oversight

Asset Forfeiture: Marshals Service Controls Over Seized Assets

Published by the Government Accountability Office on 1999-03-26.

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

                United States General Accounting Office

GAO             Report to the Honorable Janet Reno,
                The Attorney General



March 1999
                ASSET FORFEITURE
                Marshals Service
                Controls Over Seized
                Assets




GAO/GGD-99-41
GAO   United States
      General Accounting Office
      Washington, D.C. 20548

      General Government Division



      B-280466

      March 26, 1999

      The Honorable Janet Reno
      The Attorney General

      Dear Madam Attorney General:

      Since 1990, the Department of Justice’s asset forfeiture program has been
      designated a high-risk area by the Comptroller General because it has been
      characterized by mismanagement and internal control weaknesses. Over
      the years, we have reported on the existence of major operational
      problems relating to the management and disposition of seized and
                                                                               1
      forfeited property that resulted in unnecessary losses to the government.
      Our recent high-risk report noted that while improvements have been
                                                                             2
      made, several weaknesses existed, and the program remained high risk.

      As part of our continuing oversight of asset forfeiture programs, we
      initiated a review of certain U.S. Marshals Service controls over selected
      categories of seized assets—namely vehicles, vessels, real property,
      financial instruments, and general property—at four large Marshals
      Service districts: the Central District of California, the Southern District of
                                                                       3
      Florida, and the Southern and Eastern Districts of New York. At each
      location, we selected a number of assets for review from the district’s
                 4
      inventory, including totals for the four districts of 258 vehicles; 76 vessels;
      55 real properties; 230 financial instruments (e.g., travelers checks and
      money orders); and 77 items of general property (i.e., artwork, jewelry,
      tools, and machinery). Our objective was to determine whether selected
      seized assets at the test locations under Marshals Service control were
      accurately accounted for and safeguarded against theft, loss, and
      deterioration.

      1
       High-Risk Series: Quick Reference Guide (GAO/HR-97-2, Feb. 1997) and High-Risk Series: Asset
      Forfeiture Programs (GAO/HR-95-7, Feb. 1995).
      2
          High-Risk Series: An Update (GAO/HR-99-1, Jan. 1999).
      3
        The Marshals Service is the custodian of seized and forfeited properties for the Department of Justice.
      It is responsible for safeguarding, storing, and maintaining property, such as vehicles, vessels, real
      property, and financial instruments seized by the Department’s investigative agencies, such as the
      Federal Bureau of Investigation (FBI) and the Drug Enforcement Administration (DEA).
      4
       Depending on the number of assets in each category at each district, we randomly selected a sample
      of assets from the universe or, when feasible, included the entire universe in the review. In other
      instances, we included or excluded assets from review, based on time and cost constraints. The
      randomly selected samples allowed us to draw statistical conclusions about the universe of assets in
      those categories.




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                   B-280466




                   We were able to account for all of the seized assets included in our review
Results in Brief   at the four Marshals Service districts we visited. In addition, based on our
                   observations and documentation in the case files, the seized assets
                   generally appeared to be in good condition and were stored and secured
                   properly, in accordance with physical security and property management
                                                                       5
                   provisions in storage and maintenance contracts. For the categories for
                   which we randomly sampled assets, we are confident, based on our asset
                   selection methodology and our findings, that few if any of the seized assets
                   in the categories we reviewed were unaccounted for or improperly stored
                   and secured at the four districts we visited. For the categories in which we
                   reviewed all items and those in which we reviewed judgmental samples,
                   we found that all of the items reviewed were accounted for and properly
                   stored and secured. Our results apply to the four districts and cannot be
                   projected to all Marshals Service Districts.

                   Although we were able to account for each selected seized asset, we
                   identified several discrepancies between the physical location of the asset
                   and the location listed on the district’s computerized Consolidated Asset
                                                                        6
                   Tracking System (CATS) Assets on Hand inventory. Department of Justice
                   and Marshals Service officials attributed these discrepancies to delays in
                   updating CATS. When we were unable to locate assets as shown in CATS,
                   other documentation permitted us to verify the disposition of the assets in
                   question.

