FROM THE OFFICE OF PUBLIC AFFAIRS

Mr. Chairman and members of the Subcommittee, good afternoon. I want to thank the Committee for holding this hearing on civil forfeiture reform. I am pleased to appear before you today to give Treasury's perspective on the federal asset forfeiture program how we use asset forfeiture, how it supports our law enforcement and other organizations, and how we view its prospects for the future.

Day-in and day-out, Treasury law enforcement pursues a wide variety of cases in its many areas of responsibility including, but not limited to, trade and financial fraud,narcotics smuggling, illegal firearms trafficking, terrorism, counterfeiting and money laundering. In order to effectively address this diverse range of responsibilities, we work closely with other federal agencies and with state and local law enforcement officials.

The Treasury Forfeiture Fund was established by Congress in 1992 to direct a professional application of the forfeiture sanction, and to fairly and systematically strip criminal organizations of both the proceeds and instrumentalities that facilitate their illegal enterprises. Thus far, though the program has enjoyed many successes, the need for prudent reform is acknowledged and solicited and we are here today to discuss our proposal for future direction.

Our management of the program and the use of its funds is very important. We have taken measures in a number of areas to ensure that we fulfill our end of this responsibility. Since the establishment of the Treasury Forfeiture Fund in 1992, we have listened attentively to criticisms. We have heeded valid complaints and have closely managed our program, such as by conducting comprehensive training for all Treasury forfeiture personnel from our special agents and their supervisors to our seized property managers. We have underscored the importance of considered and responsible seizures and the need for the pre-seizure planning that makes these possible. We have emphasized quality in the management of seized property so that value, whether property is forfeited or returned, is never carelessly diminished. And, recognizing that justice delayed is often justice denied we have directed Treasury law enforcement to stay on top of their forfeiture caseloads, especially with regard to the adjudication of administrative forfeitures.

We will continue to ensure that Treasury's program always affords due process that it notifies all affected parties of the seizure and intent to forfeit, that it apprises them of their right to contest the forfeiture in court, that it accommodates the indigent and that it offers opportunities to achieve just resolutions short of forfeiture. In short, we are striving not for advantage but for fairness.

We recognize that asset forfeiture is a powerful tool in our arsenal and helps us accomplish our mission. As such, it must be carefully and consistently employed and monitored to protect citizens from abuse and unwarranted burden. As we confront large-scale criminal organizations, we are increasingly struck by the usefulness of asset forfeiture in dismantling their operations.

By allowing us to target the proceeds and instrumentalities of crime, asset forfeiture strikes at the very core of criminal organizations. It enables us to attack their criminal enterprises in ways that the simple incarceration of the criminals could never accomplish. It cuts to the heart of and motivation behind most criminal activity, focusing on criminal profits. It says forcefully to all honest Americans that we will not stand idly by and allow criminals to keep those rewards that fuel their illicit activities. Asset forfeiture is the tool that permits law enforcement to remove such instrumentalities and profits of crime, to ensure that "crime does not pay."

Asset forfeiture's purpose is to attack organized criminal activity and deprive criminals of their illegal profits. As an essential part of our overall law enforcement strategy, asset forfeiture has recently played a key role in a number of prominent cases involving drug trafficking, terrorism and avoiding cigarette excise taxes.

