[The following was emailed to FEAR by Arnold Gaunt on May 10, 1999. Leon]
Property Forfeiture Audit by the Office of the Legislative Auditor
Prepared by: Arnold J. Gaunt
May 9, 1999
Proposed Objectives
1. Compliance with State Law: Determine if property seizure and
forfeiture practices are in compliance with the intent of state law.
2. Forfeiture Magnitude: Determine the recipients, quantity, type, and
value of property forfeitures.
3. Circumvention of State Forfeiture Law: Determine the extent of
state participation in federal asset sharing programs.
4. Avoidance of Legislative Bodies to Obtain Grant Matching Funding:
Determine the quantity, type, and value of federal grants secured by
forfeiture proceeds.
5. Dependency on Federal Forfeiture Funds: Determine the amount of
money received from the US Department of Justice, Treasury, and Special
Forfeiture Funds.
6. Disclosure and Accountability: Determine methods for control,
allocation, and audit of forfeited property acquired by seizing
agencies.
7. Abuse: Determine instances and extent of abuse of forfeiture
powers.
Background and Rationale for Audit Objectives
Introduction: Property seizure and civil forfeiture are authorized
under various sections of Utah Code. The sections include 23-20-1 (Fish
and Wildlife), 32A-13-103 (Alcohol), 41-6-13.7 (Conveyances), 58-37-13
and its subchapters a, c, and d (Controlled Substances), 76-3-501
(Vehicles Used in Crimes in Which a Firearm is Involved), 76-10-1107
(Gambling), and 76-10-1908 (Financial Misconduct).
Anecdotal and other evidence indicates the magnitude of forfeitures
related to Controlled Substances exceeds the combination of all other
areas. Accordingly, it is the area in which the greatest amount of
public attention is placed and awareness of abuse exists. For that
reason, reform legislation HB 127, Asset Forfeiture Amendments, was
introduced in the 1999 Legislature.
In assessing the fiscal consequences of HB 127, the Office of the
Legislative Fiscal Analyst encountered significant difficulty in
determining the impacts of the proposed statutory changes. This
difficulty led the sponsor of HB 127, Rep. Bill Wright, to request an
audit of the Controlled Substances forfeiture code. Therefore, the
following discussion is specific to 58-37-13, but is not necessarily
limited to it because the other areas of code authorizing forfeiture
generally employ comparable methodologies.
1. Compliance with State Law: The Legislature has specified that
forfeited property shall be deposited in the custody of the Division of
Finance (reference 58-37-13(8)). The Division of Finance is then
empowered, upon application, to transfer the property to the seizing
agency, or other applicants if the seizing agency doesn't apply. The
prosecuting agency is reimbursed prior to the property transfer.
When Rep. Wright checked with the director of the Division of Finance,
he was informed that there had been no property placed in its custody
for the last several years. Since it is virtually indisputable that
forfeitures have occurred under 58-37-13 during this period, the
question of statutory authority for an alternative disposition
methodology is raised.
In Weber County there is evidence that one particular seizing agency
directly received and managed its own forfeited funds. An audit
performed by the State Auditor (Weber Morgan Narcotics Strike Force,
Review of Fund Balance Calculation as of December 31, 1995, Report No.
96-632) indicates that from 1988 to 1993 the Strike Force maintained
"program income" funds in a separate checking account solely under its
control after receiving property and restitution payments from the
court.
2. Forfeiture Magnitude: Since forfeited property is not deposited as
mandated with the Division of Finance, the recipients, quantity, type,
and value of property forfeitures under 58-37-13 cannot readily be
determined. This makes evaluation of the effectiveness of forfeiture in
reducing or deterring criminal activity difficult for legislators,
though they are responsible for the enabling code.
3. Circumvention of State Forfeiture Law: Utah's municipal, county,
multi-jurisdictional, and state agencies, and state/federal hybrid
agencies, have the option of bypassing forfeiture proceedings in Utah's
courts by transferring seized property to the US Justice or Treasury
Departments for forfeiture under federal code. Under federal code, upon
forfeiture of the property, the Attorney General may under an "equitable
sharing" program return up to 80% of the proceeds to the seizing agency
(see 21 USC 881(e)(1)(A), Guide to Equitable Sharing of Federally
Forfeited Property for State and Local Law Enforcement Agencies (US
Department of Justice), and Asset Forfeiture Law and Practice Manual (US
Department of Justice). Since the return of the proceeds is
discretionary, enormous power is wielded by the Attorney General over
the potential state agency recipient.
