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This is to certify that the

dissertation entitled

AN EXPLORATORY ANALYSIS OF THE USE AND
IMPACT OF FEDERAL ASSET FORFEITURE

presented by

Gregory Lawrence Warehol

has been accepted towards fulfillment
of the requirements for

Doctor of Philosophy—__degree in _tbe_SSC._Doctora1 Program

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MSU Is An Nflmotlvo Action/Equal Opportunity lnotltulon

 

 

 

AN EXPLORATORY ANALYSIS

OF THE USE AND IMPACT OF

FEDERAL ASSET FORFEITURE
By

Gregory Lawrence Warchol

A DISSERTATION

Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of

DOCTOR OF PHILOSOPHY

School of Criminal Justice

1995

ABSTRACT
AN EXPLORATORY ANALYSIS
OF THE USE AND IMPACT OF
FEDERAL ASSET FORFEITURE
By

Gregory Lawrence Warchol

One of the most unique drug trafficking control techniques
currently in use by the federal government is asset forfeiture. The
forfeiture laws give the federal government the authority to seize
property used to facilitate drug trafficking and/or that representing
the proceeds of drug trafficking. They are used by the federal
government specifically to disable narcotics enterprises. However,
the value of the federal forfeiture program as a drug trafficking
control tool is currently in doubt.

This research represents the first major study of this program
with two main objectives: to initially examine the history and
development of the forfeiture program, then explore its impact on
the drug trade by focusing on individual case characteristics. For the
analysis, this study uses a cross-sectional data set consisting of
over 6000 individual asset seizure cases from the Northern District
of Illinois, the Eastern District of Michigan, the Southern District of

Florida and the Southern District of California. The use of forfeiture

is analyzed overall and then by individual federal judicial district
focusing on regional variation. The results indicate that the most
commonly seized assets may have only a limited effect on the
ability of drug traffickers to conduct their operations. Furthermore,
the extensive use of in-rem forfeiture proceedings and economic
inefficiencies may also detract from the effectiveness of the

program.

Copyright by
GREGORY LAWRENCE WARCHOL
1995

DEDICATION

To Ruth Anne and Stan Joseph Warchol, USMC retired

ACKNOWLEDGEMENTS

I thank God for giving me the ability to complete this work. To
my mother for her unending support. Special thanks to my committee
of Dr. Dennis Payne, Dr. Mahesh Nalla, Dr. Michael Moore and Dr. Larry

Heimann for their insight and valuable assistance.

vi

TABLE OF CONTENTS

SECTION FAQ
List of Tables xiii
List of Figures xviii
Key to Abbreviations xx

Chapter One: Federal Asset Forfeiture

at Issue I
Statement of the Problem 1
The Research Questions 4
Significance of this Research 8

Asset Forfeiture as a Drug Control
Strategy: Does it Work? 8

The Economic Benefits of Asset
Forfeiture 14

Attempts at Restricting Asset
Forfeiture 21

Summary 23

vii

SECTION PAGE
Chapter Two: The Literature 26
The General Literature 27

Examining the History of Drug Control

Efforts in the United States 27

Early Regulatory Efforts 27

Later Developments: An Emphasis on

Trafficking Organizations 30

Summary 32
Asset Forfeiture 33

The History of the Concept of Asset
Forfeiture 33

American Forfeiture Law: Early
Developments 36

Modern American Forfeiture Law’s
Origins: The Racketeering and
Influence Corrupt Organizations Act 38

The Comprehensive Crime Control Act

of1984 40
Further Refinements to Asset Forfeiture

Law 44
Summary 46

The Federal Forfeiture Process: Organization
and Participants 47

Executive Office for Asset Forfeiture 49

viii

SECTION PAGE

Drug Enforcement Administration 50
Federal Bureau of Investigation 52
Immigration and Naturalization Service 52
Internal Revenue Service 53
United States Custom’s Service 53
United States Park Police 54
The United States Attorney’s Office. 54
The United States Marshal’s Service 55

The Types of Cases: Administrative,

Civil and Criminal 57
Administrative Proceedings 57
Criminal Proceedings 59
Civil Proceedings 65
Legal Protections 71
The Case Flow 76
Recent Procedural Changes to
Asset Forfeiture 80
Summary of Part One 84

The Research Literature 85

The Research Literature on Deterrence
and Asset Forfeiture 85

SECTION PAGE

Describing General Deterrence 86
Specific Deterrence and lncapacitation 89
Asset Forfeiture as a Deterrent 91

Research Examining the Nature of
Modern Drug Trafficking 96

Structure and Motivation 97

The Limited Success at Controlling the
Illicit Narcotics Business 104

Evaluating the Importance of Assets

Common to Narcotics Trafficking 115
Currency and the Need to Launder Money 117
Currency and Money Laundering 122
Domestic Drug Production 131
Conveyances: Facilitation and Proceeds 136
Residential Property 143
Personal Property 145
Rating the Impact of Assets 145
Financial Concerns of the Program:

Efficiency and Deterrence. 148
Summary of Part Two 150

SECTION
Chapter Three: Methods of Data Analysis
Introduction
Data

Qualitative

Aggregate Quantitative

Individual-Level Data

Individual-Level Variables and Measures
Validity and Reliability
Limitations of the Study

Research Questions and Methodological
Approach

Analytical Techniques

Chapter Four: Findings

Descriptive Summary of the Data
Identifying Asset Types by District
Examining the Value of Seized Assets

Time Requirements for Prosecuting
Forfeiture Cases

Examining Forfeiture Case Characteristics
in the Districts

xi

P_AG_E
152
152
152
152
153
153
158
159

160

162
166
168
168
175

181

194

203

SECTION PAGE

Chapter Five: Summary and Conclusions 223
List of References 239
List of Cited Cases. 251

xii

TABLE

Table

Table

Table

Table

Table

Table

Table

Table

Table

LIST OF TABLES

Percent Drug-Related Homicides
of Total Homicides (1986 - 1992)

DEA Seizures by Quantity, Type and
Value for Fiscal Year 1993

Comparison of Administrative,
Criminal and Civil Forfeiture

Structure, Function and Roles
within the Narcotics Enterprise

DEA Drug Removals of Cocaine
and Heroin (1983 - 1992)

Trends in the National Average
Purity of Cocaine (1990 - 1994)

Worldwide Potential for Cocaine
and Heroin Production in Metric
Tons (1989-1993)

Illegal Drug Seizures
(FY 1990 - 1993)

Rating the Deterrent Value
of the Assets

xiii

PAGE

10

15

75

99

107

111

112

114

147

TABLE

Table 10

Table 1 1

Table 12

Table 13

Table 14

Table 1 5

Table 1 6

Table 1 7

Table 18

Table 19

Table 20

Descriptive Statistics
for all Districts (1991 - 1992)

Descriptive Summary of Prosecution
Times (1991 - 1992)

Kurtosis and Skewness Results
by District (1991-1992)

Asset Type by Federal Judicial
District (1991)

Asset Type by Federal
Judicial District (1992)

Estimated, Appraised, and AFF
Deposits Mean Values by Asset
(1991)

Estimated and Appraised Mean
Asset Values (1992)

Kruskal-Wallis One Way Anova:
District by Estimated, Appraised
and AFF Deposits (1991 - 1992)

Percentage Difference between
Estimated and Appraised
Values (1991 - 1992)

Percent Difference between
Appraised and AFF Deposit
Values (1991 - 1992)

Mean Estimated Dollar Values
Comparing Forfeited and Not
Forfeited Assets by District
(1991 - 1992)

xiv

PAGE

171

173

174

178

179

185

185

186

187

187

189

TABLE PAGE

Table 21 Kruskal-Wallis One-way Anova
Results: District by Estimated and
Appraised Values and Amount Deposited
Controlling for Asset, Forfeiture
Proceeding and Disposition
(1991 and 1992) 192

Table 22 Mean Prosecution Time by Federal
District (1991 - 1992) with Analysis
of Variance Results 196

Table 23 Prostime by District with Modified
LSD Bonferroni at the .05 level 196

Table 24 Prosecutions Times by District,
Asset and Legal Proceeding 199

Table 25: Analysis of Variance: Prosecution
Time by District, Assets, Forfeiture
Proceeding and Outcomes 203

Table 26 Legal Proceeding by Federal
Judicial District (1991) 206

Table 27 Legal Proceeding by Federal
Judicial District (1992) 207

Table 28 Disposition Types by Federal
Judicial District (1991) 208

Table 29 Disposition Types by Federal
Judicial District (1992) 209

Table 30 Florida Asset Seizures
by Proceeding (1991) 21 1

Table 31 Florida Asset Seizures
by Proceeding (1992) 21 1

XV

TABLE

Table 32

Table 33

Table 34

Table 35

Table 36

Table 37

Table 38

Table 39

Table 40

Table 41

Table 42

Table 43

Table 44

Illinois Asset Seizures
by Proceeding (1991)

Illinois Asset Seizures
by Proceeding (1992)

Michigan Asset Seizures
by Proceeding (1991)

Michigan Asset Seizures
by Proceeding (1992)

California Asset Seizures
by Proceeding (1991)

California Asset Seizures
by Proceeding (1992)

Florida Asset Seizures
by Disposition (1991)

Florida Asset Seizures
by Disposition (1992)

Illinois Asset Seizures
by Disposition (1991)

Illinois Asset Seizures
by Disposition (1992)

Michigan Asset Seizures
by Disposition (1991)

Michigan Asset Seizures
by Disposition (1992)

California Asset Seizures
by Disposition (1991)

xvi

PAGE

212

212

213

213

214

214

216

216

217

217

218

218

219

TABLE PAGE

Table 45 California Asset Seizures
by Disposition (1992) 219

Table 46 Summary of Findings 221

Table 47 A Profile of the Districts
(Averaging 1991 and 1992) 237

xvii

LIST OF FIGURES

FIGURE PAGE

 

Figure 1 Total Net Deposits to the
Federal Asset Forfeiture Fund 16

Figure 2 Total Properties Seized by
the USMS (1985 -1991) 17

Figure 3 Asset Forfeiture Fund Equitable
Sharing Disbursements
(1986 -1993) 19

Figure 4 Organizational Structure of the
Federal Forfeiture Program 49

Figure 5 Trends Federal Drug Control Spending
from 1989 to 1995 (in millions) 106

Figure 6 State and Local Arrests for the Sale
and Manufacturing of Drugs
(1983 - 1992) 107

Figure 7 Trends in Federal Defendants Convicted
of Drug Offenses (1985 - 1993) 109

Figure 8 Recent Trends in the National Average
Price of Cocaine (1986 - 1994). 111

Figure 9 Value-added to Opium Production
to Retail Sale of Heroin 119

xviii

FIGURE

 

Figure 10

Figure 1 1

Figure 12

Figure 13

Figure 14

Figure 1 5

LaMina Money Laundering Process
Volume of Currency Transaction
Reports Filed with the Internal
Revenue Service (1979 - 1990)

Millions of Domestic Cannabis
Plants Eradicated (1981 - 1992)

Clandestine Labs Seized by
the DEA (1975 - 1992)

Prosecution Times by District
and Asset (1991)

Prosecution Times by District
and Asset (1992)

xix

PAGE

125

127

133

135

201

202

BATF:

CCCA:

CCE:

DEA:

DOJ:

EOAF:

FBI:

INS:

IRS:

NNlCC:

RICO:

USAO:

USCS:

USMS:

USPP:

KEY TO ABBREVIATIONS

Bureau of Alcohol, Tobacco and Firearms
Comprehensive Crime Control Act of 1984
Continuing Criminal Enterprises

Drug Enforcement Administration
Department of Justice

Executive Office for Asset Forfeiture
Federal Bureau of Investigation
Immigration and Naturalization Service
Internal Revenue Service

National Narcotics Intelligence Consumer’s
Committee

Racketeer and Influence Corrupt Organizations
United States Attorney’s Office
United States Custom’s Service
United States Marshal’s Service

United States Park Police

XX

USSFRC: United States Senate Foreign Relations Committee

xxi

Chapter One: Federal Asset Forfeiture at Issue
Statement of the Problem

Illegal drug trafficking in the United States is not a recent
phenomenon. In response to the severity of drug trafficking and its
side-effects - increasing violent and property crime - the
government has employed various enforcement strategies. These
include attempts to reduce the supply of illegal narcotics in the
1970’s to the more recent effort commonly known as the War on
Drugs. In 1989, the year the government declared war on drugs, of
the 7000 bills introduced into Congress, over 350 of them dealt with
the drug problem (Durkin, 1990). Due to its economic nature, one of
the most controversial and least understood of the various drug
control strategies employed was the revival and expansion of
federal asset forfeiture laws starting in the early-1980’s. These
laws gave the federal government the authority to seize property
used to facilitate drug trafficking and/or that representing the
proceeds of drug trafficking.

The Department of Justice [DOJ] (1992) favors asset forfeiture

as a drug control strategy because money drives the narcotics trade.

2
At every stage of the drug trade, money is transferred. Through the
seizure and forfeiture of this illegal money, the DOJ hopes to quash
the drug trade. Deprived of their most sought after asset, i.e.,
currency, traffickers will not be able to expand let alone maintain
their illegal enterprises.

In accordance with this reasoning, the US. Attorney General’s
stated main goal for the federal asset forfeiture program is “to
punish and deter criminal activity by depriving criminals of property
used or acquired through illegal activities” (DOJ, 1990:2). The
program also has a secondary goal of redistributing forfeited assets
efficiently back to law enforcement to fund additional drug control
efforts (DOJ, 1990). Supporting it main objective, the Department of
Justice provides its view on the program: “The mission of the
Department’s Asset Forfeiture Program is to maximize the
effectiveness of forfeiture as a deterrent to crime. Forfeiture is
effective because it takes the profit out of crime and deprives crime
syndicates of the tools of their trade” (EOAF, 1994:v). As such,
forfeiture is partly based on fundamental principals of deterrence
theory.

As the federal asset forfeiture program expanded, it attracted

attention from both proponents and critics. Citing yearly dollar

3

deposits to the Asset Forfeiture Fund as a measure, supporters argue
that the government is successfully using the program as a
deterrent to narcotics trafficking (Lenck, 1987, Goldsmith, 1992,
Holmes, 1992). Since the legislative changes in 1984 strengthening
the forfeiture laws, the cumulative value of property of all types
forfeited to the United States increased from $27,196,168.00 in
FY1985 to $3,260,082,526 in FY1993 (EOAF, 1994). If success can be
measured based on the forfeiture program’s ability to fund the
govemment’s drug control efforts, then supporters may be correct.
On the other hand, critics question the program’s ability to deter
narcotics traffickers, arguing that the government’s primary intent
is to generate revenue regardless of its impact on the drug trade
(Massey, 1993; Meyer, 1991; Miller and Selva 1994). Legal scholars
have also contributed much literature questioning the
constitutionality of asset forfeiture and its potential for
infringement on civil liberties (Goldsmith and Linderman, 1989;
Kasten, 1991; Strafer, 1987; Yaskowicz, 1992).

Yet, given the attention attracted by forfeiture, criminal
justice researchers have paid little attention to this policy.
Currently, no scholarly research is available on this program.

Therefore, this study which is an exploratory analysis, will fill the

4
void in the scholary research. The study has two broad objectives.
First, to examine the historical and political factors that facilitated
the emergence of forfeiture law and describe the current state of
the federal program. Second, to analyze the value of the asset
forfeiture program as a deterrent to narcotics trafficking
enterprises using new measures derived from the review of the
literature. Eight research questions are stated that specifically
focus on these two issues.
The Research QLestions

Three research questions pertain to the first objective. They
are answered through an exploratory, descriptive analysis using
qualitative and quantitative data. The answers to these initial
questions also serve as a foundation for the second objective.
Therefore, the results of the analysis are presented in Chapter Two
as the first part of the literature review.
Research Question One: What are the historical origins of current
forfeiture law in the United States?
Research Question Two: How is the federal forfeiture program
structured and how are property seizures processed within this

structure .7

5
Research Question Three: How has the federal forfeiture program
performed over time in terms of seized and forfeited assets and
yearly revenue in comparison to the extent of the narcotics problem
in the United States.

The second objective of this study is to analyze the value of
the asset forfeiture program as a deterrent to drug trafficking
enterprises. This research is exploratory in nature, a methodology
well suited to areas that have not been studied previously (Babbie,
1983). The research design is cross-sectional and uses quantitative
data describing individual asset forfeiture cases from four
geographically and demographically different federal judicial
districts. These regions are San Diego, Miami, Chicago, and Detroit.
In addition, a new measure of the deterrent value of asset forfeiture
is used in this analysis.

To further elaborate, the measure of the program’s impact
frequently reported by the Department of Justice is the dollar value
of forfeited property in each judicial district. But this measure is
only a partial indicator of the effectiveness of asset forfeiture.
Additional measures of the value of asset forfeiture must be based

on the program’s goal of deterring the narcotics enterprises.

6

The extensive review of the literature provides insight into
new measures representing deterrence. First, it is necessary to look
beyond the total dollar amount the government receives from a
forfeiture case. One should consider both the estimated value of the
asset and the actual amount received by the government as a result
of the forfeiture case - the net value.

Second, assets can be forfeited by different types of legal
proceedings and cases can have outcomes favorable to the
government or to the property owner. A closer examination of the
different proceedings and possible dispositions provides an
indication of the effectiveness of each type as a deterrent.

Finally, the literature includes a review of the structure and
characteristics of drug trafficking organizations, deterrence theory,
and the economic concerns of the government for asset forfeiture.
Specifically identified in this section are the different types of
property associated with narcotics trafficking organizations. It
reveals that certain assets are more valuable and important than
others to traffickers. As a result, the deterrent effect of asset
seizures will vary with the type of asset. The seizure of assets
critical to the operations of the narcotics enterprise will have a

greater potential to disable an operation. Seizures of less important

7

types may have only a limited effect on the business. Therefore, to
assess the use of the forfeiture as a deterrent, net value, property
type, legal proceeding, prosecution time and case disposition will
serve as measures of the deterrence value of an asset forfeiture
case. When present in a forfeiture case, they indicate that the
government’s intended use of program is to deter these illegal
organizations. Consequently, the presence of these variables in a
forfeiture case may also show a deterrent effect on the narcotics
trafficking enterprises.

The five research questions related to this issue are as
follows with the results presented in Chapter Four.
Research Question Four: Are there significant differences within and
between the four districts as to the type sof assets seized for
forfeiture?
Research Question Five: Are there significant differences within and
between the four districts as to the value of assets seized for
forfeiture?
Research Question Six: Are there significant differences between
the four districts as to the characteristics of the forfeiture cases

prosecuted by the government ?

8
Research Question Seven: Are there significanct differences within
and between the four districts as to the amount of time required to
process forfeiture cases ?
Research Question Eight: Are there significant difference between
border districts and the midwest districts in terms of their use of
asset forfeiture?

This is an exploratory study using new and innovative
measures. However, this analysis is not intended to conclusively
demonstrate whether the government is using asset forfeiture as a
deterrent or for alternative purposes. The goal is to present an in-
depth look at the nature of forfeiture cases within and between the
four districts and attempt to assess the value of the program as a
deterrent in each of these four judicial districts. In conclusion, with
the use of both qualitative and quantitative methods and a large
cross-sectional data set, this study represents the first major foray
into this controversial law enforcement strategy.

Significance of this Research
Aget Forfeiture as a Drug Control Strategic Does it Work?

The government’s interest in controlling narcotics trafficking

was not limited to reducing the supply for users. While the

government considered trafficking to be extremely serious in itself,

9
it was also concerned about the connection between drugs and crime.
The narcotics business was considered one of the root causes of the
increasing violent and property crime rates. Research by the
National Institute of Justice (NIJ) and the Bureau of Justice
Statistics supports the connection between drug and crime. They
concluded that violence is common in the illegal drug business. The
BJS reports:
Systematic violence is the “traditionally aggressive patterns
of interaction between the system of drug distribution and
use.” violence is used to protect or expand markets,
intimidate competitors, and retaliate against sellers or
buyers who are suspected of cheating. To avoid being arrested
and punished for trafficking, drug dealers commit violent
crimes against police and threaten informants or witnesses.

Some observers believe that the illegal drug business attracts
persons who are prone to violence (1992:5)

The data shown in Table 1 help illustrate the connection between

drug trafficking and homicide.

10

Table 1: Percent Drug-Related Homicides of Total Homicides
(1986 - 1992)

 

 

Number Percent
Y_e_a_r of Homicides Drug-Related
1986 19,257 3.9%
1987 17,963 4.9
1988 17,971 5.6
1989 19,954 7.4
1990 20,273 6.7
1991 21,676 6.2
1992 22,540 5.7
Source: Table reproduced from Bureau of Justice Statistics,

Drugs and Crime Facts, 1994:8

These data include only homicides that occurred specifically
during a drug felony such as sales or manufacturing. Murders
involving a drug felony and a more serious felony such as armed
robbery were not included (BJS, 1994a). Data from a BJS survey on
the connection between drugs and crime reveals that 78% of jail
inmates in 1989, 79% of State prison inmates in 1991, and 83% of
youth in long-term public facilities in 1987 had used drugs at some
point in their lives. Furthermore, about 17% of State inmates and
13% of convicted jail inmates in 1989 said they had committed their

offense to obtain money for narcotics (BJS, 1994a).

11

The government realized that traditional methods of
punishment - prosecution and sentencing of drug traffickers - were
ineffective because they left the illegal organization and its
economic base intact. The government needed an alternative strategy
capable of disabling these organizations and their members thereby
also preventing them from fostering more violent and property crime
as side-effects. The new objective was to target the profit motive
of the trafficker. If the spoils of drug trafficking could be
confiscated, the criminal enterprise and its members would be
deterred from operating in the future.

In their search for a solution, the government turned to a
sanction previously used for US. Customs law enforcement - asset
forfeiture, Forfeiture has now evolved into an integral part of
federal drug control efforts. The reasoning is that forfeiture will
take the profit out of the illegal drug trade (DOJ, 1990). This is
possible since the forfeiture laws permit the government to seize
and forfeit controlled substances, drug manufacturing equipment,
automobiles, vessels and aircraft used in trafficking and
distributing drugs, money and other financial instruments used in
drug transactions, and other property including real estate bought

with drug profits (EOAF, 1992).

12

Forfeiture is considered to have the ability to reduce the
supply of narcotics from the traffickers. This should reduce drug use
and its negative side effects. Therefore based on such logic, the
federal government decided to concentrate its efforts against the
sophisticated criminals that make up the drug trafficking networks
(Stellwagen, 1985). The goal is to seize as often as possible the
huge spoils of drug trafficking organizations so that current and
aspiring traffickers will be deterred (Bureau of Justice Statistics
[BJS], 1990). Stellwagen explains:

As a law enforcement strategy, forfeiture can be used under

federal law to break up a continuing criminal enterprise.

Foreign and domestic bank accounts can be seized, together

with planes, vessels, cars, and luxury items like jewelry or

resort homes purchased with the proceeds from the illicit drug
trade. Seizure of such assets disrupts the working capital of
criminal organizations and perhaps diminishes the motivation

to traffick in drugs (1985:1).

Forfeiture was designed to accomplish what traditional
methods of punishment could not - deter traffickers and disable
their organizations. However, while forfeiture rapidly grew in
p0pularity, its impact is subject to debate. There is no empirical
evidence to support the forfeiture program’s success in reducing

drug trafficking. The Office of National Drug Control Policy [ONDCP]

estimates that in 1990, illegal drug consumers spent over $41

13
billion for cocaine, heroin, marijuana, and other drugs (BJS, 1992).
Additionally, world production of the coca leaf has steadily
increased from 1987 to 1991 (BJS, 1992). The DEA reports that the
lowest retail price of cocaine which ranged nationally from $80 per
gram in 1986 has actually dropped to as low as $15 per gram in the
first quarter of 1993 (DEA, 1993). One possible explanation is that
forfeiture represents a business expense. According to Assistant
US. Attorneys of the Northern District of Illinois, many traffickers
consider it an easily absorbed “cost of doing business” that’s
factored into this very lucrative operation. A recent article in the
Chicago Tribune noted that drug dealers are constantly finding new
ways to avoid property seizures. The author states that: “[W]ith the
seizure laws, the dealers have gotten smarter, so they’re less likely
to be dealing out of their homes”(1993, July 16). The BJS (1992)
found that drug producers and distributors tend to either absorb
their losses or raise the price of the drug in response to efforts by
law enforcement. Another possible explanation lies in the ability of
forfeiture to generate revenue. At issue is whether asset forfeiture
being used as a wide net to drag in the maximum amount of revenue

regardless of its policy goals of deterring criminal enterprises.

14

The Economic Benefits of Asset Forfeiture

Aside from the stated ability to disable drug trafficking
organizations by seizing the profits of their business, the other
major benefit of forfeiture is the large amounts of revenue it
generates for the government. From 1985 to 1990, the number of
asset seizures grew at an average rate of 59 percent annually (DOJ,
1990). In fiscal year 1993, the Drug Enforcement Administration
[DEA] seized assets valued at more than $669 million (BJS, 1994a)

as shown in Table 2 on the following page.

15

Table 2: DEA Seizures by Quantity, Type and Value for Fiscal Year

 

1993

Type of Asset Number of Seizures Dollar Value

Currency/Financial 7563 293,234,403
Instruments 570 49,340,166
Real Property 1,516 244,352,815
Conveyances 5,1 16 95,499,681
Other 2,295 35.815.815
Total 14,430 $668,902,714

Source: Bureau of Justice Statistics,
Fact Sheet: Drug Data Summary, July 1994:2

In addition, the total amount of net deposits to the federal
government’s asset forfeiture fund from 1985 to 1991 was over 2.1
billion dollars (DOJ, 1990). Figures 1 and 2 on the following pages
provide an indication of the rapid growth of this program in terms of
both the amount and value of property seized and forfeited to the

United States.

16

 

 

 

 

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19'8519'86 19'87 19'88 19'8919'90 19'91 19'9219'93

Figure 1: Total Net Deposits to the Federal Asset Forfeiture Fund
(1985 - 1993)

Source: Annual Report of the Department of Justice
Asset Forfeiture Fund, FY 1993. Prepared by the
Executive Office for Asset Forfeiture, 1994

17

 

30000-

20000-4

10000-

 

o
1985 1986 1957 1988 1989 1990 1991

 

 

Figure 2: Total Properties Seized by the USMS (1986 - 1990)
Source: US. Department of Justice, Annual Report of the

Department of Justice Asset Forfeiture Program, FY
1990

During periods of diminished government funding, law
enforcement agencies need to stretch resources. One attractive
solution to limited or declining budgets is forfeiture. Forfeiture is
meant to be used to finance narcotics enforcement along with other
drug-related law enforcement programs (Stellwagen, 1985).

This distribution of revenue from federally forfeited assets to
law enforcement to further combat drug trafficking is the final
stated goal of the asset forfeiture program (DOJ, 1990). From fiscal

year 1985 to 1993, the Department of Justice shared over $1.1

18
billion in cash and property with state, local and foreign law
enforcement agencies (EOAF, 1994). In addition, the government has
allocated over $490 million from the sale of forfeited assets for
federal prison construction (General Accounting Office [GAO], 1991,
May). The Department of Justice distributes a portion of this revenue
via the Equitable Sharing Program to state and local law
enforcement agencies that participated in the asset seizure. The
payments from sharing reflect the amount of direct participation by
the state, local of foreign agency in the law enforcement effort that
resulted in the forfeiture (EOAF, 1994). The purpose of the Equitable
Sharing Program is to enhance the narcotics enforcement budgets of
the participating law enforcement agencies and improve inter-
agency cooperation in the war on drugs (DOJ, 1990). In addition, they
also supplement law enforcement resources without the need to
further tax the public (EOAF, 1994). Figure 3 on the next page shows
the dollar amount shared with participating state and local law

enforcement agencies from 1985 to 1993.

19

$300,000,000

 

$250,000,000 _
$200,000,000 -L
$150,000,000 J
$100,000,000 5

$50,000,000 -

 

$0 I T l I
19:84 1986 1988 1990 1992 1994

 

 

Figure 3: Asset Forfeiture Fund Equitable Sharing Disbursements
(1986 - 1993)

Source: Annual Report of the Department of Justice Asset

Forfeiture Program, FY 1993. Prepared by the Executive
Office for Asset Forfeiture

A controversial aspect of the asset forfeiture program is that
while both deterrence and providing money are considered crucial to
effective drug control efforts at all levels of government, critics
assert that the program’s ability to generate revenue has become
increasingly emphasized potentially overshadowing its deterrence
goals (Massey 1993; Meyer 1991; Miller and Selva, 1994). The
General Accounting Office literature may be interpreted as

supporting this view. A report states: “The program’s goals are to

20
deprive criminals of their illegal assets and maximize the return to
the government. Revenue from the asset forfeiture program is used
to help fight the war on drugs” (1991, May:3). In another article,
Steven A. Bertucelli, Director of the Organized Crime Division of the
Broward County, Florida Sheriff’s Office addresses this issue: “The
effectiveness of asset forfeiture depends in large part on how
thoroughly law enforcement agencies identify and address key
management questions associated with forfeiture programs”(BJS,
1990fl).

When monitoring the effectiveness of the program, the GAO has
extensively reviewed the performance of federal forfeiture
activities at the national level. These evaluations focus primarily on
management issues, i.e., the Equitable Sharing Program and the
property disposition and property storage activities of the US.
Marshal’s Service. Aside from these evaluations, little attention is
directed at assessing the impact of the program on narcotics
traffickers and their organizations. This is a surprising oversight
given the scope of this program and the attention it has attracted
from opponents.