                   The government seizes property associated with violations of various
Background         federal statutes and takes title to that property (forfeiture) through either
                   an administrative or judicial process. Asset forfeiture is a means of
                   punishing and deterring criminal activity by depriving criminals of
                   property used or acquired through illegal activities. After federal forfeiture,
                   noncash property may be sold, put into official use, or shared with state
                   and local law enforcement agencies participating in the seizure. Seized and
                   forfeited property include businesses, cash, bank accounts, vehicles,
                   vessels, airplanes, jewelry, art objects, and real estate. Justice investigative
                   agencies, such as the FBI and DEA, also seize illegal drugs, weapons, and


                   5
                    The Marshals Service contracts with private companies, called vendors, for storage and maintenance
                   of various types of assets.
                   6
                    CATS is the primary automated system for asset tracking and management used by all agencies
                   participating in the Justice asset forfeiture program.




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                         B-280466




                         counterfeit items that have no resale value to the government. These latter
                         items are typically held until they are approved for destruction.

                         The Marshals Service has primary responsibility in the Department of
                         Justice for the maintenance, protection, and disposal of seized property.
                         Ninety-four Marshals Service district offices administer seized assets
                         programs. The Marshals Service currently manages more than 25,000
                         assets valued at more than $1.3 billion. More than 35 percent of the total
                         value relates to real property, while vehicles comprise 50 percent of the
                         total inventory items.

                         At each of the four Marshals Service districts we visited, we were able to
Seized Assets Selected   account for all of the seized assets that we reviewed. At each location, we
for Review Were          selected a number of assets from the district’s CATS Assets on Hand
Accounted for,           inventory for review. In those asset categories where we reviewed all
                         cases, we were able to account for each item. In those categories where
Properly Stored, and     we randomly sampled assets, we were able to account for each selected
Secured                  item, and thus we are 95-percent confident that at least 95 percent of all
                         items in the universe were accounted for. In those categories where we
                         judgmentally sampled assets, we were able to account for all selected
                         items. Table l in the Scope and Methodology section shows the numbers of
                         seized assets reviewed and the sampling method employed by category
                         and district.

                         In addition to accounting for all of the seized assets that we selected for
                         review, based on our observations and documentation in the case files, the
                         assets we reviewed appeared to be in good condition and were stored and
                         secured properly, in accordance with physical security and property
                         management provisions in the storage and maintenance contracts for the
                         assets selected. For example, in the Central District of California, each of
                         the 14 real properties we judgmentally selected appeared to be cared for
                         properly (e.g., we observed no overgrown grass, broken windows, or trash
                         in the yard) in accordance with the grounds maintenance provisions in the
                         vendor’s property management contract. This was a marked contrast to
                                          7
                         our 1996 report, in which we observed instances where property had
                         deteriorated because of inadequate maintenance, causing the government
                         to incur unnecessary losses. Additionally, property management case files
                         for these real properties contained documentation of recent physical
                         inspections, as required by the contract, and appraisals in accordance with
                         Marshals Service policy and procedures. District officials attributed the
                         improvements in real property management, which we observed during
                         7
                             Review of SADF Disbursements (GAO/AIMD-96-114R, June 1996).




                         Page 3                                                        GAO/GGD-99-41 Asset Forfeiture
                        B-280466




                        this current review, to increased oversight of properties by district
                        personnel and preseizure planning on all real estate seizures.

                        Our current observations of real property at the Southern District of
                        Florida and the Southern District of New York also found that assets we
                        reviewed appeared to be in good condition and were properly stored and
                        secured, in accordance with vendor property management contract
                        provisions. One difference that surfaced, however, in our observations
                        among districts involved the appearance of some vehicles. We observed
                        that 7 of the 126 vehicles in inventory in the Southern and Eastern Districts
                        of New York had flat tires; and many were dirty and unwashed, while the
                        vehicles that we observed at the other two districts appeared clean and
                        had no flat tires. Both New York districts used the same vendor for vehicle
                        storage and maintenance. Although the contract did not call for the vendor
                        to wash the vehicles, district officials said that they would consider
                        corrective action.