The practice of transferring seized property to the federal government,
also known as federal adoption, is attractive to state agencies.
Forfeiture can be accomplished under administrative, not judicial
proceedings, provided that 1) the property is not real estate, 2) if it
is in the "other property" category, value is less than $500,000, or 3)
a claim and cost bond has not been filed. At one time 21 USC 881
prohibited federal adoption where doing so would deny protections that
otherwise would be available under state law, but in 199X and amendment
was made that removed this provision. Therefore, the federal adoption
can be seen to allow or facilitate forfeiture that would otherwise be
difficult or impermissible under Utah's laws and jurisprudence.
Since under equitable sharing funding is obtained directly from the
Attorney General's office, accountability to a state, county, or local
legislative body is diminished or eliminated. The extent of equitable
sharing is unknown, but a paper trail exists in concept. A request is
made for an equitable share by the state agency submitting US DOJ Form
DAG-71, Application for Transfer of Federally Forfeited Property.
According to Appendix C of the Guide to Equitable Sharing, the agency is
to maintain a log of all DAG-71s forwarded to the DOJ. In addition, the
agency is to annually execute and submit a certification accounting for
the equitable sharing funds received and expended.
e of Legislative Bodies to Obtain Grant Matching Funding:
One of the significant objections raised by the proponents of forfeiture
was that HB 127, because of the prohibition it proposed to institute
regarding equitable sharing with the federal government, would eliminate
millions of dollars of federal grants to law enforcement agencies. The
basis for this objection arises from the present ability of state
agencies to provide the required 25% "match" needed to obtain federal
grants using proceeds from the equitable sharing program (see Chapter 3,
US DOJ Office of Justice Program's Financial Guide).
By obtaining grants the state agency is able to leverage forfeiture
proceeds coming from the federal government to triple their return. As
is the case with the equitable sharing itself, the agency becomes
dependent upon the federal government to obtain a grant that may be
issued under subjective criteria and subject to various conditions, and
accountability to the applicable legislative body may be diminished.
5. Dependency on Federal Forfeiture Funds: In addition to equitable
sharing and grants, agencies may apply to the US Department of Justice
and Treasury Funds (28 USC 524(c) and 31 USC 9703), controlled by the
Attorney General and Secretary of the Treasury, respectively, for
reimbursement of various expenses including overtime salaries, travel,
training, equipment, and other expenses of a similar nature. As with
the other methods of federal funding, disbursement to the state agency
is discretionary, leading to the same potential problem of diminished
control by the applicable legislative body. The method used to obtain
and document reimbursement is unknown.
6. Disclosure and Accountability: The disclosure methods and
accountability for seized and forfeited property are uncertain based on
the non-compliance with the requirement to deposit forfeited property to
the Division of Finance, as well as the various federal funding
mechanisms which may operate outside the typical methods of financial
control. Areas of potential concern include the ability to compare the
returns associated with a seizure warrants with actual deposits of
forfeited property, arrangement of "sweetheart" deals to dispose of
forfeited property, compliance with the requirement to use forfeited
property strictly for law enforcement purposes, management of seized
assets to assure preservation of their value, and compliance with
applicable constitutional provisions, statutes, and procedures.
The integrity and efficacy of the use of seizure and forfeiture powers
Utah's law enforcement officers requires independent review, legislative
accountability, and full public disclosure. At this time there is
evidence that in some measure these necessary components of public
confidence and trust have been ignored or circumvented.
7. Abuse: Most proponents of forfeiture maintain that either there has
never been an instance of abuse of forfeiture powers in Utah, or they
are totally unaware of any. In their view, the law provides complete
protection for the innocent property owner. However, various anecdotal
evidence exists from court cases and news stories demonstrating
significant harm to innocent persons by overzealous law enforcement
officers and prosecutors. A collection of some of these occasions of
abuse is summarized in the following table. Law enforcement officers
and prosecutors are unqualified by reason of a conflict of interest to
determine the existence and extent of abuse, and therefore can not be
expected to provide an unbiased response to this question.