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Controls over Equitable Sharing Should Be Improved' which was released 
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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

July 2012: 

Justice Assets Forfeiture Fund: 

Transparency of Balances and Controls over Equitable Sharing Should Be 
Improved: 

GAO-12-736: 

GAO Highlights: 

Highlights of GAO-12-736, a report to congressional requesters. 

Why GAO Did This Study: 

Every year, federal law enforcement agencies seize millions of dollars 
in assets in the course of investigations. The AFF was established to 
receive the proceeds of forfeiture and holds more than $1 billion in 
assets. DOJ uses the proceeds from forfeitures primarily to cover the 
costs of forfeiture activities. DOJ also shares forfeiture proceeds 
with state and local agencies that participate in joint investigations 
through its equitable sharing program. GAO was asked to review (1) 
AFF’s revenues and expenditures from fiscal years 2003 through 2011 
and DOJ’s processes for carrying over funds for the next fiscal year, 
and (2) the extent to which DOJ has established controls to help 
ensure that the equitable sharing program is implemented in accordance 
with established guidance. GAO analyzed data on AFF revenues, 
expenditures, and balances; interviewed DOJ officials; and analyzed a 
sample of 25 equitable sharing determinations, which included 5 
determinations from each relevant DOJ agency. GAO’s analysis of the 
samples was not generalizable, but provided insight into DOJ’s 
decisions. 

What GAO Found: 

Annual revenues into the Assets Forfeiture Fund (AFF) from forfeited 
assets increased from $500 million in 2003 to $1.8 billion in 2011, in 
part due to an increase in prosecutions of fraud and financial crimes 
cases. Expenditures in support of forfeiture activities such as 
equitable sharing payments to state and local law enforcement agencies 
and payments to victims also increased over the same 9-year period, 
growing from $458 million in 2003 to $1.3 billion in 2011. The 
Department of Justice (DOJ) uses the difference between revenues and 
expenditures in any year to help cover anticipated expenses in the 
next fiscal year. Because the AFF uses fund revenues to pay for the 
expenses associated with forfeiture activities, DOJ carries over funds 
at the end of each fiscal year to ensure it has sufficient resources 
to cover expenses that may not be covered by the next year’s revenues. 
When determining the amounts to carry over, DOJ reviews historical 
data on past program expenditures, analyzes known future expenses such 
as salaries and contracts, and estimates the costs of any potential 
new expenditures. However, DOJ has not documented the process for 
determining the amount of funds needed to cover anticipated 
expenditures in the next fiscal year in its annual budget 
justifications. Providing more transparent information as part of the 
AFF’s annual budget process would better inform Congress’ oversight of 
the AFF. Further, after DOJ obligates funds needed to cover program 
expenses, any remaining AFF funds identified at the end of a fiscal 
year may be declared an excess unobligated balance. DOJ has the 
authority to use these balances for any of the department’s authorized 
purposes. Per Office of Management and Budget guidance, in recent 
years, DOJ used these excess unobligated balances to help cover 
rescissions. Rescissions cancel the availability of DOJ’s previously 
enacted budget authority, making the funds involved no longer 
available for obligation. For example, in fiscal year 2011, DOJ used 
excess unobligated balances to help cover a $495 million AFF program 
rescission. 

DOJ has established guidelines for making equitable sharing 
determinations, but controls to ensure consistency and transparency 
could be improved. For example, DOJ agencies responsible for making 
equitable sharing determinations may make adjustments to sharing 
percentages when work hours alone do not reflect the relative value of 
an agency’s contribution to an investigation. If a state or local law 
enforcement agency contributed a helicopter or a drug-sniffing dog to 
an investigation, its sharing percentage might be adjusted upward from 
what it would be based on work hours alone. However, DOJ’s guidance 
does not include information regarding how decisions about these 
adjustments to sharing determinations should be made. This is 
particularly important given that these determinations represent DOJ’s 
overall assessment of each agency’s unique contributions and are a key 
component of how DOJ determines how much to award to each agency. 
Furthermore, key information that serves as the basis for equitable 
sharing determinations—-such as the work hours contributed by each of 
the participating agencies in an investigation—-is not subject to 
review by approving authorities. Developing guidance regarding how 
these decisions are to be made, documenting the basis for these 
decisions, and subjecting them to review and approval would help 
ensure the consistency and transparency of equitable sharing 
determinations. 