• In Operation Casablanca, one of the most complex money laundering investigations ever conducted by United States law enforcement, Customs agents broke an integral link between narcotics traffickers and their money launderers. Forfeiting cash and monetary instruments, they were able to disrupt an organization that converted drug receipts into operating revenues for the cartels. This year, two Mexican banks pled guilty to money laundering violations and forfeited a total of over $13 million, while a third bank settled its charges and forfeited another $12 million.
• A husband and wife team, who operated a wholesale supply business in Redding, California, was also an important link in a chain that funneled precursor materials to methamphetamine manufacturers in Mexico. IRS agents found that the couple had been laundering the profits of this illegal trade and seized investment accounts,vehicles and a residence, putting out of business one source in a deadly and growing drug trade.
• A naturalized U.S. citizen arrested in Israel confessed that he had served as a financial conduit for the Hamas terrorist organization. A year ago, the Chicago Joint Terrorist Task Force seized his residence, a vehicle, bank accounts, safe deposit boxes, and other property after an investigation revealed that his funds were derived from an international money laundering operation related to Hamas activities. In this instance,the forfeiture sanction was a key tool in negating this financial channel between a terrorist cell operating within our borders and the parent organization.
• The owners of a ranch within the boundaries of the Flathead Indian Reservation in Montana would take deliveries of huge quantities of cigarettes from a licensed wholesaler. They would then load them into transports designed to look like mobile campers and deliver them to smoke shop owners, circumventing the Washington State cigarette allocation program as well as the thirty-four percent per pack tax. These ranchers were moving $13 million worth of cigarettes per year until ATF and the tribal police helped bring about the arrests, convictions and forfeitures of profits that ended the illegal operation.
• Asset forfeiture places a high levy on criminal activity, taking apart the structures that support such scourges as terrorism and the international narcotics trade. But its benefits don't stop there. With the authorities of the asset forfeiture funds, we have been able to reimburse certain victims of crime, provide valuable real properties that help resurrect crime plagued neighborhoods, make donations of goods to charities and, very significantly, bolster law enforcement capacity and cooperation throughout the United States.
• In 1996, following a lengthy investigation by the Criminal Investigation Division of the IRS, an individual pled guilty to conspiracy to defraud Medicare and agreed to forfeit $32 million that had been seized from his business, which had falsely claimed reimbursements from a Medicare insurance carrier. That money will be reimbursed to the federal Medicare trust fund and state Medicare insurers victimized by his criminal scheme.
• In Camden, New Jersey, a drug trafficker colluded with a long time family friend and realtor to invest his criminal proceeds in real estate and expensive cars. When IRS criminal investigators and the Camden Police finally helped bring him to justice, four forfeited properties were transferred by the Treasury Department to the City of Camden two to be used as satellite police stations and two more to community service providers under the Weed and Seed program.

Simply put, we take the property that comes into our asset forfeiture funds and put it to good use. We take the proceeds of crime and re-invest them in law enforcement. First, we pay the often substantial direct expenses of seizure and forfeiture, allowing the tax payers to avoid this burden. Second, we invest in the seizure and forfeiture programs of our law enforcement bureaus, allowing them to keep pace with the increasingly sophisticated criminal challenges that they must confront. Finally, other amounts available from the asset forfeiture fund are used to support Treasury and other federal law enforcement efforts including victim restitution and community programs. We do all this fairly, ever mindful of the due process rights of citizens.

We want to assure the Committee that when we do forfeit assets, we use those assets in responsible ways to further the purpose of the asset forfeiture law and combat crime. The benefits that flow from the Treasury Forfeiture Fund play out every day in many ways, including:

• When tragedy struck earlier this year in high school shootings in Littleton, Colorado, and Conyers, Georgia, explosive detection canine teams from the Bureau of Alcohol,Tobacco and Firearms (ATF) were deployed and assisted in sweeping the schools for destructive devices, firearms and evidence. Asset Forfeiture Fund resources support the ATF canine program.
• The Youth Crime Gun Interdiction Initiative is an ATF program aimed at removing the illegal sources of guns used by American youths. The program is now in 27 vulnerable U.S. communities, in part, thanks to monies from the Forfeiture Fund.
• When a gun is used in a crime, a positive firearms trace is often the crucial piece of evidence needed to make an arrest. ATF's National Tracing Center, the only operation of its kind in the world, traces firearms recovered in crimes for federal,state, local and international law enforcement. Again, the Treasury Forfeiture Fund is a key resource contributing to the Center's success.
• Forfeiture monies have also enabled us to fund and train computer investigative specialists in all the Treasury law enforcement bureaus. This departmentwide initiative, known as CIS 2000, educates agents in how to match and counter the latest information technologies employed by criminals committing financial crimes through sophisticated uses of today's advanced computers.