                        The results of our seized asset reviews in the 4 districts cannot be
                        projected to all 94 Marshals Service districts. A summary of our results for
                        each of the four districts is found in appendix I.

                        During our review, we found discrepancies between the physical location
Several Discrepancies   of several assets selected for review and the location listed on the CATS
in Inventory Control    Assets on Hand inventory. For example, we did not physically locate or
and Other Procedures    observe 34 assets selected for review in the Central District of California,
                        although we were able to account for the assets’ disposition. Marshals
Were Identified         Service and vendor officials said that the assets either had been
                        transferred to other authorized locations or had been sold. They attributed
                        these discrepancies to delays in updating CATS to reflect the changes.
                        Nevertheless, other documentation permitted us to verify the disposition
                        of these selected assets. In most cases, documentation was readily
                        available and updates to CATS were being made in a reasonable amount of
                        time.

                        Although our review did not involve an assessment of the CATS inventory,
                        we brought the CATS-related discrepancies to the attention of the
                        Department of Justice Asset Forfeiture Management staff and Marshals
                        Service officials at our exit conference. The officials responded that they
                        were aware of the situations, and would attempt to rectify them.

                        We also found several discrepancies when attempting to locate copies of
                        checks and deposit tickets to verify receipt of funds and deposits to a
                        Federal Reserve Bank or other authorized institution. In each instance, we



                        Page 4                                           GAO/GGD-99-41 Asset Forfeiture
              B-280466




              were provided alternative support that showed the deposits were made.
              For example, in the Southern District of Florida, we were unable to locate
              copies of 5 checks and 11 deposit tickets, although Marshals Service
              policies require deposit tickets to be maintained. However, the Marshals
              Service subsequently sent us copies of deposit tickets for 8 of the 11,
              documentation showing that funds had been returned in 1 case, and 3
              alternative support documents showing that funds had been received and
              deposits had been made for the remaining 2 cases. Officials in the
              Southern and Eastern Districts of New York also provided us with several
              alternative support documents for each case where copies of deposit
              tickets were not in the case files. Officials in the three districts said that
              they would emphasize the necessity to maintain copies of checks and
              deposit tickets to substantiate receipt and deposit of seized funds.
              Appendix I provides additional information on this issue.

              Through interviews of seized asset personnel, file reviews, and
Scope and     observations, we identified property management policies and procedures
Methodology   to determine if the seized assets managed by the Marshals Service could be
                                                                                    8
              accounted for and safeguarded against theft, loss, and deterioration. We
              chose four Marshals Service districts with high-dollar value seized asset
                                                                            9
              inventories and selected five categories of assets for review to determine
              whether (1) the assets could be physically located or their disposition
              documented, (2) the description of assets in CATS matched the physical
              attributes of the assets, and (3) the assets appeared to be in good condition
              and had been stored and secured in accordance with contractual
              requirements. Additionally, for financial instruments, we determined
              whether (1) the case file could be located, (2) the dollar amount in CATS
              matched the amount received by the Marshals Service, and (3)
              documentation existed to show that the appropriate amount received by
              the Marshals Service was subsequently deposited into a bank account.

              Our review included a selection of assets from the CATS Assets on Hand
              inventory on the week prior to our visit. For some asset categories and
              districts, our review included all the assets on the CATS Assets on Hand
              inventory. For other asset categories and districts, our review included
              judgmentally selected assets on the CATS inventory that were within a
              reasonable geographic distance, given our time and cost constraints. For
              8
               We did not review other major asset forfeiture program areas, including CATS, preseizure planning,
              equitable sharing, financial management, or chain of custody controls.
              9
               Vehicles, vessels, real property, financial instruments, and general property; categories varied by
              district.




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                                           B-280466




                                           the remaining assets categories and districts, we drew random samples
                                           from the CATS Assets on Hand inventories. The results of these random
                                           samples allow us to make “95-percent confidence statements” about all the
                                           assets on the inventories for these categories. Our results, however, cannot
                                           be projected to all Marshals Service districts or other asset types. Table 1
                                           shows the numbers of seized assets reviewed and the sampling method
                                           employed by category and district.