Additionally, the forfeiture operations of the individual

federal judicial districts have not been examined in detail. These

21

ninety-four regions, consisting of the local offices of the federal,
state, and city enforcement agencies, and each US. Attorney’s
Office, form the elementary components of the forfeiture program.
The lack of attention paid to the use and effectiveness of asset
forfeiture at this level is a serious oversight with this policy for a
variety of reasons. First, many police forces are participating in
forfeiture programs either through ad0ptive seizures or the
development of their own programs. The Bureau of Justice
Statistics, reporting from its 1990 survey, states that over 90
percent of county, municipal, sheriff and state police forces
participate in a drug asset forfeiture program (BJS, 1990). Second,
asset forfeiture is rather controversial and has been criticized by
the defense bar and the media which cite the law’s potential for
infringement on constitutional guarantees and abuse by police in
search of quick revenue (Goldsmith and Linderman, 1989; Kasten,
1991; Miller and Selva, 1994; Meyer, 1991; Strafer, 1987;
Yaskowicz, 1992).
Attempts at Restricting Asset Forfeitifl

Recently, as a result of its controversial nature, forfeiture
law has been subject to changes. The Supreme Court has issued

several decisions on forfeiture law recently, three of which were:

22
US v. A Parcel of Land (1 993), Alexander v. United States (1993),
and Austin v. United States (1993). Although the decisions mainly
dealt with procedural issues, it appears that the high court is
attempting to try to make some sense out of this complex body of
law and perhaps quell the increasing amount of complaints about its
harshness.

In response to the asset forfeiture program, Republican Rep.
Henry Hyde, together with two civil rights groups, teamed up to
restrict federal forfeiture laws. Citing the abuse of government
power, Hyde recently introduced legislation to curb further property
seizures. Attorneys for the ACLU favor the Hyde bill and would like
Congress to take this legislation even further (Chicago Tribune,
6/16/93).

Due to the government’s emphasis on the program’s financial
return, and also because of the unique legal attributes that
constitute forfeiture law, the defense bar has frequently criticized
this body of law for either its real or perceived infringements on
individual liberties as set for in the Constitution and Bill of Rights
(Kandaras, 1990; Kasten, 1991; Meyer, 1991; Osborn, 1991). The
literature of the defense bar represents the only body of research on

asset forfeiture, yet it is not empirical in nature.

23
In addition, the media has also shown a significant amount of
interest in asset forfeiture over the past several years, much of it
being critical. This could be due to the influence of the defense bar.

An article in U.S. News and World Report serves as an example:

Defense lawyers say the prospect of seized fees (attorney’s
fees paid out of drug proceeds) violates the Sixth Amendment
right to counsel of one’s choice, interferes with attorney-
Client privilege and precludes an effective defense since
forfeiture cases require specialized expertise Civil
libertarians, lawyers and some judges also have more
misgivings about asset seizure. Especially troubling is the
widespread use of civil, rather than criminal procedure to go
after specific property used in or acquired through drug
trafficking. Others felt that the asset-seizure strategy was
abused when vehicles and boats were seized even though only
minuscule amounts of drugs were found on them (1988:47-48).

In response to the media criticism, a paper recently prepared
by the Executive Office for Asset Forfeiture (1993) clarified many
of the issues reported by the media. Yet, even given all the attention
to the asset forfeiture program, this topic is still devoid of sound
empirical research.

Sum
Without attempting to overstate the importance of this

dissertation, this study is significant for several reasons. First,

because of the lack of research directed at the federal asset

24
forfeiture program, this study represents the first major incursion
into this important government policy area.

A second significant aspect is the data source. After
consultation with the Executive Office for Asset Forfeiture in
Washington, DC, it was concluded that the best source of accurate,
individual-level data was the United States Marshal’s Service. As
described in more detail in Chapter Three, these data provide an
overview of the program and an examination at the regional level.
Not only will the activities of this federal program be analyzed from
a broad perspective, but the data will be compared across individual
federal judicial districts in relation to their own demographic and
drug trafficking characteristics.

A third strength is the methodology. This study combines
elements of descriptive, exploratory and explanatory research with
Qualitative and quantitative data. This integrated method is well
suited to a topic that has not been studied in any detail. Though not a
formal test of a theory, this less-structured design utilizing several
research questions has an advantage. Babbie asserts that the value
Of a less formal approach is that “structured inquiries may overlook

relationships not anticipated by formal hypotheses” (1983:93).

25

A final relevant feature is that by empirically examining the
policy, this study will facilitate an objective understanding of asset
forfeiture without relying on the influences of the mass media or
the defense bar. It may help to confirm or dismiss some of the
perceptions about asset forfeiture and lead to future research
covering additional aspects of this policy.

In conclusion, the federal asset forfeiture program has become
a rather controversial public policy that is facing increased
opposition. Yet very little research exists about forfeiture. N0 effort
has been made to fully describe the origins and development of asset
forfeiture or examine if the program is being used in accordance
with its primary goal of deterring drug trafficking organizations.
Unless this policy is analyzed before it is changed by the Congress
or the Supreme Court, valuable data on its performance will be
overlooked, affecting not only the federal government, but also state

and local agencies employing this strategy.

Chapter Two: The Literature

This paper is first concerned with describing the origins and
development of forfeiture law and the current federal program, and
then analyzing forfeiture’s value as a deterrent to narcotics
trafficking enterprises. These research problems have not been
directly studied and there are few scholary studies that even
indirectly pertain to forfeiture. This leaves a significant gap in the
empirical, academic literature. However, there is a valuable body of
general literature composed of a variety of sources to serve as a
foundation for this research to build upon. Therefore, this study
integrates the few existing academic studies with government
documents and reports, federal and US. Supreme Court decisions,
legislative histories and law journal articles to construct a
nontraditional, though comprehensive literature review.

The following review consists of both general and specific
literature. The general literature presented first serves a dual
purpose. It is both a literature review and a historical description of
the origins and development of forfeiture law. It consolidates a
variety of sources describing forfeiture law, the organization of the

current program and the various forfeiture processes.

26

27

The second half of this review consists of the specific
research literature supporting this study’s cross-sectional analysis
of the use of asset forfeiture as a deterrent. It includes a summary
of the literature establishing the deterrent worth of using
forfeiture against narcotics trafficking enterprises and identifies
the new measures of deterrent value used in the analysis.
lntergrated into both sections are quantitative data supplementing
the qualitative description.

The General Literature

Examining the History of Mg Control Efforts in the United States

Efforts to control illegal narcotics have a surprisingly long
history in the United States dating back to the Civil War. The
policies and strategies for drug control initially started with an
emphasis on regulation, then moved toward treatment and eventually
prohibition. A review of the literature describing the history of
federal drug control policy illustrates how forfeiture became a
intergral part of the overall strategy.

Early Regulatory Efforts.

lnciardi (1990) states that opiate addiction in the United
States dates back to at least the mid-1880’s. With the development

and increased use of “patent” medicines, new drugs including opium,

28
morphine, laudanum, cocaine and later heroin, became widely
available. Opiates could be purchased over-the-counter and heroin
was even available by mail-order (Brecher, 1972). By 1900, it was
estimated that over a quarter of a million people in the US. were
drug addicts. The most commonly abused drugs were cocaine and
morphine (BJS, 1992).

Initial attempts to control drugs focused on regulation
including labelling and reporting requirements, taxation, and
restrictions for certain populations (lnciardi, 1990). The first
recorded anti-drug law in the United States was a San Francisco
municipal ordinance passed in 1875 aimed at banning opium smoking.
The BJS (1992) reports that the first federal drug control efforts
were prohibitions on the importation of opium by Chinese nationals
in 1887 and restrictions on opium smoking in the Philippines in
1905. This was followed by the Pure Food and Drug Act of 1906 that
regulated the labeling of over-the-counter medicine which included
certain drugs as ingredients. By the early 1900’s, most every state
and many municipalities had established some type of regulation

controlling the distribution of certain drugs.

29

The BJS reports that concern over drug abuse even spread to
the international arena in the early 1900’s as indicated by early
attempts at regulation.

The US launched a series of international conventions designed

to stimulate other nations to pass domestic laws on narcotics

control. The Shanghai Opium Convention of 1909 strongly
supported such controls, but its recommendations generated
little actual legislation among the nations involved, including
the US. Failure to pass the proposed Foster Anti-narcotic Bill
led to debate at the 1911 International Conference on Opium at

The Hague about whether the US. would actually enact such

legislation. Ratification of the convention resulting from this

Hague conference by the Senate in 1913 committed the US. to

enact laws to suppress the abuse of opium, morphine and

cocaine and helped ensure the passage of the Harrison Act as

the cornerstone of Federal anti-drug policy (1992:80).

Bugliosi (1991) asserts that the Harrison Narcotic Drug Act of
1914 was actually not a criminal statute and the possession and use
of opiates and cocaine were not prohibited. Rather, the Act was
mainly a revenue measure requiring the registration of persons who
distributed opium, morphine, heroin and other drugs and the use of
tax stamps (MCWilliams, 1990). Its only criminal provision was
directed at those who failed to register or keep accurate records on
narcotics sales.

Following the Harrison Act, several new pieces of legislation

were introduced from the late 1920’s to the 1960’s. These laws

illustrated how federal policy now emphasized a mix of treatment

30

and punishment efforts. For example, in 1929 the Porter Narcotics
Farm Act established two hospitals for narcotics addicts in
response to overcrowding in federal prisons. This would be the
model for federal drug treatment until the 1960’s (BJS, 1992). By
1937, the Treasury Department was ready to introduce marijuana
control legislation. The Marijuana Tax Act of 1937, (the first federal
legislation dealing with marijuana) like the Harrison Act, placed a
transfer tax on the sale of marijuana. The Opium Poppy Act of 1942
and the Boggs Act of 1951 imposed more penalties on the
importation and exportation of narcotics and marijuana.
Additionally, the Boggs Act includes the use of mandatory minimum
sentences and higher fines for violations (Bugliosi, 1991). In the
early 1960’s, as a result of The Community Mental Health Centers
Act of 1963, Congress expanded the national government’s role in
the treatment of narcotics addicts. Later amendments to the Act in
1968 further expanded the federal role and classified narcotics
addiction in the definition of mental illness (BJS, 1992).

Qter I_D§velopments: An E_m_ghasis on Trafficking Organizations.

By the late 1960’s to the 1980’s, partly as a result of changing
illegal drug use patterns and increasing trafficking, several

important laws were passed that altered the emphasis of federal

31
policy. The 1965 Drug Abuse Control amendments allowed for
regulation of depressant and stimulant drugs. Perhaps more
important was the Controlled Substances Act (1970) and the
Controlled Substances Import and Export Act (1970). These new
federal laws now focused on reducing the supply of drugs. The two
Acts created a “common standard of dangerousness to rank all drugs
rather than just focusing on specific substances. Additionally, they
allowed the scheduling of substances to be changed
administratively. The BJS found that these Acts, which were
intended as a model for State legislation, generally have been
adopted (1992:84). Worth noting is that during this same year, the
Racketeer-Influenced and Corrupt Organizations (RICO) and
Continuing Criminal Enterprise (CCE) laws were passed. These laws
focused on the leaders of illegal drug enterprises and added
forfeiture sanctions against the illegal profits of narcotics
organizations. In 1971, a Presidential Cabinet Committee for
International Narcotic Control was formed with the objective of
providing assistance to other countries to control drug production
(BJS, 1992). With the eventual passage of two additional acts

focusing on treatment and prevention during the mid-1970’s, the

32
government’s anti-drug efforts were fairly evenly balanced between
treatment and enforcement (BJS, 1992).

By the 1980’s, government policy was now shifting more
toward reducing supply and demand. Four major bills were enacted
during the past decade. The 1984 Crime Control Act included a
provision for expanding civil and criminal forfeiture in addition to
increasing criminal penalties and establishing a determinant
sentencing system. The 1986 Anti-Drug Abuse Act included an
emphasis on treatment, grants to state and local governments, and
controlling international drug trafficking. The 1988 Anti-Drug Abuse
Act further increased penalties for drug trafficking offenses,
increased treatment and prevention efforts to reduce demand, and
endorsed the use of sanctions aimed at users to also reduce demand.
Finally, The Crime Control Act of 1990 further strengthened the
forfeiture laws, provided more money for state and local
governments, and expanded drug control and education programs for
schools (BJS, 1992).

Summary

This literature demonstrates how the federal narcotics

legislation went from regulation to prohibition. The final changes in

drug enforcement policy, especially the new federal forfeiture laws,

33

re-directed the government efforts more toward the illegal drug
trafficking organization. The reason for the existence of these
organizations - huge profits - forced the government to revive and
refine an old sanction into a powerful and unique tactic in the War
on Drugs: asset forfeiture.
Asset Forfeitug

The History of the Concept of Asset ForfeitLLe.

Forfeiture is defined as “the taking by the government of

property illegally used or acquired, without compensating the
owner” (US v. Eight Rhodesian Statues, 1978). Although forfeiture
is relatively new to US. law, it is an ancient concept with its
“modern” roots found in the earliest stages of English common law.
Lenck asserts that the concept of forfeiture actually dates back to
the Old Testament and also appears in several subsequent legal
codes. Chapter 21 of Exodus reveals the religious background of
present forfeiture law: “If an ox gores a man or a woman, that they
die, then the ox shall be surely stoned, and his flesh shall not be
eaten, but the owner of the ox shall be quit” (1987:5). This verse is
unique in that it subjects the ox to forfeiture without any regard to

the guilt of innocence of its owner. A forfeiture under this verse

34

does not depend on the criminal conviction of any person. If the
animal killed someone, the owner loses his right to the animal.

Further examination of forfeiture demonstrates that as early
as 451 B.C., Roman Law included this concept: “if an [animal] causes
injury to anyone, let the owner tender him the established amount of
the damage; and if he is unwilling to accept it, the owner
shall...surrender the animal that caused the injury” (7 Twelve
Tables, translated in 1 Scott, The Civil Law, 69, 1973). Additionally,
the Greek legal codes also dealt with this concept. AEschines the
Greek (389 -314 BC) noted: “(W)e banish beyond our borders the
sticks and stones and mindless things, if they chance to kill a man;
and if a man commit suicide, bury the hand that struck the blow afar
from the body.” (From The Common Law as Cited in Lenck, 1987:5).

Forfeiture in its present form, has its direct foundations in
early English common law. The common law provided the idea that
the property itself can be tainted with guilt if it is used in a
criminal offense. This type of forfeiture is directed at the offending
property rather than the owner, that is, the idea of an in rem action
which is the basis of Civil forfeiture: “Where a man killith another
with a sword..., the sword shall be forfeit as deodand, and yet no

default is in the owner” (The Common Law, at 24-26). Additionally,

35
the common law also developed the idea of in personam or criminal
forfeitures based on the idea of attainder. Kasten explains the
origins of the concept:

At common law, the sovereign retained an allodial interest in
all property. Any tenant who committed a felony broke the oath
of fealty he had pledged to the Crown, and as a result, the
original grant of property from the Crown was voided. The
Crown’s interest in the property vested by way of escheat,
simultaneously with the breach of the oath. The commission of
the felony worked corruption of the blood so that those
otherwise positioned to inherit the property became deprived
of that right although they were guilty of no felony. Deodand
was the forfeiture of any object that caused the death of one
of the king’s subjects. A sword used to kill a person, for
example, was declared a deodand and forfeited to God, by way
of the Church. A deodand was forfeited even though the
deodand’s owner may have played no role in the resulting death
(1991:198-199).

The basis of this concept of forfeiture is also noted in the Drug
Administration’s Agents’ Guide to the Forfeiture of Assets:
Our ancestors created the concept of forfeiture out of a need
for revenge - against the offending thing, if not against its
owner. Over the centuries, the concept of revenge has gradually
faded from our laws, but the traditional doctrine of forfeiture
remains. Today, forfeiture is used to protect the public from
the harmful object...and it is used to deter crime (Lenck,
19873).
What occurred as a result of these common law ideas of
forfeiture based on escheat of attainder and deodand was an

eventual dichotomy of this body of law. Forfeiture based on escheat

of attainder looks to punish a property owner for committing a

36
crime, while a forfeiture based on the deodand is directed at the
guilt of the property or the offending thing. These differences led to
a procedural dichotomy in the law. Kasten writes: “Forfeiture
consequent to attainder required an underlying criminal conviction,
and was, therefore, an additional in personam sanction against the
individual.... Deodand forfeiture, however, was essentially in rem,
with only the guilt or innocence of the property at issue”
(1991:200). These form the basis of criminal and Civil forfeiture
proceedings.

American Forfeiture Law: Early Developments.

Since the Colonial period, American law has contained
numerous civil forfeiture provisions. Examining the need for asset
forfeiture, DOJ notes: “The First Congress enacted laws in 1789
subjecting vessels and cargos to in rem Civil forfeiture for
violations of the Customs laws. Governments long ago recognized the
need to protect against the smuggling of contraband into their
territory” (1993:1). Initially criminal or in personam forfeitures
were prohibited by the First Congress of the United States. As a
result, criminal forfeitures temporarily disappeared until the
passage of the RICO Act in 1970 (Lenck, 1987), but the civil actions

would become an integral part of American law.

37
Explaining early in rem forfeitures, Osborn (1991) contends
that they were limited in scope and initially passed to facilitate the
enforcement of functions specified by Congress such as the
collection of import duties and taxes. The laws were patterned after
the English navigation and Custom’s laws. Later, the enactment of
the Confiscation Act during the Civil War led to a major change in
the development of civil forfeiture law (Reed, 1985). The
Confiscation Act was passed during the Civil War to facilitate the
seizure and forfeiture of the property of all Confederate officers
and those found as sympathetic to the Confederacy. Though designed
to support the Union’s war efforts, the Act received much attention.
Osborn (1991) describes the controversy surrounding the Act:
Congressional opponents of the bill argued that the Act was an
unconstitutional punitive measure. If the government could
proceed in rem to punish treason, nothing would stop it from
proceeding similarly to punish lessor crimes. Senator
Browning predicted that if the confiscation bill were passed,
“a total revolution will be brought in our criminal
jurisprudence, and in despite of all the safeguards of the
Constitution, proceedings in personam for the punishment of
crime may be totally ignored, and punishment [will be]
inflicted by proceeding against the property alone (1991:70-
71).
Though controversial, the Confiscation Act passed in 1862. The

Supreme Court justified the Act’s constitutionality as an expedient

way to end the Civil War. As a result of this “abandonment” of

38
constitutional limitations on forfeiture during the war, the Court
had set a precedent. After the Civil War ended, the Supreme Court
then rejected the idea that property could be considered guilty. In
Boyd v. us. (1886), the Court stated that if “the forfeiture
proceeded by reason of offense, then even though they are civil (in
rem) in form, they are criminal in nature and the owner is entitled
to all privileges which appertain to a proceeding against a person”
(at 616). Yet, in 1921, as a result of an increase in forfeiture cases
due to Prohibition, the Supreme Court, relying once again on the
concept of the deodand, re-adopted this idea holding that “property
was ‘deodand’ guilty based on its involvement in a criminal act....”
(Osborn, 1991:23).

MrAern Amgrican Forfeiture La__v_I_/:§ Origins: The Ra_cketeering

Ed lnflgence Corrupt Orggfltions Act.

The concept of forfeiting guilty property has existed in the
United States since the late 18th century. However, what led to its
expansion as an established feature of American civil and criminal
law in the late 20th century? The review of the literature identifies
the government motivations that made this possible.

Criminal forfeiture would finally re-appear in 1970, when in

search of a new approach to racketeering and narcotics trafficking,

39
Congress passed the Racketeering and Influence Corrupt
Organizations Act (RICO), and the Continuing Criminal Enterprise
statute (CCE). These two statutes included the authorization of
forfeiture as a criminal sanction to be applied directly against the
offender. They also went beyond the traditional civil forfeiture laws
that only targeted contraband or property used in a crime. Congress
designed these statutes to attack the core of organized crime and
drug trafficking. The statutes gave the government authority to
seize the “ill gotten gains of organized crime figures” (Smith,
1988:47). Valukas and Walsh explain the origins and details of RICO:

Title 18, U.S.C. section 1962(c) prohibits any person
associated with an “enterprise” from directly or indirectly
participating in the conduct of the enterprises affairs through
a pattern of “racketeering activity” which is defined in
section 1961 (a) to include a number of state and federal
crimes ranging from murder to mail fraud. An “enterprise” is
broadly described to include individuals, partnerships,
corporations, groups of individuals associated in fact, and so
on. The RICO Statute also prohibits using income derived from
a pattern of racketeering activity to invest in an enterprise
that affects interstate or foreign commerce. In addition to
the traditional criminal sanctions of imprisonment, a RICO
conviction results in the mandatory forfeiture under section
1963 of these categories of property: (1) any interest in the
legal or illegal enterprise; (2) any property interest obtained
through racketeering, whether in a RICO enterprise or not; and
(3) any proceeds obtained directly or indirectly through a RICO
violation (1988:33).

40

Although effective against organized crime, these criminal
statutes had only limited success in controlling the rapidly
increasing amount of illegal narcotics trafficking. Ferris (1989)
observes that Congress and law enforcement, realizing that those
participating in the illegal drug trade were seldom deterred by even
the most severe sentences, sought another approach to the problem.

Toward a new solution, in 1978 Congress amended the existing
civil forfeiture laws (21 U.S.C. sect. 881 (a)(6) was added) to allow
for the seizure of all monies used in, and all proceeds acquired from
the illegal narcotics trade. Smith (1986) contends that by expanding
the scope of property types subject to seizure, this amendment
provided federal prosecutors with an effective civil procedure to
attack the profits of drug trafficking. This event marked the first
use of civil forfeiture proceedings against the profits of criminal
activity. As a result, large amounts of property would be confiscated
with this law for the government.

Momprehensive Crime Eontrol Act of 1984.

The next legislation to significantly change federal forfeiture
law was the Comprehensive Crime Control Act of 1984. DOJ reports
on the importance of the CCCA to the federal enforcement efforts:

Asset forfeiture as we know it today dates back to less than a
decade to the Comprehensive Crime Control Act of 1984.

41

That Act modernized federal forfeiture, expanding the
government’s legal authority to conduct an aggressive national
forfeiture program. One provision of that Act established the
Department of Justice Assets Forfeiture Fund to hold the
proceeds of forfeitures and to finance forfeiture-related
expenses as well as certain law enforcement activities. In
addition, this 1984 Act authorized the Attorney General to
equitably share forfeited property with cooperating state

and local law enforcement agencies (1993:1).

The legislative history of the Act shows how Congress found
that the classification of property subject to forfeiture in narcotics
cases was too limited. Now, large-scale forfeiture was possible.
With this legislation, 98th Congress further amended the RICO
forfeiture provisions with the Comprehensive Forfeiture Act of
1984 (CFA). Terry Reed describes the extensive procedural and
substantive modifications affecting criminal forfeiture included in
the CFA:

The substantive changes included an expansion in the

application of the criminal forfeiture provisions to more

criminal offenses and a renewed attempt to define assets that
fall within the statutory definition of forfeitable interests. On

a procedural level, the CFA established minimal uniform

procedures at both the pretrial and post verdict stages in a

criminal trial of an in-personam forfeiture (1985:750).

The legislative history of the 1984 amendments also reveals

that the Congress intended to punish drug offenders as harshly as

possible. In US v. McKeithen (1987:313), the Second Circuit relies

42
on the history of the statute noting that Congress intended the
criminal forfeiture laws to “dissuade individuals from pursuing
criminal gain and to eradicate the economic power bases making
possible organized criminal and drug-related activities”. Smith
(1984:320) further explains the Congressional intent of the
legislation:

by passing the CCCA of 1984, Congress intended to eliminate

the statutory limitations and ambiguities that have frustrated

active pursuit of forfeiture by Federal law enforcement
agencies. The Act strongly encouraged the use of the criminal
forfeiture provisions by, for example, restricting pre-
conviction transfer of property and expanding the reach of
criminal forfeiture to cover all drug felonies within the
scope of the Act. Thus, Congress was forcefully aiming both
to increase the number of forfeitures and enhance their
effectiveness.

Additionally, the CCCA amended the civil forfeiture provisions
to allow for the inclusion of real property used to facilitate drug
transactions in addition to further expanding the scope of the
existing forfeiture laws. The legislative history of this amendment
notes how the Senate Judiciary Committee was frustrated that
section 881 could not effectively reach real property (US. Code,
Cong. & Admin. News, 1984:3377-78). These excerpts also note the

intent: “the extent of drug-related property subject to civil

forfeiture under 881 is also too limited in one respect” (1984:3378).

43
The purpose of the Comprehensive Forfeiture Act was “to enhance
the use of forfeiture”, a powerful weapon in the fight against one
“of the most serious crime problems facing the country drug
trafficking” (1984:3374). According to DOJ (1990:19-20), the CFA
also included the folowing Changes:
* Authorized criminal forfeitures for any drug felony (previously
just “drug kingpin” offenses were covered);
* Broadened the range of property subject to criminal forfeiture and
strengthened theability to “freeze” forfeitable property pending
forfeiture;
* Codified “relation-back” doctrine for both criminal and civil
forfeitures so government title to forfeited property “relates
back” to the date when the offense occurred giving rise to the
forfeiture;
* Authorized equitable sharing of forfeited property with
participating state and local law enforcement agencies in both Title
21 and Title 19 forfeitures;
* Authorized payment of awards of the lessor of $150,000 or 25
percent of the net proceeds of the forfeiture for information leading

to a forfeiture;

44
* Established the Department of Justice Asset Forfeiture Fund to
hold proceeds of Department of Justice forfeitures and to fund
forfeiture-related expenses as well as certain law enforcement
activities including purchase of evidence, equipping of conveyances,
and payment of awards;
* Increased maximum Claim and cost bond from 10 percent of the
value of the property or $250 to 10 percent of the value of or $2500;
and
* Authorized discontinuance of federal forfeiture proceedings in
favor of state forfeiture.

Egrther Refinements to Asset Forfeitpre l__a_w_.

The next revision occurred with the Anti-Drug Abuse Act of
1986. This legislation made several important Changes to federal
forfeiture. These included authorizing forfeiture of the proceeds of
money laundering crimes, drug paraphernalia, and “substitute
assets” in RICO and drug felony cases. DOJ analyzes the advantage of
this new provision: “if the proceeds of the offense have been put
beyond the reach of law enforcement, lawfully acquired property of
equivalent value can be substituted for the missing proceeds and
forfeited” (1990:20). Additionally, this Act also extended the

sharing process to include cooperating foreign governments and

ma:

an

IC

45
made the Asset Forfeiture Fund permanent in addition to expanding
its uses.

With the Anti-Drug Abuse Act of 1988, Congress further
amended the narcotics Civil forfeiture law, 21 U.S.C. section 881(a)
to give more protection to innocent third-party property owners.
Goldsmith and Linderman report on the significance of the Changes:

Prior to November 1988, different third party exemptions

governed the forfeiture provisions concerning real property,

currency and vehicles. Subsection (a)(6) and (a)(7) exempted an
owner’s interest in currency and real property from forfeiture
if he didn’t consent to or know of the illegality giving rise to

the forfeiture. Subsection (a)(4) however, did not provide a

comparable innocent owner exception for conveyances. In

November 1988, as part of the Anti-Drug Abuse Act of 1988,

Congress amended subsection (a)(4) to provide a new third

party defense. The new law states that no conveyance shall be

forfeited by reason of any act or omission established by
that owner to have been committed or omitted without [his]

knowledge, consent, or willful blindness (1989:1268).

This Act also authorized the forfeiture of the proceeds of
pornography trafficking and expanded money laundering forfeiture.

Lenck (1987) asserts that this new legislation strengthened
law enforcement’s ability to attack narcotics trafficking
organizations for the very reason they exist - profit. Investigations

will no longer be limited to arresting traffickers and seizing

narcotics. The government can now seize the third critical element

46
of criminal organizations, namely the illegally acquired assets of
its members.

In 1989, two additional statutes led to more changes in these
laws. One authorized forfeiture in bank-related crimes as part of the
savings and loan bill. By 1990, even more Changes occurred. Of note
was the Customs and Trade Act which authorized administrative
forfeiture of property valued up to $500,000 and of monetary
instruments without regard to value.

Aside from the major statutes reviewed in this section, there
are other lessor-used federal forfeiture statutes. These include 31
U.S.C. Sect. 8313 which prohibits the undeclared importation of
monetary instruments in excess of $5000, to 21 U.S.C. Sect.104
which covers the forfeiture of vessels used to import swine into the
United States.

m

The literature summarized in this section examines the long
history of the concept of forfeiture and traces the foundations of
current US. forfeiture laws to English common law. Also
summarized Is the research detailing the development of modern

forfeiture law as a tool to combat illegal drug trafficking and

47
organized crime. As a result of these Changes, the government now
possess a highly unique alternative sanction.
The Federal Forfe'Lure Process: Onag_ni_zation and; Participants
The asset forfeiture program consists of two general levels.

The basic structure is illustrated in Figure 4 on the following page.

48

Administrative level

 

DEPUTY ATTORNEY
GENERJAL

ASSOCIATE DEPUTY
ATTORNEY GENERAL

EXECUTIVE OFFICE FOR
ASSET FORFEITURE

Field-level Agencies and their
Responsibilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investigations Seizures Processing Asset Mngt.
FBI FBI Judicial: USMS
DEA DEA USAO (FBI)
INS INS (DEA)
USPS (USMS) Admin: (INS)
IRS USPS FBI USPS (USPS)
BATF IRS DEA IRS (IRS)
BATF INS BATF (BATF)

 

Figure 4: Organizational Structure of the Federal Forfeiture Program

Source: Annual Report of the Department of Justice Asset
Forfeiture Program, FY 1990

49

At the federal level, several agencies are involved in asset
forfeiture cases as a part of their responsibility for enforcement of
the federal drug laws. The major Department of Justice and Treasury
Department participants in federal asset forfeiture consist of the
DEA, FBI, IRS, USCS, INS, the US. Attorneys, and the US. Marshal’s
Service. While the USPS, USPP, and BATF participate in asset
forfeiture as noted in the above-Chart, their involvement is
somewhat limited.

Executive Office for Asset Forfeiture.

The Executive Office for Asset Forfeiture serves as the
oversight agency of the federal forfeiture program. DOJ asserts that
the agency was created to provide “oversight, management and
direction to the various participating components” (1993:3). The
office is currently involved in implementing a nationwide
computerized case tracking system, developing and evaluating
forfeiture policy and procedure, facilitating communication among
the component agencies, and formulating the Asset Forfeiture Fund

budget.

50

Drug Enforcement Administration.

Primary responsibility for enforcing federal drug laws and
policies rests with the DEA. As a result, the DEA plays a major role
in federal asset forfeiture: “as a deterrent to drug trafficking, the
forfeiture efforts of the DEA effectively destroy and immobilize
criminal enterprises, including Kingpin organizations. Through the
Kingpin Strategy developed in FY 1992, DEA continues to focus the
attack on criminal organizations that produce, transport and
distribute the preponderance of cocaine and illicit drug in our
nation’s cities” (DOJ, 1993:4).

