United States. Congress. House. Committee on the J.

Civil Asset Forfeiture Reform Act : hearing before the Committee on the Judiciary, House of Representatives, One Hundred Fourth Congress, second session, on H.R. 1916 ... July 22, 1996 online

. (page 13 of 37)
Online LibraryUnited States. Congress. House. Committee on the JCivil Asset Forfeiture Reform Act : hearing before the Committee on the Judiciary, House of Representatives, One Hundred Fourth Congress, second session, on H.R. 1916 ... July 22, 1996 → online text (page 13 of 37)
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subchapter" that is punishable by imprisonment for more than one
year. Section 863 is such a violation. Deletion of section
863(c) also removes section 863(c) 's contradiction of section
853(h) 's provision for disposition of criminally forfeited drug
paraphernalia by the Attorney General. Disposition of drug
paraphernalia forfeited civilly under section 881 is also by the
Attorney General pursuant to 21 U.S.C. 881(e).

Section 406 Authorization to Share Forfeited Property with
Cooperating Foreign Governments.

Section 981 (i) authorizes the sharing of forfeited property
with foreign governments in certain circumstances. It currently
applies to all civil and criminal forfeitures under 18 U.S.C.
§§ 981-82, which are the forfeiture statutes for most federal
offenses in Title 18. Older parallel provisions applicable only

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to d.-ug cases and Customs cases appear in 21 U.S.C.

§ 88j. (e) (1) (E) and 19 U.S.C. § 1616a(c)(2), respectively.

The amendment simply extends the existing sharing authority
to all other criminal and civil forfeitures, including those
undertaken pursuant to RICO, the Immigration and Naturalization
Act, the ant i -pornography and gambling laws, and other statutes
throughout the United States Code. Because the amendment makes
the parallel provisions in the drug and customs statutes unneces-
sary. Section 881(e) is amended to remove the redundancy.

Section 407 Forfeiture of Counterfeit Paraphernalia

18 U.S.C. § 492 has provided for the civil forfeiture of
counterfeiting paraphernalia since 1909. It was last amended in
1938. The amendments are intended to bring the statute up to
date and in conformance with modern civil forfeiture statutes by
cross-referencing procedures pertaining to administrative forfei-
tures in the customs laws, 19 U.S.C. § 1602 et seq. . and the
civil forfeiture procedures in 18 U.S.C. § 981-87. The amendment
also adds a criminal forfeiture provision that cross-references
the procedures in § 982.

Section 408 Closing Loophole to Defeat Criminal Forfeiture
Through Bankruptcy

These provisions passed the Senate in 1990 as Section 1904
of S.1970. They would prevent the circumvention of criminal
forfeiture through the use of forfeitabiy pioperty to satisfy
debts owed to unsecured general creditors. The limitation to
those bankruptcy proceedings commenced after or in contemplation
of criminal proceedings safeguards against interference with
legitimate bankruptcy filings.

Section 409 Statute of Limitations for Civil Forfeiture

The first part of this amendment makes a minor change to the
wording of the statute of limitations for civil forfeitures.
Presently, forfeiture actions must be filed within 5 years of the
discovery of the offense giving rise to the forfeiture. In
customs cases, in which the property is the offender, this
presents no problem. In such cases, the discovery of the offense
and the discovery of the involvement of the property i.i the
offense, occur simultaneously.

This provision of the customs laws, however, is incorporated
into other forfeiture statutes. In those cases, the government
may be aware of an offense long before it learns that particular
property is the proceeds of that offense. For example, the
government may know that a defendant robbed a bank in 1990 but
not discover that the proceeds of the robbery were used to buy a
motorboat until 1993. Under current law the forfeiture of the

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motorboat would be barred by the statute of limitations. The
amendment rectifies this siti ation by allowing the government 5
years from the discovery of the involvement of the property in
the offense to file the forfeiture action.

The second part of the amendment extends the statute of
limitations for civil forfeiture proceedings involving banking
law violations, as enumerated in 18 U.S.C. § 981(a) (1) (C) , to ten
years. This conforms to the extension, accomplished by section
2533 of the Crime Control Act of 1990, of the statute of
limitations for bringing civil actions under section 951 of the
Financial Institutions Reform, Recovery and Enforcement Act of
1989 (FIRREA) to ten years. There is no reason to distinguish in
terms of the applicable period of limitations between civil
actions for a monetary penalty under section 951 and civil for-
feiture actions under 18 U.S.C. 981(a) (1) (C) . (The same prin-
ciple applies to the offenses enumerated in the current law in
sub-paragraph (D) . Another provision of this Act, however, would
striJce sub-paragraph (D) and combine it with sub-paragraph (C) .
Thus, the amendment does not cross-reference sub-paragraph (D) .)

