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Forfeit Your Profits, or Else!

by Leon Felkins

While doing research for some of my recent essays on asset forfeiture and seizure, as practiced by our various government agencies, ("Louisiana Revenuers" and "Hooked on Forfeiture") the thought occurred to me, "I wonder how much does all this cost?" Yes, I said cost, not earn -- for it is fundamental principle of politics that ALL government programs cost. How many of you happened to notice last year when the "End Welfare as We know It" bill was being considered that there was a fairly large price tag associated with it? Most citizens probably naively assumed that a bill that was written as a result of complaints about welfare abuse and costs would somehow save us money. To assume such is not to understand the political process.

The looting of private property by the government under the provisions of the Forfeiture and Seizure laws was originally sold to the public as an effective means to fight the War on Drugs. (Note that while the cost of the drug war continues to increase, so has the usage of illegal drugs. Yep, just like the War on Poverty which continues to cost more every year while the Poverty Rate is now more than it was at the beginning of the "War". You probably also noticed that the more money the Federal Government has spent on Education, the stupider the graduates of the public education system have become. There seems to be a pattern here.) But like all government programs, the legal operative of Forfeiture and Seizure has been greatly expanded. Personal assets can now be seized for the most trivial of law infractions.

The primary incentive behind the growth of the government's asset forfeiture programs is the powerful lust for more money that all government agencies suffer under -- not, as they claim, that it is an effective deterrent to crime. (Since they make this claim so exuberantly, one has to wonder what would the illegal drug use be in this country had they not invoked the "Forfeiture and Seizure" laws). While the amount that the states and local governments are raking in under the provisions is not easy to determine, there are several published reports that document the enormous growth of the Federal government's stash of loot. The Federal U.S. Marshals Service, the current custodian of Federally seized property claims:

"Asset Seizure and Forfeiture

Currently, managing more than 21,900 assets
Value: more than $1.5 billion
More than $1.4 billion shared with state and locals since FY 1985
More than 28% of total value is real property
Vehicles comprise 47% of inventory items"
Actually they modestly understate their cache: the GAO says that the Federal Forfeiture program,
"had experienced enormous growth in seized assets inventories as reported by Justice and Customs (from $33 million in 1979 to $1.4 billion in 1989 and was almost $2 billion in 1994)" (The report details the usual duplication of efforts, waste, corruption, and ineptitude to be expected with bureaucratic management of valuable assets.)

Now, does this not sound like a money making opportunity! This "yet-another-scheme-of-hidden-taxation" would seem to be almost as lucrative as the hijacking and extortion of large tobacco companies!

Alas, as with all government programs, the scheme apparently is not making a profit. According to the budget, it is necessary to fund the Forfeiture program to the tune of about $400,000,000 a year! (Here are the 1995 numbers.) Apparently there are many costs associated with managing stolen loot -- costs that may exceed its value.

The GAO report, mentioned above, outlines some of the expensive problems. For example, the "Bicycle Club", a card casino, which was seized in 1990, has had a severe reduction in revenue since it came under Federal operation. The income declined from $23.1 million in 1993 to $14.0 million in 1995, according to the report. Many items (such as houses, autos and horses) have to be maintained. Apparently the U.S. Marshals Service is not all that keen on maintenance.

Also it is very expensive keeping track of all this loot. According to the GAO, much of the seized property gets misplaced or is inadequately accounted for. So, we must have audits. Audits are expensive -- especially when the government has to have one! Here is a recent example found in the Commerce Business Daily (CBD) at the Govcon site:

"FINANCIAL AUDIT OF THE TREASURY ASSET FORFEITURE FUND POC Steve VanderLinden, Contract Specialist, (202) 283-1379. CNT Tir-95-0104 AMT $594,649.00 LINE ALL DTD 092995 TO Gardiner, Kamya & Associates, 1717 K Street, NW., Suite 601, Washington, DC 20036 (0312)"
(Now before you get your skivvies in a wad about the cost of this audit, let me add some more facts that might make it a bit more acceptable. While it appears from the address that Gardiner, Kamya and Associates, might just be another "Inside the Beltway Bandit", at least they are classified as a "Minority Business," therefore the money is at least being transferred from the selfish "wealthy" to the unselfish "disadvantaged".)