Because of this responsibility, the DEA pursues an integrated
approach to drug enforcement that consists of a three part strategy:
(1) trafficking arrests; (2) drug removal; and (3) asset seizure.
Lenck further discusses the program:

These activities are taken in concert; to pursue one and ignore

another is less than effective. For example, to arrest and

subsequently incarcerate a trafficker but ignore legal removal
of his assets permits the trafficker the latitude of reinvesting
his illicit wealth through confederates at large. Most

important, asset removal strikes at the reason for illicit drug

trafficking - large, quick monetary gain (1987:283).

DEA policy has emphasized the use of forfeiture under 21 U.S.C.

881 (a)(6), that is, the Civil statute. The decision to utilize this

statute was based on resource constraints and the relaxed burden of

51

proof requirement. Lenck explains the reasoning of the Drug
Enforcement Administration to justify this policy: “The limited
resource availability to drug enforcement indicates that we must be
flexible. The decision to utilize a particular statute affects the
extent of the investigation itself. an investigator will have to
present a higher degree of proof in a criminal action than a civil
action. This may require more time or money” (1987:290). AS a
result of their efficient use of asset forfeiture’s civil statute, the
DEA has generated a considerable amount of revenue for the
government to use for further drug enforcement. The BJS (1992)
report found that in 1990, the DEA seized assets valued at more than
$1 billion with two-fifths of these assets being currency valued at
$364 million. Aside from currency, during 1990, the DEA also seized
primarily from cocaine investigations real property valued at almost
$346 million, 5,674 vehicles worth over $60 million, 187 vessels
valued at over $16 million and 187 vessels worth in excess of $16
million (BJS, 1992:142).

In addition to their extensive application of civil forfeiture,
the DEA also administratively forfeits property that has not been
claimed, rules on petitions for remission and mitigation of

forfeitures, and participates in determining the amount of equitable

52
sharing that will be made as a result of joint investigations with
state or local law enforcement agencies (DOJ, 1990).

Federal Bureau of lnvestigartion.

The FBI also maintains concurrent jurisdiction with the Drug
Enforcement Administration over federal drug laws. Additionally,
the FBI has increased its cooperation with the DEA in its drug
enforcement efforts (BJS, 1992:142). The reasoning is that the FBI
recognized that certain drug traffickers are also involved in other
types of violations, i.e., organized crime for example, that would
come under the jurisdiction of the Bureau. As a result, the FBI and
DEA cooperate in joint investigations. Similar to the DEA, the FBI
maintains an asset forfeiture unit designed to coordinate seizures
and provide information with participating agencies.

Immigration and NaturaLzation Service.

The INS relies on federal forfeiture in its efforts to enforce
the laws on immigration and smuggling. INS is authorized to seize
vehicles used in violation of these laws. Most of the INS seizure
cases involves attempts to enter the United States illegally, a
violation frequently related to drug smuggling as well as alien

smuggling (EOAF, 1993).

53
Internal Revenue Service.

The Executive Office for Asset Forfeiture (1993) contends that
while not involved in asset forfeiture to the extent that the DEA and
FBI are, the IRS investigations into money laundering and tax and
currency violations are frequently associated with narcotics
trafficking. These cases commonly lead to property forfeitures. As a
result, the IRS is important part of the federal forfeiture program.
The Department of Justice believes that IRS efforts have a
significant impact on crime by completely dismantling criminal
enterprises with the removal of the fruits of their illegal business
(EOAF, 1993).

United: States Custom’s Service.

The Custom’s Service is responsible for the interdiction and
seizure of contraband, including illegal drugs, that are being
smuggled into the United States. Additionally, this agency also has
the authority to enforce provisions of the Back Secrecy Act which
covers deposits of currency and other monetary instruments, both
domestic and international (BJS, 1992). This special jurisdiction
brings the USCS into contact with international drug trafficking and

money laundering. The USCS, which also maintains its own asset

54
forfeiture fund, has secured deposits of $100 million in 1990 (BJS,
1992).

United States Park Police.

Part of the United States Department of Interior, the US. Park
Police also utilize the federal forfeiture laws in association with
the FBI. The USPP emphasis is on smaller distribution organizations
usually headed by mid-level traffickers conducting their business on
public lands under the jurisdiction of the Interior Department. The
Executive Office for Asset Forfeiture (1993) has Characterized the
organizations commonly targeted by the USPP as consisting of three
to ten suspects and normally involving the seizure of one to three
vehicles, $1,000 to $10,000 in cash, $2,000 to $5,000 in other
assets and several firearms. As a result of their efforts, the USPP
play an integral role in the federal program.

The Unitet1_S_tgLes Attorney’s Office.

The 94 US. Attorneys are the chief federal law enforcement
officers in their judicial districts. They are responsible for
investigating and prosecuting federal drug offenses and are
frequently involved in organized crime and drug task forces, and

judicial asset forfeiture cases.

55

Each US. Attorney’s Office (USAO) maintains an Asset
Forfeiture Unit, usually attached to the Civil Litigation Division
since most forfeiture cases are civil actions. These specialized
units typically consists of attorneys, paralegals, and support staff
trained in asset forfeiture. In addition to the litigation of forfeiture
cases, the USAO coordinates with federal, state and local law
enforcement agencies to facilitate forfeiture investigations,
litigation, and equitable sharing (DOJ, 1990).

The United States Attorney’s Offices also have an Organized
Crime and Drug Enforcement Task Force (OCDET F). OCDETF is a
specialized unit consisting of prosecutors and staff responsible for
investigating, prosecuting and destroying high-level narcotics
trafficking organizations and criminal groups (BJS, 1993,
November). Forfeiture actions resulting from the work of the OCDETF
unit are criminal cases.

The United—Spates Mgrshgl’s Service.

The primary role of the United States Marshal’s Service (USMS)
in asset forfeiture is of custodian of seized and forfeited property.
For example, by September 30, 1990, the USMS had custody of more
than $1.3 billion worth of property including $630 million worth of

real estate (BJS, 1992). Prior to the actually taking custody of an

56

asset, the USMS works closely with the US. Attorney and the federal
investigative agencies to pre-plan the seizure. DOJ states that this
helps avoid typical problems such as inaccurate title information,
improper seizures, contaminated real property, and threats to
public safety (1991, March). Once the seizure is made, and pending
the resolution of the case, it is the responsibility of the USMS to
store and manage the asset. This process involves the storage of
vehicles in leased or government-owned facilities, the deposit of
currency into government accounts, utilization of occupancy
agreements for the owners of homes that have been seized, and the
hiring of property managers for real estate.

Due to the large amount of property maintained by this agency,
the USMS needs to run this law enforcement program similar to a
business. The Attorney General notes in his annual report: “Careful
coordination among the forfeiture components is necessary to
achieve the maximum law enforcement impact as well as the
maximum return for the taxpayer” (DOJ, 1990:12). Once the property
is forfeited to the US, the Marshal’s Service is responsible for its
disposition. Property is disposed of by the USMS is various manners.
It can be transferred directly to participating federal, state or local

agencies in accordance with the terms of the equitable sharing

57

agreement, or sold at auction with the funds distributed to various
law enforcement and the Asset Forfeiture Fund.
The Types of Cases: Administrative. Civil and Criminal

Federal forfeiture proceedings are divided into three
categories: administrative, criminal and Civil. Criminal and Civil
forfeitures are considered ”judicial” since they result in a court
order of forfeiture, while administrative cases are processed by the
federal agency that seized the property or adopted the case.

Administrative proceedi_ng§

The federal investigative agencies may forfeit property with
an administrative procedure that does not involve the district court
or the US. Attorney’s Office. Pursuant to 19 U.S.C. 1607, prior to
mid-1990, these agencies had the authority to administratively
forfeit cash and other types of property valued at no more than
$100,000, in addition to cars, boats and planes that were used to
transport controlled substances regardless of their value. In August
of 1990, the Customs and Trade Act raised the dollar value cap
thereby increasing the number of forfeiture cases that could follow
the administrative route. The new legislation permits the
administrative forfeiture of monetary instruments withort regard

to their value and other property valued up to $500,000. All real

58
property must still follow the judicial route for forfeiture (DOJ,
1990).

In an administrative case, following the seizure of property, a
notice of seizure and intent to forfeit is mailed to all persons known
to have an interest in the property in addition to being published in a
national newspaper. If a claimant comes forward to file a claim and
cost bond on the asset, the case generally follows the civil court
route. If no one claims an interest in the property, and following the
expiration of the time requirement, the property is forfeited to the
US. without court action (Lenck, 1987).

Administrative proceedings are the fastest, most efficient,
and cost-effective manner to forfeit property because no one is
claiming ownership of the asset and the dollar value caps are set
very high. The refusal to assert an ownership claim may be due to
guilt more than the inability to afford legal counsel or innocence. In
forma pauperous Claims allow the indigent to legally contest a
property seizure. Without this protection, the indigent may end up
spending more on attorneys to contest a seizure than what the asset
is worth. It can also be argued that innocent owners ablerto afford
counsel still may balk at the costly venture of contesting a civil

forfeiture with the government. Yet, as described later in this

59

Chapter, substantial legal protections exist to protect innocent
owners. A more plausible conclusion is that assets that have been
administratively forfeited are tainted with guilt and would be
difficult to prove otherwise. The owners have little desire to
contest the seizures. It may very well be that property
administratively forfeited was owned by the truly guilty.

Criminal Proceedi_ng§

As noted in the earlier section, prior to 1970 with the
enactment of the RICO and CCE statutes, criminal forfeiture was not
a part of the American legal heritage. Instead, American law relied
on a variety of civil forfeiture provisions actually dating back to the
first meeting of Congress. Reed (1985) notes that when Congress
enacted the criminal forfeiture provisions of the RICO and CCE, it
adopted a new form of forfeiture based on an adjudication of
criminal guilt. Later refinements in the law enacted in the
Comprehensive Forfeiture Act of 1984 made forfeiture applicable to
more types of criminal offenses and also included more types of
property. These changes now penalized an individual convicted of a
felony under federal drug laws with the forfeiture of their assets

used in that offense or bought with the proceeds.

60

Specifically, criminal forfeitures are in personam proceedings
directed against the individual. They authorize an in personam
liability against the criminal defendant and are conducted in
conjunction with the criminal prosecution of the defendant. The
success of a criminal forfeiture depends on criminally convicting
the defendant (Calero-Toledo v. Pearson Yacht Leasing Co., 1974).

Criminal forfeiture laws generally adhere to their background.
Lenck explains: “In ancient times, in England, the property of a
convicted felon was forfeited to the king as a form of criminal fine.
These proceedings were against the felon and their success depended
upon the criminal conviction of the felon” (1987:70).

The forfeiture is actually part of the criminal trial, but is
only initiated in conjunction with a specific criminal Charge that
provides for forfeiture such as a gambling or narcotics violation.
The criminal indictment, in addition to outlining the criminal
charges, contains the forfeiture allegations listing the subject
pr0perty (Lenck, 1987). Because .of these inherent features, there are
several unique advantages for the defendants and for the
government. Valukas and Walsh (1988) found that one advantage is
that since the forfeiture allegations are in the indictment, a not

guilty plea on the part of the defendant preserves the defendant’s

61
rights. Additionally, because these are criminal proceedings, the
government must first prove the defendant’s guilt beyond a
reasonable doubt - quite different from a Civil action explained in
the next part. Finally, if the government loses the criminal case, it
also loses the associated forfeiture action.

Since these are criminal proceedings, the government
maintains the advantage of the grand jury which can be a very
powerful weapon in investigating criminal activity. Maveal explains,
noting the Supreme Court’s description of a grand jury:

a body with powers of investigation and inquisition, the scope

of which is not limited narrowly by questions of propriety or

forecasts of the probable result of the investigation, or by
doubts whether any particular individual will be found properly

subject to an accusation of crime (1992:55).

Some have described the government’s latitude in using the grand
jury as unregulated (Blair v. United States, 1992).

Another advantage to the government with starting a criminal
forfeiture is venue. All the property listed in the indictment goes
forward without the need to file a parallel civil forfeiture case.
When a parallel civil action is filed to forfeit property from a drug

offender, the civil actions can be stayed until the criminal trial is

concluded (Leach, 1991). With a criminal forfeiture, both a criminal

62
prosecution and a forfeiture are conducted together. This can result
in a substantial financial savings to the government.

Criminal actions also avoid the rather extensive discovery
provisions of civil cases. In Civil actions the rules of discovery
permit rather broad access to government files and witnesses which
may lead to evidence and impeachment problems at the trial.
Traditionally, in a criminal action, discovery is limited while the
entire range - depositions, interrogatories, and document requests -
are available in civil forfeitures (Walsh and Valukas, 1988).

The other strategic advantage with using the criminal process
is that the government may follow an unsuccessful criminal
forfeiture with a civil action. Maveal (1992) argues that this can be
especially beneficial since the burden of proof requirement will be
lower in a civil forfeiture. One court has even held that the
government may effect a criminal forfeiture after a prior civil
action against the same property has been dismissed with prejudice.

Perhaps the most important advantage to using criminal
proceedings is its most obvious. Not only does a criminal action
forfeit the assets of the drug trafficker potentially destroying the
economic base of his organization, but it also incapacitates the

offender with incarceration. As a result, this strategy can prevent

63
much of the criticism directed at forfeiture, i.e., forfeiture without
charging one with a crime and the use of Civil proceedings favoring
the government. Forfeitures conducted with the full protection of
criminal proceedings for the defendants, followed by the
incapacitation of both the offender and the organization can
potentially help to meet the goals of Congress and the Department of
Justice.

After the conviction is entered in a criminal case, the court
will address the forfeiture allegations stated in the indictment.
Since they are in personam proceedings, criminal forfeiture provides
the district court with jurisdiction over the defendant’s property
even if its is located in another federal district. Because innocent
third-parties with an interest in the property (leinholders, etc) are
not part of the trial, they cannot assert their interest until the
trial’s conclusion. In other words, a criminal case is an in personam
proceeding just between the government and the defendant, the
forfeiture conviction determines only their respective rights. The
rights of third party claimants (leinholders, etc) are determined at
the ancillary hearings held after the trial (Valukas 8: Walsh, 1988).
At this stage, if there is a guilty verdict, the forfeiture allegations

will be addressed by the court.

64

This process starts with the issuance of a preliminary order of
forfeiture followed by hearings to adjudicate and settle third-party
claims. Historically, the innocence of a third-party claimant was not
a defense to forfeiture since these proceedings relied on the concept
of the guilty property. This concept persists in the law, both
criminal and civil although there are exceptions. Each of the civil
and criminal statutes contains the relation back provision that vests
title to the forfeited property in the United States as of the moment
the criminal acts were committed. Yet, third-party rights are
recognized in each statute.

The ancillary hearings protect the third-party rights as long as
they comply with the statutory deadlines for filing petitions,
administrative claims, judicial claims, and answers. The process
concludes with the issuance of a final order of forfeiture. Once this
is issued by the district court, the property is forfeited to the
United States.

Interestingly, there is some new interest in increasing the use
of criminal forfeiture due to its benefits. George W. Proctor,
Director of the Department of Justices’ Asset Forfeiture Office
(AFO), writing in Asset Forfeiture News explains the value of

criminal actions:

65

US. Attorney’s that have successfully transferred the
emphasis of forfeiture actions from civil to the criminal
divisions of their offices have discovered many
advantages.Thein personam jurisdiction attendant with
criminal prosecution has extended the reach of the US.
Attorney to assets not only in other district, but in other
countries as well. Forfeiture actions formerly filed civilly
are now being disposed of more expeditiously as criminal
cases due to the priority given by the courts to the criminal
docket. Additionally, members of the public who portray the
owners of civilly or administratively forfeited property as
“innocent” owners in their battles waged against the
forfeiture laws are disarmed by a forfeiture which is
conditioned on a guilty verdict against the property owner
(1991, July/August:3)

Although these are significant advantages, civil actions will
still remain in the forefront due to the lesser burden of proof and
their quick resolution when compared to criminal proceedings. These
are discussed in the following section.

_Civil Progeedjpg;

The most commonly used forfeiture statutes are civil. These
are in rem proceedings brought “against the thing” or subject
property in question (Loui, 1991). This idea is again based on the
legal fiction that the property itself is guilty, i.e., the theory is that
the property involved in the illegality is tainted by guilt (The
Palmyra, 1827). Therefore, the guilt or innocence of the property
owner is of no significance in determining if the property is subject

to forfeiture (U.S. v. Sandini, 1987). In addition, the law considers

66

that the ownership interests in the property at issue vests to the
United States at the time of the offense. This is the relation back
doctrine which eliminates all subsequent transfers to third parties.

Civil forfeitures - actions against the property involved in
some wrongdoing - have a long history. The First Congress of the
United States passed civil forfeiture legislation to supplement
Customs laws (Calero-Toledo v. Pearson Yacht Leasing Co., 1974). In
civil actions, the subject property is completely independent of any
criminal action against the owner. The Drug Abuse Prevention and
Control Act, 21 U.S.C., Section 881, provides for the civil forfeiture
of controlled substances, materials and equipment, containers,
conveyances, and records used to facilitate illegal drug-related
activity. Additionally, property which is determined to be the
proceeds of drug trafficking is also subject to forfeiture under the
Act if there is a substantial connection between the property and
the drug transaction. Substantial connection refers to the link or
chain that connects these assets to an illicit-drug exchange. The
process of identifying the chain is referred to as tracing (Lenck,
1987). The Joint House-Senate report states the meaning of this:
“(The Statute) provides for forfeiture of property which is the

proceeds of an illegal drug transaction only if there is a traceable

67
connection between such property and the illegal exchange of
controlled substances” (US. Code Cong. 8: Ad. News, 1978:9522).

Civil proceedings offer the government several advantages
over criminal forfeitures. Unlike criminal actions, civil forfeitures
do not depend on the conviction of the wrongdoer. In these cases, it
is the guilt of the property that is at issue. This explains why one
sees civil complaints with captions such as US. v.. One 1992
Corvette or us. v. 1,000,000 U.S.Currency. This also been a source of
controversy for the government, that is, the seizure of property with
arrest or conviction. Yet in the author’s experience with hundreds of
Civil forfeiture cases, these cases usually start with the arrest of
an individual(s) for a narcotics offense, either as the result of a
pre-planned investigation or a reactive action such as a traffic stop.
Whether or not the government decides to proceed with the criminal
charge depends on the individual and the seriousness of their
offense. Additionally, if the cases are adoptive seizures, that is, the
forfeiture is brought by a participating state of local agency to the
US Attorney for prosecution, many times the individual from whom
the property has been seized will be facing state Charges.

Furthermore, another advantage is that the seizure of the

property is not postponed until the conclusion of the criminal trial.

68
In fact, the actual seizure and custody are considered jurisdictional
perquisites to civil forfeiture actions (DOJ, 1987). The civil
forfeiture order issued by the court is not limited to just the
wrongdoer as in criminal actions. It is good against all parties
without judicial actions (DOJ, 1987).

Civil actions also have a lessor standard of proof than criminal
forfeitures. This is a huge benefit to the government. To initiate a
civil forfeiture, the government needs only to Show probable cause
that the property in question was used to violate federal law. Proof
beyond a reasonable doubt it not necessary (U.S. v. Brock, 1984). The
same probable cause police need to arrest or search is adequate to
begin a civil action. Probable cause is defined as: “requiring
reasonable grounds for belief of guilt, supported by less than prima-
facia proof, but more than mere suspicion” (US v. $250,000 USC,
1987). The reasoning for this lessor standard of proof is that only
property, not individual liberty, is at issue in a civil action. Civil
forfeitures are remedial actions to right a wrong and have only been
considered quasi-criminal by the Supreme Court.

Additionally, another factor in favor of the government is the
law allows for the admissibility of hearsay evidence in establishing

probable cause (Lenck, 1987). Once the government succeeds in

69
establishing probable cause, the burden of proof shifts to the person
claiming an interest in the property to prove its “innocence” by a
preponderance of the evidence (U.S. v. A Single Family Residence,
1986). Maveal (1992) notes that any hearsay evidence submitted to
the government to establish probable cause cannot be considered by
the trier of facts on the merits of the forfeiture issue.

In contrast to the criminal forfeiture’s ability to incapacitate
both the organization and the offender, the Civil forfeiture can be
viewed as more economically efficient in that it can forfeit
property without the need to incarcerate a defendant. The result is a
twofold financial benefit to the government. First, the government
takes possession of the assets hindering the trafficking business.
These seized assets are then used for further drug enforcement.
Second, there is a financial savings of not having to carry out a
lengthy criminal trial and pay for incarceration. As a result, civil
forfeiture is advertised by the government as a self-supporting drug
enforcement strategy (McAnany, 1994).

Civil forfeiture is not without disadvantages that the
government must consider in its application of these law for
fighting drug trafficking. Civil forfeiture does require the

government to promptly seize and secure the property at issue as

70
soon as the forfeiture case is filed. This burdens the government
with storage and maintenance costs in addition to the problems of
occupancy agreements for homes and property management issues
while the case is pending.

Another problem is that a civil action can be rather
cumbersome in terms of procedure. Maveal explains: “Civil claimants
deluge the federal courts with lawsuits and motions challenging the
government’s seizure, seeking return of the seized. property, and
insisting upon a prompt filing and trial of the civil forfeiture
action” (1992:38).

The low burden of proof requirement needed to start a civil
forfeiture can also be a long-term problem. The issue is that since
there is such a low requirement of proof for probable cause and no
grand jury to protect against unjust seizures of property, there are
some inherent dangers for abuse and mistakes.

While the federal legislation was designed to enhance both
criminal and civil actions, as a result of these advantages even
given the disadvantages, civil forfeiture has been the preferred

method.

71

Legal Protections

While these characteristics of civil provisions favor the
government and can make forfeiture a rather harsh penalty, there are
a variety of safeguards - both formal and informal - in asset
forfeiture to protect the innocent. First, property cannot be seized
unless the government believes that it is subject to forfeiture.
Although not required by law, DOJ policy states that seizures should
not be made until a neutral and detached judicial official has made
an independent finding of probable cause and issued a federal
warrant for seizure (AFO, 1992, March/April). While there are some
limited exceptions to this policy, it is mandatory for real estate
seizures. Because forfeiture actions are strictly construed by the
courts, seizing agencies must adhere to constitutionally and
statutory guidelines (US. v. Oregon, 1981). In addition, forfeiture
actions, whether under federal or state law conform to certain
principles (Lamar v. Universal Supply, 1985). Property owners must
be given due process. Aylesworth (1991) asserts that such due
process must include constitutionally adequate nature of the taking
and a meaningful system for disputing the action. Additionally,
Fourth Amendment restrictions on search and seizure also apply to

forfeiture cases. Evidence required to prove a forfeiture case can be

72
suppressed if it was obtained illegally. The exclusionary rule
doctrine used to correct “government violations of the fourth
amendment rights in criminal proceedings is applicable in forfeiture
cases as forfeiture actions are generally viewed as “quasi-
criminal” (Aylesworth, 1991 ).

Following the property seizure, various safeguards are
activated. Notice of seizure and intent to forfeit must be made to
the person(s) in possession of the property when it was seized and
all those known to have a legal interest in the asset. Any claimant
can file a bond to contest the forfeiture (DOJ, 1990). The Fifth
Amendment may also be asserted by a claimant, but he/she does risk
an adverse factual finding if they elect to invoke this protection
(Baxter V. Palmigiano, 1976, In U. S. v. A Single Family Residence,
1986).

In addition to these basic safeguards, several defenses exist
to protect innocent owners of the property in question. Section 881
provides various exceptions to forfeiture. Property is not subject to
forfeiture if it is a common carrier used in the transaction of
business (unless the person in charge consented to the violation) or
if it was used in violation of the narcotics laws while in the

unlawful possession of one other than its owner (21 USC Sect. 881

73
(a)(4)(A)-(B), (a)(6) 1988). Property claimants are also protected by
the innocent owner defense. This defense is established when a
claimant proves they had no knowledge of the violation or they did
all that could be reasonably be expected to prevent the illegal use of
the property (U.S. v. Four Million, Two Hundred Fifty-five Thousand,
1985).

Innocent third-parties still must comply with the same
deadlines as the criminally involved for filing petitions,
administrative claims, judicial claims, and answers. However, only a
phone call to the AUSA is necessary [to notify the government of
their interest.] Valukas and Walsh explain the government’s position:
“Despite the shocking legal results in this field, the goal of the
asset forfeiture statutes is the hurt the bad guys, not penalize the
innocent. Most prosecutors will work hard to avoid injury to
faultless bystanders” (1988:36) The government is more flexible
than one may assume with the forfeiture laws. Valukas and Walsh
note that when an innocent spouse of a drug dealer is a joint owner
of a house, the government may sell the house and give the spouse a
chance to receive the proceeds. It’s possible that if children are
living at home, the government will assume the dealer’s forfeited

position as joint owner and allow the innocent spouse and family to

74
remain in the house. The authors offer this advice to defense
attorneys: “In fact, the government’s heart is probably softest when
it comes to kids. Where children’s welfare is at stake, implore the
prosecutor to forego the forfeiture” (1988:36).

Even after the forfeiture, federal law authorizes the Attorney
General to remit or mitigate the forfeiture if it would be unduly
harsh (Louis, 1988). The Attorney General’s 1990 report notes: “The
Department of Justice routinely grants petitions for remission or
mitigation of forfeiture, primarily to innocent leinholders and
innocent family members. It is the Department’s policy to liberally
grant such petitions as a manner of avoiding harsh results”
(1990:18).

In conclusion, each type of forfeiture proceedings has its
attributes and liabilities. A comparison of the three procedures is

shown Table 3 on the next page.

Table 3:
Forfeiture

75

Comparison of Administrative, Criminal and Civil

Advantages of each Proceeding

 

Administrative

Criminal

Processed directly by the
seizing agency

Allows for the immediate
seizure of the assets

No requirement for a civil
or criminal trial

Covers most types of property

Unclaimed assets quickly
forfeited and placed into
official use

Less time consuming and
costly

Covers all types and values
ofassets

Incapacitates both the asset
andthedefendant

Leaves less doubt about
the illegal use of the asset

No need for a parallel
civil proceeding to forfeit
theasset

Allows for the use of the
grand jury

Provides the full range of
legal protections to the
defendant

Innocent owners protected
with ancillary hearings

Limited discovery
Unsuccessful criminal case

can be followed by a civil
forfeiture case

CoveIs all types and
values of assets

No need for a Iengthly
and costly criminal
trail to establish the
guilt of the defendant

Allows for the
immediate seizure of
the asset

Lessor standard of
proof than in a
criminal case

Hearsay evidence
allowed

Limited Fifth
Amendment protection
favors government

Wide range of
discovery allowed

76

Table 3 (cont’d)

Disadvantages of each Proceeding

 

Administrative Criminal Civil

A claim of ownership requires Time consuming and costly More time consuming

that the case becomes a civil than administrative

action proceedings

Cannot be used to forfeit A finding of guilt necessary Lengthly cases can

real property before addressing the lead to high storage

forfeiture allegations and management

costs

Commonly subject to criticism If the government loses the Subject to criticism

due to seizures without arrest case, it also loses the since the guilt of the

or prosecution forfeiture asset owner is not at
issue

Extensive discovery
can lead to
impeachment or
evidence problems
at trial

 

The Case Flow

Forfeiture cases can start in a variety of manners including
traffic stops where narcotics are discovered, pre-planned raids
leading to the seizure of homes and business, controlled drug
purchases and sales, or “profile stops” of suspects at transportation
terminals. The seizures must be made pursuant to a lawful arrest or
search (AFO, 1991). As noted earlier, a variety of law enforcement

agencies are involved in the process. The local, state or federal law

77
enforcement agency (Drug Enforcement Administration, Federal
Bureau of Investigation, Internal Revenue Service and Immigration
and Naturalization Service) involved in the seizure; the US.
Marshal’s Service acting as property custodian after seizure and
responsible for property disposition following the case’s conclusion;
and the US. Attorney’s Office as prosecutor of the case.

If the property is seized by a federal law enforcement agency,
the case then directly enters the federal system. If a state or local
law enforcement agency seized the property, the case enters the
federal system through the adoption process. Adoption is the process
whereby: “a state or local law enforcement agency that has seized
the property, in some instances, can request one of the United States
Department of Justice investigative bureaus to adopt the seizure and
proceed with federal forfeiture” (DOJ, 19873). First, the property
must be forfeitable pursuant to one of the federal provisions the
Department of Justice enforces. Second, there must be a valid
prosecutorial purpose in requesting the adoption of a property
seizure for forfeiture. For example, a state’s forfeiture provisions
may require proof beyond a reasonable doubt and the case in question
may not meet those standards. Federal standards usually require a

lessor burden of prior (DOJ, 1987 September). An additional

78

requirement for this process is the adopting federal investigative
bureau must have the available resources to process the case.
Finally, the property must meet the minimum monetary standards of
equity (vehicles: $2500, aircraft: $5000, real property: $10,000 and
all other types of property: $1000) before it can be accepted.

Following the seizure, the government will proceed initially
with an administrative or judicial action depending on the property
type and its value. Those holding an interest in the property have the
opportunity to file a claim asserting their interest. For certain
types of property, if a claim of ownership is not filed, and after the
complying with notice and time requirements, the government may
directly forfeit the property administratively and close the case
without having to go through the courts. If the seizure and forfeiture
is contested by a claimant or the property must be forfeited
judicially, the case moves on to the prosecutor.

Once the case enters the federal system, it is forwarded to the
US. Attorney for prosecution provided there is a claim of ownership
or the property falls under certain statutory requirements
mandating judicial activity. Covington (1989) explains that in
making the decision to prosecute and file the case with the federal

district court, the case is reviewed to determine if there is probable

79
cause to proceed, the validity of any ownership claims, and whether
its is financially viable. Dismissals of cases that are never filed
commonly occur at this early stage.

Once accepted for prosecution, the civil case follows the
typical path through the federal judicial system and is generally
concluded either through a forfeiture order, settlement, or
dismissal. If the property is forfeited, the government then retains
title to the asset. Third-party Claims, if any, are settled and the
remaining value of the asset is disposed of by the US. Marshal’s
Service. The Department of Justice and the participating law
enforcement agencies typically receive a portion of the asset
through the Equitable Sharing program.