The extended limitations period would apply to acts giving
rise to forfeiture that are not time barred when the amendment
becomes law.

Section 410 Assets Forfeiture Fund and Property Disposition

This section makes a variety of minor and technical
amendments to the statute governing th o ' ucc of the Justice
Department Assets Forfeiture Fund. Subsection (a) makes
technical amendments to ensure correct cross-references within
the statute. This subsection includes a number of conforming
amendments required by the redesignation of paragraphs in
§ 524(c) (1) and other statutes, in this Act and in previous
legislation. Subsection (a) (6) is a technical amendment intended
to conform with the intent of the Federal Reports Elimination and
Sunset Act of 1995 (Public Law 104-66) . That Act repealed
§ 524 (c) (7) (dealing with reports and audits) but failed to
repeal § 524 (c) (6) which concerns the filing of another annual
report. The amendment corrects this oversight.

Subsection (b) amends 28 U.S.C. § 524(c)(8), as redesignated
in the Section, to provide a set of disposal authorities of the
Attorney General for forfeited property. These amendments will
be neutral in their effect on the federal budget. For the most
part, they merely restate in one place authorities that currently
exist in several places. This is intended to clarify the
interplay between the substantive forfeiture statutes, which
specify the uses that may be made of the forfeited property, and
§ 524 (c) which authorizes uses to be made of property deposited
in the Assets Forfeiture Fund.



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The Attorney General ' s current authority to warrant clear
title to forfeited property pursuant to 28 U.S.C. § 524(c) (9)
does not provide for the expenditure of funds to indenmify title
insurers who rely upon the Attorney General's action but are
nevertheless found liable if a defect in the title is estab-
lished. The last sentence of subsection (b) is intended to
correct this possible defect by authorizing the use of
appropriated funds for such purposes .

Subsection (c) makes clear the requirement that any monetary
amount obtained from settlement in lieu of forfeiture be deposit-
ed into the Department of Justice Assets Forfeiture Fund. Essen-
tially, all amounts accepted in lieu of forfeiture would be
treated in the same manner as the proceeds of sale of a forfeited
item.

Subsection (d) is intended only to make clear that the Fund
may accept deposits of amounts representing reimbursement of
costs paid by the Fund.

Subsection (e) amends § 524 (c) (1) to add authority to indem-
nify foreign governments held liable in connection with assis-
tance rendered to the United States in a forfeiture action.
Under current U.S. law, there is no provision allowing the return
of forfeited property to a foreign country or other entity, such
as a foreign bank, that suffers foreign legal liability as the
result of assisting a United States forfeiture action. This
amendment authorizes the Attorney General to return the forfeited
property plus-any earned interest in sueh—eircumstances . Without
assurances that the property plus interest can be returned, a
number of foreign jurisdictions have been unwilling to seize or
repatriate property on behalf of the United States.

Moreover, the international sharing statutes ( i.e. , 18
U.S.C. § 981(i) and 21 U.S.C. § 881(e)(1)(E)) do not furnish the
means to address this problem since these statutes provide simply
for the distribution of forfeited assets among the United States
and other countries in proportion to the effort each has expended
in bringing about a forfeiture of property under United States
law.

As a result of this vacuum, foreign jurisdictions have
declined to provide the United States with forfeiture-related
assistance unless the United States first promises to return the
property plus interest in the event the seizure or repatriation
by the foreign authorities results in an adverse judgment against
the foreign government and those acting at its instructions
( e.g. . banking officials that wire funds to the United States for
forfeiture at the behest of the foreign authorities) . Without
such an agreement, some foreign countries have been unwilling to
take any risk on the United States' behalf, with the consequence



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that criminal proceeds have been insulated from our forfeiture
laws .

This proposal is meant primarily to satisfy foreign govern-
ments whose international forfeiture assistance laws have not yet
been tested in court. Such foreign countries have expressed
concern that if they repatriate assets (usually drug proceeds on
deposit in local bank accounts) for forfeiture in the United
States, and their assistance is later successfully challenged in
court, the foreign jurisdiction or other entity in question v/ill
be left to pay damages while the United States confiscates the
property in question.