What GAO Recommends: 

GAO recommends that, among other things, DOJ clearly document how it 
determines the amount of funds that will need to be carried over for 
the next fiscal year, develop guidance on how components should make 
adjustments to equitable sharing determinations, and ensure that the 
basis for equitable sharing determinations is documented and subjected 
to review and approval. DOJ concurred with GAO’s recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-12-736]. For more 
information, contact David C. Maurer at (202) 512-9627 or 
maurerd@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

AFF Revenues and Expenditures Have Increased since Fiscal Year 2003, 
and DOJ's Process for Carrying Over Funds Could Be More Transparent: 

DOJ Could Enhance Controls and Oversight Mechanisms for Its Equitable 
Sharing Program: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments: 

Appendix I: Equitable Sharing: 

Appendix II: Assets Forfeiture Fund Expenditure Categories: 

Appendix III: Results of Asset Forfeiture and Money Laundering Section 
Compliance Reviews Completed as of December 2011: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: AFF's Expenditures across All Fiscal Years by Type of 
Expenditure: 

Table 2: Total Funds Available for Use in Fiscal Year 2010: 

Table 3: Funds Reserved to Cover AFF's Annual Rescissions for Fiscal 
Years 2003 through 2011: 

Table 4: Results of Compliance Reviews of Equitable Sharing 
Participants: 

Figures: 

Figure 1: DOJ Asset Forfeiture Program Participants: 

Figure 2: AFF's Revenue Totals for Fiscal Years 2003 through 2011: 

Figure 3: Total Forfeiture Program Expenditures from Fiscal Years 2003 
through 2011: 

Figure 4: Funds Carried Over at the End of the Fiscal Year to Cover 
Solvency, Equitable Sharing, and Third-Party Payments in the Next 
Fiscal Year: 

Figure 5: Process for Identifying Excess Unobligated (Super Surplus) 
Balances: 

Figure 6: Process for Making Equitable Sharing Determinations: 

Figure 7: Equitable Sharing Payments across the United States in 
Fiscal Year 2011: 

Abbreviations: 

AFF: Assets Forfeiture Fund: 

AFMLS: Asset Forfeiture and Money Laundering Section: 

AFMS: Asset Forfeiture Management Staff: 

ATF: Bureau of Alcohol, Tobacco, Firearms and Explosives: 

CATS: Consolidated Asset Tracking System: 

DAG: Deputy Attorney General: 

DEA: Drug Enforcement Administration: 

DOJ: Department of Justice: 

FBI: Federal Bureau of Investigation: 

OIG: Office of Inspector General: 

OMB: Office of Management and Budget: 

RICO: Racketeering Influenced and Corrupt Organizations: 

TFF: Treasury Forfeiture Fund: 

USAO: United States Attorney's Office: 

USMS: United States Marshals Service: 

VOCA: Victims of Crime Assistance: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

July 12, 2012: 

Congressional Requesters: 

Every year, federal, state, and local law enforcement agencies seize
millions of dollars in assets that are forfeited through the 
Department of Justice’s (DOJ) Asset Forfeiture Program. Forfeited 
assets can include, but are not limited to, businesses, cash, bank 
accounts, automobiles, boats, airplanes, jewelry, art objects, and 
real estate.[Footnote 1] A primary goal of the program is preventing 
and reducing crime through the seizure and forfeiture of assets that 
were used in or acquired as a result of criminal activity. The 
Comprehensive Crime Control Act of 1984 established the Assets 
Forfeiture Fund (AFF) within DOJ to receive the proceeds of 
forfeitures and the AFF currently holds more than $1 billion in 
assets.[Footnote 2] Revenues generated from forfeitures are used to 
fund program-related expenses including payments to victims and 
lienholders, the costs of storing and maintaining forfeited assets, 
and certain law enforcement activities, such as the payment of awards 
for information leading to asset forfeiture.[Footnote 3] After funds 
have been obligated for program expenses in the current fiscal year, 
any unobligated funds that remain in the AFF at the end of the fiscal 
year are then carried forward to the next fiscal year.[Footnote 4] 
Specifically, at the end of each fiscal year, DOJ carries over funds to
ensure it has resources to cover expenses that may not be covered by
the next year’s anticipated revenues. Those funds determined to be in 
excess of these requirements (excess unobligated balances) may be 
declared as Super Surplus and, after congressional notification, can be
used at DOJ’s discretion for a variety of purposes.[Footnote 5] 