As briefly noted earlier, a provision in the Comprehensive
Crime Control Act of 1984 authorized the Attorney General of the
US. to transfer or share forfeited property with participating state
or local law enforcement agencies. The shares are distributed in
proportion to the contribution of the agencies that directly
participated in any of the facts that led to the seizure or forfeiture
(FBI,1985). Prior to the passage of the CCCA, the federal government
could not share property with other non-federal law enforcement

agencies. The goal of this provision was to enhance inter-agency

80
cooperation in narcotics trafficking cases as well as provide them
with valuable resources in their anti-drug efforts (FBI, 1985).
Recent Procedural Changes to Asset Forfeiture

During 1993, the Supreme Court issued rulings in five asset
forfeiture cases. The ruling indicate that the Court is showing
considerably less tolerance for the aggressive and excessive use of
asset forfeiture by the government. Three of the relevant cases are
discussed below.

In a case entitled US v. A Parcel of Land, (1993) the Supreme
Court dealt with the issue of innocent owners. In this case, the
Department of Justice sought to seize the home of a woman in New
Jersey because it was purchased with tainted drug money without
giving the woman a chance to prove that she was an innocent owner.
In an article on this case, the New York Times stated: “the
[government’s] argument was so sweeping that mortgage lenders and
title searchers could lose their shirts if a real estate deal turned
out to involve a home purchased with tainted funds” (1993, February
27). The Justice Department argued that the “proceeds of the illegal
drug transaction actually belonged to the government and in turn
converts any subsequently acquired property to the government as

well. In the Department’s view, the only ‘innocent owner’ was the

81
one who owned the property before someone else made illegal use of
it” (New York Times, 1993, February 25).

The Court, in a 6-3 decision, restricted the government’s
sweeping power to confiscate pr0perty. Justice John Paul Stephens,
writing for the majority, said that the government’s argument
“would effectively eliminate the innocent owner defense in almost
every imaginable case in which proceeds could be forfeited”. Two of
the concurring Justices added in a separate opinion that the
government’s argument “has rested on a fundamental misconception”
that the government automatically takes legal title to property at
the moment it is used illegally without the need for additional
proceedings. A close examination of this decision reveals that
although it does not prevent the government from seizing assets
directly from drug dealers, it does raise some complications for
prosecutors. Mainly, its questions the relation-back doctrine upon
which forfeiture rests. Based on this doctrine, no matter what
happens, the government “owns” the property from the time of the
offense. Justice Stephens did note that “this doctrine might be valid
in its general outline, it was not self-executing. Forfeiture could
occur only through some sort of judicial proceeding” (New York

Times, 1993, February 25).

82

The second critical decision that gives an indication of future
changes is Alexander v. United States (1993). Alexander was a First
Amendment Challenge to the government’s use of forfeiture under
RICO. In this case, the government forfeited an entire chain of adult
bookstores and movie houses after finding obscene items for sale.
The government destroyed thousands of books and films after the
jury found seven items that met the legal test for obscenity (New
York Times, 1993, January 15). The total amount of loss to the
defendant was placed at $39 million.

The principal question for the high court was whether the
government’s action amounted to an unconstitutional prior restraint
of expression that is protected by the First Amendment. Chief
Justice William Rehnquist, writing for a 6-3 majority, stated: “the
forfeiture order in the case imposes no legal impediment to
[Alexander’s] ability to engage in any expressive activity he
Chooses” In a strong dissent, Justice Kennedy, joined by Justices
Blackman and Stephens, called for a ruling on the “ominous, onerous
threat” to free speech and press freedom. But perhaps the more
important part of the ruling that would soon have an implication for

asset forfeiture was the Court’s unanimous decision that the

83
forfeiture could be Challenged for excessiveness under the Eighth
Amendment.

The third decisive forfeiture case ruled on that year was
Austin v. United States (1993). At issue was the forfeiture of the
petitioner’s home and autobody shop after he pleaded guilty to the
sole Charge of possession of cocaine with intent to deliver. The
forfeiture was made pursuant to 21 U.S.C. 881, section (a)(4) and
(a)(7) - the facilitation statute - which provides for the forfeiture
of property used or intended to be used to facilitate the commission
of certain drug related crimes. At issue was whether the forfeiture
violated the Eighth Amendment’s excessive fines provision. The
Court, in a unanimous decision, ruled that the Constitution limits
the government’s authority to seize homes, business and other types
of property of criminals and suspects. The Court found that the
Eighth Amendment Clause on excessive fines does require that there
must be a relationship between the gravity of an offense and the
property that is seized. Although the Court did not explicitly rule in
this particular instance that the amount of the fine was in fact
excessive, it just said that it could be. The Court remanded the case

back to the trial court.

84
An analysis of these cases illustrates their impact on asset
forfeiture and what might occur in the future. As a result of
Alexander and Austin, with its unopposed decision regarding the
Eighth Amendment to asset forfeiture, the government must take a
new look at its civil and criminal actions to confiscate property. It
will have to consider the value of assets to be forfeited in relation
to the severity of the offense at issue. This ruling gives critics of
forfeiture and defendants a potent new weapon to fight back when
the government seizes property. The ruling also may weaken the
facilitation statute that provides for the more efficient forfeiture
of property when compared to the proceeds statute. Even more
important, this recent decision illustrates the Court’s concern with
the government’s increasingly aggressive use of the forfeiture laws.
It appears that the high court is trying to make some sense out of
the concept of forfeiture.
Summary of Part One
This first part of the literature review details the historical
and politcal forces that led to the development and expansion of
federal asset forfeiture. The concept of forfeiting property has a
long history. Forfeiture laws have been part of the American legal

Code for over 200 years in a variety of forms. Their most recent

85
incarnation is a result of the government’s search for an effective
means to deter organized criminal groups involved in narcotics
trafficking. Presently, the federal program employs three different
forfeiture proceedings, all with their own specific requirements,
merits and liabilities as drug control tools.

Aside from the laws, the current federal program is a large
scale effort combining several law enforcement agencies with an
administrative office. The quantitative data presented in this study
illustrate the rapid growth of the program from the 1984 to 1993
and its economic potential. Though still growing, it has recently
come under scrutiny from the Supreme Court. A series of decisions
in 1993 made resulted in procedural Changes to these laws.

Research Literature
The Research Literature on Deterrence and Asset Forfeiture

This second part of the review supports the analysis of the
deterrent value of asset forfeiture. The review initially examines
studies on the philosophy of deterrence and its connection to
forfeiture law. This is followed by research on the target of federal
forfeiture - the drug trafficking enterprise. These studies identify

their structure and motivation and most importantly, the assets

Crucial to the operation these illegal businesses. Based on the

86
results of these studies, important conclusions are made about the
deterrent value of each of these assets. The identification of an
asset’s deterrent value will serves as the new measure employed in
the analysis.

Describing General Deterrence.

Deterrence is act of preventing crime before it occurs by
means of the threat of criminal sanctions. Bentham (1748-1832), an
English philosopher believed that people could be deterred or
frightened away from crime if the punishment associated with its
commission was swift, appropriately severe, and of unwavering
certainty (Abadinsky and Winfree, 1992). Deterrence can be
summarized in a quote by John Bradford (1510-1555) made four
hundred years ago: “The familiar story, that on seeing an evildoer
taken to the place of execution, he was want to exclaim” ‘But for the
grace of God goes John Bradford,’ is an universal tradition which has
overcome the lapse of time”.

There are two types of deterrence, general and specific.
General deterrence has been defined as “the inhibiting effect of
sanctions on the criminal activity of people other than the

sanctioned offender (Blumstein, Cohen and Nagin, 1978:3). It is at

the heart of Classical criminology. Classical theorists including

87
Ernest Van Den Haag believe that the purpose of the law and justice
system is to create a threat system. Van Den Haag explains:

Criminal laws prohibit some acts and try to deter from them

by conditional threats which specify the punishment of

persons who were not deterred. Sufficiently frequent
imposition of these punishments by courts of law make the
threats credible. If the community feels that they are
deserved, punishments also gratify its sense of justice, and
help to legitimize the threat system of the criminal law by

tigmatizing crime as morally odious (1982:709).

What is referred to is the predicted inverse relationship
between the Chance that a criminal act will take place and the
speed, certainty and severity of punishment directed against the
offenders (Seigel, 1989). As Cesare Becarria asserts in his formula
for deterrence theory, if a potential criminal feels that its
reasonably certain that he will be caught by the authorities, quickly
tried and punished appropriately, he will not commit this illegal act
(Paolucci, 1977). Its important to note that deterrence is also based
on the idea that people are rational and calculating. Seigel explains:

The underlying assumption of the general deterrence model is

that people are fully aware of the punishments associated

with criminal acts and choose to forego law-violating behavior
because of those punishments. If people were unaware of the
pains associated with criminal sanctions, then the force of

punishment would have no effect on them (1989:101).

The potential offenders are aware of, and weigh the costs and

benefits of their future actions. All three elements, that is, speed,

88
certainty and severity must also be present in this formula for the
law to deter.

Researchers Michael Geerken and Walter Gove have attempted
to place the idea of awareness of the punishment into a theoretical
perspective of deterrence. They assert that as people hear about
crime and punishment in the mass media, they develop and
exaggerated view of the effectiveness of law enforcement and the
severity of the punishment. This is because the media tend to report
on dramatic individual crimes that are frequently solved and the
offender is punished. The more people rely on the mass media as
their source of information, the more distorted their view becomes
of crime and punishment and the greater the effects of the
deterrence system (1975:505). Reuter (1992) notes that media
reports on illegal drugs were a frequent topic in 1988 actually
increasing the public knowledge of the drug crisis. The Department
of Justice has been well aware of the media attention specifically
given to its program. Cary Copeland, Director of the Executive Office
for Asset Forfeiture acknowledges media attention directed at the
forfeiture program referring to it as a “massive media contact”
(AFO, 1992, May/June:2). It is important to mention that few studies

illustrate that perceptions of deterrence or deterrent measures

89
actually reduce the propensity to commit crime or reduce the crime
rate (Seigel, 1989).

Raymond Paternoster (1983) argues that individuals do not
always fit the mold of being rational criminals. This is in
accordance with Simon’s (1976) view of bounded rationality, that is,
one can never be fully aware of all available options when choosing a
course of action. Paternoster and his associates, W. William Minor
and Joseph Harry (1983) found little evidence that perceptions of
punishment actually deter crime.

§pecific Deterrence and lncapacitation.

Specific deterrence aims at punishing offenders already
sentenced for an offence from committing future crimes (Samaha,
1994). The model of specific deterrence requires that the
punishment be severe enough to prevent the offender from repeating
their acts. For example, a person convicted of drunk driving could be
fined, jailed and have his car confiscated. The sought-after effect
would be that this individual refrains from future driving while
intoxicated.

James Q. Wilson is an advocate of specific deterrence. In
Thinking About Crime, Wilson (1975) concludes that punishment

appropriate to deter future criminal behavior could prevent crime

90
regardless of the reasons that people committed it in the first
place. Wilson asserts that a small number of people are responsible
for the majority of crime. This group does not fear punishment
because of the weaknesses in the justice system, i.e., different
length sentences for the same crime and the failure of
rehabilitation. He argues that the answer lies in specific deterrence
theory. If criminals realize that the cost of their crime increases
without any change in their expected benefits, then potential
criminals will be deterred from this course of action.

Directly associated with specific deterrence is the
effectiveness of punishment. lncapacitating criminals is designed to
prevent them from committing crimes both while behind bars and
after their release. Seigel notes current research findings: “The
incapacitation view is supported by findings on the chronic career
criminal. If in fact a small number of dangerous criminals commits a
large percentage of the nation’s crimes, then an effort to
incapacitate these few ‘troublemakers’ makes sense” (1992:146).
Peter Greenwood of Rand Corporation (1982) concluded that
incapacitation would be effective if directed against a specific

DOpulation of offenders. Some additional research supports these

91
findings, yet the cost of incarceration of problem populations makes
this strategy extremely expensive.

Asset Forfeiture as a Deterrent.

Before the government turned to asset forfeiture,
incarceration was the relied-upon method for controlling narcotics
traffickers. Reuter argued that incarceration should have been an
effective deterrent driving up the price of the drug. He states:
“lncarcerating sellers Should raise the price of the drug by removing
those who were the most willing to be dealers” (1992:38). The ‘
imprisonment of drug traffickers incapacitates the individual, but
fails to reach their organization. However, the huge profits
weakened the deterrent effect of prosecution and imprisonment.
Surprisingly, traffickers seem to be undeterred by event the
harshest mandatory minimum sentences (DOJ, 1990). Even if
imprisoned, new members of the competition could fill the void left
in this illegal market.

A new approach was necessary to compensate for this inherent
weakness in the traditional sanction of incarceration. In the War on
Drugs, forfeiture was designed as an alternative to the use of
prisons or jails for drug traffickers. DOJ and Congress realized that

the lifeblood of drug trafficking was money. It provides the criminal

92
organization with the necessary capital to maintain and expand their
illegal business. If the flow of money can be cut off, the criminal
organization will wither no matter how great the demand for their
product (DOJ, 1990). Massey explains the reasoning:

Forfeiture is particularly useful because it targets asset

producing patterns of criminality. The desire to engage in drug

trafficking is spurred on by the offenders’ beliefs the drug
trade is a highly lucrative endeavor that affords traffickers

an opportunity to accumulate substantial wealth with a

relatively small expenditure of energy. Were forfeiture not an

option to drug enforcement agencies, arrest and conviction for
drug trafficking would be a small price to pay if one were able

to retain the proceeds from the illegal enterprise (19939).

In addition to removing the economic base of the trafficking
organization, asset forfeiture should also increase the price of the
illegal drugs, having an effect on consumption. In their research on
heroin markets, Reuter and Kleiman assert: “If falling heroin prices
pose a problem, one solution is to take action to increase prices.
This is primarily the domain of law enforcement. In general, a
program that imposes costs on the heroin industry, via seizure or
destruction of drugs, seizure and forfeiture of assets, or
imprisonment of heroin entrepreneurs and their employees, tends to
force prices up” (1986:18). Asset forfeiture, with its assumed

ability to deter the drug trafficker and incapacitate the narcotics

enterprise, was the new solution to an old and persistent problem.

93

There is some evidence of the effectiveness of forfeiture on
the drug trade. James Jacobson, an investigator with the Bayfield
County Sheriff’s Department writes: “the belief is that this [the
forfeiture of real property] used to grow marijuana had a serious
impact on the growing activities. We have found the price of
marijuana to have increased 100 percent. The asset forfeiture of the
Hayes property, although not a large monetary return to the federal
government, had an impact in one area that cannot be measured in
dollars and cents” (1990:1). Asset forfeiture is designed to alter the
cost-benefit ratio of the criminal drug trafficking organization
reducing or neutralizing its benefits (Massey, 1993).

What makes asset forfeiture unique is that it is relied upon as
a deterrent. Asset forfeiture meets the requirements of deterrence
theory. As a general deterrent, asset forfeiture threatens the drug
dealer’s prospects of making huge economic gains from trafficking.
As a specific deterrent, forfeiture is designed to target the actual
property as an instrumentality of the crime (Massey, 1993) thereby
incapacitating the enterprise. If the use of this sanction makes the
facilitation if the crime more costly to the potential offender, then

there is a deterrent effect.

94

Administrative and civil forfeiture best fulfill the
requirements of certainty and swiftness. As a threat, administrative
and civil forfeitures lead to the same outcome as a criminal
proceeding. However, civil forfeiture is unique in that it increases
the certainty of punishment since it is an in rem Civil proceeding.
Civil actions offer substantially fewer protections for the property
owners ordinarily granted to a criminal defendant. Civil forfeiture
does not consider the criminal liability of the property owner, only
that of the property. Additionally, with the burden of proof shifted
to the claimant in civil proceedings, the odds that an owner will be
victorious is reduced significantly.

The swiftness of the punishment is obvious in administrative
forfeiture and Strengthened with the relation-back doctrine in
criminal actions. This states that the offending asset becomes
forfeitable at the time it was used to facilitate the illegal act. The
government’s only requirement to support the asset seizure is
probable cause demonstrating that it was used to facilitate the
offense. The punitive effect is then sustained by a “house of
horrors” a claimant enters when they attempt to recover their

seized asset (Valukas and Walsh, 1988).

95

A strong argument can also be made regarding the
proportionality of the punishment with forfeiture. Civil and
administrative forfeitures are unique in that they only target the
guilty property. Criminal proceedings result in both the
incarceration of the traffickers and the loss of his ill-gotten gains.
Massey writes: “Where the cost of prison time might be off-set by
the long-term enjoyment of crime’s proceeds, forfeiture removes
benefits associated with such a trade-off” (1993:15). Forfeiture not
only reduces the benefits of the crime, but serves as poetic justice.
The trafficker’s seized assets are sold by the government and used
to fund drug enforcement. From a deterrence perspective, the value-
added component associated with forfeiture does not in itself
support excessive or gratuitous punishment” (Massey, 1993:15).

Finally, forfeiture meets the requirement of specific
deterrence with its ability to incapacitate the narcotics enterprise.
The seizure of assets - both those necessary for operating the
business and the profits of the business - can disable this illegal
enterprise.

Though the Department of Justice states that its main goal is
to use forfeiture as a deterrent, the program can generate a large

amount of revenue. This makes it very attractive to law enforcement

96

especially with equitable sharing. The second goal of the program is
to use forfeiture to fund narcotics enforcement (DOJ, 1990). The
potential for conflict between the goals of deterrence and revenue is
commonly cited by critics (Massey, 1993; Meyer, 1991; Miller and
Selva, 1994). They contend that forfeiture is mainly being used to
generate revenue for law enforcement with little regard for
deterring narcotics trafficking organizations. Miller and Selva
(1993), in an ethnographic analysis of asset forfeiture, concluded
that “asset forfeiture is a dysfunctional policy which, in
implementation, has strayed from its original intent” (315). The
authors assert that seizing assets solely to generate revenue has
become the primary concern of smaller agencies at the expense of
the larger goal of deterrence (319). Though a common criticism,
there is only very limited empirical research to support this
assertion.
Research Examining the Nature of Modern Drug Trafficking

The asset forfeiture program is formally designed to deter
drug trafficking enterprises by destroying their economic foundation
through the aggressive seizure and forfeiture of assets. Liverpool’s
research supports the reasoning behind this policy: “Traffickers

Seem to fear imprisonment only second to losing their assets”

97
(1983:21). An understanding of the structure, motivation and assets
of narcotics trafficking enterprises allows one to evaluate the
application of federal asset forfeiture as a deterrent. Therefore,
this section of the paper reviews the literature describing the
nature of drug trafficking networks, their motivation, and the types
and importance of specific assets associated with the business. In
turn, the identification of these assets will be used to analyze
forfeiture’s value as a deterrent to narcotics trafficking.

Structure and Motivation.

Tullis (1991) notes that at the beginning of the current drug
use wave, much of the narcotics distribution was informal, i.e., akin
to a cottage industry. Small-scale traffickers moving a few hundred
grams of the drug relied on informal and trusted contacts to conduct
their operations. Some of the current trafficking is still carried on
this way. However, drug trafficking is becoming increasingly
organized, especially at the production, wholesale and middleman
levels pushing many of the small-scale dealers strictly into retail
sales.

Similar to legitimate business, the drug trafficking enterprise
exists in a variety of forms. These range from the cartels to mid-

level dealers to the street-level sellers. Table 4 on the following

98
pages provides an overview of the structure of drug trafficking at

different levels of the business.

Table 4:

99

Enterprise

Structure, Function and Roles within the Narcotics

 

Approximate Role
in a Legal Market

Role by Common Title

Major Functions done
at this Level

 

 

 

Grower/ Producer Coca, opium or Grow coca, opium or
marijuana farmer marijuana - the raw materials

Manufacturer Collector, transporter, All stages of preparation
elaborator, Chemist, for cocaine, heroin and
drug lord marijuana as commonly sold

TRAFFICKERS:

Importer Multi-kilo importer, Smuggling large quantities
mule, airplane pilot, of drugs into the US.
smuggler, trafficker,
money Iaunderer

Wholesale Major distributor, Transportation and

Distributor investor, “kilo- redistribution of multi-
connection” kilogram and single quantities

DEALERS:

Regional Pound and Ounce men, Adulteration and sale

Distributor weight dealers of moderate cost products

Retail Store Owner House connections Adulteration and
and suppliers production of retail-level

dosage units in very large
numbers

Assistant Manager, “Lieutenant”, Supervises three or

Security Chief, or
Aooomtant

“muscle”, transports,
drugs, crewboss,
crack-house manager

more sellers, enforces
formal contracts,
collects money,
distributes multiple-
dosage units to sellers

100

Table 4 (cont’d)

 

SELLERS:
Store Clerk, Street drug seller,
Salesman runner, juggler

Makes actual direct sales to
consumer, private seller
responsible for both money
and drugs

 

LOW-LEVEL DISTRIBUTORS:

Advertiser, Steerer, tout, cop-
Security Guards, man, look-out, holder,
Leaflet Distributor runner, help friend

Servant, Temporary Runs shooting gallery,

Employee injector, taster, free-
baser, apartment Cleaner,
drug-bagger

—~§_

Assists in making sales, advertises,
protects seller from police and
criminals, solicits customers,
handles drugs or money, but not
both

Provides short-term services
to users and sellers for money
or drugs

Source: Johnson, Williams, Dir, and Sabina (1990)

Table 4 illustrates that paralleling legitimate industry, the

illegal narcotics enterprise is involved in producing, refining,

Wholesaling and retailing of narcotics.

Drug trafficking is commonly viewed as having a formal, highly

Organized structure because its participants undertake complex

tasks over a period of time. Yet, aside from the very top levels of

the business, drug trafficking is characterized by the absence of a

highly formal, corporate or military structure. Instead these

101
organizations are somewhat more informal in nature as Holmes
explains:

Generally, drug trafficking has an informal organizational
structure with a network of more dominant and less dominant
figures playing various roles in the business venture. As in the
[legitimate ] real estate industry, with its roles of financing,
developing, construction, and sales, drug traffickers also play
definable roles. Cocaine trafficking, for example, requires
production, processing, transportation, distribution, and money
laundering. The cocaine industry - at least at its higher
importing and wholesaling levels - needs support-service

business such as legal defense, money laundering, and financial
advice (1992:10).

The production of the narcotics takes place in Bolivia,
Columbia, Peru, Ecuador and Mexico. The control of the trade is
presently vested in the hands of a limited number of drug cartels all
located in South American. They manage cocaine and marijuana
diStribution. Four major organizations have been identified as the
Medellin, Cali, Bogota, and North Atlantic Cartels. All of these are
|°Cated in South America and they represent the major wholesalers
and retailers of cocaine and marijuana. The Department of Justice

(1 990) estimates that the Medellin and Cali cartels in Columbia

Could control up to 80 percent of the cocaine sent to the United

States.

102

Operating within the United States are several different types

of organized narcotics enterprises. Perhaps the most famous is the
mafia which is considered a major distributer of heroin in the US.
(DOJ, 1990). In 1988, the FBI estimated that about 25 percent of
crime families making up the mafia or La Cosa Nostra (meaning “our
thing”) are involved in drug trafficking. Contemporary research on
the structure of the mafia indicates that it is not one, massive
national organization, but many smaller local groups (lanni, 1972
and Albini, 1971). Albini further concluded that organized crime was
based on loosely constructed “patron-client relations”. Examining
Organized crime in Seattle, William Chambliss (1971) found that it
c0mmonly consisted of local political and business leaders, not a
national syndicate.

Smaller organizations - local gangs representing racial or
ethnic groups - have also been identified as heavily involved in
narcotics trafficking. These groups operate in both urban and rural
a"eas and represent a significant category of traffickers. Lyman

Observes: “They are frequently well-organized, highly structured and
Usually composed of extremely violent career criminals” (1991:218).
The government found that Jamaican, Cuban and Dominican gangs

commonly sell cocaine powder and crack in many US. cities. Much of

103
the heroin trade is controlled by the Chinese, Thai, Sicilian and
Mexican organizations (DOJ, 1990). The El Rukns of Chicago were an
example of this type urban narcotics enterprise. Formed in the mid-
1960’s as the Blackstone Rangers, the El Rukns were heavily
involved in the cocaine and heroin trade on the Southside of Chicago.
It is also estimated by the Chicago Police that the El Rukns were
responsible for between 24 to 72 murders in their years of operation
(Chicago Tribune Magazine, 1994, August 21). This gang was
eventually disabled as a result of a large-scale joint, federal and
local investigation that included both criminal prosecutions and
forfeitures.

Another domestic organized group noted for their involvement
in narcotics trafficking is the outlaw motorcycle gang. Originating
with the Hell’s Angels (named after a World War II bomber) in 1947,
the role of the outlaw motorcycle gang Changed from being just
considered troublemakers by local police to a serious criminal
enterprise by the 1970’s (Lyman, 1991). The FBI currently reports
that the Hell’s Angels narcotics operations include the production
and distribution of methamphetamine. Lyman explains the extent of
these gangs:

Today, outlaw motorcycle gangs have emerged into
sophisticated criminal groups that, according to the DEA

104

number about 850 with a membership exceeding 8000 in the

United States alone. Their criminal activities vary, but include

drug trafficking, contract killing, extortion, arson, fraud,

embezzlement, and money laundering (1991:193).

The outlaw motorcycle gangs are also involved in legitimate
businesses. These include, but are not limited to bars, clubs,
amusement arcades, restaurants, billiard parlors and vending
machine operations (Lyman, 1991). The use of legitimate businesses
by these gangs has several purposes. They serve as cover for their
operations, a place to make contacts, and perhaps most important, a
location for laundering their illegal profits from narcotics
trafficking.

The Limited Success at Controlling the Illicit Narcotics

Business.

The government has made a concerted effort to win the War on
Drugs. Funding has risen significantly at the federal level to support
narcotics enforcement. Law enforcement has also pursued it
integrated policy of targeting narcotics at the source, in transit, and
at the wholesale and retail levels. Table 5 and Figures 5 through 7 on

the following pages provide a partial indication of the government’s

efforts at narcotics control at the different levels.

105

$14,000

 

$12,000-

$10,000—

$8.000—

 

 

 

$6’OOO I l I l l l T
1989 1990 1991 1992 1993 1994 1995

Figure 5: Trends in Federal Drug Control Spending, 1989 - 1995
(in millions)

Source: US. Department of Justice, Drugs & Crime Data,
Fact Sheet: Drug Data Summary, July 1994, p. 5

106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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1983 1984 1985 1986 1987 1988 1989 1990 1991 1992

Figure 6: State and Local Arrests for the Sale and Manufacturing
Drugs (1983 - 1992)

Source: US. Department of Justice, Drugs & Crime Data,
Fact Sheet: Drug Data Summary, July 1994, p.1

107

Table 5: DEA Drug Removals of Cocaine and Heroin (1983 - 1992)

Cocaine in Heroin in
Xaag Pounds Pounds
1983 19,625 662
1984 25,344 850
1985 39,969 985
1986 59,699 801
1987 81,823 804
1988 127,967 1,841
1989 182,357 1,554
1990 160,097 1,405
1991 129,481 2,479
1992 172,391 1,534
Source: U.S. Department of Justice, Drug Enforcement

Administration, Drug Enforcement Statistical Report,
1992, (Washington, DC US Department of Justice,
1993).

108

20000

 

175004
150004
125004
100001

75% i I T I
1984 1986 1988 1990 1992 1994

 

 

 

Figure 7: Trends in Federal Defendants Convicted of Drug Offenses
(1985 - 1993)

Source: Bureau of Justice Statistics, Federal Criminal Case
Processing (1993)

While the impact of the asset forfeiture program on the drug
trade has yet to be researched, there is a consensus as to the failure
of the government to reduce the supply of narcotics and win the drug
war. A considerable body of research exists Stating that government
efforts have failed in the War on Drugs. (Friedman, 1991; Kleiman
and Caulkins, 1990; Nadelmann, 1991; Reuter, 1991). Given the
increased use of forfeiture and the continuing traditional

enforcement efforts of drug interdiction, education, and

109
incarceration, its logical to expect that the drug trade would have
all but disappeared in the past few years. This is also expected
since the drug business is economically motivated and should
respond to changes in the market (Reuter, 1992).

A disturbing trend is that the price of illicit drugs has either
remained stable or declined - quite contrary to what should have
happened as a result of the massive government enforcement efforts
(Skolnick, 1992). The 1991 NNICC report, describing the recent
trends in heroin pricing, stated that the supply of heroin to the US.
market has been increasing over the past several years. The
frequency of large-scale seizures has risen as have the sizes of
individual seizures, but wholesale kilogram-level prices are
substantially below those of the early 1980’s. Additionally, the
retail-level purity of heroin has increased substantially. The
average retail price per-miligram of heroin in New York, its largest
market, is comparable to its price in the mid-1960’s.

Reuter examined cocaine prices and concluded that they only
increased modestly in 1990 as illustrated in Figure 8. Even with
stringent enforcement - cocaine prices were only about 25% above
their 1988 nadir and close to their 1986 levels in nominal dollars

(1992:36-37).

110

120

 

y = 1.4l7x — 2721.667

1104

904

 

804

 

 

 

70 I l l
1985 1987.5 1990 1992.5 1995

Figure 8: Recent Trends in the National Average Price of Cocaine
(1986 - 1994)

Source: Drug Enforcement Adminstration,
Illegal Drug Price/Purity Report, November 1994
Furthermore, the DEA (1993) reports that while cocaine
pricing has been relatively stable, the purity at the gram and ounce

level has increased as shown in Table 6.

111

Table 6: Trends in the National Average Purity of Cocaine
(1990 - 1994)

Quantity 1990 1991 1992 1993 1994
Kilogram 80% 86% 83% 82% 83%

Ounce 58% 72% 74% 70% 73%

Gram 54% 59% 64% 63% 65%

Source: Drug Enforcement Adminstration,

Illegal Drug Price/Purity Report, November 1994

There are several possible explanations for this phenomena.
Skolnick (1992) argues that this problem may be due to increased
production. The demand for illegal drugs continues to grow in Europe
and the United States which leads to more production at the source
countries. Table 7 provides an indication of the tremendous

production potential in this trade for both cocaine and opium.