It should be emphasized that this amendment to Section
524 (c) (1) does not create an obligation to pay, but simply vests
the Attorney General with the discretion to commit the Fund to
return property to a cooperating foreign jurisdiction in the
event of an adverse foreign judgment. This discretion, however,
is not unfettered. The United States is limited in the amount it
can transfer to the forfeited property or proceeds plus interest
earned on the funds, to the extent that the property and interest
have not already been disbursed to the government in sharing or
awards. The statute does not authorize other types of payments
such as damages and attorneys fees. Furthermore, there is a
v;indow of liability to make clear that the foreign government or
entity must vigorously defend any action brought against it if it
wants the return of the monies. In addition, because the time
the Fund is at risk is limited to five years from the time that a
final United -States forfeiture judgment— irs -entered against the
property, exposure is not open-ended.

Subsection (f ) amends redesignated section 524 (c) (7) (E) to
provide guidance regarding excess surplus funds remaining in the
Fund at the end of this and future fiscal years.

Subsection (g) amends section 524(c) (1) (E) to apply not only;
to remission and mitigation but also to any other authority givertl
to the Attorney General by statute. This provision, in addition \\
to the amendment to 28 U.S.C. § 524(c) (8) in subsection (b) !
clarifies the statutory authority to restore forfeited property J
to qualified victims from the Department of Justice Assets
Forfeiture Fund. That provision applies, of course, only to
property forfeited in a given case and does not permit
restitution from the Fund generally.

Section 411 Clarification of 21 U.S.C. S 877

Section 877 of 21 U.S.C. provides that " (a) 11 final determi-
nations, findings, and conclusions of the Attorney General under
this subchapter shall be final... except that any person ag-
grieved by a final decision of the Attorney General may obtain
review of the decision in the United States Court of Appeals for

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the District of Columbia or the circuit in which his principal
place of business is located upon p -jtition filed with the
court... ." One court has found that the "express and unambigu-
ous terms" of Section 877 provided the court of appeals with
jurisdiction to review on direct appeal a denial of a petition
for remission or mitigation of the forfeiture of property by an
agency. Scarabin v. PEA . 925 F.2d 100, 100-01 {5th Cir. 1991) .
This decision was recently upheld in Clubb v. FBI . No. 93-4 912
{5th Cir. Feb. 28, 1994) (unpublished) .

The decision in Scarabin is contrary to the statutory lan-
guage and legislative history of Section 877 which show that
Congress intended judicial review only for those decisions of the
Attorney General affecting the pharmaceutical and research in-
dustries. The amendment clarifies the meaning of Section 877 by
excluding the review of decisions of the Attorney General or her
designees relating to the seizure, forfeiture, and disposition of
forfeited property, including rulings on petitions for
remission or mitigation.

Section 412 Certificate of Reason5±>le Cause

This section makes a technical amendment to 28 U.S.C. § 2465
to provide that a certificate of reasonable cause shall be issued
in appropriate circumstances whether the property in question was
seized or merely arrested pursuant to an arrest warrant in rem .
The amendment is necessary in light of the Supreme Court's de-
cision in United States v. James Daniel Good Property . 114 S. Ct .
492 (19 93) which explained that the govexnraent need not seize
real property for forfeiture but may instead post the property
with an arrest warrant issued pursuant to the Admiralty Rules and
file a lis pendens .

Section 413 Conforming Treasury and Justice Funds

This section makes several changes to the statute authoriz-
ing the creation of the Treasury Department's Assets Forfeiture
Fund to make the administration of the Fund more like the admin-
istration of the Justice Assets Forfeiture Fund. It makes one
change to the Justice Fund statute for the same purpose.

Section 414 Disposition of Property Forfeited Under Customs
Laws

This section fills a gap in the current law regarding the
authority of the Secretary of the Treasury to dispose of forfeit-
ed property in Customs cases by sale or other commercially feasi-
ble means. The amendment adds the authority currently available
under other statutes, such as 21 U.S.C. § 881(e), to 19 U.S.C.
§ 1616a. This provision is intended to increase the options
available and not to impose a preference for one method of
disposal of property over another.

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"ection 415 Technical Amendments Relating to Obliterated Motor
Vehicle Identification Numbers

This section contains minor conforming amendments to 18
U.S.C. § 512, the civil forfeiture statute governing motor vehi-
cles and parts with obliterated serial numbers. The amendments
cross-reference the new procedural statutes in sections 981-87
and, in particular, the innocent owner defense in section 983.

Section 416 Fugitive Disentitlement

This provision authorizes the district court to bar a
fugitive from justice from attempting to hide behind his fugitive
status while contesting a civil forfeiture action against his
property. It reinstates what is commonly known as the fugitive
disentitlement doctrine under which "a person who is a fugitive
from justice may not use the resources of the civil legal system
while disregarding its lawful orders in a related criminal
action." United States v. Enq , 951 F.2d 461, 464 (2d Cir. 1991)
(applying the doctrine to bar an appellant who was resisting
extradition from participating in related civil forfeiture
proceedings) .