All federal law enforcement agencies within DOJ participate in the Asset
Forfeiture Program including the United States Marshals Service (USMS);
the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); the Drug
Enforcement Administration (DEA); and the Federal Bureau of 
Investigation (FBI) as well as other agencies not part of DOJ such as 
the Department of Defense Criminal Investigative Service. Often, state 
and local law enforcement agencies participate in joint investigations 
with DOJ’s law enforcement agencies. In return, state and local law
enforcement agencies can receive a portion of the proceeds of forfeited
assets resulting from these investigations in the form of cash or 
property through DOJ’s equitable sharing program.[Footnote 6] From 
fiscal years 2003 through 2011, DOJ has shared over $3.2 billion in 
cash and property with more than 9,200 state and local law enforcement 
agencies. You expressed interest in the management of the AFF and 
oversight of the equitable sharing program. Thus, this report 
addresses the following questions: 

1. How, if at all, have the AFF's revenues and expenditures changed 
from fiscal years 2003 through 2011 and to what extent does DOJ have 
processes in place to ensure transparency when carrying over funds for 
the next fiscal year? 

2. To what extent has DOJ established controls to help ensure that the 
equitable sharing program is implemented in accordance with 
established DOJ guidance? 

To determine how the AFF's revenues and expenditures from fiscal year 
2003--the year in which the AFF was removed from GAO's high-risk list--
through fiscal year 2011 had changed, we analyzed DOJ data on revenues 
and expenditures by fiscal year.[Footnote 7] We used information on 
revenues and expenditures contained in the department's financial 
accounting systems. We interviewed DOJ officials regarding information 
in the financial accounting systems to discuss trends and anomalies in 
the revenues and expenditures over this 9-year period. As part of our 
review we also determined the extent to which DOJ has processes in 
place to ensure transparency when carrying over funds for the next 
fiscal year. We reviewed information on unobligated and excess 
unobligated balances from DOJ's annual Congressional Budget 
Justifications to Congress, available through DOJ's public website and 
also contained in the AFF's financial accounting systems.[Footnote 8] 
Specifically, we assessed the extent to which the Congressional Budget 
Justifications outlined the processes for carrying over funds for the 
next fiscal year. We also reviewed prior GAO reports on the importance 
of transparency in federal budget submissions to Congress. We 
interviewed DOJ officials from the Asset Forfeiture Management Staff 
responsible for oversight of the AFF regarding their processes for 
carrying over funds at the end of the fiscal year. Further, we 
analyzed data on the AFF's excess unobligated balances from fiscal 
years 2003 through 2011, and interviewed officials about how excess 
unobligated balances have been used since 2003, including how these 
balances have been used to cover the cost of annual rescissions over 
this time period. 

To assess the reliability of DOJ's financial accounting system for 
providing revenues, expenditures, and excess unobligated balances 
data, we reviewed relevant documentation and conducted interviews with 
knowledgeable DOJ agency officials to understand how DOJ collects, 
categorizes, and tabulates the information and the actions it takes to 
ensure its consistency, accuracy, and completeness. We determined 
information on the financial accounting system provided by DOJ to be 
sufficiently reliable for presenting the total revenues, expenditures, 
and excess unobligated balances for fiscal years 2003 through 2011. 