112

Table 7: Worldwide Potential for Cocaine and Heroin Production
in Metric Tons (1989-1993)

Metric Tons Produced

Opium 3,948 3,257 3,519 3,409 3,699

Cocaine 298,070 305,970 331,140 333,900 271,700

Source: Bureau of International Narcotics Matters,
U. S. Department of State, International narcotics control
strategy report, March 1991 :22

The rise in production further increases demand, which
stimulates the whole cycle again. The problem may also lie in the
nature of the drug trade and the government’s use of its drug control
strategies. Skolnick makes the interesting observation that
interdiction only hurts the marginally inefficient traffickers and
their enterprises. “... the best organized, the most corrupting of the
authorities, the most ruthless and efficient, survive... “ (1993:143).
Kleiman (1985), in support of this view, contends that the drug
market may be inelastic. If this is the case, drug enforcement may
actually increase the profits of traffickers who are able to elude the
government’s efforts. The “fittest” traffickers now make even

larger profits.

113

The attraction of large profit margins may be another
explanation. Reuter (1992) states that the significant profit margin
of dealers, as indicated by his 1988 District of Columbia findings of
even an hourly rate of $30 for dealers at the low end, provides an
incentive to remain in the business. The enormous profits from the
drug trade are hard to offset with enforcement efforts. Abadinsky
(1991) calculated that a $500 to $700 purchase of cocaine leaves,
when converted to a kilogram of cocaine hydrochloride, increases to
a value of $3000 to $5000. When shipped to Miami for street-level
distribution, it yields $160,000 to $240,000. Unfortunately for the
traffickers, the glut of cocaine reaching the US. has kept prices
down from their high 1983 levels (1991:214). With these prices, it
is easy to see the motivation to stay in the business.

A fourth explanation examines how traffickers respond to
enforcement efforts. According to the National Drug Control
Strategy (1989), the government has been successful in seizing
increasing amounts of illegal drugs which has forced the traffickers
to change their strategies as shown in Table 8. Yet, the traffickers
have responded with new tactics that are increasingly difficult for

the government to deter.

Table 8: Illegal Drug Seizures (FY 1990 - 1993)

Drug FY 1990
Heroin 1,794
Cocaine 235,214
Marijuana 483,248
Hashish 17,062

114

Seizures in Pounds

FY1991

3,030
246,324
499,070
178,21 1

Source: US. Department of Justice,
Drugs 8: Crime Data, Fact Sheet: Drug Data Summary, July 1994

FY1992

 

2,551
303,254
783,343

4,048

FY 1993

3,345
238,053
752,114

26,080

A final explanation holds that the success of government

enforcement efforts may actually contribute to increased narcotics

use. Zinberg and Robertson (1972), examining the results of the 1969

Operation Intercept at the Mexican border to cut off the supply of

marijuana, found an increase in heroin use among urban, white,

middle-class high school students shortly after the start of the

operation (1972:210). Successful enforcement may force users to

switch to more potent and available substances increasing the

demand for these substances.

115
Evaluatigg the Importance of Assets Common to Narcotics
Trafficking

The research in this part of the review indicates that
forfeiture can potentially be a deterrent. It also summarized the
studies describing the nature of narcotics trafficking organizations
and the failure of traditional enforcement to control this problem.
The following section connects the two by reviewing the studies
detailing the types of assets common to narcotics trafficking
enterprises and suggesting their relative importance. The findings
from these studies are lntergrated to develop a measure of deterrent
value used in the analysis.

Research on a cocaine distribution enterprise illustrates
what’s required for a successful trafficking business. Holmes
writes:

A participant, say a wholesaler, seeks to put his assets to

work to secure his position as a dominant network member.

The assets he needs include dependable sources of good

product, trustworthy transportation, and a network of

distributors. If he undertakes transportation himself, he may
control physical assets such as boats, planes and auto. He may
also control a safe location for cutting and distributing the

cocaine and insure a secure method of communication, such as

a beeper and mobile phone setup, his greatest necessity, of

course, is to convert cash received from distributors into

usable personal wealth through a secure money laundering
process (1992:11-12).

116

The general makeup of drug trafficking organization - whether
it be cocaine, heroin, marijuana or designer drugs - and their
methods of operation have important implications for law
enforcement. Holmes (1992) asserts that the enterprise is the sum
of its components. For example, the basic delivery of cocaine to a
customer requires a number of tasks and the use of different assets.
The drug must be produced, imported, transported, and distributed,
with the final profits laundered either by cash or business
transactions. The disruption of business at any one of these steps
through forfeiture can stop of hinder or stop the flow of drugs.

It is asserted in this study that the deterrent value of the
government’s seizure and forfeiture of assets linked to drug
trafficking organizations will vary with the type of asset. Figure 8
on the preceding pages gave an initial indication of the types of
assets common to the narcotics enterprise. These assets, further
described in the following section, include large amounts of cash
and financial instruments, businesses for money laundering and as
fronts, real property (both residential and open land for cultivation
of crops and clandestine labs), equipment used in cultivating and
processing narcotics, conveyances including planes, boats and

automobiles that are either used for transporting narcotics or

1 17
represent the proceeds of the business, and personal property such
as jewelry, furs and electronics.

Currency and the Need to Launder Money.

Money is what drives the drug trade (Skolnick, 1992). As
described earlier in this study, different government sources
estimate the value of the illegal narcotics trade in the United States
to be between $40 - $50 to as much as $110 billion (DOJ, 1993). The
USSFRC Subcommittee on Narcotics and Terrorism (1990) quotes a
figure of $300 billion as an estimate of the global value of the drug
profits. As far back as 1985, the NNICC estimated that with an
average price of $300 to $600 for a pound of marijuana at the
wholesale level and Mexican production at 3-4 thousand metric tons,
the end result of marijuana production in Mexico had a wholesale
value between $2.3 and $4.6 billion. The retail value would be
several times higher when priced at the 1985 cost of $50 -
$100/ounce (NNICC Report, 1987). Figure 9 gives an indication of the

increasing value of heroin as it moves from production to retail sale:

118

 

OPIUM
MEXICAN

10 kilograms
$28,000 to 80,000

 

 

 

 

 

HEROIN
MEXICAN AND U.S. WHOLESALE
LEVEL
60-80% purity
$100,000 to $180,000 per kilogram

U.S. MID-LEVEL
20—80% purity
$300,000 to $500,000 per kilogram

U.S. STREET LEVEL
BROWN HEROIN BLACK TAR HEROIN
3-10% purity 20-80% purity
$1.4 to 2.5 per kilogram

 

 

 

 

 

 

 

 

 

 

 

Figure 9: Value-added from Opium Production to the Retail Heroin

Source: Bureau of International Narotics Matters,
U.S. Department of State, International Narcotics
Control Strategy Report, March 1991

119

Because of the lucrative nature of this business, narcotics
enterprises have literally amassed billions of dollars dealing drugs
(Ruiz-Cabanas, 1989) with little incentive to stop. The rewards of
drug dealing are greater than the risks. Reuter and Kleiman (1986)
calculated that a cocaine retailer in 1984 had an expectation of
spending no more that 9 percent of his time incarcerated, yet his
expected earnings might have been about $75,000. This is a
considerably higher risk return than in many other criminal
occupations, especially given the low skill level of most dealers.

In a 1989 study, Peter Reuter and John Haaga researched the
high-level narcotics organizations and concluded that those dealers
who were in the business for several high-level deals had annual
incomes in the hundreds of thousands. While not all are as fortunate,
their findings did confirm the common perception that this is a
highly profitable business. Reuter and Haaga:

Men of obvious skill were able to earn enormous incomes for

incurring quite modest risks. These unusually large incomes

were almost entirely rewards for risk-taking, since no large
initial investment was required. Capital in this business
consists almost entirely of an inventory which is turned over
very regularly and the “good will” built up by knowing good

suppliers and customers” (1989:35).

Supporting this finding, Karchner (1990), in his examination of

aspects of the narcotics business determined that the wholesalers

120
and mid-level dealers can earn hundreds of thousands or even
millions of dollars. One large enterprise was the heroin trafficking
business established by organized crime in the 1980’s. Known as the
“Pizza Connection”, DOJ estimates that this group imported more
than $1.6 billion worth of heroin to the U.S. The investigation
showed that extensive multikilo heroin trafficking and money
laundering were characteristics of the business. This group used a
series of pizza parlors to operated by members to launder their
profits (Blumenthal, 1988).

A study by Peter Reuter, Robert MaCCoun and Patrick Murphy
(1990) on regular and part-time street-level dealers in Washington
D.C. presents a dealer profile and the amount of money at the low-
end of this business. The research showed that their average income
from their respondents who were occasional sellers — one day a
week or less - is approximately $700 per month. Drug dealing was
commonly used to supplement their income from legitimate jobs.
The authors concluded that street-level dealers accumulate little
wealth since it is common for them to use their profits to support
their own habits. However, the study also revealed that the regular
dealers - those selling more than once a week and even daily - could

be as high as $55,000 annually.

121

The drug trafficking business has many peculiar
characteristics including the specific types of assets common to
and necessary for conducting business. The seizure of certain types
of property can have a significant impact on the enterprise. Holmes
describes these important assets:

law enforcement must attack the key assets, both physical and

personal, of the drug kingpin. The physical assets include

safe houses, and vehicles used in drug importation and money

exportation, land for marijuana cultivation, and, above all,

cash proceeds. Civil remedies play an indispensable role in

effective drug trafficking law enforcement. Removing assets

and thereby dissuading potential profit-seekers causes the

network to suffer a realistic loss making the venture an

unattractive investment despite the potential profit

(1992:19).

Unique about drug trafficking and what makes asset forfeiture
a useful sanction is that the narcotics business is a cash business
with payments in-kind and loans being very much the exception
(Lenck, 1988, Dorn, Murji, and South, 1992). At each point in the drug
trade, the transactions are handled in cash. Checks, money-orders
and other monetary instruments leave a paper trail for law
enforcement to follow (Lenck, 1987). As a result, cash - especially
in large amounts - is the most common and preferred asset by drug

traffickers. Profits from the cash and carry drug trade are

eventually hidden by changing their form. They are converted into

122

homes, yachts, planes cars, precious metal accounts, stock, bonds
businesses, bank accounts and other property. Lenck writes: “The
power to seize and forfeit cash exchanged for drugs strikes at the
operational funds of the illicit business. The power to seize and
forfeit drug proceeds poses a much greater threat to the
accumulated profits of traffickers” (1987:100). Subsequently, cash
is also considered the best asset to seize by the government, both
from a deterrence and efficiency viewpoint (USMS Official
interview, 1994). Currency requires no expensive storage and tends
to be forfeited faster than other types of property especially in
larger amounts. The DEA’s Drug Agent’s Guide to the Forfeiture of
Assets reminds agents that “large sums of cash are highly unusual
in the community, finding a large sum of cash with other evidence of
trafficking makes it probable that the money was exchanged or
intended for exchange for drugs” (Lenck, 1987:104). Traffickers are
hard pressed to account for large cash holdings. As a result, the
larger the amount of currency seized, the less frequently the seizure
is contested by the owners. (DEA Official Interview, 1994).

Qarrency and Money Laundering;

Even though cash represents a major asset for the narcotics

enterprise, it is also a major liability. Lenck (1987) asserts that

123

cash is physically bulky and heavy in large amounts. Its easily stolen
and difficult to trace. If it is not invested, it will not earn interest.
Yet, it is difficult for traffickers to make large deposits to a bank
due to the currency transaction reporting laws. DOJ elaborates:
“Drug traffickers want to use their drug money to expand their
business, to support their lavish lifestyles, and to increase their
wealth and power” (1990:62). The drug traffickers find themselves
in a dilemma: how to reduce the likelihood of detection and asset
seizure of their illegal cash income. Keeping money in safe deposit
boxes or home safes are well-used methods, but as the amount of
currency increases into the hundreds of thousands or even millions,
these practices become less useful. Authorities target savings
deposit boxes, bank accounts and home safes in their investigations
of narcotics enterprises. Because of these liabilities, traffickers
need to find new ways to convert cash and at the same time, earn
additional revenue. Drug money is eventually invested in the
legitimate economy in businesses, securities, real estate and other
assets ( DOJ, 1990:62).

A favorite and useful method of traffickers for converting and
concealing large amounts of cash is money laundering. Money

laundering is “the concealment of income and its conversion to other

124

assets in order to disguise its illegal source of use” (Karchner,
1988:6). This practice originated in Switzerland in the 1930’s.
Wealthy Europeans, hoping to protect their money from the German
government, sought new methods to move money (Lyman, 1991).
Currently, money laundering is a major component of the illegal
narcotics trade. A prime example of a money laundering operation is
La Mina, The Mine, an illegal organization that reportedly laundered
$1.2 billion for the Columbian cartels over a two year period. Figure

10 illustrates the process.

125

 

Currency from selling cocaine was packed in

boxes labeled jewelry and sent by armored car
to Ropex, a jewelry maker in Los Angeles.

 

 

 

 

 

The cash was counted and deposited in banks that
filed the CTRs, but few suspicions were raised
because the gold business is based on cash.

 

 

 

 

 

Ropex then wire transfered the money to New York

banks in payment for fictitious gold purchased
from Ronel, allegedly a gold bullion business.

 

 

 

 

Ronel shipped Ropex bars of lead painted gold to
complete the fake transaction. Ropex used the
alleged sale of this gold to other jewelry
businesses to cover further currency conversions.

 

 

 

 

 

Ronel then transferred the funds from American
banks to South American banks where the Columbian
cartel could gain access to them.

 

 

 

Figure 10: La Mina Money Laundering Process

Source: Figure reproduced from BJS Drugs, Crime, and the Justice
System, December 1992, NCJ-133652:64

Money laundering has evolved into a crucial component of the

high-level drug dealer compared to the street dealer who is

126
motivated more by their own desire for drugs in addition to money.
They see little alternative to dealing drugs and is not always
deterred by criminal or civil penalties (Holmes, 1992). There are a
variety of different money laundering strategies. One is referred to
as “smurfing” or Structuring. DOJ (1990) defines that as the
conversion of cash in amounts less than $10,000, the threshhold
level that requires filing a currency transaction report (CTR) with
the IRS, into bank accounts or other negotiable instruments. Figure

11 illustrates the rapidly increasing volume of currency reports.

127

8000000

 

6000000'

4000000I

2000000'

 

Currency transaction reports

 

 

or-__, - _ -
1979 1981 I983 1985 1987 1989

1980 I982 I984 I986 1988 1990

 

t i —

YEAR

Figure 11: Volume of Currency Transaction Reports Filed with the
Internal Revenue Service (1979 - 1990)

Source: Data taken from Bureau of Justice Statistics, Technical
Appendix to Drugs, Crime and the Justice System, June

1993:64 citing the U.S. Department of the Treasury,
1991.

Other common money laundering techniques include the use of
businesses, banks, brokerage houses, real estate investment,
gambling casinos, and offshore corporations. For purposes of this
study, the focus is on money laundered through a business. Money

laundering through a business commonly involves reporting more

128
income on the books of the business that was actually produced,
overstating expenses that actually necessary to operate the
business, or depositing excess cash (Murphy, 1992).
Dorn, et al, describe a simple, narcotics money laundering
operation in the UK. run by a husband and wife team with a front of
being in the art business:

It all worked with false bills, false receipts. For example,
what went through my legitimate business was money for film
extras and so on. Its quite easy, really! I went to France and
had an artist do some modern paintings, and I bought them for
200 pounds each. Then I threw them away and wrote myself
receipts for 2000 pounds each. You don’t have to produce the
buyer himself, you can just book it as a cash sale (1992:28).

Perhaps the most famous highly sophisticated money
laundering case involved the Bank of Credit and Commerce (BCCI).
Allegedly, BCCI was used by one-time Panamanian President General
Noriega and other major drug traffickers to launder their profits.
Dom, et al. elaborate:

it is known that the bank moved at least $28 million of money
around for Noriega and that it continued to move his money out
of U.S. jurisdiction even after he had been indicted.
Furthermore, the prosecuted incidents are said to be only a
small number of the alleged cases in which BCCI has helped in
the laundering of criminal moneys. Operation C-Chase, a U.S.
Customs and FBI undercover ‘sting’ operation against BCCI
uncovered the Noriega fund transfers. The undercover agents
were involved in laundering up to $32 million in cash from the
cocaine sale of one of the Medellin Cartel (1992:70).

129
The federal prosecution of BCCI resulted in $14 million forfeited to
the United States.

This need to launder large amounts of dirty money is in fact
the “achilles heel” of these criminal organizations (DOJ, 1990:24).
The forfeiture of businesses used to launder profits can have a
devastating effect on narcotics enterprises by depriving them of a
necessary asset. Forfeiting businesses, aside from depriving the
trafficking enterprise with a location for money laundering, can also
remove a front facilitating their operations.

Supporting the findings about the need to target money
laundering, a major finding of the President’s Commission (1986)
was that narcotics traffickers account for almost 38 percent of all
organized criminal activity in this country. The largest part of
organized crimes’ money comes from the narcotics business.
Following up on this finding, the Wharton Econometric Forecasting
Associates (1992) estimated that more than 62 percent of the total
revenue of organized crime ($25.5 billion) comes from the drug
trade. They also concluded that organized crime is extensively
involved in legal businesses including construction, food and liquor
distribution, clubs, hotels, banking and real estate. Also identified

among businesses are car dealerships and repair shops, motels,

130
appliance stores, medical labs, and import/export houses. Drawing a
similar conclusion, Murphy (1992) asserts that bars, restaurants and
night Clubs are the most common establishment for money
laundering. This is due to a variety of reasons including: (1) the cash
nature of most transactions in these places; (2) that these
establishments represent traditional gathering places and are well
suited for making contacts for illegitimate activity such as
gambling and drugs; and (3) they are commonly associated with
ethnic groups in specific locations and they represent a starting
point for each ethnic group’s legal and illegal activities. Reuter and
Haaga (1989) found in that many of the dealers in their study were
owners of businesses - restaurants, bars and nightclubs. This
characteristic helped them make contacts with potential customers
and suppliers. As a result, businesses represent a major critical
asset necessary for the criminal enterprise.

The importance of the cash nature of narcotics trafficking and
money laundering can not be understated. High-level dealers are
motivated by profit and this money is the engine that drives the
violent, economic and corruptive aspects of drug trafficking. As
discussed earlier, the criminal narcotics enterprise has to move

money as part of its business. Money is also the most flexible and

131

powerful single asset in the hands of a criminal; therefore, it should
be the physical asset targeted first by law enforcement (Holmes,
1992). To protect themselves from asset seizure, increase their
profits and make illegal revenue appear to be legitimate, the
trafficker needs to launder his money. The federal government
recognizes this vulnerability and targets money laundering. There
are hundreds of federal statutes that authorize the forfeiture of
property and the laws most frequently used by the Department of
Justice are the drug laws, the money laundering laws, and the
racketeering laws. The seizure of businesses, either that serve to
facilitate narcotics trafficking and/or are related to money
laundering are a prime target of the government forfeiture efforts.
The seizure of cash and businesses used for money laundering and as
a “cover” for the operation strikes at the heart of the criminal
enterprise depriving them of critical assets.

DomesticflProduction.

While cocaine and heroin are primarily manufactured overseas
then imported to the United States, several drugs are produced
domestically. Perhaps the most common is marijuana, followed by
LSD, PCP, and methamphetamine. A conservative estimate puts

domestic marijuana production as accounting for about 12 percent of

132
the country’s retail market although there are indications that it is
increasing rapidly (DEA, 1987). Federal law enforcement has been
aware of the problem for many years. One indication of the extent of
domestic marijuana production and federal enforcement efforts
comes from a Report of the National Drug Policy Board (1987):
“According to the DEA, in 1987, 12.9 million cannabis plants were
destroyed and 645 greenhouse/indoor operations were seized”

(1987:104). Figure 12 documents the DEA’s efforts.

133

150.0

 

100.0-

50.0 -

 

 

0'0 I I I I
1980 1982 1985 1988 1990 1992

 

Figure 12: Millions of Domestic Cannibas Plants Eradicated (1981 -
1991)

Source: DEA, 1990 Domestic Cannibas Eradication/Supression
Program, 1991:10

Critical resources necessary for the domestic production and
processing of narcotics are open land for marijuana cultivation and
clandestine laboratories. The seizures of ranches and farms used for
marijuana cultivation are common (USMS Official interview, 1994).
In addition to outdoor growing, indoor techniques have become more
popular and successful. Techniques such as pot-growing and
hydroponics can result in year-around production. Associated with
this method is necessary equipment including pots, lighting

systems, greenhouses, and irrigation systems (DEA, 1990). Combined

134
with the land, a marijuana cultivation can represent a major
investment, but with a high return.

Besides marijuana, designer drugs are produced in the United
States in clandestine laboratories. The DEA reports that the drugs
most commonly produced by clandestine laboratories are
methamphetamine (82%), amphetamine (10%) and PCP (2.5%) (1990).
Domestic clandestine drug laboratories range from crude, makeshift
operations to highly sophisticated and technologically advanced
facilities. They are often found in private residences, apartments,
house trailers, houseboats, campgrounds, and commercial
establishments. Often these labs are hidden in nondescript houses or
barns in remote rural areas (DEA, 1990). These labs are frequently
located in isolated rural areas in part due to the strong odors
emitted from methamphetamine and PCP production.

Figure 13 reveals the number of clandestine labs seizures.

135

 

1000

7504

500-

250~

 

 

0 I l l I
1970 1975 1980 1985 1990 1995

 

Figure 13: Clandestine Labs Seized by the DEA (1975 - 1992)
Source: DEA as presented in BJS, Sourcebook of Criminal Justice
Statistics, 1990 NCJ-130580:467

The popularity of labs is due in part to the successful
interdiction efforts of federal enforcement and increased demand
for the drugs (Lyman, 1991). The seizure of Clandestine labs and
their equipment - chemicals, stoves, flasks, beakers, glass-tubing,
and packaging - has always been a target of the federal asset
forfeiture program (Lenck, 1987). While the seizure of just the
processing equipment is important, its not necessary enough to
deter the trafficker. The seizure of the real property with its higher

value should have more of a deterrent effect. Therefore, seizures of

136
labs and chemicals are considered to be of moderate value for this
study.

Conveyances: Facilitation and Proceeds.

Conveyances - primarily automobiles, aircraft and vessels -
represent either the proceeds of this enterprise or resources
necessary to facilitate drug trafficking. It is common for narcotics
traffickers to convert a portion of their profit into luxury
automobiles, boats, and motorcycles. Frequently, these items are
purchased for cash for the trafficker, his family and friends. Lyman
observes: “automobiles are also one of the most sought after of the
drug dealer’s status symbols. Vehicles such as Mercedes Benz’s and
Rolls Royces have been seized by law enforcement agents after
vehicles have been purchased with cash earned from illicit sources”
(1991:66). Based on the author’s experience in this program, other
favorite types of drug traffickers include high-end vehicles such as
the BMW, Jaguar, Lincoln and Cadillac.

Yet, there is some indication that traffickers are becoming
less ostentatious. This is due in part to law enforcement’s success
in tracing cash purchases of conveyances back to trafficker
resulting in successful forfeitures. Additionally, the high-priced

luxury car tends to be more noticeable attracting the attention of

137

the authorities especially when driven by a known criminal. As
Reuter and Haaga (1989) noted, traffickers respond to the strategies
of the authorities. Over time, traffickers are not as willing to
display their wealth with expensive vehicles. Frequently, drug
traffickers are not making cash purchases of luxury automobiles.
Expensive seized vehicles can also have substantial liens making
them less attractive to the government. Federal policy dictates that
automobiles need to have substantial equity to warrant their
forfeiture. If a $30,000 Cadillac is seized, but a title search
determines that its owner has only $2,000 equity in the vehicle, it
is likely that the case to be dismissed. If prosecuted and the
automobile forfeited, the federal government, protecting the rights
of leinholders, would be responsible for compensating the finance
company out of the proceeds of the car’s sale. For example, if the
forfeited Cadillac was sold at auction for $30,000, then the
government would pay GMAC its $28,000 balance due. This would
leave the government a total of $2,000 revenue as the financial
benefit of its seizure.

By financing their purchases, the dealer enjoys use of the
asset, yet limits his loss’s if the asset is seized. This also has

implications for the federal forfeiture program. Because of these

138
trends, seizures of luxury automobiles belonging to traffickers are
of questionable deterrent value to the organization as a whole.
Aside from representing the proceeds of drug trafficking, cars,
trucks, and vans are also obviously necessary to transport narcotics.
DOJ (1990:44) reports:

Illegal drugs from foreign countries myust be smuggled into
the United States for distribution. The U.S. has 88,633 miles of
coastline an more than 7500 miles of borders with Canada and
Mexico. There are more than 300 ports of entry to the U.S. In
fiscal year 1991, more than 438 million people entered or re-
entered the country. That year more than 128 vehicles,
157,000 vessels, 586,000 aircraft, and 3.5 million containers
also entered the U.S.

The large number of vehicle seizures by the INS at the border
are directly related to drug trafficking (USMS Official Interview,
1994). Conveyances are a necessary part of the narcotics business -
they provide the trafficker with mobility. In his testimony before
Congress, John Ingersoll, the Director of the Bureau of Narcotics and
Dangerous Drugs stated:

Effective law enforcement demands that there be a means of
confiscating the vehicles and the instrumentalities used by the
drug trafficker in carrying on his trade. The traffickers must
merchandise his product, and to do so, he needs mobility.
Seizure and forfeiture of vehicles he uses in carrying on his
illicit trade will prevent their use in subsequent offenses and
restrict mobility, which in many cases is vital to the illicit
traffickers success (Ingersoll, 1970). '

139

The narcotics business primarily relies on face to face
communication. Cars serve as mobile offices to negotiate and
finalize drug deals with customers. Automobiles offer privacy from
electronic telephone surveillance and public observation. They are
also used to transport large quantities of currency and narcotics.
Traffickers have gone to great lengths to modify vehicles to carry
contraband. Seized automobiles have been adapted for this role with
hidden compartments in trunks, fuel tanks, frames, and behind rear
seats. Automobiles also help the trafficker escape capture. They are
required operating tools of the drug trade (Lenck, 1987, U.S. v. One
1941 Pontiac Sedan, 1948).

However, vehicles used to transport narcotics may
realistically represent an expendable asset to traffickers. High
numbers of vehicle seizures due to the use of drug courier profiles,
traffic stops, and aggressive drug investigation reflect new tactics
used by dealers. Traffickers responding to law enforcement’s efforts
use less expensive vehicles in this role. Lyman (1991) notes that a
police developed drug courier profile now alerts officers to ordinary
looking rental cars. These changes in strategy by traffickers serves
several purposes. First, the use of inexpensive vehicles attracts less

attention. Second, if seized, the financial losses are limited. Third,

140
traffickers have hired individuals to transport narcotics in their
own cars. The seizure of the vehicle most likely represents more of
a deterrent to the hired driver than the trafficker. As a result, the
deterrent effect of vehicle seizures used to transport narcotics or
facilitate deals by criminal enterprises is questionable. Its safer to
assume that these forfeitures could potentially deter low-level
dealers, but in terms of the objectives of the federal forfeiture
program, they represent a less important asset.

Another common asset that facilitates narcotics trafficking is
aircraft. Lyman states: “In 1985, general aviation aircraft were
suspected in being responsible for over 50 percent of the cocaine
and 10 percent of the marijuana entering the United States. Drug
smugglers prefer light, twin engine general aviation aircraft and
will usually fly at low altitude, placing them under the line of sight
coverage of coastal scanners” (1991:270). Yet, even though light
aircraft are an expensive asset necessary for certain operations, the
deterrent effect of their seizure and forfeiture is limited.

Reuter and Haaga (1989) found that piloting represents a
unique skill needed by the criminal enterprise. Research does show
that while top- level drug enterprises may own transport aircraft

(seizures of multiple aircraft have occurred), this situation is not

141
very common. The high cost of maintenance and storage makes
owning aircraft inefficient. As a result, pilots are frequently hired
by narcotics dealers to transport the contraband in their personal
aircraft. According to the DEA, the Medellin Cartel recruits
American pilots who fly planes equipped with advanced navigation
equipment to move their drugs to the United States (Lyman, 1991).
These pilots can be paid as high as $5,000/kilo and transport loads
as large as 300 kilograms. The huge profits in this enterprise allow
the cartel to afford the high cost of air transport.

The seizure and forfeiture of aircraft, if “subcontracted” by
the trafficking enterprise, may not have a substantial impact on this
organization especially if narcotics were not confiscated. Reuter
(1988) also concluded that the dealers are able to absorb the loss’s
because of the low cost of raw material and labor. The criminal drug
enterprise simply has more to spend on transportation than the
authorities have to stop them. Additionally, because of the lucrative
nature of this business, the loss of an aircraft and its pilot may only
have a limited deterrent effect on aspiring pilot/traffickers. A
recent article in the Minneapolis Star Tribune notes that Columbian
drug traffickers are using converted Boeing 7275 to transport huge

loads of cocaine into Mexico. Profits are so high that traffickers can

142
afford to abandon the aircraft on remote airstrips if necessary
(Golden, 1995). The seizure and forfeiture of aircraft can generate
substantial income for the authorities and possibly deter some
pilots, but it is more likely considered a cost-of-doing-business by
the criminal narcotics enterprise.

The third category of conveyance used for narcotics
transportation is vessels. The use of this method parallels aircraft
in many ways. While high speed power boats and larger cargo ships
are expensive, they are not necessarily owned by the criminal
enterprises. High-value cash payments are an enticing draw for boat
and ship owners.

In summation, the forfeiture of the conveyances described
above, especially those involved in facilitating narcotics
trafficking, will not necessarily deter the criminal drug enterprise
from engaging in future business. Partly due to pressure from the
authorities and also the need to maximize profit, the research on
trafficking illustrates that these assets are either of low value or
are hired for the job. Their loss to the government may have little

impact on the criminal enterprise.

143

Residential Property.

An important category of property is residential real estate
belonging to domestic drug traffickers. (The forfeiture of homes
belonging to the foreign cartels is not considered a factor for this
study). This property can be seized either as the proceeds of
trafficking or that used to facilitate trafficking. The forfeiture of
real property can deprive criminals of assets and a site for their
activities, discourage similar activity, establish a positive public
relations image and provide the seizing agency with a source of
revenue (Aylesworth, 1991 ).

