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Hearing Before the Subcommittee on Criminal Justice Oversight of the Committee on the Judiciary United States Senate One Hundred Sixth Congress First Session

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Hearing Before the Subcommittee on Criminal Justice Oversight of the Committee on the Judiciary United States Senate One Hundred Sixth Congress First Session S. HRG. 106-673 OVERSIGHT OF FEDERAL ASSET FORFEITURE: ITS ROLE IN FIGHTING CRIME HEARING BEFORE THE SUBCOMMITTEE ON CRIMINAL JUSTICE OVERSIGHT OF THE COMMITTEE ON THE JUDICIARY UNITED STATES SENATE ONE HUNDRED SIXTH CONGRESS FIRST SESSION ON FEDERAL ASSET FORFEITURE, FOCUSING ON ITS ROLE IN FIGHTING CRIME AND THE NEED FOR REFORM OF THE ASSET FORFEITURE LAWS JULY 21, 1999 Serial No. J-106-38 Printed for the use of the Committee on the Judiciary Department of Justice NOV30 2000 MAIN LIBRARY U.S. GOVERNMENT PRINTING OFFICE 66-959 CC WASHINGTON : 2000 COMMITTEE ON THE JUDICIARY ORRIN G. HATCH, Utah, Chairman STROM THURMOND, South Carolina PATRICK J. LEAHY, Vermont CHARLES E. GRASSLEY, Iowa EDWARD M. KENNEDY, Massachusetts ARLEN SPECTER, Pennsylvania JOSEPH R. BIDEN, JR., Delaware JON KYL, Arizona HERBERT KOHL, Wisconsin MIKE DEWINE, Ohio DIANNE FEINSTEIN, California JOHN ASHCROFT, Missouri RUSSELL D. FEINGOLD, Wisconsin SPENCER ABRAHAM, Michigan ROBERT G. TORRICELLI, New Jersey JEFF SESSIONS, Alabama CHARLES E. SCHUMER, New York BOB SMITH, New Hampshire MANUS COONEY, Chief Counsel and Staff Director BRUCE A. COHEN, Minority Chief Counsel SUBCOMMITTEE ON CRIMINAL JUSTICE OVERSIGHT STROM THURMOND, South Carolina, Chairman MIKE DEWINE, Ohio CHARLES E. SCHUMER, New York JOHN ASHCROFT, Missouri JOSEPH R. BIDEN, JR., Delaware SPENCER ABRAHAM, Michigan ROBERT G. TORRICELLI, New Jersey JEFF SESSIONS, Alabama PATRICK J. LEAHY, Vermont GARRY MALPHRUS, Chief Counsel GLEN SHOR, Legislative Assistant (II) CONTENTS STATEMENT OF COMMITTEE MEMBER Page Thurmond, Hon. Strom, U.S. Senator from the State of South Carolina 1 DeWine, Hon. Mike, U.S. Senator from the State of Ohio 3 Schumer, Hon. Charles E., U.S. Senator from the State of New York 3 Leahy, Hon. Patrick J., U.S. Senator from the State of Vermont 4 Biden, Hon. Joseph R., Jr., U.S. Senator from the State of Delaware 7, 8 CHRONOLOGICAL LIST OF WITNESSES Statement of Hon. Henry Hyde, A Representative in Congress from the State of Illinois 10 Statement of Hon. Anthony D. Weiner, A Representative in Congress from the State of New York 13 Panel consisting of Eric H. Holder, Jr., deputy attorney general, U.S. Depart­ ment of Justice, Washington, DC; James E. Johnson, under secretary for enforcement, U.S. Department of the Treasury, Washington, DC; Bonni G. Tischler, assistant commissioner, Office of Investigations, U.S. Customs Service, Washington, DC; and Richard Fiano, chief of operations, Drug Enforcement Administration, U.S. Department of Justice, Arlington, VA 15 Panel consisting of Gilbert G. Gallegos, national president, Fraternal Order of Police, Washington, DC; Johnny Mack Brown, past president, National Sheriff's Association, Alexandria, VA; Johnny L. Hughes, director, govern­ ment relations, National Troopers Coalition, Annapolis, MD; Samuel J. Buffone, National Association of Criminal Defense Lawyers, Washington, DC; and Roger Pilon, director, Center for Constitutional Studies, CATO Institute, Washington, DC 66 ALPHABETICAL LIST AND MATERIAL SUBMITTED Biden, Hon. Joseph R., Jr.: Letter from Robert T. Scully, executive director, National Association of Police Organizations, Inc., dated July 15, 1999 9 Brown, Johnny Mack: Testimony 70 Prepared statement 72 Buffone, Samuel J.: Testimony 76 Prepared statement 78 Fiano, Richard: Testimony 38 Prepared statement 41 Pictures of various drug seizures 47 Gallegos, Gilbert G.: Testimony 66 Prepared statement 67 Holder, Eric H., Jr.: Testimony 15 Prepared statement 17 Hughes, Johnny L.: Testimony 73 Prepared statement 75 Hyde, Hon. Henry: Testimony 10 Johnson, James E.: Testimony 29 Prepared statement 31 (III) IV Page Johnson, James E.—Continued Letter to Senator Thurmond from the Department of the Treasury, dated July 21, 1999 34 Pilon, Roger: Testimony 85 Prepared statement 87 Letters to Hon. Henry Hyde from: Americans For Tax Reform, Washington, DC, dated June 18, 1999 .... 92 R. Bruce Josten, executive vice president, government affairs, Cham­ ber of Commerce, dated June 23, 1999 94 Edward L. Yingling, deputy vice president, executive director of gov­ ernment relations, American Bankers Association, dated May 14, 1999 94 Tischler, Bonni G.: Testimony 35 Prepared statement 37 Weiner, Hon. Anthony D.: Testimony 13 APPENDIX QUESTIONS AND ANSWERS Responses of Eric Holder to Questions From Senators: Thurmond 107 Leahy 108 Response of James E. Johnson to a Question From Senator Thurmond 112 Responses of Bonni G. Tischler to Questions From Senator Thurmond 113 Response of Richard Fiano to a Question From Senator Thurmond 115 Responses of Gilbert G. Gallegos to Questions From Senators: Thurmond 116 Leahy 116 ADDITIONAL SUBMISSIONS FOR THE RECORD Prepared statement of: The Federal Bureau of Investigation 118 The Department of Justice 119 The National Association of Realtors and the Institute