments, and (3) generate revenues to help fight the war on drugs. Given
                              these objectives and the sharply increasing value of assets being seized,
                              the need for sound policies, good internal controls, and comprehensive
                              financial reporting is paramount.


                              By law, cash seizures over $100,000 must be forfeited judicially even
Results in Brief              though 89 percent of all cash forfeited judicially is never contested, that
                              is, no one comes forward to claim the money.


                              Page2                                            GA0/GGD9094AssetFo&&me