© 2011, Forfeiture Endangers American Rights Foundation

Congressman to NOAA: “allowing NOAA Fisheries to retain the proceeds from forfeitures, seizures, fines and penalties against fishermen gives the agency a perverse incentive to continue its abusive enforcement practices against fishermen. ... It is extremely troubling that the agency’s draft policy would allow fines, penalties and forfeitures from fishermen to be used to pay the salaries of the Administrative Law Judges.”
by Judy Osburn
In his official letter of December 2, 2010 to NOAA Administrator Jane Lubchenco, U.S. Congressman Walter B. Jones (3rd Distrcit, North Carolina) urged the National Oceanic and Atmospheric Administration (NOAA) to change its policy of using proceeds of fines, penalties and forfeitures imposed by the agency against the fishing industry to pay the salaries of the Administrative Law Judges who decide cases the agency brings against fishermen. Rep. Jones summarized the July 1, 2010 report by Department of Commerce Inspector General Zinser: 
...As you know, a recent Inspector General-commissioned audit of the NOAA Fisheries Asset Forfeiture Fund (AFF) found extensive waste, fraud and abuse by the agency. It also proved what fishermen have long suspected: allowing NOAA Fisheries to retain the proceeds from forfeitures, seizures, fines and penalties against fishermen gives the agency a perverse incentive to continue its abusive enforcement practices against fishermen. This conflict of interest must be eliminated. While the draft policy1 includes encouraging elements, it unfortunately falls short of that goal.
It is important to reiterate just how badly NOAA Fisheries mismanaged the Asset Forfeiture Fund. The audit found that NOAA Fisheries “administered the AFF in a manner that is neither transparent nor conducive to accountability, thus rendering it susceptible to both error and abuse.” It also found that NOAA Fisheries used the AFF extensively “to cover a variety of expenses which do not appear to be ‘...directly related to investigations and civil or criminal enforcement proceedings,” which they are required to be by law. Such expenditures include over $500,000 spent on international travel in the past four and a half years. Other expenditures include $4.6 million for the purchase of 200 vehicles for only 172 enforcement personnel...; $2.7 million for the purchase of vessels, including $300,000 for an undercover vessel that the manufacturer’s website described as “luxurious” with a “beautifully appointed cabin”; and dozens of purchase cared transactions that were either improper, fraudulent or duplicative.
The agency’s draft policy wisely includes proposals to curb some of these abuses,” including prohibitions on the use of AFF funds for:
·         funding for NOAA employee labor, benefits, or awards;
·         funding for vehicle of vessel purchases or leases;
·         funding for travel not related to specific investigations or enforcement proceedings; and
·         funding for equipment such as computers, blackberries, cell phones and furniture.
These prohibitions are necessary to help realign NOAA policy with the statutory language in the Mangnuson-Stevens Fisheries Management Act that authorizes the AFF. However, they are not sufficient in that regard.
On that note, it is extremely troubling that the agency’s draft policy would allow proceeds from fines, penalties and forfeitures from fishermen to be used to pay the salaries of the Administrative Law Judges (ALJ) deciding cases brought against fishermen. Not only is this use of funds not authorized by the Magnuson-Stevens [Fisheries Management Act that authorizes NOAA’s AFF], it is terrible policy. The right to a trial before an unbiased, impartial judge is a bedrock principle of our democracy. If fisheries law judges are compensated with money from judgments against fishermen, the appearance, if not the practice, of impartiality is fundamentally compromised. ...
NOAA’s ability to retain and use proceeds from fines and forfeitures that it imposes against commercial fishermen  has resulted a wildly disproportionate treatment of New England fishermen and oppressive dealings with New England’s fishing industry, as each of the Sheriff of Nottingham style Special Agents in Charge of NOAA’s six Office of Law Enforcement (OLE) regions decide which expenditures should be paid from NOAA’s Asset Forfeiture Fund (AFF) – without any standardized policy or oversight.
In his U.S. Department of Commerce July 1, 2010 memo to NOAA Administrator Dr. Jane Lubchenco, Inspector General Todd J. Zinser presented the results of the review commissioned by his department to examine the administration and utilization of NOAA’s Asset Forfeiture Fund (AFF)2 by NOAA’s Office of Law Enforcement (OLE) and Office of General Counsel of Enforcement and Litigation (GCEL). Inspector General Zinser’s office “engaged a major public accounting and auditing firm, KPMG, to conduct a forensic review of the collection of fines and penalties into, and expenditures from the AFF,” as a follow-up to the Commerce Department’s January 2010 “Review of NOAA Fisheries Enforcement Programs and Operations.” The review commissioned by Inspector General Zinser found widespread excessive enforcement by NOAA officials, who socked fishermen and businesses in the Northeast with fines of up to 500 percent higher3 than those meted out in other parts of the country.

