FROM THE OFFICE OF PUBLIC AFFAIRS

TREASURY EXECUTIVE OFFICE FOR ASSET FORFEITURE
DIRECTOR JAN P. BLANTON, HOUSE JUDICIARY COMMITTEE

Mr. Chairman, and to all the members of the Committee, good morning. My name is Jan Blanton and I am the Director of the Department of the Treasury's Executive Office for Asset Forfeiture. I am pleased to appear before you today to offer our views on H.R. 1835 and the changes it would bring about in federal forfeiture. With your permission, I would like to make a brief opening statement after which I would be glad to answer any questions you or the other members may have.

When I was last privileged to appear before your committee almost a year ago to speak to the merits of a bill aimed at reforming civil asset forfeiture, I took as my theme the reasoned progress that the Congress and law enforcement together have made over the years in crafting and applying the forfeiture authorities we have today. That cooperative effort has put federal law enforcement in a position where it can go after the proceeds and instrumentalities of crime.

It has empowered us to be able to strike at the very core of criminal organizations. It has become a pivotal element in our overall enforcement strategy. And it has even benefitted the too often forgotten victims of criminal activity. In FY 1996, our Treasury Forfeiture Fund alone oversaw the return of over $50 million to the victims of financial fraud. In the current fiscal year, we likewise expect to return over 30 million taxpayer dollars recovered from a Medicare fraud scheme. Financial fraud and health care fraud - just two of the areas in which federal forfeiture helps the victimized.

We are neither unaware of nor insensitive to concerns that forfeiture law can and should be further refined. The citizens of the United States will be comfortable with federal forfeiture authorities as long as they have faith in the integrity of the program. That faith is best secured by the legislature's enactment of needed statutory changes and by the executive's development of program policies and guidance that reflect America's sense of fair play.

RR-1748

We have taken important measures in a number of areas to ensure that we fulfill our end of this responsibility. In the last five years since the establishment of the Treasury Forfeiture Fund, we have listened attentively to the criticisms of forfeiture programs. While some of this has been directed to programs at the state and local level, we have heeded the valid complaints and we have tightened up our program. We have stressed 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 pre-seizure planning that makes these possible. We have emphasized quality in seized property management so that value, whether it be forfeited or returned, is never carelessly diminished. And recognizing that justice delayed is often justice denied, we have directed Treasury law enforcement to keep on top of their forfeiture caseloads, especially with regard to the adjudication of administrative forfeitures.

We are doing whatever it takes to ensure that Treasury's forfeiture program always affords due process - that it strives to notify all affected parties, that it invites arguments against the intention to forfeit, that it accommodates the indigent and that it offers opportunities to achieve just resolutions short of forfeiture in appropriate cases. In short, we are striving not for advantage but for fairness.

How best to fulfill the other end of that responsibility for the public's faith in federal forfeiture authority is what we are here today to consider. Forfeiture law should ensure its recognition of basic protections afforded property rights. For instance, we share your support of the concept of a uniform innocent owner provision and of shifting the burden of proof in certain cases. But we must register our reservations about H.R. 1835.

These reservations center first upon how this bill would amend several sections of the Tariff Act of 1930, codified in Title 19 USC, by:

raising the standard of proof from probable cause to clear and convincing evidence; and by,

eliminating cost bonds to pursue a civil judicial proceeding.

We also have other reservations about how this bill would affect forfeiture authorities beyond Title 19 by:

providing for appointment of counsel in any and all civil forfeiture actions;

providing for the release of seized property prior to forfeiture if the seizure causes substantial hardship on a claimant; and

providing for a cause of action to release property pending the completion of the forfeiture proceeding.

With regard to Title 19 civil forfeiture authorities, it is important to keep in mind that these involve statutes concerning national self-protection. The Customs forfeiture laws served as a template for much of the expanded criminal forfeiture authorities enacted during the last two decades. If the application of the Title 19 forfeiture model to other titles of the code has left some of these more recent forfeiture laws in need of changes, it is not because of inadequacies in the Title 19 model. Let's reform what needs to be fixed and not weaken the ability of the Treasury Department to protect the American public and hamstring federal law enforcement in its fight against drug trafficking, fraud and illegal arms trafficking at the border. Amending Title 19 is not the way to implement civil forfeiture reform. We submit that reform is best accomplished through our cooperative, measured efforts to implement changes in the appropriate body of statutes.

While we can appreciate the overall reform intentions of H.R. 1835 , we fear that its changes to Title 19 authorities will have a significant adverse impact on Treasury forfeiture activities. Customs laws codified in Title 19 are designed to prohibit the introduction of contraband items into the United States, protect intellectual property rights along with the public health and safety, facilitate trade and expedite the collection of import duties. In addition, at the border, our Customs Service stands in the place of numerous other federal agencies, enforcing hundreds of provisions of law protecting the well being of America's citizens.

It must be recognized that at the border Customs officers routinely detect goods being imported or exported in violation of law. Many of these violations make the goods subject to seizure and forfeiture. In such cases, Customs generally is not aware of all the facts and circumstances surrounding the importation or exportation, though it does have probable cause for the seizure and forfeiture. The Customs laws are designed around the fact that in this border environment owners of the goods are in the best position to come forward with an explanation of the transaction giving rise to the seizure. Accordingly, these laws require that in a judicial proceeding the government must establish probable cause for the forfeiture; only then does the claimant (who, again is in the best position to explain the facts surrounding the importation or exportation) have the burden of proving that the goods are not subject to forfeiture. Given that the time frame between seizure and forfeiture in these cases is very short, it is all the more important for the owners to come forward with exculpatory information as any other rule places the government at a tremendous disadvantage in border enforcement. The changes proposed by H.R. 1835 would compromise the ability of the United States Customs Service to fulfill its vital responsibilities, many of which include key support of our foreign policy and national security. Not only will this bill make it more difficult for the United States to deprive criminal violators of their ill-gotten proceeds but it will also directly diminish the ability of the Customs Service to enforce restrictions and prohibitions at the border.

We believe any bill must retain probable cause as the standard of proof under the Customs laws when they are applied to traditional Customs cases. Without that standard, Customs will be unable to accomplish the following seizures:

· rocket fuel from going to Iran

· vehicles carrying tungsten stolen from a bonded and sealed freight car from Canada

· 20,000 pairs of knock-off blue jeans illegally bearing a registered U.S. trademark

· dangerous food products

· adulterated or unlicensed drugs

· images of sexually exploited children

· illegal firearms

· unsafe consumer products

· the products of convict and slave labor

· hazardous substances

· pirated intellectual properties

All of these items threaten the safety, security and prosperity of the American people. International trafficking in them undermines the benefits to be realized from an increasingly open world economy. With free market economies proliferating and free trade agreements expanding, this is not the time to disarm critical law enforcement authorities at the border. Should such an unintended consequence of H.R. 1835 be permitted to occur, the green light to fair and honest progress in international trade would be a green light also to the unscrupulous and the corrupt.

Needed refinements today should not be allowed to obstruct the longstanding record of effectiveness in serving the best interests of American citizens. We are available to work with the Committee to help it strike a well-balanced reform that continues to ensure the faith of Americans in the fairness of our federal forfeiture program.

Mr. Chairman, this concludes my opening statement. I will be pleased to answer any questions you or the other members of the committee may have at this time. Thank you.