of Real Estate Management 123 Letter to Senator Thurmond from Richard Gallo, Federal Law Enforcement Officers Association, dated July 20, 1999 125 Letter to Hon. Henry J. Hyde, from Myrna Raeder, American Bar Association, dated May 20, 1999 125 Report to the House of Delegates from the American Bar Association—Crimi­ nal Justice Section 126 OVERSIGHT OF FEDERAL ASSET FORFEITURE: ITS ROLE IN FIGHTING CRIME WEDNESDAY, JULY 21, 1999 U.S. SENATE, SUBCOMMITTEE ON CRIMINAL JUSTICE OVERSIGHT, COMMITTEE ON THE JUDICIARY, Washington, DC. The subcommittee met, pursuant to notice, at 2:06 p.m., in room SD-628, Dirksen Senate Office Building, Hon. Strom Thurmond (chairman of the subcommittee) presiding. Also present: Senators DeWine, Ashcroft, Sessions, Schumer, Biden, and Leahy. OPENING STATEMENT OF HON. STROM THURMOND, A U.S. SENATOR FROM THE STATE OF SOUTH CAROLINA Senator THURMOND. The subcommittee will come to order. I am pleased to hold this oversight hearing today regarding the use of Federal asset forfeiture and its importance in fighting crime. The government has had the authority to seize property con­ nected to illegal activity since the founding days of the Republic. Forfeiture may involve seizing contraband, like drugs, or the tools of the trade that facilitate the crime. Further, forfeiture is critical to taking the profits out of the ille­ gal activity. Profit is the motivation for many crimes like drug traf­ ficking and racketeering, and it is from these enormous profits that the criminal activity thrives and sustains. The use of traditional criminal sanctions of fines and imprisonment are inadequate to fight the enormously profitable trade in illegal drugs, organized crime, and other such activity, because even if one offender is im­ prisoned, the criminal activity continues. Criminal and civil forfeiture is essential to ensure that crime does not pay. Criminals must not be allowed to enjoy the fruits of their illegal activity. In fact, some criminals would prefer to spend some time in prison if they can live off the proceeds of their ille­ gally-gotten gains when they are released. Civil forfeiture is sometimes the only avenue open to law enforce­ ment. For example, sometimes the criminal remains in a foreign base of operation and is untouchable from criminal prosecution. Here, the government's only option may be to take his illegal assets through civil forfeiture. Asset forfeiture deters crime. It has been a major weapon in the war on drugs since the mid-1980's, when we expanded civil forfeit­ ure to give it a more meaningful role. One of the reforms at the time permitted law enforcement to keep forfeiture proceeds, and it (1) 2 has become an important source of revenue for law enforcement. This is especially true for State and local law enforcement, which depend on the millions of dollars in shared money for various pur­ poses, such as officer training and to upgrade equipment. Another benefit of forfeiture is that some assets are returned to victim own­ ers, and we need to consider expanding this area even more to allow civil forfeiture to pay restitution to victims. At the same time, forfeiture is about the government using its powers to take private property, and there must be adequate re­ strictions to prevent abuse of this power. The Supreme Court has imposed some limits, such as holding that criminal and many civil forfeitures can constitute an excessive fine in violation of the Eighth Amendment if they are grossly disproportionate to the of­ fense. Also, law enforcement agencies should not view forfeiture simply as a way to make money for their agencies, but as a way to fight crime. Prosecutors must use good judgment in case selec­ tion and settlement posture, and show a healthy respect for prop­ erty rights. Forfeiture should never result in the government tak­ ing the property of innocent Americans. Most agree that additional reforms of Federal civil forfeiture laws are needed. For example, the administration believes that the government should have the burden of proving that it is more like­ ly than not that the property was involved in the criminal activity, rather than the owner having to prove that the property was not involved. There is wide support for developing a more uniform innocent owner defense. Further, some are concerned that under current law, the government is not liable when it negligently damages property in its possession, even when the property is later returned to its innocent owner. The Civil Asset Forfeiture Act that has passed the House would fundamentally alter Federal civil forfeiture. I respect the sincere ef­ forts of its sponsors to achieve needed reform in this area. How­ ever, if passed in its current form, I am concerned that it goes too far. It may undermine the use of forfeiture law in the war against drugs, child pornography, money laundering, telemarketing fraud, terrorism, and a host of other crimes. For example, we should not make the government's burden of proof in a civil forfeiture higher than it is in a criminal forfeiture. Also, we should not make it so easy for anyone to request a lawyer at government expense that it overwhelms the system with frivo­ lous claims.
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