Asset forfeiture and the federal forfeiture funds are also major supporters of the unprecedented levels of cooperation that exist today among federal, state and local law enforcement. The forfeiture funds allow us to share equitably among all agencies that have contributed to investigations leading to forfeiture. In FY 1998, the Treasury Fund alone shared $72 million in currency and $3 million in property with state and local law enforcement agencies. These are amounts that are available to supplement the resources of our state and local law enforcement colleagues. In other years, forfeiture funds have:

• built a new forensic laboratory for the New York State Police;
• aided California's Orange County police officers to educate schoolchildren to better resist drugs and gangs; and,
• permitted Florida's Broward County to hire more police officers by matching and extending its share of grants under the Community Oriented Policing Services (COPS) program.

When we view the future of asset forfeiture, we see it continuing to be a valuable tool to do what prisons alone cannot do: give the victimized a chance at restitution; build communities torn apart by drugs and violence; and, strengthen law enforcement's ability to protect and serve.

We recognize, however, that the citizens of the United States will be comfortable with federal forfeiture authorities only as long as they have faith in the integrity of the program. That faith is best secured by Congress' enactment of necessary statutory changes to update asset forfeiture laws as well as by our implementation and continual refinements of policies and guidance that reflect America's sense of fair play.

From our perspective, we also recognize that program improvements can be made which is why we support the Administration's bill regarding civil asset forfeiture. The Administration's Bill would:

• raise the standard of proof to preponderance of evidence and shifts the burden of proof to the government;
• protect innocent owners and bona fide purchasers;
• require seizure warrant for all seizures of forfeitable property unless the 4th Amendment exception applies;
• permit Attorney General to use forfeited property to pay restitution to victims;
• make government liable for pre-judgement interest; and,
• establish a process for return of property pending the outcome of the forfeiture case.

The House Bill, however, would have a significantly negative impact on our current ability to use asset forfeiture against organized criminal activity. Chiefly, it would:

• constrain our ability to seize and forfeit criminal proceeds when the owner is overseas or otherwise beyond the jurisdiction of the United States;
• cause us to forego numerous forfeitures we currently pursue in order to protect our witnesses and investigations because it would eliminate hearsay evidence in meeting the government's initial burden;
• greatly limit the use of administrative forfeitures, now about 70% of all our forfeitures, through a combination of eliminating cost bonds and providing counsel in civil actions;
• require the return to the streets of many of the guns we seize everyday because of unrealistically short time frames for initiating the forfeiture proceeding and because they cannot be criminally forfeited; and,
• inordinately increase the risk that property may be removed from the jurisdiction of the United States by allowing criminal organizations to retain their assets during forfeiture proceedings upon a simple petition to the court.

While refinements to the asset forfeiture process would be useful, they should not be allowed to undo asset forfeiture's longstanding record of accomplishment in serving the best interests of American citizens. This is especially true in the area of civil forfeiture, the most historic and tested element of our forfeiture program. If the use of civil forfeiture is curtailed, it will seriously undermine our effectiveness in investigating drug trafficking, money laundering, fraud and other financial crimes.

As I said at the start, we are making important strides in our struggle against most types of organized criminal activity, treating it now for just what it truly is a subversive business enterprise that needs to be acquired, taken over and deconstructed lock, stock and barrel.

I hope that I have been able to convey to you the actual intent and application of this most valuable law enforcement tool. If change is to be made, it should be based on a factual analysis of need, not misconception based on anecdotal stories from the early days of the program. I thank you for allowing us to present our views on the asset forfeiture program. We appreciate the support of the Committee in this area and throughout federal law enforcement. I will be pleased to answer any questions you may have at this time.