Residential real estate seizures represent a high-value asset
and depending on their dollar value, have the potential to be a strong
deterrent to the criminal enterprise. The federal government in the
Northern Judicial District of Illinois once seized an $800,000 house
and its furnishings which included more than 40 oriental carpets as
drug proceeds. The owner had negotiated to buy heroin from an
undercover DEA agent. In order to convince the agent of his ability to
pay, he took him on a tour of the house stating that the house and
everything in it had been acquired from his drug dealing (Valukas and

Walsh, 1988).

144

The forfeiture of homes can have a devastating effect on the
mid to low-level trafficker. Family-run criminal enterprises may be
both deterred and incapacitated by the seizure of their residence.
The seizure of homes of traffickers of larger organizations can also
represent a substantial financial loss to the enterprise. As
discussed in the following section, real property is commonly used
to house clandestine narcotics laboratories or for producing
marijuana - either indoors or outdoors. The DEA has forfeited real
estate used as laboratory sites, marijuana growing lands, airstrips
locations and drug storage facilities under 21 U.S.C. Section
881(a)(7) (Lenck, 1987). The seizure of these properties can
potentially disable the entire operation.

Based on the experience of the author, narcotics traffickers at
all levels of the business frequently vigorously contest the seizures
of their homes. In a previous longitudinal study of the asset
forfeiture program at the Northern Judicial District of Illinois, real
estate seizures took the longest amount of time to prosecute and
resulted in the highest number of settlements and closed cases
(Warchol, 1993). Not only does the forfeiture of a home represent a
major financial loss, but it also forces the trafficker to relocate

himself and/or his family. It may also be perceived as a direct,

145
personal attack on the trafficker unlike the seizures of assets used
solely to maintain and expand his business. Because of the potential
impact of forfeiting residential property, it’s deterrence value is
considerable.

Personal Property.

The next category of assets is personal property. This includes
the jewelry, weapons, electronic equipment, art, antiques, and
clothing. Certain items such as jewelry and furs can have high value,
but for a high-level criminal enterprise, these Ioss’s are not
necessarily substantial. As a result, they will be classified as of
low deterrent value.
filfipg the lmgct of Assets

The government literature stresses that the seizure of the
assets of the trafficking organization will deter the current and
aspiring traffickers and disable the narcotics enterprise. Yet little
concern is directed at rating the value of these assets. It is the
contention of this study that the deterrent value of property
seizures will vary with the type and value of an asset. The
preceeding studies examining the different assets owned and used by
narcotics enterprises helps clarify this issue. The different types of

property associated with narcotics trafficking have been defined and

146
assessed in terms of their value to the trafficking organization. The

results of this review are tabulated in Table 9 on the following page.

147

Table 9: Rating the Deterrent Value of Assets

 

 

ASSET DETERRENCE JUSTIFICATION

VALUE
Monetary High *Primary motivation for trafficking
Instruments *Necessary to conduct business

*Most liquid of all type of assets

*Incorne producing source for business

*Nature of trafficking requires large
amounts of currency to be on-hand

 

Real Property High *Money laundering facility
*Used to facilitate contacts
*Provides cover for trafficking
*Necessary for domestic drug production
*High dollar value has potential for
for considerable financial impact

 

Drug Lab
Equipment Moderate *Necessary to produce specific narcotics
*May disable small-scale operations
*Questionable effect on large operations
if only equipment is seized

 

Conveyances Low *Successful enforcement has caused
traffickers to use low-value or rental
vehicles

*Large leins are negate effect of seizure
*Common practice to hire individuals who
are not a part of the organization to use

their own conveyances

*High profit margin at higher levels of the
business makes conveyances easily
replaceable

148
Financial Concerns of the Program: Efficiency gig Deterrence

While deterrence is the main purpose of forfeiture, the other
important objective of the federal program is provide money for law
enforcement. According to the Attorney General, the second goal of
the program is to: “redistribute these assets in the most efficient
manner back to law enforcement to fund additional anti-drug
efforts” (DOJ, 1990:2). The need for proper management of the
program is detailed in the government literature. The GAO (1990,
June) concluded that the efficient seizure, management and
forfeiture of assets is crucial to the success of the federal program.
Improved processing of large amounts of currency is one of the
critical goals - both from a management and law enforcement
perspective. The faster the currency can be forfeited, the quicker it
can be placed back into law enforcement to further enhance
narcotics control programs. Therefore, prosecution time becomes an
issue.

Uncovering and correcting internal case processing problems
within the various component agencies helps increase efficiency and
enhance revenue (GAO, 1991 June). The operations of the United
States Marshal’s Service has been the subject of government

auditor’s attention. The GAO (1991, May) noted problems with the

149
pre and post-seizures of businesses. The failure to obtain title
information before the seizure, and to maintain and manage these
assets have resulted in substantial economic losses to the
government. A related area is the disposition of real property by the
USMS. The objective is to dispose of real estate in a timely manner
at the best price, yet this is not always the situation (GAO, 1992
September). Real estate is a high value asset, but also costly to
maintain. The rapid processing of the case and quick disposal of the
asset after forfeiture not only saves the government property
management costs, but places the proceeds of the sold asset back
into law enforcement.

In addition to being concerned with proper management of
financial resources, the government relies on total dollar deposits
to the Asset Forfeiture Fund as one measure of success. Yet, as
stated at the outset of this paper, the value of the asset can also be
linked to the government’s intent to deter deter narcotics
traffickers. A better method to assess the intent of the government
is to compare the estimated value of the asset at the time of
seizure to the final dollar amount received by the government
following disposition of the case. (The deterrent value of the asset

must also obviously be considered in this equation) It is reasoned

150
that if the government is seizing high deterrent value, high dollar
value assets, yet receiving little for their efforts, there is only a
limited deterrent effect. If this is the case, it may indicate that the
government’s intent is to target high-value assets without much
initial investigation as to third-party innocent owners who must be
compensated or the strength of the case. That is, property with
substantial leins will not have much deterrent effect on the drug
traffickers nor will cases in which a substantial portion of the
assets are returned to the owner. Therefore, for purposes of this
exploratory analysis, the difference between the estimated value
and value received - referred to here as net value - will be used as a
measure of the government’s intent.
Summary of Part Two

This final part of the review supports the analysis of the
deterrent value of the federal asset forfeiture program. It
demonstrates that narcotics trafficking organizations utilize
various types of assets. Some types are crucial to the operation of
the business while others are expendable. Their forfeiture is one
cost of doing business. There are important implications from this
for the federal forfeiture program. If it is to effectively deter, then

it must seize and forfeit those assets critical to trafficking

151
enterprises. A rating system based on the identification of these
asset’s deterrent value was established for use as a measure in the

analysis.

Chapter Three: Methods of Data Analysis
Introduction

This work has two primary objectives: to describe the history
of forfeiture law and the state of the current federal program, and
analyze its value as a deterrent to narcotics trafficking enterprises.
A total of eight research questions are specified based on these
objectives. These research questions use different methodological
approaches and data. A historical, descriptive analysis of qualitative
data combined with aggregate—level, quantitative data are used to
depict the origins and development of forfeiture law. Individual-
level, quantitative data are used to explore the value of asset
forfeiture as a deterrent to narcotics trafficking organizations. This
study also uses a new measure to analyze the deterrent value of the
federal asset forfeiture program. The flexibility of this approach
should yield considerable insight into this policy.

Data

Qualitative

A wide variety of documents are used to describe the origins
and development of forfeiture law. To provide a complete and

objective portrayal, the sources include publications from the

152

153

Department of Justice and local law enforcement agencies, articles
from law andacademic journals, newspapers and magazines,
interviews with asset forfeiture specialists in the Department of
Justice, and federal and Supreme Court cases.
Aggggate Quantitative

Aggregate-level, quantitative data are used only to supplement
the qualitative representation of the federal asset forfeiture
program presented in Chapter Two. They describe the extent of this
program and the magnitude of narcotics trafficking in the United
States. These data were obtained from various government sources.
The sources include the Drug Enforcement Administration, the
Executive Office for Asset Forfeiture, and the Bureau of Justice
Statistics (The Sourcebook).
Individual-Level Data

At the outset of this study, it was realized that individual-
level data are best suited to analyze the deterrent value of asset
forfeiture. These data would have to contain information about
specific characteristics of individual asset forfeiture cases
identified as having a deterrent value. The required characteristics
of each case include the type of asset seized, its value, prosecution

time requirements, the type of forfeiture proceeding, and the

154
disposition of the case. The use of these variables will facilitate an
analysis of the intent of the government in using asset forfeiture as
a deterrent to drug trafficking enterprises. They also help provide a
rich, cross-sectional description of this federal program.

The challenge for this study was obtaining data meeting these
requirements and not exceeding the available resources of money and
time. Discussions with administrators at the Executive Office for
Asset Forfeiture, colleagues familiar with this subject, and
personal experience identified three potential data sources - USAO,
PROMIS and USMS data. The first two sources were considered, but
not used for reasons stated below.

Initially considered was the idea of collecting data from the
individual case files of the United State’s Attorney’s Offices from
different judicial districts. While the case files generally contain
the necessary information in addition to other details, collecting
these data would be prohibitively expensive and time consuming for
several reasons.

First, collecting the USAO data would first require obtaining a
sampling frame from the Prosecutors Management Information
System (PROMIS) for each of the selected four judicial districts.

Unfortunately, the PROMIS database is generally considered

155

inaccurate and the sampling frame would require considerable
cleaning. Once the sampling frame was prepared, the second step
would be to obtain each of the case files and transcribe the sought-
after information into a database. The author was involved in a study
using this data gathering technique at just one judicial district. The
problems with this method included finding the case files selected
for the sample and locating missing documents. Common practice for
the USAO is to transfer closed cases to remote storage. These files
are not always complete, commonly missing final disposition orders
and other necessary pleadings. It was necessary to obtain missing
documents from the district court files for the incomplete cases - a
very time consuming process. The district court also transfers their
overflow to remote storage facilities further complicating the data
collection process. The data collection for the above-mentioned
project for one judicial district took approximately 10 months to
complete. Because of these problems, the USAO and PROMIS data
were eliminated as choices.

The decision was made to use an available, existing source of
quality data. The author was familiar with the different data kept by
the USMS in their role in the asset forfeiture program. Contacts at

the EOAF and USMS confirmed the accuracy and availability of these

156
sources. The selected source of data was the Property Disposition
Reports. These reports contain a comprehensive record of the
population of individual properties seized by the U.S. for forfeiture
and disposed of by the USMS by fiscal year for any of the 94 federal
judicial districts. The data also contain the other necessary
information to answer the research questions. The EOAF agreed that
the USMS data would meet the needs of this project and offered
assistance in obtaining the information.

The next step was to select the four different sites. The
selected judicial districts and their main cities are Southern
District of California (San Diego), Southern District of Florida
(Miami), Northern District of Illinois (Chicago), and the Eastern
District of Michigan (Detroit). They were selected based on their
geographic location and level of drug trafficking. San Diego and
Miami represent border districts commonly used as ports of entry
for illegal narcotics and have been classified by the Office of
National Drug Control Policy as “High Intensity Drug Trafficking
Areas” (ONDCP, 1993). The selected sites allow for an exploratory
comparison of asset forfeiture cases based on these geographic and

narcotics trafficking differences.

157
Two fiscal years of data are used in this study. These are 1991

and 1992. The number of observations for each district is as

follows:

District N(1991) N(1992)
Northern District of Illinois: 478 539
Eastern District of Michigan: 458 346
Southern District of Florida: 825 837
Southern District of California: 16$ 11$
Totals: 3427 2860

This data source has several advantages. First, since the entire
population of cases was available for each of the four districts, it
will be used for the analysis eliminating potential problems with
sampling error and bias within each district. Second, it also
provides a large sample to generalize to other districts. Third, it is
not only the most adequate source of existing data, but considered
highly accurate (USMS Official interview, 1994). Fourth, these data
are specific. The definitions of property type, dollar value, time and
disposition are absolutely specific and unambiguous. What is meant
by each term is clear and accurate giving these definitions a
scientific virtue. This is a major strength for comparing the

activities of the four districts.

158

lprflvigal-Level Variables and Measures

The available variables in the data set - their descriptions,
values and level of measurement - are described below:
ASSET: Describes the specific type of asset seized by the
government in the forfeiture case. Values: conveyances, monetary
instruments, real property, lab and equipment. (Nominal)
PROSTYPE: Indicates the type of forfeiture proceeding used by the
government. Values: civil, criminal and administrative. (Nominal)
DISTRICTzThe four federal judicial districts used in this analysis.
Values: Northern District of Illinois (IL), the Eastern District of
Michigan (MI), the Southern District of California (CA), and the
Southern District of Florida (FL). The principal Cities in each of
these districts are respectively: Chicago, Detroit, San Diego, and
Miami. (Nominal)
ESTVALUE: The estimated value of the asset at the time it was
seized. (Interval)
APPVALUE: The accurate appraised value of the asset after it has
been placed in the custody of the United States Marshal’s Service
pending the outcome of the case. (Interval)
DlSPTYPE:This variable describes how the property was disposed of

by the USMS. Values: not forfeited, forfeited/sold, forfeited-

159
retained, or forfeited substitute asset. Forfeited-retained indicates
that after the asset was forfeited, it was retained by the
government for its own use. Forfeited substitute asset indicates
that the claimant contesting the case forfeited a substitute asset of
equal value in place of the seized asset. (Nominal)
AMTDEP: The dollar amount received by the United States as a
result of the forfeiture and deposited to the Asset Forfeiture Fund.
(Interval)
PROSTIME: The amount of time in days used to process a forfeiture
case from date of custody to the date of disposal by the USMS.
(Interval).
Validity and Reliability
A new measure is used to analyze the deterrent value of the
asset forfeiture program. Therefore, one must identify the specific
charactertics in a case that lead to a forfeiture so they can be used
measures of the deterrent effect of the program. The problem is how
to develop such a measure that will be a valid representation of the
concept when using an existing source of data that is limited in
some respects. Babbie, addressing this issue states: “the problem of
validity in connection with the analysis of existing statistics can

usually be handled through logical reasoning and replication” (1983:

160
309). As documented in the literature review, the specific values of
property type, legal proceeding, disposition and net value have been
established as representing deterrence. When present, they may have
a deterrent effect on narcotics trafficking enterprises.

The choice of these variables was not serendipitous. The
justification for these measures is grounded in the literature on
asset forfeiture, drug trafficking, deterrence theory, interviews,
and logical reasoning. The literature reviewed in Chapters Two and
Three outlines the different forfeiture proceedings and possible
outcomes in addition to the comparative worth of the various values
and types of assets to the drug trafficking organization. To
facilitate the analysis, the net value, property type, legal
proceeding, and disposition are categorized as to their deterrent
value.

Limitations of the §_t_p_dy

Given that this study relies on an existing data source for its
social-scientific inquiry, there are limitations. These data were not
specifically collected for the purpose of this research. As a result,
they lack some supplemental detail about the attributes of each

asset forfeiture case.

161

The data used for the first research issue have been obtained
from several governmental sources. They are used only for
descriptive purposes to illustrate the history and development of
the asset forfeiture program and the extent of narcotics trafficking
in the United States.

To address the second research issue on the deterrent value of
a forfeiture, net value, property types, legal proceeding, and
disposition are used as measures. While it is acknowledged that
other specific attributes of each case are lacking and these
measures are serving as proxies, their use represents a new
approach to an unanswered question. The objective of addressing
this question is not to find absolute proof of the government’s intent
for the forfeiture program, but to provide an indication of the value
of asset forfeiture as a deterrent to drug trafficking enterprises.

Another limitation is the use of a cross-sectional design.
Although one would prefer to understand this policy over time, this
design only allows for conclusions to be made about a particular
point in time. To compensate for this limitation, a second year of
data is used as a follow-up to address any anomalies in the data.

Overall, although there are limitations to this study, it does

represent the first major empirical study of federal asset

162
forfeiture. This is exploratory research using new and innovative
measures to examine unanswered questions. The findings will help
illustrate the need for future research and new methodologies and
data sources.
ReStflzLQuestions am: Methodological Approach

This study uses both qualitiative and quantitative methods.
The research questions and methodological approaches are listed
below.
Research Question One: What are the historical origins of current
forfeiture law in the United States?
Research Question Two: How is the federal forfeiture program
structured and how are property seizures processed within this
structure?
Research Question Three: How has the federal forfeiture program
performed over time in terms of seized and forfeited assets and
yearly revenue in comparison to the extent of the narcotics problem
in the United States.

These three questions are answered with a descriptive,
qualitative and quantitative research methodology to provide
significantly more than a casual answer to the question. The results

are based on a review of the literature. Aggregate data specifically

163
describing the forfeiture program and federal drug enforcement
efforts from the 1984 to 1993 at a national level are also used to
answer this question. These data will describe the four selected
districts and the nation as a whole. The quantitative data will be
analyzed with the SPSS 6.1 statistical program. Results are
presented with descriptive statistics and graphical displays.
Research Question Four: Are there significant differences within and
between the four districts as to the type of assets seized for
forfeiture ?
Research Question Five: Are there significant differences within and
between the four districts as to the value of assets seized for
forfeiture ?
Research Question Six: Are there significant differences between
the four districts as to the characteristics of the forfeiture cases
prosecuted by the government ?
Research Question Seven: Are there significanct differences within
and between the four districts as to the amount of time required to
process forfeiture cases ?
Research Question Eight: Are there significant difference between
border districts and the midwest districts in term of their use of

asset forfeiture ?

164

The objective is for this second part of the study not to
determine if the forfeiture program is deterring trafficking
enterprises, but rather to present a detailed picture of the types of
forfeiture cases in the four district and assess the value of asset
forfeiture as a deterrent based on how the government is using this
program. If the government is using forfeiture to deter, certain
patterns should be present in the data in each judicial district.
First, the predominant type of property seized should be that
classified as having a high deterrent value. (See Figure 8) Seizing
the high deterrent value assets is a preliminary indication that the
government is targeting the type of property most likley to deter
and incapacitate these organizations. Therefore, high-deterrent
value assets should be over-represented among the types of seized
property.

Second, the government should be winning forfeiture cases. Not
just any type of forfeiture case, but those specifically involving
high deterrent value assets. Successful prosecutions of these types
of assets are an indication that the government not only seized the
right type of property, but also had a strong case that led to a

forfeiture.

165

Third, there should be little difference in the dollar value of
seized property and the amount received by the government after the
forfeiture. If the government is seizing high dollar value property
and receiving little for its efforts, it may indicate problematic
cases involving assets with significant leins held by innocent
owners. As discussed in Chapter Three, the deterrent effect of an
asset seizure is partly a function of how much equity the owner had
in the seized asset. A house seized from a high-level drug trafficker
with a lien on 80 percent of the value of the property hinders the
trafficker less than if he had 80 percent equity in the house. The
deterrent value of the seized asset must also be considered in this
analysis. The seizures should be of high deterrent value assets to
have the most impact on the trafficking enterprises.

Fourth, the time required to prosecute a case is examined. The
effectiveness of forfeiture as a deterrent is in part a function of the
amount of time necessary to forfeit an asset to the government or
return an asset to its owner.

Finally, the type of proceeding must be considered. If
administrative forfeitures are over-represented among the three
types of forfeiture proceedings, a considerable number of asset

owners declined to contest the property seizures. However, criminal

166

forfeitures have the double deterrent effect of incapacitating both
the asset and the defendant. The frequency of the use of the three
types of proceedings has implications for the effectiveness of the
program. The reasons for this have been discussed in Chapter Two.

The patterns in the data will indicate if the program is
actually being used in accordance with its primary goal of deterring
the trafficking enterprises and to what degree. That is, does it
appear that the government is targeting the high-level trafficking
organizations, or those at the lower levels of this business. It will
also give an indication of the govemment’s concern for producing
revenue. Accordingly, the analysis will focus on: (1) the type of
property seized in each district; (2) the type of legal proceeding; (3)
the type of outcomes; (4) prosecution time; and (5) the net value
received by the government.

Analytic Technigifia

The data was entered into a SPSS 6.1 data set for the analysis.
Summary statistics are used to describe and compare the
populations and subpopulations from each district. This gives a
preliminary indication of the forfeiture activities of each district
and how the districts compare to one another. The next consideration

is to decide which type of procedure to use on these data.

167
Nonparametric procedures are appropriate for the categorical data.
The distributions of the interval level variables are also Checked for
normality with the skewness and kurtosis tests. These results
dictate the use of both parametric and nonparametric statistics.
Following this, contingency tables and elaboration analysis are
employed with the appropriate measures of association and the chi-
square test of independence to examine bivariate relationships for
the categorical variables within and between each of the districts.
Due to the large number of tables to be generated, the results of
some of the tablular analysis are combined into summary tables. To
test for significant differences between the four districts in terms
of property values and prosecution times, the appropriate
parametric or nonparametric one-way analysis of variance is
employed. The 1991 and 1992 results are displayed together to

facilitate a comparison of the two years.

Chapter Four: Findings
Descriptive Summary of the Data

Tables 10 and 11 on the following pages present an aggregate
summary of the variables for the 1991 and 1992 data without
controlling for individual judicial districts. Overall, the results
show that the most frequently seized assets are monetary
instruments and conveyances representing 81.4% and 78.6% of all
seizures for both years. A surprising finding is the very low
percentage of criminal forfeitures. While criminal forfeiture has
been promoted (AF News, July-August 1991), it represents less than
1% of all forfeiture proceedings. However, administrative forfeiture
(68.5% in 1991 and 62.3% in 1992) is the most frequently used
forfeiture proceeding followed by civil. Aside from the proceedings,
the data also provide a measure of the government’s success with
this program. Over 73% of all property seizures for both years
resulted in a forfeiture. However, less than 10% of forfeited assets
were retained by the seizing agency for their own use.

The average values (estimated and appraised) of the seized
assets are considerable. Monetary and real property averaged the

highest of all types. Even property categorized as “other” — mainly

168

169
personal assets including cellular phones, computers, jewelry, and
furs - had appraisedvalues of $8,244 and $10,001 per seizure for
both years. One surprising finding is that there is little disparity
between the estimated and formal appraised value of an asset. The
estimated value is an informal evaluation of the worth of the asset.
The appraised value is the more exact evaluation of the asset’s
worth following custody (USMS interview, 1994). These results may
initially contradict the idea federal law enforcement is randomly
seizing assets that appear valuable. These results indicate that
there is accurate planning involved in determining the true worth of
an asset.

While the estimated and appraised values are high, the amount
finally deposited to the Asset Forfeiture Fund (AFF) is substantially
lower than these initial values for all types of assets. This is due to
a number of factors including the payment of innocent leinholders,
lower sale values, and settlements with claimants. The government
averaged $15,316 in 1991 and $22,248 per seizure in 1992 deposited
to the AFF per forfeiture. These AFF deposit figures represent 43.7%
and 55.1% of the appraised value of the asset - a considerable

percentage increase from 1991 to 1992 in AFF deposits. DOJ even

170
managed over $1,300 in 1991 and $2,018 in 1992 per asset revenue
on property that was returned to the owner.

One rather controversial aspect of the program is the use of
forfeited property by the government. The data show the average
estimated value of assets (primarily conveyances) that were
forfeited to the government and retained by the participating agency.
The 1991 and 1992 average estimated asset values of retained
conveyances of $7,367 and $8,773 represents approximately 55% and
59% of their average appraised value. Also of note is that while the
total number of assets declined from 1991 to 1992, the average
overall amount deposited to the AFF actually increased substantially
from $15,316 to $22,248 per seizure. This may be an indication that
the government is becoming more selective in targeting asset to

obtain the highest return on each seizure.

171

Table 10: Descriptive Statistics for all Districts (1991-1992)

 

 

1991 1992

Variables N (96) N ( 96)
Asset

Monetary 1763 (51.0) 1261 (44.1)

Real Property 279 (08.1) 314 (11.0)

Conveyance 1038 (30.3) 987 (34.5)

Lab Equipment 6 (00.2) 4 (00.1)

Other 341 (10.0) 294 (10.3)
ProsType

Administrative 2347 (68.5) 1782 (62.3)

Civil 1049 (30.6) 1058 (37.0)

Criminal 31 (00.9) 20 (00.7)
Auetw

DEA 2940 (85.8) 2343 (81.9)

FBI 310 (09.0) 323 (11.3)

ATF 0 (00.0) 3 (00.1)

USCS 9 (00.3) 4 (00.1 )

IRS 85 (02.5) 118 (04.1)

USPS 3 (00.1 ) 7 (00.2)

N/A 80 (02.3) 62 (02.2)
District

NDIL 478 (13.9) 539 (18.8)

EDMI 458 (13.4) 346 (12.1)

SDFL 825 (24.1) 837 (29.3)

SDCA 1666 (48.6) 1138 (39.8)
Disptype

Not Forfeited/

Returned 786 (22.9) 748 (26.2)

Forfeited/Sold 2348 (68.5) 1913 (66.9)

Forfeited/

Retained 253 (07.4) 164 (05.7)

Forfeited/Cash

Substitute 40 (01.2) 35 (01.2)

Table 10 (cont’d)

172

 

 

1991 1992
Variables Mean ($) Std. Dev. (5) Mean ($) Std. Dev.($)
Estvalue
(Overall) 35,982.33 127,672.84 41,684.01 113,725.65
(By Asset)
Monetary 33,681.93 124,913.72 42,194.37 133,646.61
Real Prop. 160,756.91 272,057.45 146,238.11 148,810.19
Conveyance 15,083.45 45,078.61 16,983.22 51,821.47
Lab Eqpmnt. 11,124.50 20,222.37 22,337.50 21,747.53
Other 9,840.70 42,809.69 10,528.72 40,212.64
(By Disposition)
Not Forfeited 38,977.66 98,944.00 47,107.35 102,047.77
Forfeited/Sold 37,389.54 142,619.24 41,112.74 121,107.02
Forfeited/
Retained 7,367.92 9,439.56 8,773.1 1 9,153.05
Forfeited/Cash
Substitute 75,507.50 54,906.73 112,837.19 148,016.95
Appvalue
(Overall) 35,043.87 119,007.70 40,228.19 111,649.17
(By Asset)
Monetary 33,724.33 125,031.66 42,224.12 133,677.05
Real Prop. 157,479.33 229,585.66 140,133.66 141,803.94
Conveyance 13,316.90 27,478.90 14,807.91 47,465.74
Lab Eqmnt. 11,124.50 20,222.37 22,337.50 21,741.53
Other 8, 244.87 42,262.78 10,001.34 39,651.84
Arntdep
(Overall) 15,316.15 97,663.18 22,284.83 91,650.52
(By Asset)
Monetary 21,302.25 114,895.09 36,139.26 127,356.09
Real Prop. 42,087.16 177,580.33 41,679.03 87,701.55
Conveyance 2,292.95 8,546.09 4,508.56 18,845.84
Lab Eqmnt. 242.66 594.40 1,353.00 1,538.02
Other 2,371.63 15,095.72 1,760.11 8,883.29
(By Disposition)
Not Forfeited 1,332.41 16,636.46 2,018.56 24,489.49
Forfeited/Sold 21,523.48 116,974.60 32,053.05 109,585.89

 

173

Table 10 (cont’d)

 

 

 

 

 

1991 1992
Variables Mean ($) Std. Dev. ($) Mean ($) Std. Dev.($)
Forfeited/
Retained 0.0 0.0 48.78 624.69
Forfeited/Cash
Substitute 22,601.22 32,216.57 22,751.08 32,006.75
Table 11 Descriptive Summary of Prosecution Times (1991 -
1992)
1991 1992

Variables Mean days Std. Dev. Mean days Std. Dev.
Prostime (Overall) 378.43 349.22 400.67 403.72
(By Asset)

Monetary 316.31 340.43 287.82 345.83

Real Prop. 599.17 400.82 717.88 481.63

Conveyance 388.10 318.60 443.77 390.01

Lab Eqmnt. 805.33 581.74 551.00 418.25

Other 459.83 358.86 399.18 381.30
(By Prostype)

Admin. 332.04 331.55 278.34 335.15

Civil 472.22 359.99 605.23 420.30

Criminal 715.90 457.71 445.95 651.11

 

Kurtosis and Skewness statistics were calculated on the
interval-level variables to justify the selection of the correct
significance tests. The results in Table 12 indicate that a
combination of parametric and nonparametric tests are appropriate

for these data.

174

Table 12 Kurtosis and Skewness Results by District (1991-1992)

 

 

 

1991 1992
Kurtosis Skewness Kurtosis Skewness

Amount Deposited

Florida 112.71 9.64 33.69 5.27

Illinois 50.37 6.41 174.23 12.19

Michigan 133.51 9.88 91.16 8.59

California 277.09 15.36 71.02 7.40
Appraised Value

Florida 93.65 8.24 22.83 4.25

Illinois 28.15 4.78 124.79 9.82

Michigan 41.44 5.25 24.70 4.41

California 102.97 8.85 65.00 6.53
Estimated Value

Florida 128.53 9.45 19.58 4.00

Illinois 57.92 6.48 121.83 9.78

Michigan 32.07 4.85 24.42 4.33

California 112.65 9.24 70.63 6.87
Prostime

Florida 1.75 1.41 2.07 1.35

Illinois 3.36 1.62 1.75 3.59

Michigan 2.22 1.45 1.91 1.55

California 2.19 1.48 5.98 2.20

 

The dollar value variables of Estvalue, Appvalue and Amtdep
show a considerable amount of skew in their distributions. The high
kurtosis values further indicate that the distributions of these three
variables are not uniform. Because of the uncertainty raised by these

results, the nonparametric Kruskal-Wallis One-Way Analysis of

175
Variance will be used to compare the four judicial districts on these
variables. The kurtosis and skewness results for the Prostime
variable are much Closer to zero allowing for the use of a
parametric analysis of variance to compare the different districts.
The remainder of the variables are categorical, measured at the
nominal level. As a result, the chi-square test will be used to test
for significance.
Identifying Asset Types by District

While the aggregate data help present an overview of the
federal forfeiture program, the primary objective of this research is
to analyze and compare the forfeiture activities of the four judicial
districts. Therefore, a first concern is to explore the relationship
between district and asset type. Specifically, what types of assets
are seized in the four districts and how different are the districts
in terms of seized assets?