Enq and similar cases in other circuits applied a judicially
created rule intended to protect the integrity of the judicial
process from abuse by a fugitive in a criminal case. But in

Deqen v. United States , S. Ct . , 1996 WL 305720 (1996),

the Supreme Court held that as a judge-made rule, the sanction of
absolute disentitlement goes too far. TTT^the absence of
legislative authority to bar a fugitive from filing a claim,
courts must resort to other devices to prevent a fugitive from
abusing the discovery rules or otherwise taking advantage of his
fugitive status in litigating a civil forfeiture case, such as
imposing sanctions for failure to comply with discovery orders.

These devices, however, are not adequate to address the
problems that arise when fugitives contest forfeiture actions.
Moreover, if a forfeiture action involves a business, perishable
property, or any other asset whose value depreciates with time,
the government cannot simply stay the civil case until the
fugitive is apprehended. In such cases, delay is prejudicial to
the government, "for if its forfeiture claims are good, its right

to the properties is immediate." Deqen , S. Ct . at .

Finally, as the Supreme Court acknowledged, the law should not
encourage "the spectacle of a criminal defendant reposing in
Switzerland, beyond the reach of our criminal courts, while at
the same time mailing papers to the court in a related civil
action and expecting them to be honored." Id.

This provision addresses these concerns through legislation,
thus imposing the straightforward sanction of disentitlement that
judges by themselves are not able to impose without statutory

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authorization. Under the proposal, the doctrine would apply in
all civil forfeiture cases such as Eng as well as the ancillary
proceedings in criminal forfeitures in which fugitive third-
parties might otherwise be able to file claims. For the purposes
of this provision, a fugitive from justice would be any person
who, in order to avoid criminal prosecution, purposely leaves the
jurisdiction or decides not to return to it. See 951 F.2d at
464.

Section 417 Admissibility of Foreign Records

This section adds a new provision to Title 28 to allow
foreign-based records of a regularly conducted activity, obtained
pursuant to an official request, to be authenticated and admitted
into evidence in a civil proceeding, including civil forfeiture
proceedings, notwithstanding the requirements of F.R.Evid. Rules
803(6) and 901(a) (1), by means of a certificate executed by a
foreign custodian (or other person familiar with the
recordkeeping activities of the institution maintaining the
records) . This new provision would be the civil analog to 18
U.S.C. § 3505.

To make foreign records of a regularly conducted activity
admissible in a civil proceeding under current law, F.R.Evid.
Rules 803(6) and 901(a)(1) currently require that a foreign
custodian or other qualified witness give testimony, either by
appearing at a proceeding, or in a deposition taken abroad and
introduced at the proceeding, establishing a record-keeping
exception to the hearsay rule (under Rul£„aD3(6)) and
authentication (under 901(a)(1)).

There is, however, no means by which we can compel the
attendance of a foreign custodian or other qualified foreign
witness at a U.S. proceeding to testify. Thus, to adduce the
requisite testimony we must (1) rely on the prospective witness'
willingness to voluntarily appear (which is very rare and subject
to vicissitude) or (2) attempt to obtain a foreign deposition of
the witness. The latter process is unduly cumbersome (when
measured in terms of the objective, i.e., to make records
admissible) and may not be available in many situations,
especially under administrative agreements, such as a tax treaty.

By enacting a civil analog to 18 U.S.C. § 3505, which
provides for the admissibility of foreign business records in
criminal cases, this provision would provide for a streamlined
process for making foreign records of a regularly conducted
activity admissible without having to either (1) rely on having a
foreign witness voluntary travel to the U.S. and appear at a
civil proceeding or (2) get involved in the unduly cumbersome
process of deposing the witness abroad.

Section 418 Amendment to FIRREA Act of 1989

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This section extends a provision in the FIRREA Act of 1989
that authorizes the use of grand jury information by government
attorneys in civil forfeiture cases.

Under current law, a person in lawful possession of grand
jury information concerning a banking law violation may disclose
that information to an attorney for the government for use in
connection with a civil forfeiture action under 18 U.S.C.
§ 981(a) (1) (C) . This provision makes it possible for the govern-
ment to use grand jury information to forfeit property involved
in a bank fraud violation; it does not permit disclosure to
persons outside of the government, nor does it permit government
attorneys to use the information for any other purpose.