Zinser’s July 1, 2010 report of the review by KPMG explains:

An objective of our prior review was to examine the AFF, based on industry concerns raised to that NOAA's fines were excessive, constituting a form of bounty, partly because of NOAA 's ability to retain and use proceeds from its enforcement cases. However, we found that despite OLE reporting a balance of $8.4 million as of December 31,2009, OLE officials could not provide evidence that the AFF had ever been audited. We found that while the AFF's balance included in the Department's overall annual financial statements, internal controls over the fund were weak and were not tested as part of the Department's annual financial statement audit due the relatively small size of the fund within NOAA's overall budget. Accordingly, we could not readily determine how NOAA had utilized the AFF and were unable to address the concerns raised to us regarding its use; therefore, we commissioned the forensic review.
According to the forensic accounting firm KPMG’s report, NOAA broadly interpreted the Magnuson-Stevens Act to authorize its Office of Law Enforcement to extensively use its Asset Forfeiture Fund to pay for materials and services such as vehicles, travel and training, while its Office of General Counsel of Enforcement and Litigation “uses the AFF to fund over 99 percent of its non-salary operating expenses.” However, KPMG was completely “unable to discern the current balance of the AFF,” or verify the $8.4 million balance provided by NOAA’s OLE and Office of Finance. Rather, KPMG’s analysis suggests that NOAA’s current AFF balance likely falls within a broad range that could be “much higher than $8.4 million,” considering that KPMG found that from January 2005 through June 2009 indicating the AFF received approximately $96 million while expending about $49 million through over 82,000 transactions – leaving some $40 million of unaccounted funds.
The KPMG findings also show “that NOAA has administered the AFF in a manner that is neither transparent nor conducive to accountability, thus rendering it susceptible to both error and abuse. Reflective of a lack of transparency and accountability is the fact that the AFF is not identified in any NOAA or Department of Commerce annual budget document, to include the yearly submission of OLE, which is the chief recipient and administrator of AFF proceeds.” The May 13, 2010 final report by KPMG also found that:
·         No single unit or individual within NOAA has a detailed understanding of the AFF and how it functions.
·         Between collection and disbursement, there is a significant number of “hand-offs” form one NOAA organization to another, without a consistent method of tracking funds.
·         Revenues comprising AFF are co-mingled with other funds, making it nearly impossible to track and oversee receipts and expenditures.
·         OLE does not have a formal budget for its use of the AFF, rather OLE charges whatever expenses it deems appropriate to the AFF. Further, While only a minimal budget (usually less than $1,000) is appropriated to GCEL for its annual operating costs, NOAA’s litigation arm simply “assumes that virtually all of its operating costs are reimbursable from the AFF.”
·         “OLE’s processes for disbursing AFF monies do not ensure that they are legally authorized and are not centrally managed or monitored; instead disbursement processes are different in each division (region).”
·         62 percent of 604 transactions KPMG selected for further analysis did not have required supporting documentation, and 27 percent did not have required approvals.
·         “KPMG identified approximately 4,000 OLE and GCEL transactions that appeared to be split into two or more transactions to circumvent single purchase limits and/or avoid competitive procedures – in violation of Federal Acquisition Regulation requirements.”
·         “KPMG identified nearly 1,200 potential duplicate purchase card transactions, of which 290 were selected for further review. While 15 were confirmed to be duplicate transactions, KPMG was unable to assess over half of those selected for review as they lacked supporting documentation.”
·         “Regarding purchase cards issued to nearly all OLE special agents and enforcement officers, KPMG tested all purchase card transactions where the monthly total value purchased from any single vendor had a value above $3,000. KPMG selected 394 for further review, of which 54 percent (totaling approximately $204,000) did not have required supporting documentation.”
On September 23, 2010 Commerce Secretary Locke announced “sweeping reforms to increase accountability, and strengthen the public’s trust in NOAA’s Office of Law Enforcement and the General Counsel for Enforcement and Litigation.” Locke appointed Judge Charles Swartwood as a Special Master to review enforcement cases the Commerce Department’s Inspector General identified as problematic, some dating as far back as 2001.  Secretary Locke planned to restricted use of NOAA’s Asset Forfeiture Fund (AFF), to “ prohibit[] 50 percent of the Fund’s historical uses.”