Table 1: Seized Assets Reviewed by Asset Category and Marshals Service District
                                                                 Marshals Service districts
Asset category                Central California  Southern Florida Southern New York          Eastern New York           Total
                                                a                 a                     b                     b
Vehicles                                     60                60                   80                     58             258
                                                c                 b                     d                     d
Vessels                                      19                57                     0                     0              76
                                                c                 c                     c                     d
Real property                                16                21                    18                     0              55
                                                a                 a                     a                     a
Financial instruments                        60                60                   50                     60             230
                                                a                 d                     b                     b
General property                             60                 0                   13                      4              77
Total                                       215               198                   161                    122            696
                                           a
                                               Random selection of cases.
                                           b
                                               Selection of all cases.
                                           c
                                               Judgmental selection of cases.
                                           d
                                               Not included in our review.
                                           Source: GAO review of Marshals Service data.


                                           During our visits to the four districts, we interviewed Marshals Service and
                                           vendor officials, reviewed vendor contracts and case files for the selected
                                           assets, and traveled to various seized asset storage facilities, consisting
                                           primarily of warehouses and boatyards for storing and securing vehicles
                                           and vessels. At the facilities, we observed the overall condition of the
                                           selected assets, noting whether they were clean and appeared to be in no
                                           danger of deteriorating. We also observed whether the facilities appeared
                                           to be secure and had fencing, alarms, and security personnel, for example.
                                           We reviewed selected provisions in vendors’ contracts (e.g., physical
                                           security and storage provisions), but we did not attempt to assess vendor
                                           compliance with numerous other contract provisions, including auction
                                           and payment activities.

                                           We also traveled to numerous real estate locations to personally observe
                                           the appearance of the selected properties. While at these locations, we
                                           observed the overall condition of the property, focusing on the exterior
                                           and looking for any apparent damage or adverse conditions, such as
                                           overgrown grass, broken windows, and trash in the yard, that could
                                           contribute to possible deterioration. We did not enter the structures and
                                           did not perform any inspection of the interior, the roof, plumbing, wiring,
                                           or interior condition. We also did not attempt to assess vendor compliance



                                           Page 6                                               GAO/GGD-99-41 Asset Forfeiture
                  B-280466




                  with numerous other contract provisions, including maintenance and
                  repair. However, we reviewed the related case files to check for recent
                  inspections by others.

                  For financial instruments, we traced receipt of the instrument identified on
                  the CATS inventory (e.g., check or money order) to the Marshals Service
                  from the seizing agency. We then verified the instrument’s deposit in a
                  Federal Reserve Bank or other authorized institution, usually by deposit
                  ticket but in some cases by alternative support, such as Marshals Service
                  internal reports showing deposits made to a bank account. With respect to
                  the general property, we also observed various seized assets, usually
                  jewelry, stored in Marshals Service district office vaults. We conducted our
                  work between July and November 1998 in accordance with generally
                  accepted government auditing standards.

                  We provided a copy of a draft of this report to the Attorney General for
Agency Comments   comment. On February 3, 1999, we met with Department of Justice
                  officials to discuss a draft of this report. These officials generally agreed
                  with the information presented in this report and provided technical
                  comments that we incorporated as appropriate.

                  We are sending copies of this report to Senator Robert Byrd, Senator Orrin
                  Hatch, Senator Patrick Leahy, Senator Joseph Lieberman, Senator Ted
                  Stevens, and Senator Fred Thompson, and to Representative Dan Burton,
                  Representative John Conyers, Representative Henry Hyde, Representative
                  David Obey, Representative Henry Waxman, and Representative C.W. Bill
                  Young in their capacities as Chair or Ranking Minority Member of Senate
                  and House Committees. We are also sending copies of this report to Gerald
                  McDowell, Chief, Asset Forfeiture and Money Laundering Section,
                  Criminal Division, Department of Justice; Michael Perez, Director, Asset
                  Forfeiture Management Staff, Justice Management Division; and The
                  Honorable Eduardo Gonzalez, Director, U.S. Marshals Service. Copies will
                  also be made available to others upon request.




                  Page 7                                             GAO/GGD-99-41 Asset Forfeiture
B-280466




The major contributors to this report are listed in appendix II. Please
contact me on (202) 512-8777 if you have any questions about this report.