To determine the extent to which DOJ has established controls to help 
ensure that the equitable sharing program is implemented in accordance 
with established guidance, we analyzed the most current guidance 
provided to DOJ agencies, including the 2009 Guide to Equitable 
Sharing for State and Local Law Enforcement Agencies and the 2008 
Asset Forfeiture Policy Manual, which is also provided to all DOJ 
agencies. In the course of our review, DOJ officials informed us that 
they are in the process of updating the 2008 Asset Forfeiture Policy 
Manual and provided us with a copy of the revised chapter on equitable 
sharing, which we also analyzed. We interviewed officials from DOJ's 
Asset Forfeiture Management Staff responsible for managing the AFF, 
and officials from the Asset Forfeiture and Money Laundering Section 
responsible for establishing the policies and procedures of the fund. 
In addition, we discussed equitable sharing guidance, policy, and 
related issues with headquarters officials from DOJ's law enforcement 
agencies, including ATF, DEA, FBI, and USMS. We also compared DOJ's 
equitable sharing guidance against criteria included in Standards for 
Internal Control in the Federal Government.[Footnote 9] 

To determine the extent to which DOJ ensures that agencies responsible 
for making equitable sharing decisions follow DOJ guidance, we also 
reviewed a nonprobability sample of 25 equitable sharing 
determinations completed during fiscal year 2010. Specifically, we 
selected the last 5 equitable sharing determinations approved in 
fiscal year 2010 by each of the three DOJ law enforcement agencies 
responsible for making equitable sharing decisions, the last 5 
determinations that were reviewed and approved by the Asset Forfeiture 
and Money Laundering Section in fiscal year 2010, and the last 5 
determinations that were subject to review and approval by the U.S. 
Attorney's Office in fiscal year 2010.[Footnote 10] We also 
interviewed officials from six local law enforcement agencies in two 
states to get their perspectives on the equitable sharing program. We 
selected agencies from these two states because they are two of the 
states that received the largest amounts of equitable sharing dollars 
in fiscal year 2011. While the views of these local law enforcement 
agencies cannot be generalized to the population of equitable sharing 
participants, these interviews provided insight into the views of 
select local law enforcement agencies on the equitable sharing 
program. As part of our review of the equitable sharing program, we 
also analyzed information on equitable sharing payments by state and 
by fiscal year. To assess the relationship between equitable sharing 
payments and the population of a state, and per capita equitable 
sharing payments and arrest rates, we reviewed equitable sharing 
payments data from fiscal years 2003 through 2011 provided by DOJ, 
U.S. Census Bureau data for the U.S. population in 2010, and FBI's 
annual uniform crime data on arrest rates for 2010, which were the 
most current data available at the time we did our analysis. We 
interviewed FBI officials to assess the reliability of the FBI uniform 
crime data. In the course of the interview we determined that the 
arrest data for Washington, D.C. and Illinois did not capture the 
entire area, but determined the data for all other states was 
sufficiently reliable for the purposes of our review. Consequently, we 
excluded Washington, D.C. and Illinois from our analysis. Because it 
was out of the scope of our work, we did not attempt to determine 
other factors that could explain the relationship between equitable 
sharing funds and population or arrests. 

We conducted this performance audit from April 2011 through July 2012 
in accordance with generally accepted government auditing standards. 
[Footnote 11] Those standards require that we plan and perform the 
audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objectives. 

Background: 

The Asset Forfeiture Program has three primary goals: (1) to punish 
and deter criminal activity by depriving criminals of property used or 
acquired through illegal activities; (2) to enhance cooperation among 
foreign, federal, state, and local law enforcement agencies through 
the equitable sharing of assets recovered through this program; and, 
as a by-product, (3) to produce revenues in support of future law 
enforcement investigations and related forfeiture activities. A number 
of federal law enforcement organizations participate in the AFF, 
including USMS, which serves as the primary custodian of seized and 
forfeited property for the program. See figure 1 for the Asset 
Forfeiture Program participants. 

Figure 1: DOJ Asset Forfeiture Program Participants: 

[Refer to PDF for image: illustration] 

Department of Justice: 
Asset Forfeiture Program: 
* AFMLS: Asset Forfeiture and Money Laundering Section; 
* AFMS: Asset Forfeiture Management Staff; 
Program Participants: 
* USMS: Unites States Marshall's Service; 
* USAOs: United States Attorney's Offices; 
* ATF: Bureau of Alcohol, Tobacco, Firearms and Explosives; 
* DEA: Drug Enforcement Administration; 
* FBI: Federal Bureau of Investigation. 

Source: DOJ. 