By September 28 the Secretary Locke’s plan for reform ran up against the labor union at NOAA.  Marguerite Matera, the union’s regional chairwoman, demanded that “the restrictions placed on the use of the Asset Forfeiture Fund be lifted ... until ... we have the opportunity to bargain over the impact of the loss of this funding on salaries, awards and training of the attorneys we represent.
On January 20, 2011, New England's Gloucester Times wrote:
It was a year ago today that a federal inspector general exposed how a law enforcement bureau inside the National Oceanic and Atmospheric Administration had, for many years, been using the badge to extract exorbitant fines and weaken the commercial fishing fleet. ...
Subsequent reports from Commerce Department Inspector General Todd Zinser in March and September brought more clear evidence that the agents together with the litigators were using and enjoying the ill-gotten gains.
Proceeds from NOAA's Asset Forfeiture Fund — nearly $50 million over 41/2 years — was accumulated and used without clear accounting or oversight, to purchase a fleet of boats and vehicles, finance overseas travel to exotic destinations, Kuala Lumpur, Mozambique, Trondheim, Norway, for international fisheries conventions and fund the day-to-day operations of the Office of Enforcement and Litigation.
Locke recruited retired federal judge Charles B. Swartwood III, the chairman of the Massachusetts State Ethics Commission, to undertake a broad and open-ended review of miscarriages to determine if reparations were warranted, and make recommendations to the secretary.
But NOAA has still not provided a coherent theory for how a federal police force transformed into a free-wheeling band that, as documented by the IG's report, intimidated targets into paying heavy fines for minor or even technical offenses.
NOAA has worked diligently to address the problems and create a more fair and effective enforcement program and we have accomplished a great deal in the year since the first IG report was released, said NOAA spokesman Scott Smullen. ...
New internal controls have been established that improve management, oversight, and accountability within NOAA's enforcement programs, the statement continued. New policies are in place to more accurately track funds and expenses and we will soon finalize a formal policy that guides how we use the Asset Forfeiture Fund.
... But there is little sense of optimism within the industry or Congress.
It is clear that NOAA has been left to investigate and sanction itself, said Gloucester Mayor Carolyn Kirk. We have seen the result — which is arrogance from NOAA officials, a disregard for justice, and disdain for the public and most egregiously, the working people who have been hurt by their actions.
Not much has changed, added [Gloucester attorney Stephen] Ouellete, who was recognized in the IG's report for having documented and objected to the full panoply of NOAA law enforcement abuses in a 15-page single-spaced letter to the Congressional delegation in 2001
There has been some attempt to improve transparency in the assessment of fines, Ouellette said, but the agency has announced a revised regimen with higher fines than previously and they are now doing so on a national basis.
Those people remain unchanged, Ouellette said. There are within the government people who pursue their bureaucratic jobs without concern for the impact on people. This is a sad and scary message. Two years from now they will have returned to their old ways.
It is disappointing that not much has changed in light of the Inspector General's report, hopefully, the review of (Special master) Judge Swartwood will move Secretary Locke to effective and deliberative action in favor of our community, said state Rep. Ann-Margaret Ferrante, who sparked the chain of protest events that led to the letter from Congress that eventually moved Lubchenco to ask the IG to step in.
The resistance drew together a bipartisan, bicameral coalition from Maine to North Carolina, the range of law enforcers based in Gloucester.
One year later, it is unacceptable that these egregious abuses of power by NOAA personnel have gone unpunished and uncorrected, said U.S. Sen. Scott Brown, who was elected a year ago this week to complete the term of the late Sen. Edward M. Kennedy. Kennedy had been the lead advocate of the industry and a signer of the letter to Lubchenco for investigation of NOAA law enforcement.
January 23, 2011: a full year after the release of the January 20, 2010 preliminary report from the office of Department of Commerce Inspector General Todd Zinser, the Gloucester Times called for full criminal probe into National Oceanic and Atmospheric Administration (NOAA) Fisheries’ extensive misuse of asset forfeiture funds and civil fines, document shredding and widespread abuse of power.  
In its January 23, 2010 editorial, “Full criminal probe is only answer to NOAA’s stonewalling,” Gloucester Times wrote:
A full year after the release of the preliminary report from the office of Department of Commerce Inspector General Todd Zinser, there are tons of serious questions still hovering over NOAA law enforcement's oppressive dealings with fishermen and the fishing industry.
Yet one answer that seemed clear within days after the January 2010 release of Zinser's findings is even more obvious today.
The National Oceanic and Atmospheric Administration has no interest whatsoever in reforming its vindictive regulation and enforcement oversight of the commercial fishing industry, and bringing to justice those who shamed the agency and any sense of American justice.
And the sooner that members of Congress — especially those who represent home states to the commercial fishing industry — realize that, the better.
Zinser reported wildly disproportionate treatment of New England fishermen, extensive misuse of millions of dollars of an asset forfeiture fund, document shredding and an attempt to shut down the Gloucester Seafood Display auction that even included an unauthorized, after-hours forced entry into the auction that was documented by Gloucester Police. ...
This blatant obfuscation and disrespect shown everyone from Congress to Gloucester's fish piers is coming from the top. Lubchenco has no intention of making changes or being transparent to the public that pays her and her agency. She won't, unless Congress forces the issue with the hiring of an independent criminal — not administrative — prosecutor this case has needed from the start.
It has been a year, and Lubchenco and her minions have had more than enough time to act.
She hasn't. Congress must — now.
Earlier the same week the Gloucester Times reported on January 18 that, since his appointment last September 23 by Commerce Secretary Gary Locke, the Secretary’s investigative “special master” Retired Judge Charles B. Swartwood III has been working to determine which, if any, law enforcement actions undertaken by NOAA were so unjust that compensating action “to modify or remit penalties” is warranted.
Then on January 28 the Boston Herald and South Coast Today reported that Commerce chief Locke “denied the appeals of the fishing industry and political leaders, ruling that he will not expand the group of law enforcement cases to be reviewed by the ‘special master” looking into law enforcement abuses” by NOAA Fisheries. U.S. Representative Barney Frank (D-Mass) commented that he is “appalled at this latest assault on the fishing industry” by Locke. U.S. Senator John Kerry (D-Mass), also objected, stating Locke’s decision is an unacceptable “step backwards,” and that he is “troubled that not only are our fishermen being denied appropriate remedies but they’re being forced to pay fines before their cases are even reviewed.”
South Coast Today  also reported4 that New Bedford attorney Pamela Lafreniere, who represents fishermen in such enforcement cases, called Locke’s decision “completely and utterly unfair,” as many fishermen were afraid to come forward when the inspector general was soliciting cases because they feared retaliation, while others who were not made aware of Inspector General Zinser’s investigation should be given a chance to seek review. “Lafreniere said Congress should act immediately to freeze the asset forfeiture fund, which the inspector general identified as a slush fund to pay for cars, boats and travel for NOAA and for the administrative law judges deciding cases and issuing fines.”
Lafreniere said Congress should act immediately to freeze the asset forfeiture fund, which the inspector general identified as a slush fund to pay for cars, boats and travel for the National Oceanic and Atmospheric Administration and for the administrative law judges who were deciding cases and issuing fines.
“Congress should take over the asset forfeiture fund with all due haste,” she said. “Congress should do it because everything [Locke] says he's going to do he does not follow through. They should not leave this up to him.”