Sincerely,




Richard M. Stana
Associate Director
Administration of Justice Issues




Page 8                                          GAO/GGD-99-41 Asset Forfeiture
Page 9   GAO/GGD-99-41 Asset Forfeiture
Contents



Letter                                                                                                  1


Appendix I                                                                                             12
                        Central District of California, Los Angeles                                    12
Summary of Four         Southern District of Florida, Miami                                            13
Marshals Service        Southern District of New York, Manhattan                                       15
                        Eastern District of New York, Brooklyn                                         17
Districts
Appendix II                                                                                            19

Major Contributors to
This Report
Tables                  Table 1: Seized Assets Reviewed by Asset Category and                           6
                          Marshals Service District




                        Abbreviations

                        CATS           Consolidated Asset Tracking System
                        DEA            Drug Enforcement Administration
                        FBI            Federal Bureau of Investigation




                        Page 10                                             GAO/GGD-99-41 Asset Forfeiture
Page 11   GAO/GGD-99-41 Asset Forfeiture
Appendix I

Summary of Four Marshals Service Districts


                          To assess Marshals Service controls over seized assets in the Central
Central District of       District of California, we selected 215 out of 2,957 seized assets
California, Los Angeles   representing 5 asset categories from the CATS Assets on Hand Inventory
                          Report, as of August 1, 1998. The 5 asset categories and numbers we
                          selected included vehicles (60); vessels (19); real property (16); financial
                          instruments (60); and general property (e.g., artwork, jewelry, tools, and
                          machinery) (60). We visited sites during the months of August and
                          September 1998.

                          We were able to account for all 215 selected seized assets. Overall, based
                          on our observations, the assets appeared to be in good condition and were
                          stored properly in accordance with physical security and property
                          management provisions in the vendors’ contracts and the Marshals Service
                          Policy and Procedures Manual. However, we found some discrepancies
                          between the physical location of the assets and the location noted on the
                          CATS inventory. The following paragraphs explain how the discrepancies
                          were resolved. For example, we could not locate or observe 21 general
                          property assets because the CATS inventory records had not been updated
                          to reflect transfer or sale of assets. We were able to examine
                          documentation that permitted us to verify the disposition of these selected
                          assets.

                          Specifically, we found the following:

                          Vehicles – We physically located 52 of the 60 vehicles randomly sampled
                          from a universe of 264 vehicles. The 52 vehicles appeared to be stored
                          properly, in a warehouse, in accordance with the physical security and
                          storage provisions in the vendor’s property management contract.
                          According to documentation we reviewed in Marshals Service case files,
                          the eight other vehicles either had been sold, transferred for other law
                          enforcement agency use, or were in transit between storage sites. A
                          Marshals Service official explained that the CATS records had not been
                          updated to reflect the sales or transfers.

                          Vessels – We physically located 14 of the 19 vessels, selected from a
                          universe of 20 vessels. We did not try to verify the location of one vessel
                          because the CATS inventory listing showed that it was located too far
                          away for a practical visit. The 14 vessels we examined appeared to be
                          stored properly (e.g., in dry dock or wet storage) in accordance with the
                          vendor’s property management contract storage provisions. The remaining
                          five vessels were sold prior to our visit, according to other documentation
                          in the Marshals Service case files, but were still listed on CATS.




                          Page 12                                           GAO/GGD-99-41 Asset Forfeiture
                       Appendix I
                       Summary of Four Marshals Service Districts




                       Real property – We visited 14 of 16 real properties, judgmentally selected
                       from a universe of 47 properties. We did not randomly sample or visit all of
                       the properties because of time and cost considerations. Based on our
                       observations, all of the properties we visited appeared to be cared for
                       properly (e.g., we observed no overgrown grass, broken windows, or trash
                       in yard) in accordance with the vendor’s property management contract.
                       Prior to visiting the selected properties, we reviewed each case file and
                       found recent appraisals and evidence of regular inspections performed by
                       contractors for the Marshals Service. Two of the 16 properties were no
                       longer in Marshals Service custody. According to documentation in the
                       Marshals Service case files we reviewed, cash settlements had been
                       received in lieu of the Marshals Service maintaining custody of the
                       properties. However, according to the Marshals Service, the CATS records
                       had not been updated to reflect the settlement actions.