But maintenance and audits are only part of the expense, and a small part at that. As you all have heard many times, including from the President in his "State of the Union" show, the government has been drastically cutting back on its "civil servants". Now how do you think this is possible? Well, there is no magic. The only way to cut back, when the work still has to be done, is to hire contractors (and they don't come cheap! But just because these contractors might cost twice as much, you can't assume they are twice as efficient. Often they are simply the same government employees, now working for the contractor!). After being criticized so unfairly by the GAO for mismanaging these seizures, the U.S. Marshals Service decided the thing to do was to hire contractors to take care of it. And like I said, they don't come cheap!

Again, I reference the CBD. Here are some example contracts:


SERVICES FOR TOWING, STORAGE, MAINTENANCE IN STORAGE AND SALE OF SEIZED VEHICLES IN THE DISTRICT OF MARYLAND POC Mary Swain, Contracting Officer, 202-307-9774. CNT MS-97-D-0001 AMT $606,150.00 DTD 102396 TO Parkville Automotive, Inc., 8522 Old Harford Road, Baltimore, MD 21234

TOWING, STORAGE, MAINTENANCE, AND DISPOSAL OF SEIZED/FORFEITED VEHICLES IN THE WESTERN DISTRICT OF WASHINGTON CNT MS-96-R-0040 LINE N/A AMT $1,094,850.00 DTD 101597 TO Manheim Auctions Government Services, Inc., 1400 Lake Hearn Drive, Atlanta, GA 30319

TOWING, STORAGE, MAINTENANCE, AND DISPOSAL OF SEIZED AND FORFEITED VEHICLES IN THE NORTHERN DISTRICT OF GEORGIA POC Maxine Robinson, POC, 202-307-9336. CNT MS-96-D-0026 AMT $966,107.50 LINE MS-96-D-0026 DTD 071296 TO Manheim Auctions Government Service c/o Bishop Brother Auction, 1400 Lake Hearn Drive, Atlanta, GA 30319

DISPOSAL/MANAGEMENT SERVICES FOR GOVERNMENT SEIZED AND/OR FORFEITED PROPERTY IN THE EASTERN DISTRICT OF NORTH CAROLINA POC Mary Swain, Contracting Officer, 202-307-9774. CNT MS-96-D-0035 AMT $2,285,710.00 DTD 083096 TO McCullen Group, Inc., 108 Sycamore St., Clinton, NC 28329

RELOCATION, STORAGE, MAINTENANCE, AND DISPOSAL OF SEIZED AND FORFEITED VESSELS IN THE DISTRICT OF PUERTO RICO POC Patrick Keefe, Contracting Officer, 202-307-9346. CNT MS-96-D-0029, MS-95-R-0025 AMT $1,512,302.00 DTD 080996 TO Marina Puerto del Rey, Inc. Carr, #3, Km. 51.4, Fajardo, Puerto Rico 00738

APPRAISAL SERVICES FOR GOVERNMENT SEIZED AND/OR FORFEITED PROPERTY IN THE EASTERN DISTRICT OF NORTH CAROLINA POC Mary Swain, Contracting Officer, 202-307-9774. CNT MS-96-D-0031 AMT $477,550.00 DTD 073096 TO Carlton Appraisal and Realty Co., Inc., 109 S. Rountree St., Wilson, NC 27894

CUSTODY, MANAGEMENT AND DISPOSITION OF SEIZED & FORFEITED PROPERTY AND SALE OF GENERAL ORDER MERCHANDISE POC Contact Point, James Lieberman, (202)927-0435, Contracting Officer, Althea Kearney, (202)927-0386, Additional Contact, Sharon Lim, (202)927-4914 CNT Tc-96-001 AMT $237,725 LINE All DTD 111595 TO EG&G Dynatrend, Inc., 24 New England Executive Park, Burlington, MA 01803

This is just a sample. It has been necessary to hire such contractors in practically every state. (For a complete list, log into the GSA site out in Pueblo, Colorado. This site tells you how you can participate in the auctions of the federally seized properties. I am told that some of this stuff goes real cheap.)

Now when you extrapolate these kinds of costs to every state, assuming that all the "custodians" and "auditors" present bills of about the same amount, you quickly conclude that it is a losing proposition! But, we must keep in mind that it is not money they are after but the control of crime -- especially, illegal drug usage.

And just think what the rate of drug usage might be if it were not true that "asset forfeiture is one of the most effective law enforcement tools we have", as the government claims!


More of Leon Felkins' essays may be found on his home page, A Rational Life.

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