Forfeiture, according to the Department of Justice, is intended
to be used at the source of the drug problem - drug trafficking
organizations at the higher levels of the business. The literature
revealed the different types of assets used by drug trafficking
organizations. These included monetary instruments, real property,

conveyances, and drug production equipment. The literature also

176

established that certain type of assets - monetary instruments, real
estate and drug production equipment - are more valuable to the
organization both in terms of economic worth and for conducting
business than other types. These have been categorized as “high-
impact” assets. However, at the higher levels of the business, and to
an extent at the mid and lower levels, conveyances and personal
property are more expendable due to their lower dollar values. Based
on these findings, it is reasoned that the ability of asset forfeiture
to disable drug trafficking organizations is in part a function of the
types of assets seized by law enforcement. The type of seized asset
serves as one measure of the government’s use of the forfeiture
program and its potential impact of drug trafficking. By identifying
the types of seized assets, one obtains an initial view of how the
asset forfeiture program is being used by the Department of Justice.
If the government is interested in targeting the higher-level
narcotics traffickers and their organizations, one would expect an
over-representation of the “high-impact” assets identified in
Chapter Two.

The four judicial districts must also be considered in this
analysis. Two districts - Southern Florida and Southern California -

have been identified as “high-intensity drug trafficking areas” and

177
serve as ports of entry being border districts. The two central
districts - Northern Illinois and Eastern Michigan - are less known
as drug distribution centers and may exhibit different
Characteristics from the border districts. By comparing the four
districts, one can draw initial conclusions about how the forfeiture
program used and regional variation. The data in Tables 13 and 14
illustrate the relationship between district and asset for 1991 and

1992.

178

Table 13: Asset Type by Federal Judicial District (1991)

 

 

 

DISTRICT
Florida Illinois Michigan California
ASSET

Monetary 47.4% 35.4 48.9 58.8

(491 ) (169) (224) (979)
Real Prop. 15.0 11.3 16.4 1.6

(1 24) (054) (075) (026)
Conveyance 30.2 48.1 24.5 26.8

(249) (230) (1 12) (447)
Lab Equip. 0.0 0.2 0.0 0.3

(000) (001 ) (000) (005)
Other 7.4 5.0 10.3 12.5

(061) (024) (047) (209)
Totals 100% 100 100 100

(825) (478) (458) (1 666)

 

Cramer’s V = .176

Chi-square = 319.368 df= 12

p< .001

 

179

 

 

 

Table 14: Asset Type by Federal Judicial District (1992)
DISTRICT
Florida Illinois Michigan California
ASSET
Monetary 40.0% 34.5 42.8 52.0
(335) (186) (148) (592)
Real Prop. 16.2 15.4 16.5 03.3
(1 36) (083) (057) (038)
Conveyance 36.4 42.9 24.6 32.2
(305) (231 ) (085) (366)
Lab Equip. 00.0 00.2 00.6 00.1
(000) (001 ) (002) (001 )
Other 07.3 07.1 1 5.6 12.4
(061) (038) (054) (141)
Totals 99.9% 100 100 100
(837) (539) (346) (1 138)
Cramer’s V = .148 Chi-square =188.483 df = 12 p < .0000

 

The most striking finding from these tables is the overall

relative similarity of the four districts with monetary intruments

and conveyances comprising the highest percentage of seized assets.

The variation between districts is in terms of these specific asset

types. The Northern District of Illinois has the highest percentage of

conveyance seizures for both years. Additional variation is found in

180
the Southern District of California. This district stands out with the
highest percentage of monetary asset seizures and the lowest
percentage of real property seizures. The 1991 results are
confirmed by their resemblance to the 1992 data.

The distribution of asset types raises questions about the use
of this policy. The literature indicates that the illegal drug business
is about money. Money is the necessary asset for conducting
business at all levels of the trade. Therefore, monetary assets have
been identified in this research as a “high-impact” asset. However,
real property, another critical asset due to its high value, never
exceeds more that 16.4% in any of the districts. Of note is the
Southern District of California with only 1.6% and 3.2% of all
seizures being real property in 1991 and 1992. In this district,
monetary assets comprise over 50% of its seizures for both years.
Additionally, lab equipment seizures never exceed .6% of all asset
types for either year.

Conveyances also constitute the other major class of assets
comprising no less that 24.5% of seizures to a maximum of 48.1% of
seizures in Illinois for 1991. Nonetheless, based on the literature,
the value of conveyance seizures as a way to disable drug

trafficking organizations is questionable. A final striking result

181
from these tables is the high percentage of seizures of “other”
types of assets in the Southern District of California and the
Eastern District of Michigan. Though not considered an important
asset to confiscate, it represented over 15% of all seized assets in
Michigan in 1992.

While the chi-square test of independence indicates
statistically significant results for both years, the similiarty of the
four districts is confirmed by the weak Cramer’s V statistic of only
.17 and .14 for the 1991 and 1992 results. Even though the districts
are distinct from one another geographically and in terms of the
extent of narcotics trafficking, these data suggest that there is an
overall similarity in terms of the most common types of assets they
are targeting. There are only subtle differences between the
districts. An initial conclusion is that there is only limited
deviation regarding policy determining the types of assets targeted
for forfeiture.

Examining the Valde of Sized Assets

The identification of asset types in the previous section gives
an initial indication of the intended use of this policy by federal law
enforcement and its potential for impacting the drug trafficking

organization. However, a critical issue long recognized by the

182

government is the value of the seized assets. The literature reveals
that the government is very concerned with the financial
management of the forfeiture program. It is also one of the most
thoroughly audited federal programs. A main concern is to prevent
waste in terms of asset storage and property disposition and
improve the program’s economic efficiency. The data in the previous
section Show that while the number of seizures has decreased, the
AFF deposits have increased from 1991 to 1992 as have the
estimated value of seized assets. However, aside from the issue of
economic efficiency, these property values provide additional
information about the value of this program as a deterrent.

Contributing to the effectiveness of the forfeiture’s ability to
disable drug trafficking organizations is the financial value of the
seized assets. The effectiveness of a forfeiture case is a function of
both the dollar return received by the government since this money
is returned to drug enforcement and its ability to deprive the
trafficker of the Spoils of their illegal enterprise. The idea behind
forfeiture is to economically disable the trafficking organization.
One approach is to seize a_l_l of the organizations assets. While this
strategy would deprive an owner of the use of the asset, the

financial impact of the seizure on the trafficker depends on the

183
value of the asset and the presence of any liens. It is of limited
value to seize assets that have substantial liens, that is, the
trafficker has little or no equity in the asset. It may have little or
no financial impact on the trafficker and provides no financial
benefit to law enforcement. The asset or the proceeds of its sale
will be returned to the lienholder. Traffickers, realizing this, now
frequently use rented or low-value vehicles to transport drugs, and
conduct business in motels and hotels to avoid the loss of valuable
cars and homes. As a result, the effectiveness of the forfeiture
program depends on seizing assets that are necessary for the
operation of the business and if forfeited, will have a significant
financial impact.

This section will address this issue by first examining the
value of the different assets in each of the district. Three dollar
values have been identified and will be used in this analysis. These
are the initial appraisal or estimated value of an asset (estvalue),
the more precise appraised value (appvalue) made by the USMS after
custody, and the dollar amount deposited to the Asset Forfeiture
Fund (amtdep). For the highest dollar return and the most impact on
the trafficker, the less disparity between the appraised value and

the amount deposited, the better.

184

This is followed by an analysis of the value of forfeited and
non-forfeited assets and the difference between the estimated and
appraised values of an asset. These differences between forfeited
and non-forfeited values and the estimated and appraised value
serve as a measure of efficiency of the government in judging the
value of property. It can also be considered a measure of the misuse
of the program. Estimated values that are considerably higher than
the more accurate appraised values may indicate that law
enforcement is mistakenly targeting what it considers valuable
assets only to find that they are of much less value.

This analysis is followed by a more in-depth examination of
the relationship between property values and judicial district by
controlling for the specific characteristics of the forfeiture case,
that is, asset type, legal proceeding and disposition. This is
accomplished with a KruskaI-Wallis one-way analysis of variance of
the subpopulations to test for differences between the four

differences.

185

Table 15: Estimated, Appraised, and AFF Deposit Mean Values by
Asset (1991)

 

District Estimated Value Appraised Value* AFF

 

Deposns
FL $76,963 $73,977 $43,015
IL $27,656 $26,332 $14,222
MI $35,767 $34,518 $12,156
SC $18,136 $18,396 $ 2,781

 

* 6 missing cases

Table 16: Estimated and Appraised Mean Asset Values (1992)

 

 

District Estimated Value Appraised Value AFF
Deposits
FL $79,597 $76,269 $44,305
I L $42,033 $42,239 $24,383
MI $31,848 $31,082 $13,212
SC $16,742 $15,676 $ 7,762

 

186

Table 17: Kruskal-Wallis One Way Anova: District by Estimated,
Appraised and AFF Deposits (1991 - 1992)

 

 

 

1991 1992
Chi-sqgare E Chi-sguare p_<
Estvalue 252.706 .0000 278.1 34 .0000
Appvalue 226.1 97 .0000 260.272 .0000
Amtdep 968.566 .0000 70.228 .0000

 

The data in Tables 15 and 16 indicate the disparity of property
values between two border districts considered to be high drug
trafficking areas. One finds a high mean value of seized property in
the Southern District of Florida and a surprisingly low value in
California. There is even a $8,000 and $10,000 dollar difference
between the two central districts of Illinois and Michigan for 1991
and 1992. While the data in the previous section showed that the
types of assets in each district are relatively similar, their values
differ considerably. A more precise comparison of the four districts
is accomplished by the Kruskal-Wallis one-way analysis of variance.
The results of the Kruskal-Wallis Anova in Table 17 confirm the
earlier observation that the four districts are different from one

another on all three asset values.

187

 

 

 

 

 

 

 

Table 18: Percentage Difference between Estimated and Appraised
Values (1991 - 1992)

District Percent Difference 1991 Percent Difference 1992

FL 96.1% 95.8

IL 95.2 +0.004

MI 96.5 97.5

SC +0.01 93.6

Table 19: Percent Difference between Appraised and AFF Deposit
Values (1991 - 1992)

District Percent Difference 1991 Percent Difference 1992

FL 58.1% 58.0

IL 54.0 57.7

MI 35.2 42.5

SC 15.1 49.5

 

Of note is the minimal disparity between the estimated and

appraised value of the assets showing the accuracy of these early

estimates of the value of an asset. There is little variation between

the four districts in this respect. Finally, while these approximated

values are considerable, the mean amount deposited to the AFF is

substantially lower. However, when comparing the two years, the

188
mean amount deposited to the Asset Forfeiture Fund increased for
every district.

Table 18 shows the percentage difference between these
values never exceeds 93.6% for California in 1992. The appraised
values are actually higher than the estimated values in California in
1991 and Illinois in 1992. Table 19 reveals distinct differences
between the four district in terms of the difference between the
appraised values and the AFF deposits. The Southern District of
Florida deposited the highest amount - 58.1% and 58.0% of the
appraised value of a seized asset. They were followed closely by the
Northern District of Illinos at 54.0% and 57.7%. This may suggest
better pre-planning of asset seizures in these two districts to
minimize liens and innocent owner claims. Michigan and California
in 1991 showed the greatest disparity in these values. This
indicates that they received considerably less for their efforts than
the other two districts in 1991. This pattern changed in 1992 with a
large percentage increase in both districts.

Another approach to the issue of asset values is to compare
the values of assets that are forfeited to those that are returned to
the owners, that is, not forfeited. The data in Table 20 on the

following page provides some interesting findings.

189

Table 20: Mean Estimated Dollar Values Comparing Forfeited and

 

 

 

 

Not Forfeited Assets by District (1991 - 1992)
DISTRICT

ASSET Florida Illinois Michigan California

Monetapy

1991 Forfeited $ 77,757 34,720 30,355 18,349
Not Forfeited $ 60,892 13,219 26,951 16,597

1992 Forfeited $ 99,089 55,413 29,180 12,399
Not Forfeited $ 82,607 15,745 48,323 9,210

ml Prgem

1991 Forfeited $230,097 122,466 92,907 198,900
Not Forfeited $175,055 72,500 109,085 269,281

1992 Forfeited $168,923 120,294 83,973 159,700
Not Forfeited $170,770 134,934 104,362 222,566

Conveyances

1991 Forfeited $ 22,966 10,319 14,617 8,724
Not Forfeited $ 38.015 9.196 16,355 11,794

1992 Forfeited $ 33,623 8,103 12,004 8,550
Not Forfeited $ 35,836 12,319 14,016 15,629

Lab Eguipment

1991 Forfeited $N/A N/A N/A 14,686
Not Forfeited 1N_/_A MA l_\l_/A 8,000

1992 Forfeited $N/A 15,000 36,675 1,000
Not Forfeited $N/A 15,000 N/A N/A

9m

1991 Forfeited $ 8,031 3,048 20,200 5,338
Not Forfeited L_ZJ .553 13,117 6,446 13,122

1992 Forfeited $ 33,623 7,823 7,988 3,065
Not Forfeited $ 14,810 5,525 12,812 5,626

 

 

 

 

190

These data suggest that for currency seizures in all the
districts the estimated value appears related to disposition with
the higher value monetary assets being forfeited. This may be an
indication of their focus on forfeiting an asset considered to have a
higher deterrent value. However, this pattern changes as one
examines the four other types of assets. In 1991 Florida and Illinois
are more successful with higher value real property. However, by
1992, all districts have forfeited the lower value real property
assets. Even more surprising, for both years, only Illinois in 1991
has forfeited the more valuable vehicles. The pattern is less distinct
with the low numbers of lab equipment seizures and other types of
property fluxuating from 1991 to 1992. Regardless, with the
exception of real property and monetary assets, these other types of
assets are considered to have less of an impact on the trafficking
organization if forfeited.

For a more detailed analysis of any differences between the
districts, the KruskaI-Wallis one-way analysis of variance was
calculated on the property values for each district while controlling
for asset, proceedings and disposition. These results are surprising.
They show that for a majority of cases resulting in a forfeiture, the

districts are significantly different at a minimum of the .05

191
probability level. The values of the the seized assets are distinct
from one another when comparing districts. However, there are only
limited differences in terms of non-forfeitures. The financial values
of assets that are returned to their owners are less distinct from
one another between districts. That is, the districts are more
similar in terms of the financial values of seized assets in cases

that are lost or those the government dismisses.

192

 

 

Table 21: Kruskal-Wallis One-way Anova Results: District by
Estimated and Appraised Values and Amount Deposited.
(Controlling for Asset, Forfeiture Proceeding and
Disposition) - 1991 and 1992

NOT FORFEITED FORFEITED
K—W Chi-sqr/p < K-W Chi-sqr/p <

Admin/ Estvalue: 1 .569/ .6663 106.251 /.0000

Monetary Appvalue: 1 .576/ .6648 1 06.463/ .0000

(1991 ) Amtdep: 0.098/ .9920 881 .749/ .0000

Admin/ Estvalue: 7.543/.0565 72.885/.0000

Monetary Appvalue: 7.542/.0565 70.664/.0000

(1992) Amtdep: 0.235/.9717 69.51 1/ .0000

Admin/ Estvalue 1 .429/ .6987 004.675/.1972

Conveyance Appvalue 5.666/ .1 290 000.51 4/ .0000

(1 991 ) Amtdep 0.000/1 .0000 240.676/ .0000

Admin/ Estvalue 1 6.651/.0008 12.010/.0073

Conveyance Appvalue 1 5.587/.001 4 06.098/.1069

(1992) Amtdep 02.745/ .4325 58.864/ .0000

Admin/ Estvalue 8.483/.0370 2.474/.4799

Other Appvalue 8.487/.0369 2.562/.4642

(1991) Amtdep 1 .689/ .6372 21 326/0001

Admin/ Estvalue 00.1 60/ .9837 31 009/0000

Other Appvalue 1 6.535/ .0009 34.441 / .0000

(1 992) Amtdep 1 6.459/ .0009 28.1 66/ .0000

Civil/ Estvalue 9.201 /.0267 5.555/.1354

Monetary Appvalue 9.201 / .0267 5.569/.1 346

(1 991 ) Amtdep 0.294/ .961 1 89.742/ .0000

193

Table 21 (cont’d)

 

NOT FORFEITED
K-W Chi-sqr/p <

FORFEITED
K-W Chi-sqr/ p <

 

Civil/ Estvalue 31 .259/ .0000 34.253/.0000
Monetary Appvalue 31 .51 1 / .0000 34.282/ .0000
(1992) Amtdep 00.024/ .9990 30.1 02/ .0000
Civi l / Estvalue 20.1 35/ .0002 26.700/ .0000
Conveyance Appvalue 20.549/ .0001 29.529/ .0000
(1991) Amtdep 1.583/.6631 53.955/.0000
Civil/ Estvalue 08.1 12/.0438 10.759/.0131
Conveyance Appvalue 07.904/ .0480 1 1 .481 / .0094
(1992) Amtdept 03.294/ .3485 19.529/.0002
Civil/ Estvalue 28.343/ .0000 35.222/ .0000
Real Prop. Appvalue 30.296/ .0000 35.656/ .0000
(1991) Amtdep 3.426/.3304 13.122/.0044
Civil/ Estvalue 9.261 /.0260 20.844/.0001
Real Prop. Appvalue 1 1 .658/ .0087 1 7.226/ .0006
(1992) Amtdep 1 3.620/ .0035 1 9.694/ .0002
Civil/ Estvalue 3.354/.3401 1 1.957/.0075
Other Appvalue 3.637/ .3034 22.252/ .0001
(1991) Amtdep 0.1 70/ .9822 1 4.408/ .0024
Civil/ Estvalue 07.123/0681 10.013/.0185
Other Appvalue 07.1 23/ .0681 1 1 .403/ .0097
(1992) Amtdep 01.1 18/.7725 03.037/.3859

Note: The Kruskal-Wallis statistic was not calculated for criminal
forfeitures due to the small samples sizes of less than 10 for each
combination.

r"

 

194
Time Reguirementa for Prosecuting Forfeitdre Cases

One unique aspect of the forfeiture program relevant to its
effectiveness is the amount of time necessary to prosecute a
property seizure. This is an issue of concern to the government, but
primarily for management reasons. Once an asset is seized, property
management costs accrue. These can be considerable with real
property and businesses. The longer a forfeiture case takes to
prosecute, the greater these costs. These are partly offset if the
asset is forfeited, but if the case is lost, the government may not
recoup any of its management expenses. Asset seizures cases that
have little chance of resulting in a forfeiture should be disposed of
as quickly as possible to minimize costs to the government and
inconvenience to innocent owners.

Time is also a critical element for a second reason. The faster
an asset can be forfeited, the sooner the asset or the proceeds of its
sale can be used to fund additional drug enforcement with minimal
depreciation. Finally, timely forfeitures serve the interests of
justice. Assets belonging to innocent owners should be returned
promptly and the guilty assets should be forfeited swiftly for
maximum effect. This will also help allay some criticism of the

program. This brings us to the question of of how long does it take to

195
prosecute a forfeiture case. This section addresses this issue by
comparing the four districts overall, then by asset type and by legal
proceeding.

The data in Table 22 reveal that with the exception of the
Southern District of Florida, its takes approximately one year to
prosecute a forfeiture case. A surprising finding is that the mean
amount of time increased for every district except the Southern
District of California. Time requirements in the Southern District of
Florida showed the greatest increase -just over 100 days from 1991
to 1992. The problem with these findings is that prosecution time
increases are contrary to the goals of efficiency and impact.
Included with these results is an analysis of variance results and
the Levene Test. This post-hoc test tests the hypothesis that the
groups come from populations with the same variances in the One-
Way Anova. The observed significance levels are small for both
years, thereby allowing for a rejection of the null that all the

variances are equal.

196

Table 22 Mean Prosecution Time by Federal District (1991 - 1992)
with Analysis of Variance Results

 

 

 

Year District Mean Days S.D. Case
1991 Florida 427.66 392.89 825
Illinois 332.02 328.43 478
Michigan 318.67 265.50 456
California 383.72 348.45 1666
1992 Florida 528.55 438.16 837
Illinois 356.15 391.06 539
Michigan 397.66 388.75 346
California 328.62 363.70 1138
1991 F Ratio = 12.994 p < .0000 Levene Stat = 23.013
p < .001
1992 F Ratio = 44.180 p < .0000 Levene Stat = 16.487
p < .000

 

Table 23 Prostime by District with Modified LSD Bonferroni at the

 

 

.05 level
1991 1992
District District
District Ml IL CA FL District CA IL Ml FL
Michigan California
Illinois Illinois
California * * Michigan *

Florida * * * Florida * * *

 

197

While the results of the analysis of variance in Table 22
support a rejection of the null hypothesis, a Bonferroni multiple
comparison test is used to indicate which specific pairs of groups
have means significantly different from one another. The results in
Table 23 allow for a more precise analysis offering protection from
calling too may pairs of means as significantly different.

An asterisk marks the pairs of means that are different at the
.05 level. The differences are only marked once in the lower diagonal
of the table. The 1991 Bonferroni results show that Illinois and
Michigan differ from California and Florida. The 1992 Bonferroni
test results indicate that the mean prosecution times in California
are significantly different from Michigan and Illinois. Additionally,
Illinois and Michigan differ from Florida, but not from one another.
Overall, the central districts are not significantly different from
one another but are distinct from the border districts. However, the
Southern Districts of California and Florida are significantly
different from one another in terms of prosecution times.

The prosecution time analysis is taken further by controlling
for asset and legal proceeding. These data in Table 24 suggest that
the prosecution times vary by asset type and legal proceeding.

Before considering the legal proceeding for all districts, monetary

198
asset forfeiture cases require on average about 10 months to
prosecute at 302.93 days in 1991 and 309.61 in 1992. For the four
districts, conveyances average 373.26 days and 408.99 days in 1991
and 1992. The longer time-frame for real property at 568.73 days in
1991 and 667.75 days in 1992 is not surprising. These are high-
value assets and commonly involve third-party Iein holders. They are
also all judicial forfeitures. One does find a considerable amount of
variation between the four districts for real property times with a
low of 395.93 days in Michigan to a high of 748.56 days in Florida in
1991.

When examining legal proceeding, the criminal forfeitures
require a considerable amount of time to prosecute. Florida real
property criminal forfeitures averaged 1205.50 in 1991 and 1552.50
days in 1992. Averaging all the prosecution times for the 1991
criminal cases provides a mean time of 746.21 days. The efficiency
in terms of time of administrative proceedings becomes more

apparent.

199

 

 

Table 24 Prosecutions Times by District, Asset and Legal

Proceeding

1991 1992

DISTRICT Mean Days Std. Dev. N Mean Days Std. Dev. N
FLORIDA 427.66 392.89 825 528.55 438.16 837
Monetary 353.41 387.59 391 375.35 316.74 335
Admin 330.14 409.01 268 277.55 283.28 213
Civil 407.30 331.62 122 547.51 301.01 121
Criminal N/A N/A 001 375.00 001
Real Promrty 748.56 413.69 124 861.30 557.54 136
Civil 726.35 403.74 120 853.14 554.71 133
Criminal 1205.50 307.12 004 1552.50 542.35 002
_C9n__vey;nge; 396.12 299.87 249 556.40 418.51 305
Admin 344.90 289.82 170 444.19 392.14 205
Civil 506.32 293.10 071 789.63 374.03 098
Criminal 620.00 625.08 002
Other 380.09 407.06 061 488.77 377.04 061
Admin 430.20 270.60 025 372.06 266.06 043
Civil 345.30 480.42 036 828.62 447.63 016
Criminal 279.00 171.11 002
ILLINOIS 332.02 328.43 478 356.15 391.06 539
Monetary 269.89 273.79 169 255.32 380.85 186
Admin 235.60 237.39 126 188.33 342.56 136
Civil 355.75 333.46 041 484.88 418.58 045
Criminal 670.50 574.87 002 N/A N/A 005
Real Promrty 558.77 398.30 054 651.40 429.87 083
Civil 556.22 401.66 053 660.62 430.64 081
Criminal 694.00 N/A 001 278.00 176.77 002
M 295.60 300.56 230 356.39 320.55 231
Admin 313.86 259.63 109 235.28 253.98 125
Civil 241.31 297.30 112 499.21 332.94 106
Criminal 750.11 413.93 009
Lab Eguimnt 253.00 N/A 001 148.00 001
Civil 253.00 N/A 001 148.00 001

 

Table 24 (cont’d)

200

 

 

 

1991 1992

DISTRICT Mean Days Std. Dev. N Mean Days Std. Dev. N

Other 611.54 424.63 024 208.86 424.30 038
Admin 303.00 196.60 007 96.32 98.41 028
Civil 732.85 478.12 014 380.12 520.68 008
Criminal 765.33 8.14 003 1099.50 1525.22 002
MICHIGAN 318.67 265.50 456 397.66 388.75 346
Monetary 260.45 234.21 222 383.10 460.44 148
Admin 220.37 198.07 156 346.00 431.74 107
Civil 365.04 285.37 062 491.95 522.27 040
Criminal 202.25 209.87 004 N/A N/A 001
Real Propgm 395.93 230.21 075 536.59 292.73 056
Civil 394.57 224.41 071 520.76 280.84 055
Criminal 420.00 362.42 004 701.00 001
Conveyance 360.68 309.53 112 280.12 281.35 085
Admin 291.51 237.89 072 206.30 193.08 052
Civil 422.21 320.37 037 417.87 355.13 031
Criminal 1262.00 15.58 003 64.50 3.53 002
Other 370.23 290.04 047 456.85 350.29 054
Admin 333.38 269.01 031 306.66 370.21 018
Civil 441.62 324.06 016 531.94 319.12 036
CALIFORNIA 383.72 348.45 1666 328.62 363.70 1138
Monetary 327.97 343.42 979 224.68 298.67 592
Admin 299.90 347.19 838 158.37 257.43 469
Civil 494.80 265.44 141 477.51 310.73 123
Real Property 571.69 440.44 026 621.73 378.58 038
Civil 571.69 440.44 026 621.73 378.58 038
Conveyance 440.64 326.18 447 443.06 400.49 366
Admin 407.20 313.12 355 379.30 359.91 266
Civil 569.68 344.73 092 612.66 452.35 100
Lab Equijment 915.80 575.77 005 232.00 N/A 001
Admin 915.80 575.77 005 232.00 N/A 001
Other 486.98 340.63 209 389.63 366.92 141
Admin 483.75 339.37 183 368.24 367.78 116
Civil 509.69 355.33 023 N/A N/A N/A

Mean prosecution time (days)

201
Figures 14 and 15 provide another perspective on time
requirement examining the prosecution times by disposition. The
results are somewhat unexpected. Of the four districts, only Illinois
disposes of non-forfeited assets in less time than forfeited assets.
In 1992, Michigan non-forfeitures required over 150 days more time

than forfeited assets.

 

500

400-

300I

zooI Disposition

Not forfeited

 

 

 

 

 

.Forfeited

Florida Illinois Michigan California

Federal Judicial District

Figure 14 Prosecution Times by District and Asset (1991)

Mean Prosecution Time (days)

202

 

600

    
     

5°°' 391 |

 

. I I
...........

IV I' IV V' I' r I' V' I' 1*
I "I .'l ..l .'I "a "I “I ‘.I "I "I
I I I a I I I I I I I
I ..l .‘I .‘I .‘o .‘I 'I .‘I .‘I '.I 'I
I I I I I. I I I I‘

'- r '- I r I Iv '- Iv If v- v' I' I I
.I. .I. 'I. .l. .0. .0. It. .0. .0. 'I. .0. .0. .l. .l. .l. .-
I I I I I I I I I I I I l I I
I. I. O. I. O. 0' I. l. O. I. ‘- I. I. I. O. I
.I .I . .l . .l .I .I .I .0 .I .I .l .I .I I

400 .

 

300 '

    

    

 

 

 

 

 

 

Florida Illinois Michigan California

Federal Judicial District

 

Type of disposition

.not forfeited
.Forfeited

Figure 15 Prosecution Times by District and Asset (1992)

203
A second analysis of variance tested the same hypothesis with
two additional factors: asset type and legal proceeding. These
results are in Table 25.

Table 25: Analysis of Variance: Prosecution Time by District,
Assets, Forfeiture Proceeding and Outcomes

 

 

1991 1992

Source of F. F.

Variation Ratio DF p< Ratio DF p<
Main Effects: 38.81 .000 82.84 .000
District: 27.90 3 .00 32.84 3 .00
Asset: 35.94 4 .00 37.1 1 4 .00
Forftype: 51 .23 2 .00 1 60.29 2 .00
Disposition: 27.26 1 .000 39.63 1 .000
Explained 38.81 .000 82.84 .000

 

This analysis of variance test results includes the additional
factor of case disposition, that is, forfeited or not forfeited. The
results of the multiple factor analysis of variance confirm the
previous results that the four districts are significantly different
from one another on all factors for prosecution time.

Examining Forfeiture Case Characteristics in the Districts
The distribution of property types in the four district provides
an initial, but limited view of the federal forfeiture program. A

more in-depth look at two important characteristics of individual

204
cases will provide more insight into the operation of this program.
These characteristics include the type of legal proceeding -
administrative, civil or criminal - and the disposition of the case.
Each method has benefits and liabilities influencing the
government’s ability to meet the program’s formal goals. Of the
three, criminal forfeiture, though time consuming and costly, best
meets the deterrence goal with its ability to both incapacitate the
trafficker and his organization. Administrative forfeitures, and to a
lesser extent, civil actions have a significant economic advantage
for the government. The data revealed that civil and administrative
cases can be prosecuted faster and allowing the forfeited assets to
be disposed of in a timely manner. They allow law enforcement to
proceed directly against the assets without the necessity of the
criminal trial.

The disposition of the case also has obvious implications for
the government. For the program to be a success, assets must be
forfeited. To provide the greatest detail in this analysis, disposition
values include not forfeited, forfeited with the asset sold, forfeited
with the asset retained by the government for its own use, and
forfeited with the owner forfeiting substitute assets for the

original seized property.