U.S. Sen. Scott Brown (R – MA) also stated on January 28 If Commerce refuses to own up to its failings, an independent investigation will be necessary to right the many wrongs our fishermen have suffered.
1. Federal Register, Vol. 75, No. 188, 60085, September 29, 2010: NOAA Proposed Policy on Prohibited and Authorized Uses of the Asset Seizure and Forfeiture Fund.

2. Under provisions of the Magnuson-Stevens Fishery Conservation and Management Act (MSA), NOAA has authority to retain proceeds from the civil penalties it imposes and collects, and pursuant to asset forfeitures (e.g., the sale of seized fish, vessels, elc.) for violations of the Act, to pay for certain expenses directly related to investigations and civil or criminal enforcement proceedings. NOAA's Asset Forfeiture Fund primarily consists of monetary proceeds from MSA enforcement actions, but also includes proceeds from enforcement of provisions of the Lacey Act and Endangered Species Act, which provide similar authorities.

3. Sen. Brown revives call for indy NOAA probe, Gloucester Times, January 30, 2011.

4. “Commerce chief won't widen fishing probe,” January 28, 2011.

© 2011, Forfeiture Endangers American Rights Foundation
Copyright notice:  This article may be linked to, emailed, printed, and disseminated to others so long as it is done free of charge, without changes to the text, and with this copyright notice included.  However, this article may not be republished for sale, either by itself or as part of a compilation of other material, without written permission from the author.