                       Financial instruments – We were able to trace and verify the amounts of all
                       60 financial instruments, randomly sampled from a universe of 806
                       instruments, to copies of checks sent to the Marshals Service from seizing
                       agencies. Further, we judgmentally selected 10 case files and verified
                       copies of the deposit tickets from the Federal Reserve Bank, as required in
                       the Marshals Service Policy and Procedures Manual. No discrepancies
                       were noted.

                       General property – We physically located 39 of the 60 assets randomly
                       sampled from a universe of 1,656 assets. Based on our observations, the 39
                       assets appeared to be stored properly in accordance with the storage
                       provisions in the vendor’s property management contract. According to
                       documentation in the Marshals Service case files we reviewed, of the
                       remaining 21 assets, 14 were stored at a vendor in Atlanta, GA; 6 had been
                       sold; and 1 was discovered missing and presumed stolen during an
                       inventory check done in connection with property transfers from one
                       warehouse to another. According to a Marshals Service official, delays by
                       data analysts in recording transfers of assets accounted for the
                       discrepancies between the CATS listing and the actual location of the
                       property.

                       We selected 198 out of 646 seized assets, representing 4 categories of
Southern District of   assets from the CATS Assets on Hand Report. The 4 asset categories and
Florida, Miami         numbers we selected included vehicles (60); vessels (57); real property
                       (21); and financial instruments (60).

                       We were able to account for all 198 selected seized assets. Overall, based
                       on our observations of the selected assets that we could physically locate,



                       Page 13                                         GAO/GGD-99-41 Asset Forfeiture
Appendix I
Summary of Four Marshals Service Districts




the assets appeared to be in good condition and had been stored properly
in accordance with physical security and property management provisions
in the vendors’ contracts and the Marshals Service Policy and Procedures
Manual. However, we found some discrepancies between the location of
the assets and the location noted on the CATS inventory. For example, we
could not locate or observe two vessels because the CATS inventory
records had not been updated to reflect that the vessels had been released
to other agencies. We were able to examine other documentation that
permitted us to verify the disposition of these selected assets.

Specifically, we found the following:

Vehicles – We physically located 57 of the 60 vehicles randomly sampled
from a universe of 133 vehicles. The 57 vehicles appeared to be stored
properly in accordance with the physical security and storage provisions in
the vendor’s property management contract. According to documentation
in the Marshals Service case files, the remaining three vehicles either had
been sold or released to the owner or to an attorney, yet they remained on
the CATS inventory. The CATS records were not updated to reflect these
dispositions, according to Marshals Service officials.

Vessels – We physically located 52 of 57 vessels. All 52 vessels appeared to
be stored properly in accordance with the storage provisions in the
vendor’s property management contract. According to documentation in
the Marshals Service case files, of the five remaining vessels, three were
sold prior to our visit. A fourth vessel had recently been released to the
FBI for official use, and a fifth vessel had been released to the Immigration
and Naturalization Service for evidence in a criminal trial. The CATS
inventory for the five vessels had not been updated at the time of our visit.

Real property – We visited 21 judgmentally selected real properties from a
universe of 38 real properties. We did not randomly sample or visit the
universe of properties because of time and cost constraints. We reviewed
the case files for each of the selected properties and found recent
appraisals and evidence of regular inspections by the contracted property
manager. Furthermore, based on our observations, each of these
properties appeared to be cared for properly, in accordance with the
grounds maintenance provisions in the vendor’s property management
contract.