205

The data in Tables 26 and 27 on the following page confirm the
earlier finding that criminal forfeiture is seldom used by any of the
four districts. The emphasis is on the more economically efficient
administrative and civil proceedings. While Florida, Illinois and
Michigan are quite similar, the Southern District of California again
is very distinct with its high percentage (82.9%) of administrative
forfeitures. It also shows minimal use of civil proceedings.
Additionally, the four districts are remarkably similar to one
another on this variable for both years. The results of the chi-square

test further indicate that the results are statistically significant.

206

Table 26 Legal Proceeding by Federal Judicial District (1991)

 

 

DISTRICT
PROCEEDING Florida Illinois Michigan California
Administrative 56.2% 50.6 56.8 82.9

(463) (242) (260) (1381)

Civil 43.2 46.2 40.8 17.1
(357) (221) (187) (285)

Criminal 0.5 3.1 2.4 0.0
(005) (015) (011) (000)

 

Cramer’s V = .225 Chi-square = 350.00 df = 6 p < .0000

 

207

 

 

 

Table 27 Legal Proceeding by Federal Judicial District (1992)
DISTRICT
PROCEEDING Florida Illinois Michigan California
Administrative 55.2% 53.8 51.4 74.9
(461) (290) (177) (852)
Civil 44.0 44.5 47.4 25.1
(369) (240) (165) (286)
Criminal 00.8 01.7 01.2 00.0
(007) (009) (004) (000)
Cramer’s V = .219 Chi-square = 137.569 df = 6 p < .0000

 

While type of asset and legal proceeding provide information
about the nature of forfeiture cases, of even more concern is the
relationship between district and disposition. Based on the data in
Tables 29 and 30, the four districts are similar in the sense that
they all have more forfeitures than non-forfeitures. They are also
similar in terms of the low percentages of retained assets and the
forfeiture of substitute assets. Retained assets accounted for less
than 8% for both years for all districts. However, the Southern
District of California is again distinct. California forfeited at least
75% of all seized assets for both years. This district also has the

lowest percentage of non-forfeitures for each year.

208

Table 28 Disposition Types by Federal Judicial District (1991)

 

 

DISTRICT
DISPOSITION Florida Illinois Michigan Calif
Not Forfeited 29.2% 34.3 21.4 17.0

(241) (164) (098) (283)

Forfeited/ Sold 69.8 59.4 65.3 71.4
(576) (284) (299) (1 189)

Forfeited/ Retained 00.8 03.8 07.4 1 1.6
(007) (01 8) (034) (194)

Forfeited-Substitute
Assets 00.1 02.5 05.9 00.0
(001 ) (01 2) (027) (000)

 

Cramer’s V = .169 Chi-square = 295.429 df = 9 p < = .001

 

209

Table 29 Disposition Types by Federal Judicial District (1992)

 

 

DISTRICT
DISPOSITION Florida Illinois Michigan Calif
Not Forfeited 26.3% 28.6 29.5 23.9

(220) (1 54) (102) (272)

Forfeited/ Sold 71.1 61.0 57.5 69.4
(595) (329) (199) (790)

Forfeited/ Retained 02.4 07.6 07.8 06.7
(020) (041 ) (027) (076)

Forfeited-Substitute

Assets 00.2 02.8 05.2 00.0
(002) (01 5) (018) (000)

 

Cramer’s V = .116 Chi-square = 115.477 df = 9 p< .0000

 

The above-tables allow for a comparison of the four districts
in terms forfeiture proceeding and disposition, however, the use of
elaboration analysis will provide a more precise picture of this
program by controlling for individual judicial district. This will
allow for an identification of the use of legal proceedings and
individual property dispositions by district. Of note is that even
given the large sample size, the results of this analysis left several

tables with expected frequencies too low to produce a valid Chi-

210
square statistic. When this is the case, it is not reported with the
table. Additionally, due to the very low number of criminal
forfeitures, the analysis also resulted in tables with fewer than 5
cases. Therefore, they have not been presented with the following
results.

The final part of this analysis controls for judicial district
with partial tables. While the insufficient expected frequencies
prevented the calculation of Chi-square tests on all but one table,
the results suggest a relationship between asset and proceeding in
the individual districts. Tables 30 through 37 describe the
relationship between asset type and legal proceeding for each

district for each year.

211

Table 30 Florida Asset Seizures by Proceeding (1991)

 

 

ASSET
PROCEEDING Monetary Real Prop. Conveyance Other
Administrative 68.5% 00.0 68.3 41.0
Civil 31.2 96.8 31.7 59.0
Criminal 00.3 03.2 00.0 00.0

 

Cramer’s V = .35

Table 31 Florida Asset Seizures by Proceeding (1992)

 

 

ASSET
PROCEEDING Monetary Real Prop. Conveyance Other
Administrative 63.6% 00.0 67.2 70.5
Civil 36.1 98.5 32.1 26.2
Criminal 00.3 01.5 00.7 03.3

 

Cramer’s V = .35

The Florida data show the extensive use of administrative
proceedings for most categories of assets. Again, one finds a very

limited use of criminal forfeiture in this border district.

212

Table 32 Illinois Asset Seizures by Proceeding (1991)

 

 

 

 

 

 

ASSET
PROCEEDING Monetary Real Prop. Conveyance Lab Other
Administrative 74.6% 00.0 47.4 00.0 29.2
Civil 24.3 98.1 48.7 100 58.3
Criminal 01.2 01.9 03.9 00.0 12.5
Cramer’s V = .33
Table 33 Illinois Asset Seizures by Proceeding (1992)

ASSET
PROCEEDING Monetary Real Prop. Conveyance Lab Other
Administrative 73.1% 00.0 54.1 100 73.7
Civil 24.2 97.6 45.9 00.0 21.1
Criminal 02.7 02.4 00.0 00.0 05.3

 

Cramer’s V = .36

 

213

Table 34 Michigan Asset Seizures by Proceeding (1991)

 

 

ASSET
PROCEEDING Monetary Real Prop. Conveyance Other
Administrative 70.1% 00.0 64.3 66.0
Civil 28.1 94.7 33.0 34.0
Criminal 01.8 05.3 02.7 00.0

 

Cramer’s V = .36

 

Table 35 Michigan Asset Seizures by Proceeding (1992)

 

 

ASSET
PROCEEDING Monetary Real Prop. Convync. Lab Other
Administrative 72.3% 00.0 61.2 00.0 33.3
Civil 27.0 98.2 36.5 100 66.7
Criminal 00.7 01.8 02.4 00.0 00.0

 

Cramer’s V = .38

 

The results from the Illinois and Michigan data analysis are
quite similar to one another and to Florida. Administrative
forfeiture is the perfered method followed by civil then criminal.
The measure of association indicate a moderate relationship

between asset type and legal proceeding.

214

Table 36 California Asset Seizures by Proceeding (1991)

 

 

ASSET
PROCEEDING Monetary Real Prop. Convync. Lab Other
Administrative 85.6% 00.0 79.4 100 87.6
Civil 14.4 100 20.0 00.0 12.4

 

Cramer’s V = .28

 

Table 37 California Asset Seizures by Proceeding (1992)

 

 

ASSET
PROCEEDING Monetary Real Prop. Convync. Lab Other
Administrative 79.2% 00.0 72.7 100 82.3
Civil 20.8 100 27.3 00.0 17.7

 

Cramer’s V = .33 Chi-square = 124.54 df = 4 p < .0000

 

215

One sees the preference for administrative forfeiture
especially in the Southern District of California with 82.9% in 1991
and 74.9% in 1992 of all assets following the administrative route.
Criminal proceedings accounted for the lowest percentage of all
types in all districts with California having no criminal forfeitures
for either year. A surprising finding is high percentage of civil
forfeitures of personal property (other) in Florida and Illinois in
1991 and Michigan in 1992. While not considered a high-impact
asset, nor of great value, more than 50% of these seizures were
contested resulted in a more time consuming judicial proceeding in
these districts. This may support the argument to avoid seizing this
type of assets.

In addition to examining legal proceeding, disposition was
analyzed by asset and district. These results reported in Tables 38
through 45 show a weak to moderate association between asset and
disposition for both years. However, with the exception of the 1991

California table, all the results are significant at the .0000 level.

216

Table 38 Florida Asset Seizures by Disposition (1991)

 

 

 

ASSET
DISPOSITION Monetary Real Prop. Conveyance Other
Not Forfeited 15.6% 37.9 44.2 37.7
Forfeited 84.4 62.1 55.8 62.3
Cramer’s V = .28 Chi-square = 68.65 df = 3 p < .0000

 

Table 39 Florida Asset Seizure by Disposition (1992)

 

 

 

ASSET
DISPOSITION Monetary Real Prop. Conveyance Other
Not Forfeited 17.6% 49.3 25.2 27.9
Forfeited 82.4 50.7 74.8 72.1
Cramer’s V = .24 Chi-square = 50.32 df = 3 p < .0000

 

The Florida data in Tables 38 and 39 for both years reveal that
this district is very successful with monetary assets. However, real
property had about a forfeiture rate of approximately only 50% in
1992. Conveyance seizures, a low-impact asset also had a rather
low forfeiture rate in 1991. It is similar to the Illinois data in 1991

in Table 40.

217

Table 40 Illinois Asset Seizures by Disposition (1991)

 

 

 

ASSET
DISPOSITION Monetary Real Prop. Conveyance Lab Other
Not Forfeited 11.8% 44.4 50.0 00.0 20.8
Forfeited 88.2 55.6 50.0 100 79.2
Cramer’s V = .37 Chi-square = 67.91 df = 4 p < .0000

 

Table 41 Illinois Asset Seizures by Disposition (1992)

 

 

ASSET
DISPOSITION Monetary Real Prop. Conveyance Lab Eqpmt Other
Not Forfeited 10.8% 27.7 39.0 00.0 55.3
Forfeited 89.2 72.3 61.0 100 44.7

 

Cramer’s V = .31 Chi-square = 54.85 df = 4 p < .0000

 

218

Table 42 Michigan Asset Seizures by Disposition (1991)

 

 

 

ASSET
DISPOSITION Monetary Real Prop. Conveyance Other
Not Forfeited 12.5% 18.7 38.4 27.7
Forfeited 87.5 81.3 61.6 72.3
Cramer’s V = .26 Chi-square = 31.20 df = 3 p < .0000

 

Table 43 Michigan Asset Seizures by Disposition (1992)

 

 

 

DISPOSITION Monetary Real PéfrfF-lConveyance Lab Eqpmt Other
Not Forfeited 17.6% 31.6 47.1 00.0 33.3
Forfeited 82.4 68.4 52.9 100 66.7
Cramer’s V = .26 Chi-square = 24.07 df = 4 p < .0000

 

Michigan also shows percent differences from 1991 to 1992 in
its forfeitures of real property and conveyances. The data in Tables
42 and 43 illustrate that during this one year period, it forfeited a

lower percentage of both types of these assets.

219

Table 44 California Asset Seizures by Disposition (1991)

 

 

ASSET
DISPOSITION Monetary Real Prop. Conveyance Lab Eqpmt Other
Not Forfeited 05.8% 61.5 31.1 20.0 33.5
Forfeited 94.2 38.5 68.9 80.0 66.5

 

Cramer’s V = .36

 

Table 45 California Asset Seizures by Disposition (1992)

 

 

 

DISPOSITION Monetary Real Riggs-Conveyance Lab Eqpmt Other
Not Forfeited 10.0% 50.0 35.0 00.0 46.8
Forfeited 90.0 50.0 65.0 100 53.2
Cramer’s V = .35 Chi-square = 143.09 df = 4 p < .0000

 

These partial tables reveal that most types of property seized
results in a forfeiture. The districts are most successful with
monetary assets. The percentage of monetary assets forfeited
ranges from a low of 82.4% in Florida (1992) and Michigan (1992) to
a high of 94.2% in California in 1991. However, when examining
assets in the Southern District of California in more detail, real

estate has the lowest forfeiture percentage - 38.5% in 1991 and

220
50.0% in 1992. Illinois and Florida In 1992 also showed a high
percentage of non-forfeited real property assets at 44.4% and 49.3%.
These findings may explain the low frequency of real property
seizures across the four districts.

The data shows another potential drawback with conveyance
seizures. Illinois forfeited the lowest percentage of all its
conveyance seizures - 50% in 1991 and 61% in 1992. While
conveyances comprise a considerable portion of all asset types, the
percentage of conveyance forfeitures is well under that of monetary
assets for all districts. Finally, most districts are forfeiting the
majority of the personal property seized. While this represents an
economic gain, its impact on the drug trafficker is questionable.

Table 46 on the following pages provides a brief summary of

the main highlights of the findings for each research question.

Table 46: Summary of Findings

221

 

Research Question

Finding

 

What are the historical
origins of federal forfeiture
law?

Patterned after English Common Law,
initially used in the U.S. to enforce
federal custom’s laws during the
American Revolution.

Subsequently used during American
Civil War and Prohibition.

1970 RICO Act first in a series of
recent legislation that tranformed
forfeiture into a modern organized
crime and drug control tool. Now used
to economically disable criminal
enterprises

 

How is the program
structured and how
are cases processed?

Multi-Ievel federal organization
including administrative branch, most
major federal enforcement agencies,
and USMS as property custodian.

Cases can be proceeded against in
one of three manners - administrative,

civil or criminal. Each has its own
benefits and liabilities for both the
government and the property owner.

 

How has the program
performed over time?

Highly successful from a financial
viewpoint generating over $1 billion
in forfeited assets. Many states
developing their own capabilities.

Impact of forfeiture on overall drug
trafficking problem in doubt. Current
government data shows drug prices
stable or declining while drug
production increasing.

 

What types of assets
are most frequently
Seized?

Monetary instruments and conveyances
comprise the majority of all seized
assets across the four districts.

Table 46 (cont’d)

222

 

How valuable are the
seized assets?

The average estimated value of a
seized asset was $35,982 in 1991
and $41,684 in 1992 with the
government depositing about one-
half of that amount into the federal
Asset Forfeiture Fund.

The Southern District of Florida had
the highest value of seized assets while
the Southern District of California
had the lowest value of seized assets.

 

How much time is
required to prosecute a
forfeiture case?

Averaging all four districts, it requires
approximately one year to prosecute
a forfeiture case.

Monetary instruments require the least
time while real property requires the
most.

 

What legal proceeding
and outcome is most
common among the
seizure cases?

Administrative forfeiture is most
frequently used followed by civil.
Criminal forfeiture is seldom
employed in any of the four districts.

Across the four districts, over 70% of
all seized assets are forfeited to the
federal government.

 

Are the border districts
unique from the central
districts?

The four districts are relatively
similar to one another on most
characteristics of the forfeiture cases.
One minor exception is California.

The main source of variation between
districts is in the dollar values of the
seized and forfeited assets.

 

Chapter Five: Summary and Conclusions

This project represents the first major attempt to understand
the use of asset forfeiture by the federal government as a drug
control policy. The review of the literature revealed that forfeiture
is widely used and generates hundreds of millions of dollars in
revenue from the sale of forfeited assets for law enforcement. It
also showed that the program has ardent proponents and critics.
However, to date, there have been no large-scale studies of this
program examining the history of forfeiture and its use as a drug
enforcement technique. Therefore, the objective of this research
was to begin to fill the void in the empirical research. Eight
research questions were specified addressing these two issues. This
project also used a variety of data sources in order to facilitate a
comprehensive analysis of asset forfeiture.

Addressing the first three research questions, the analysis
focused on the history and development of forfeiture law and the
federal forfeiture program. It illustrated how forfeiture law had its
origins in U.S. Custom’s law during the time of the American

Revolution. However, following this time period, forfeiture was used

223

224
as an alternative sanction only sporadically until the passage of the
RICO Act 1970. With RICO, thegovernment, in its fight against
criminal organizations, now began to see the potential ability of
forfeiture to economically disable a criminal enterprise.

This analysis further showed how the early forfeiture laws
were subsequently used for drug enforcement by the mid-1980’s. The
passage of several major legislative acts strengthened and expanded
the use of asset forfeiture to include more types of offenses and
property. The end result was the transformation of an obscure body
of law to a commonly used drug enforcement tool that allowed for
the seizure of property from offenders, in some cases without the
need to prosecute or even arrest the individual.

This section also examined in detail the three different types
of forfeiture proceedings - administrative, civil and criminal - and
their benefits and liabilities for drug enforcement. The analysis
illustrated that while administrative and civil proceedings are more
economically efficient, criminal forfeiture with its ability to
incapacitate both the asset and the offender, is a more complete
sanction. Additionally, during late 1980’s, the U.S. Attorney General
and Congress formally defined the goal of the federal asset

forfeiture program. The goal of the forfeiture program was to

225
disable drug trafficking organizations by targeting their economic
base.

The aggregate data used to supplement this historical analysis
illustrated the rapid economic growth of the program. By 1993, over
a billion dollars in assets had been forfeited to the federal
government. As the federal program expanded, states also began to
pass their own forfeiture legislation to exploit the effectiveness of
this technique.

However, this analysis also showed that while forfeiture was
expanding, the amount of criticism directed at this program was
also increasing. Opponents were frequently questioning the structure
of these laws, their use and their effectiveness. Additional
aggregate data gives merit to the criticism. The data revealed that
drug trafficking has not subsided. While forfeiture should have
raised the cost of doing business, the data show that drug prices
have remained stable or decreased and drug purity has even
increased. The Supreme Court has even begun to pay more attention
to these laws. Five major decisions in 1993 altered some of the
procedural aspects of the forfeiture laws.

These findings served as the foundation for the second part of

the analysis, that is, examining the use and impact of asset

226

forfeiture as a drug control technique. It also raised the important
question of how does one analyze the impact of asset forfeiture. To
date, no one has attempted to answer this question. As a result,
there was no existing research to serve as a guide. An approach to
analyzing the impact of forfeiture had to be developed from zero.

The solution to this problem was found in the literature. A
wide variety of literature was examined covering the nature of drug
trafficking organizations, the drug business, the assets common to
these illegal enterprises, and the essential tenets of the deterrence
philosophy. From this literature, it was determined that assets have
different values for drug enterprises. That is, certain types of
property are critical for the enterprise to function while others are
more expendable. Based on these findings, the five main categories
of assets were identified and rated as to their impact on the drug
enterprise if seized and forfeited. Monetary assets, lab equipment
and real property were rated as “high-impact” while conveyances
and personal property were considered “low-impact”.

The literature further revealed that the value of the assets,
the amount of time used to prosecute a case, the legal proceeding,
and the case disposition also contribute to the effectiveness of the

program. It is of little value to seize asset with no equity.

227
Furthermore, forfeitures should be done in a timely manner to reduce
property management costs to the government, to allow the asset or
the proceeds of its sale to be used to further drug enforcement, and
to return property to those from whom it was wrongly seized.
Additionally, of the three types of legal proceedings, the criminal
cases are considered to have the most impact on the organization,
while civil and administrative, though economically efficient, are of
less value without parallel criminal charges. Finally, for an asset
seizure to have the most impact, the asset must be forfeited.

The objective of this second part of the analysis was to
examine the use and impact of federal asset forfeiture. This part of
the study utilized a large data set consisting of over 6000 property
seizures cases in four federal judicial district. These district differ
both geographically and in terms of the level of drug trafficking. The
Northern District of Illinois and the Eastern District of Michigan are
both central districts. The Southern Districts of Florida and
California are border districts and have been classified as high
intensity drug trafficking areas by the government. It is beyond the
scope of this paper to make specific assumptions about what should
be found in these districts, rather the goal is to explore the

relationship between district and the use of forfeiture.

228

The data selected for this study contained the necessary
information identified in the literature. This included asset type,
monetary values, prosecution time, legal proceeding and disposition.
The analysis used the data to first develop a picture of the types of
forfeiture cases in these different regions of the country, then make
an assessment about the potential impact of the program based on
the types of cases.

The initial findings from the aggregate data revealed several
interesting characteristics relevant to the use and potential impact
of the program. Of note is that the border districts had the largest
number of forfeiture cases for both years. This may be a function of
their location as ports of entry and known higher levels of drug
trafficking. However, even though California had the greatest number
for 1991 and 1992, it had the lowest property values. Florida on the
other hand had the highest value assets. These data also showed that
while there was a decline in the number of seizures from 1991 to
1992, there was an increase in the amount deposited to the federal
Asset Forfeiture Fund. This may suggest more careful case selection
and prosecution.

However, the individual data from each of the four judicial

districts provides a more detailed picture of the use and potential

229
impact of forfeiture. The results of the analysis for research
question four showed that the four districts are quite similar in
terms of the types of assets seized. However, they differ in the
percentages seized of these assets Even given their distinctly
different locations and level of drug trafficking, there was little
variation. The most frequently seized assets were monetary and
conveyances for all four districts. Real property, a high-impact
asset, accounted for a very low number of all seizures for all
districts. Perhaps most striking was that over 70% of all asset
seizures resulted in a forfeited disposition. Additionally,
administrative procedures are the frequently used forfeiture
process by all districts followed by civil. The aggregate data showed
that criminal forfeiture is a seldom used alternative.

Certain policy recommendations can be proposed from these
findings. The high frequency of monetary instrument seizures is in
accordance with the program’s objective. They are high-impact
assets crucial for the operation of the drug business, require little
if any in the way of storage costs and do not have liens. However,
the practice of targeting conveyances causes concern. It indicates
that law enforcement may be concentrating on the transportation

end of the drug trafficking business. However, the value of this

230

strategy as part of the forfeiture program was questioned earlier in
the paper. The literature revealed that conveyances of all types have
become increasingly expendable by drug organizations. As a result,
they have less impact on the mid and upper-level drug trafficking
organizations. However, conveyance seizures may seriously disrupt
the operations of those traffickers who are marginally efficient at
best. Additionally, conveyance seizures have other drawbacks. They
are also costly to store and maintain and they depreciate over time.
Furthermore, they have a lower rate of forfeitures compared to
monetary assets. Finally, conveyances have less financial return for
the government because of these costs. The higher number of
conveyance seizures may offset the value of the monetary asset
seizures. However, the high number of conveyance seizures may
indicate that regional policy focuses on targeting the transportation
end of the drug business. A concentrated emphasis on depriving
traffickers of the means to move their illegal goods may have long-
term benefits not yet apparent in the data on drug control efforts.

The rather low numbers of real property seizures, a high-
impact asset, may also be hindering the performance of the program.
Although a costly asset to seize, one that generates controversy, and

one that requires a judicial forfeiture, the literature reveals that

231
its seizure can seriously disrupt or disable an illegal enterprise.
Real property is commonly used for money laundering operations
(commercial establishments), locations to facilitate business, and
sources of drug production and packaging.

The fifth research question addressed the relationship
between an asset and its values. Three values were identified - the
estimated and appraised values and the amount deposited to the
Asset Forfeiture Fund. One finds that the monetary and real property
assets are most valuable of the five different types. This helps
confirm the original view that their seizure can have a greater
impact on the drug organization than the other three types.
Conveyances also ranked third in value among the five types of
assets, but were the second most frequently seized asset. This adds
support to the argument that they are not high-value and high-
impact assets. The government should consider reviewing the
practice of targeting conveyances in large numbers.

While the earlier findings showed that the districts are
relatively similar in terms of asset types, the statistically
significant results of the analysis showed considerable variation on
the asset values between districts. While California had a high

frequency of monetary asset seizures, they were of the lowest value

232
of the four districts. There are some possible explanations for this.
First, law enforcement in this district may be seizing more assets
than the other three to keep pace in terms of revenue. Second, they
may be targeting lower-level dealers which accounts for the lower
value of the monetary assets. Third, there may be an over-
representation of low or mid-level traffickers in this district.
Finally, these values may be a characteristic of this regions with its
border with Mexico. However, California had high mean value of real
property, but very few seizures of this type. Florida had the most
valuable monetary and real property assets.

One important finding was the difference between appraised
value and the final amount deposited to the Asset Forfeiture Fund.
This represented approximately one-half of the appraised values.
Yet, overall the four districts did manage to deposit to the Asset
Forfeiture Fund $15,316 in 1991 and $22,248 in 1992 per asset
seizure. This difference between values is due in part to the need to
pay the claims of innocent lien holders. A reduction in this amount is
advocated. It would lead to an improvement in economic efficiency
and reduce criticism from innocent lien holders whose asset are
frozen by the government. These dollar results also provides a

measure of the profitability of this program.

233

Two additional dollar value findings contribute to addressing
the question of the program’s impact. First, the mean value of seized
assets increased from 1991 to 1992 as did Asset Forfeiture Fund
deposits. This occurred in light of a decrease in overall seizures.
This may show that the government is more selective and is
targeting higher value assets. Second, there was minimal disparity
between the estimated and appraised value of an asset. This
indicates that the government is very accurate in identifying the
value of assets.

Research question six addressed prosecution times. The
analysis of this issue also suggests certain policy implications. The
impact of the forfeiture program is also partly a function of the
amount of time it takes to prosecute an asset seizure case. Like the
property values, the prosecution times also varied between
districts. The findings revealed that with the exception of the
Southern District of California, prosecution times increased for the
districts from 1991 to 1992. Another striking feature is that with
the exception of Illinois, the districts required more time for non-
forfeitures than forfeitures. Illinois disposed of non-forfeitures in
about one-third of the time required for forfeitures. In this

situation, these districts are holding and maintaining assets for

234
long periods of time that will eventually be returned to their
owners. This is costly for the government in terms of dollars and
increased criticism of the program.

This prosecution time analysis further disclosed that the non-
contested administrative forfeitures generally required the least
time. However, criminal proceedings, though potentially more
effective by prosecuting the person and the asset, are among the
most time consuming for all types of assets. This may explain why
criminal forfeiture has seen limited use in these districts. Finally,
conveyance seizure time for all districts increased from an average
of 372 days in 1991 408 days in 1992. This further supports a
change in policy away from targeting conveyances.

The seventh research question focused on two principle
characteristics of individual forfeiture cases - how the case was
proceeded with and its final outcome. The analysis of the legal
proceeding and dispositions has additional implications about the
use and impact of this program. There is relative parity between
Florida, Illinois and Michigan in terms of their selection of legal
proceedings. The results show an emphasis on the more economically
efficient administrative seizures. Administrative forfeitures

accounted for over one-half of all types of proceedings. Additionally,

235
assets are more likely to be forfeited with this procedure. This also
indicates that a large percentage of asset seizures are not
contested, at least initially. Administrative forfeitures are most
prevalent in the Southern District of California. Their high loss
percentages with civil forfeitures may account for this finding. One
may conclude that this district has focused on high volume, lower
value, administrative cases while disregarding criminal proceedings.

The Southern District of California is again distinct from the
other three when examining dispositions. It had the least non-
forfeitures for both years. An indication that the extensive use of
administrative seizures on lower value assets leads to more
favorable outcomes. However, this is not necessarily evidence of
success based on the measures derived from the literature. It may
just indicate that this district is focusing on low-value,
uncontested seizures.

The almost negligible use of criminal forfeiture also is a
cause for concern. 0f the three types of proceedings, only criminal
can effectively incapacitate both the asset and the offender. Given
that it provides the full range of constitutional protections inherent
in a criminal trial to the defendant, critics are less likely to

question a forfeiture when it follows a conviction of the defendant.

236

While administrative and civil proceedings are more economically
efficient, a greatly increased use of criminal forfeiture may allow
DOJ to attain the primary goal its has set for its forfeiture program.

Table 47 utilizes specific aspects of the earlier analysis to
develop a profile of how forfeiture is used the individual districts.
The data reveal that the main sources of variation between districts
lie within the asset values and prosecution times. As stated earlier,
the four districts are quite similar in terms of asset types, legal

prbbeedings and dispositions.

237

Table 47 A Profile of the Districts (Averaging 1991 and 1992)

 

SDFL

NDIL

EDMI

SDCA

 

Top Two Most

Commonly

Seized

Assets Monetary
Conveyance

Conveyance
Monetary

Monetary
Conveyance

Monetary
Conveyance

 

Most

Frequently

Forfeited

Asset Monetary

Monetary

Monetary

Monetary

 

Mean Appraised

Values for

all

Assets $7 5,1 2 3

$34,123

$32,800

$17,036

 

Mean
Prosecution
Time 477 days

344 days

357 days

355 days

 

Most Frequently
used Legal

Proceeding Admin. Forf.

Admin. Forf.

Admin Forf.

Admin. Forf.

 

Most Frequent
Disposition
Type Forfeited

Forfeited

Forfeited

Forfeited

 

Most

Frequently

Retained

Asset Conveyance

Conveyance

Conveyance

Conveyance

 

Most Frequently
Non-Forfeited
Asset Real Prop.

Conveyance

Conveyance

Real Prop.

 

Mean AFF

Deposits $43,660

$19,302

$12,684

$5,271

 

LIST OF REFERENCES

LIST OF REFERENCES

Abadinsky, H. (1991). Drug Abuse: An Introduction. Chicago: Nelson
Hall.

Abadinsky, H. and Winfree, S. (1992). Crime & Justice: An
Introduction (2nd Ed.). Chicago: Nelson-Hall.

Albini, J.L. (1971). The American Mafia: Genesis of a Legend. New
York: Doubleday & Co.

Asset Forfeiture Office. (1991). Compilation of Selected Federal
Forfeited Statutes. Washington, D.C: United States Department of
Justice.

Asset Forfeiture Office. (1991, March). Quick Reference to Federal
Forfeiture Procedures. Washington, D.C: United States Department of
Justice.

Asset Forfeiture Office. (1991, April). Compilation of Selected
Federal Asset Forfeiture Statutes. Washington, D.C: United States
Department of Justice.

Asset Forfeiture Office. (1991, May-June). Asset Forfeiture News.
Washington, D.C: United States Department of Justice.

Asset Forfeiture Office. (1991, September-October). Asset
Forfeiture News, Washington, D.C: United States Department of
Justice.

Asset Forfeiture Office. (1992, May-June). Asset Forfeiture News.
Washington, D.C: United States Department of Justice.

239

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U.S. v. McKeithen, 822 F.2d 310 (2nd Circuit, 1987).

251

252
U.S. v. One I 941 Pontiac Sedan, 83 F. Supp. 999 (SD NY, 1948).
U.S. v. Oregon, 644 F.2d 500 (5th Circuit, 1981).
U.S. v. Sandini, 816 F.2d 869 (3rd Circuit. 1987).

U.S. v. $250,000 USC, 808 F.2d. 895, (1987).

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