[End of figure] 

Roles and Responsibilities of Asset Forfeiture Program Participants: 

DOJ's Asset Forfeiture Management Staff (AFMS) is part of DOJ's 
Justice Management Division and is responsible for managing and 
overseeing all financial aspects of the AFF, review and evaluation of 
asset forfeiture program activities, internal controls and audit 
functions, information systems, and other administrative functions 
related to the fund. The Asset Forfeiture Money and Laundering Section 
(AFMLS) is part of DOJ's Criminal Division and is responsible for 
legal aspects of the program, including civil and criminal litigation 
and providing legal advice to the U.S. Attorneys' Offices. AFMLS is 
responsible for establishing the Asset Forfeiture Program's policies 
and procedures, coordinating multidistrict asset seizures, acting on 
petitions for remission in judicial forfeiture cases, and coordinating 
international forfeiture and sharing. AFMLS also oversees the AFF's 
equitable sharing program. United States Attorneys' Offices (USAO) are 
responsible for the prosecution of both criminal and civil actions 
against property used or acquired during illegal activity. 

USMS serves as the primary custodian of seized property for the Asset 
Forfeiture Program. USMS manages and disposes of the majority of the 
valued property seized for forfeiture. In serving as the primary 
custodian of the majority of assets managed by the fund, USMS manages 
all valued assets that are not considered evidence, contraband, or 
targeted for use by individual law enforcement agencies. ATF enforces 
the federal laws and regulations relating to alcohol, tobacco, 
firearms, explosives, and arson by working directly and in cooperation 
with other federal, state, and local law enforcement agencies. While 
USMS is the primary custodian over valued assets, ATF maintains 
custody over assets seized under its authority, including firearms, 
ammunition, explosives, alcohol, and tobacco. DEA implements major 
investigative strategies against drug networks and cartels. DEA 
maintains custody over narcotics and other seized contraband. The FBI 
investigates a broad range of criminal violations, integrating the use 
of asset forfeiture into its overall strategy to eliminate targeted 
criminal enterprises. 

There are several agencies outside the Department of Justice that also 
participate in the DOJ Asset Forfeiture Program. Non-DOJ participants 
include the United States Postal Inspection Service, the Food and Drug 
Administration's Office of Criminal Investigations, the United States 
Department of Agriculture's Office of the Inspector General, the 
Department of State's Bureau of Diplomatic Security, and the 
Department of Defense Criminal Investigative Service. 

Types of Forfeiture: 

There are two types of forfeiture: administrative and judicial, and 
they differ in a number of ways, including (1) the point in the 
proceeding, generally at which the property may be seized; (2) the 
burden of proof necessary to forfeit the property; and (3) in some 
cases, the type of property interests that can be forfeited. 

Administrative forfeiture allows for property to be forfeited without 
judicial involvement. Although property may be seized without any 
judicial involvement, seizures performed by federal agencies must be 
based on probable cause.[Footnote 12] In administrative forfeitures, 
the government initiates a forfeiture action and will take ownership 
of the property provided that no one steps forward to contest the 
forfeiture. Specifically, the administrative forfeiture procedure 
requires that those with an interest in the property be notified and 
given an opportunity to request judicial forfeiture proceedings. See 
below for an example of an administrative forfeiture. 

[Text box: Example of Administrative Forfeiture: 
DEA initiated a task force investigation into a drug-trafficking 
organization. Task force officers received information from a 
confidential source that the drug-trafficking organization was using a 
van with hidden compartments to transport methamphetamine and drug 
proceeds, and a drug detection dog gave a positive alert to the 
presence of drugs in the van. Officers obtained and executed a search 
warrant on the vehicle, which resulted in the discovery and seizure of 
149 kilograms of cocaine and $1,229,785 in U.S. currency. Because no 
party filed a claim contesting the forfeiture, the currency was 
administratively forfeited by DEA pursuant to 19 U.S.C. § 1609.
Source: DOJ. End of text box] 

Judicial forfeiture, both civil and criminal, is the process by which 
property may be forfeited to the United States by filing a forfeiture 
action in federal court. In civil forfeiture, the action is against 
the property and thus does not require that the owner of the property 
be charged with a federal offense. The government must only prove a 
connection between the property and the crime. By contrast, criminal 
forfeiture requires a conviction of the defendant before property is 
subject to forfeiture. 