Financial instruments – We located the case files for all 60 financial
instruments randomly sampled from a universe of 385 instruments. In each
file, we looked for copies of checks that corresponded to the amount listed



Page 14                                          GAO/GGD-99-41 Asset Forfeiture
                       Appendix I
                       Summary of Four Marshals Service Districts




                       in CATS and that had been sent to the Marshals Service from the seizing
                       agency. At the time of our visit, we were unable to find copies of checks in
                       5 out of 60 files. Subsequently, the Marshals Service provided
                       documentation showing receipt of the five checks. We also randomly
                       selected a subsample of 20 out of the 60 selected financial instruments to
                       verify deposit of seized funds into a bank account, as required by the
                       Marshals Service Policy and Procedures Manual. We were unable to locate
                       deposit tickets for 11 out of 20 files. However, the Marshals Service
                       subsequently sent us copies of deposit tickets for 8 of the 11 files. The
                       Marshals Service also provided documentation showing that funds had
                       been returned in one case, and provided three alternative support
                       documents for each of the remaining two cases showing funds had been
                       received and deposits had been made.

                       We selected 161 out of 412 seized assets, representing 4 categories of
Southern District of                                                                        1
                       assets from the CATS Assets on Hand Report. The 4 asset categories and
New York, Manhattan    numbers selected included vehicles (80); real property (18); financial
                       instruments (50); and general property (i.e., jewelry) (13).

                       We were able to account for all 161 selected seized assets. Overall, the
                       assets generally appeared to be in good condition and were stored
                       properly in accordance with physical security and property management
                       provisions in the vendors’ contracts and the Marshals Service Policy and
                       Procedures Manual. However, we found some discrepancies between the
                       location of the assets and the location noted on the CATS inventory. For
                       example, we could not locate or observe nine real properties because the
                       CATS inventory records had not been updated to reflect all properties sold
                       and cash settlements received in lieu of property. We were able to examine
                       documentation that permitted us to verify the disposition of these selected
                       assets.

                       Specifically, we found the following:

                       Vehicles – We physically located 77 of 80 vehicles. According to
                       documentation in the Marshals Service case files we reviewed, of the three
                       remaining vehicles, one was returned to the owner on the day prior to our
                       visit; another was destroyed in a law enforcement demonstration project
                       and had not been removed from CATS; and the last vehicle was sold in
                       1991, but CATS had not been updated to reflect the sale. Overall, the
                       1
                         We did not try to verify the location and condition of the one vessel maintained in the district due to
                       time and cost constraints.




                       Page 15                                                             GAO/GGD-99-41 Asset Forfeiture
Appendix I
Summary of Four Marshals Service Districts




selected vehicles appeared to be stored and secured properly in
accordance with the physical security and storage provisions in the
vendor’s property management contract. In most cases, the selected
vehicles appeared to be in good condition, although some were dirty and
unwashed; and 5 of 77 had flat tires, unlike the vehicles that we observed
in some of the some of other district storage locations that we visited.
Although the contract did not call for the vendor to wash the vehicles,
when we brought this to the attention of district management, they agreed
to consider corrective action.

Real property – We physically located 9 of the 18 real properties we
                                  2
judgmentally selected for review. According to documentation in the
Marshals Service case files that we reviewed, of the remaining nine
properties, three had been sold, cash settlements had been received in lieu
of property for four, and two were listed in CATS in error. Based on our
observations, each of the nine properties we visited appeared to be cared
for properly in accordance with the grounds maintenance provisions in the
vendor’s property management contract. Prior to visiting the properties,
we reviewed each of the case files and found evidence of inspections
performed by a contractor for the Marshals Service. The CATS report had
not been updated to show that the sold and settlement properties were no
longer on hand.

Financial instruments – We traced and verified the amounts of all 50
financial instruments, randomly selected from a universe of 300
instruments, to copies of checks sent to the Marshals Service from seizing
agencies. Further, we randomly selected 16 of these checks to verify
whether there were copies of the deposit tickets, as required by the
Marshals Service Policy and Procedures Manual. Thirteen of the 16 cases
had deposit tickets, while each of the 3 remaining cases had 3 or more
alternative support documents showing funds had been received and
deposits had been made.

General property – We physically located the universe of 13 general
property items (i.e., jewelry). Based on our observations, the items
appeared to be securely stored in accordance with Marshals Service policy
and procedures.




2
 The universe contained 19 real properties. We did not include one parcel of vacant land due to time
and cost constraints.