The limitation to forfeiture under § 981(a) (1) (C) for
"banking law" violations, however, is obsolete. Since 1989,
subparagraph (C) has been amended to provide for the forfeiture |
of the proceeds of other financial crimes and thus is no longer
limited to banking law violations. Accordingly, the amendment
strikes "concerning a banking law violation" so that disclosure
under 18 U.S.C. § 3322(a) will be permitted in regard to any
forfeiture of proceeds within the scope of § 981(a) (1) (C) . The
restrictions regarding the persons to whom disclosure may be made
and the use that may be made of the disclosed material will
remain unchanged.

Section 419 Prospective Application

This section provides that the am endm ents made in this Act
to the forfeiture laws are intended to apply prospectively. In
the case of the amendments to the customs laws, Admiralty Rules,
and other statutes affecting administrative forfeitures and the
procedure for filing a claim and cost bond to initiate a judicial
civil forfeiture, the new provisions would apply to seizures
occurring 60 days after the effective date of the Act. The new
trial procedures governing judicial civil forfeitures would appl',
to cases in which the complaint was filed by the government at
least 60 days after the effective date of the Act. Changes to
the procedures governing criminal forfeitures would apply to
indictments returned on or after the effective date. Finally,
changes to the substantive forfeiture statutes, such as those
that expand forfeiture to apply to offenses for which forfeiture I
has not previously been available as a remedy, would apply to
offenses occurring on or after the effective date.



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A BILL

Be it enacted by the Senate and House of Representatives of
the United States in Congress assembled,

SEC. 1. SHORT TITLE.

This Act may be cited as the Forfeiture Act of 1996.

SEC. 2. TABLE OF CONTENTS

TITLE I - CIVIL FORFEITURE
Subtitle A - Administrative Forfeitures
Sec. 101. Time for Filing Claim; Waiver of Cost Bond
Sec. 102. Jurisdiction and Venue

Sec. 103. Judicial Review of Administrative Forfeitures
Sec. 104. Judicial Forfeiture of Real Property
Sec. 105. Preservation of Arrested Real Property
Sec. 106. Amendment to Federal Tort Claims Act Exceptions
Sec. 107. Pre- Judgment Interest

Subtitle B - Judicial Forfeitures
Sec. 121. Judicial Forfeiture Proceedings
Sec. 122. Time for Filing Claim and Answer
Sec. 123. Uniform Innocent Owner Defense



120



Sec. 124. Stays

Sec. 125. Application of Forfeiture Procedures

Subtitle C - Seizures and Investigations

Sec. 131. Seizure Warrant Requirement

Sec. 132. Civil Investigative Demands

Sec. 133. Access to Records in Bank Secrecy Jurisdictions

Sec. 134. Access to Other Records

Sec. 13 5. Currency Forfeitures

TITLE II - CRIMINAL FORFEITURE

Sec. 201. Standard of Proof for Criminal Forfeiture

Sec. 202. Non-Abatement of Forfeiture When Defendant Dies Pending j
Appeal

Sec. 203 Repatriation of Property Placed Beyond the Jurisdiction
of the Court

Sec. 204. Motion and Discovery Procedures for Ancillary
Proceedings

Sec. 205. Pre-Trial Restraint of Substitute Assets

Sec. 206. Defenses Applicable to Ancillary Proceedings in
Criminal Cases

Sec. 207. Uniform Procedures for Criminal Forfeiture

Sec. 208. Criminal Seizure Warrants

Sec. 209. Forfeitable Property Transferred to Third Parties

Sec. 210. Right of Third Parties to Contest Forfeiture of
Substitute Assets

Sec. 211. Hearings on Pre-trial Restraining Orders; Assets Needed
to Pay Attorneys Fees

Sec. 212. Availability of Criminal Forfeiture

Sec. 213. Appeals in Criminal Forfeiture Cases

Sec. 214. Discovery Procedure For Locating Forfeited Assets

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Sec. 215. Scope of Criminal Forfeiture

TITLE III - PROPERTY SUBJECT TO FORFEITURE

Sec. 301. Forfeiture of Proceeds of Federal Crimes

Sec. 302. Uniform Definition of Proceeds

Sec. 3 03. Forfeiture of Firearms Used in Crimes of Violence and
Felonies

Sec. 304. Forfeiture of Proceeds Traceable to Facilitating
Property in Drug Cases

Sec. 305. Forfeiture for Alien Smuggling



Online LibraryUnited States. Congress. House. Committee on the JCivil Asset Forfeiture Reform Act : hearing before the Committee on the Judiciary, House of Representatives, One Hundred Fourth Congress, second session, on H.R. 1916 ... July 22, 1996 → online text (page 13 of 37)