[Text box: Example of Civil Forfeiture: 
After obtaining a search warrant, agents searched a residence and the 
adjoining land on a 50-acre farm. Agents found firearms and 
ammunition, along with 60 pounds of processed marijuana. Agents also 
found approximately 4,000 marijuana plants growing outside in the 
adjacent field, along with approximately 2,500 plants being processed.
While the owner of the farm will be subject to prosecution, because 
the land was used for illegal activities, a separate civil forfeiture 
action was filed against the property. The farm where the marijuana 
plants were located was seized and will be forfeited under civil 
forfeiture proceedings. Source: U.S. Attorney's Office. End of text 
box] 

[Text box: Example of Criminal Forfeiture: 
According to the United States Attorney, two Philadelphia-based 
corporations operated an Internet enterprise that facilitated 
interstate prostitution activities. The defendants allegedly developed 
and operated an Internet website and created an online network for 
prostitutes, escort services, and others to advertise their illegal 
activities to consumers and users of those services. 

The case was investigated by state police, FBI, and the Internal 
Revenue Service Criminal Investigations Division. The investigation 
found that defendants received fees in the form of money orders, 
checks, credit card payments, and wire transfers from users of the 
website. The funds the defendants allegedly received were the proceeds 
of violations of federal laws prohibiting interstate travel in aid of 
racketeering enterprises, specifically prostitution, and aiding and 
abetting such travel. The money-laundering conspiracy charge alleges 
that the defendants engaged in monetary transactions in property of a 
value greater than $10,000 derived from those unlawful activities.
The defendants entered guilty pleas to the money-laundering conspiracy 
charge and agreed to serve a probation term of 18 months and to pay a 
$1,500,000 fine. In addition, under the terms of the plea agreement, 
the defendants agreed to the criminal forfeiture of $4.9 million in 
cash derived from the unlawful activity, as well as forfeiture of the 
domain name, all of which represent property used to facilitate the 
commission of the offenses. Source: U.S. Attorney's Office. End of 
text box] 

The asset forfeiture process involves a number of key steps, including 
necessary planning in advance of the seizure, seizing and taking 
custody of the asset, notifying interested parties, addressing any 
claims and petitions, and equitable sharing with state and local law 
enforcement agencies. According to DOJ, enhancing cooperation among 
federal, state, and local law enforcement agencies is one goal of the 
equitable sharing program. For more information on how agencies 
qualify for equitable sharing, see appendix I. 

AFF Revenues and Expenditures Have Increased since Fiscal Year 2003, 
and DOJ's Process for Carrying Over Funds Could Be More Transparent: 

From fiscal years 2003 through 2011, AFF revenues and expenditures 
increased, with annual revenues doubling in fiscal year 2006, due in 
part to an increase in forfeitures resulting from fraud and financial 
crimes investigations. DOJ estimates anticipated revenues and 
expenditures based on prior years' trends and then carries over funds 
to help cover operational expenses and other liabilities in the next 
fiscal year, including reserves needed for pending equitable sharing 
and third-party payments. However, the transparency of DOJ's process 
for carrying over these funds could be enhanced. Once all expenses 
have been accounted for and unobligated funds deemed necessary for 
next year's expenses have been carried over to the next fiscal year, 
DOJ then reserves funds to cover annual rescissions.[Footnote 13] 

AFF's Revenues More than Tripled from Fiscal Years 2003 through 2011: 

In the 9-year period from fiscal years 2003 through 2011, AFF revenues 
totaled $11 billion, growing from $500 million in fiscal year 2003 to 
$1.8 billion in fiscal year 2011. Since 2006, an increase in the 
prosecution of fraud and financial crime cases has led to substantial 
increases in AFF revenue.[Footnote 14] For example, a money laundering 
case in fiscal year 2007 involved the misappropriation of funds by the 
founder of a television cable company, Adelphia Communications, and 
resulted in over $700 million in forfeited assets. As a result of the 
increase in forfeitures resulting from money laundering and financial 
crimes investigations, in 2006, revenues doubled those of previous 
years, and for the first time in the AFF's history, total annual 
revenues grew above $1 billion to approximately $1.2 billion. Since 
2006, the AFF's annual revenues have remained above $1 billion, with 
the highest revenues of $1.8 billion reported in 2011.[Footnote 15] 
Figure 2 shows the fund's revenue growth over time from fiscal years 
2003 through 2011. 