Page 16                                                          GAO/GGD-99-41 Asset Forfeiture
                      Appendix I
                      Summary of Four Marshals Service Districts




                                                                                                                    3
                      We selected 122 out of 920 seized assets, representing 3 categories of
Eastern District of   assets from the CATS Assets on Hand Report. The assets and numbers we
New York, Brooklyn    selected included vehicles (58); financial instruments (60); and general
                      property (i.e., jewelry) (4).

                      We were able to account for all 122 selected seized assets. Overall, the
                      selected assets generally appeared to be in good condition and were stored
                      properly in accordance with physical security and property management
                      provisions in the vendors’ contract and the Marshals Service Policy and
                      Procedures Manual. However, we found some discrepancies between the
                      location of the selected assets and the location noted on the CATS
                      inventory. For example, we could not locate or observe nine vehicles
                      because the CATS inventory records were not always updated to reflect
                      sale of a vehicle or vehicles held by other agencies. We were able to
                      examine documentation that permitted us to verify the disposition of these
                      selected assets.

                      Specifically, we found the following:

                      Vehicles – We physically located 49 out of the universe of 58 vehicles. The
                      49 vehicles appeared to be stored properly in accordance with the storage
                      provisions in the vendor’s property management contract. In most cases,
                      these selected vehicles appeared to be in good condition, although some
                      were dirty and unwashed; and 2 of the 49 vehicles had flat tires, unlike the
                      vehicles that we observed in some of the other district storage locations
                      that we visited. As in the Southern District of New York, the district
                      management agreed to consider corrective action. According to
                      documentation in the Marshals Service case files, of the remaining nine
                      vehicles, one was still in DEA’s possession, one was sold prior to our visit,
                      one had the wrong identification number on the windshield (which was
                      corrected when we brought it to their attention), four were stored locally
                      at various law enforcement agencies, and two had been sent to federal
                      agencies for their official use. Again, Marshals Service officials attributed
                      these discrepancies to delays in updating the CATS inventory.

                      Financial instruments — We traced and verified the amounts of all 60
                      financial instruments, randomly sampled from a universe of 257
                      instruments, to copies of checks sent to the Marshals Service from seizing
                      agencies or to documents showing the account was seized in place at a
                      3
                       We did not try to verify the location and condition of the one vessel or the condition of the real
                      properties maintained in the district due to time and cost constraints.




                      Page 17                                                             GAO/GGD-99-41 Asset Forfeiture
Appendix I
Summary of Four Marshals Service Districts




bank. Further, we randomly selected 20 of the cases to verify copies of the
deposit tickets, as required by the Marshals Service Policy and Procedures
Manual. Of the 20 cases, 17 had deposit tickets. Of the remaining three
cases, other documentation showed that one was an account that was
frozen in place at the bank rather than the funds being transferred to the
Marshals Service (so there was no deposit ticket). In the other two cases,
the deposit tickets had been destroyed, according to a Marshals Service
official. However, for each case, we were provided three or more
alternative support documents showing funds had been received and
deposits had been made.

General property – We physically located only one of the four assets we
selected (i.e., jewelry). According to documentation in the Marshals
Service case files we reviewed, one of the remaining three assets was
listed on CATS inventory in error; the asset had been disposed of in 1990
and had not been removed from the list. A Marshals Service Property
Detail Report showed that the other two assets were stored in bank safe
deposit boxes. The Property Detail Report specified the name of the bank
and storage location of each item, and a bank document verified that the
Marshals Service had rented the bank safe deposit boxes.




Page 18                                         GAO/GGD-99-41 Asset Forfeiture
Appendix II

Major Contributors to This Report


                        Darryl W. Dutton, Assistant Director
General Government      Barry J. Seltser, Assistant Director
Division, Washington,     Design, Methodology, and Technical Assistance
D.C.                    Sidney Schwartz, Senior Mathematical Statistician
                          Design, Methodology, and Technical Assistance
                        Michael Little, Communications Analyst

                        Bonnie D. Hall, Evaluator-in-Charge
Los Angeles Field
Office                  Carla D.Brown, Senior Evaluator

                        Hector Wong, Evaluator




                        Page 19                                       GAO/GGD-99-41 Asset Forfeiture
Page 20   GAO/GGD-99-41 Asset Forfeiture
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