Figure 2: AFF's Revenue Totals for Fiscal Years 2003 through 2011: 

[Refer to PDF for image: vertical bar graph] 

Fiscal year: 2003; 
AFF Revenue: $500 million. 

Fiscal year: 2004; 
AFF Revenue: $571 million. 

Fiscal year: 2005; 
AFF Revenue: $612 million. 

Fiscal year: 2006; 
AFF Revenue: $1.207 billion. 

Fiscal year: 2007; 
AFF Revenue: $1.662 billion. 

Fiscal year: 2008; 
AFF Revenue: $1.421 billion. 

Fiscal year: 2009; 
AFF Revenue: $1.450 billion. 

Fiscal year: 2010; 
AFF Revenue: $1.793 billion. 

Fiscal year: 2011; 
AFF Revenue: $1.804 billion. 

Source: GAO analysis of DOJ data. 

[End of figure] 

Moreover, according to DOJ officials, in addition to an increase in 
the prosecution of fraud and financial crime cases, the increase in 
revenues can also be attributed to an overall increase in the number 
of forfeiture cases together with higher-value forfeitures. Across all 
fiscal years, forfeited cash income constituted 76 percent or more of 
the AFF's revenue sources. Forfeited cash income includes 
cash/currency, as well as financial instruments such as money orders, 
bank accounts, brokerage accounts, and shares of stock. The second, 
and much smaller, source of revenue is the sale of forfeited property 
including automobiles, boats, airplanes, jewelry, and real estate, 
among others. In fiscal year 2011, revenues from forfeited cash income 
and the sale of forfeited property together accounted for over 84 
percent of the total revenues. Other sources of income may include 
transfers from the Treasury Forfeiture Fund (TFF), and transfers from 
other federal agencies[Footnote 16]. Additionally, since fiscal year 
2006--when the AFF's revenues from fraud and financial crime cases 
increased--large-case deposits (forfeitures greater than $25 million) 
of forfeited cash income have contributed an average of 37 percent to 
total revenue[Footnote 17]s. For example, in 2007, DOJ reported a 
total of six large deposits that totaled $842 million, or slightly 
over 50 percent of the AFF's total revenues in that fiscal year. These 
forfeitures of assets greater than $25 million involved investigations 
of misappropriation of funds, including corporate fraud and the 
illegal sales of pharmaceutical drugs. The types of assets that were 
seized in these investigations were primarily forfeited cash income. 

AFF's Expenditures on Forfeiture Activities Also Increased: 

From fiscal years 2003 through 2011, AFF expenditures totaled $8.3 
billion. As revenues have increased, there has been a corresponding 
increase in expenditures in support of asset forfeiture activities. 
Specifically, expenditures increased from $458 million in fiscal year 
2003 to $1.3 billion in fiscal year 2011. Figure 3 shows the 
expenditures from fiscal year 2003 through 2011, including the large 
growth in expenditures beginning in 2007. 

Figure 3: Total Forfeiture Program Expenditures from Fiscal Years 2003 
through 2011: 

[Refer to PDF for image: vertical bar graph] 

Fiscal year: 2003; 
Expenditures: $458 million. 

Fiscal year: 2004; 
Expenditures: $604 million. 

Fiscal year: 2005; 
Expenditures: $568 million. 

Fiscal year: 2006; 
Expenditures: $658 million. 

Fiscal year: 2007; 
Expenditures: $1.250 billion. 

Fiscal year: 2008; 
Expenditures: $1.094 billion. 

Fiscal year: 2009; 
Expenditures: $1.081 billion. 

Fiscal year: 2010; 
Expenditures: $1.290 billion. 

Fiscal year: 2011; 
Expenditures: $1.312 billion. 

Source: GAO analysis of DOJ data. 

[End of figure] 

Revenues resulting from forfeitures are used to pay the forfeiture 
program's expenditures in three major categories: 

1. payments to third parties, including payments to satisfy interested 
parties such as lienholders, as well as the return of funds to victims 
of large-scale fraud; 

2. equitable sharing payments to state and local law enforcement 
agencies that participated in law enforcement efforts resulting in the 
forfeitures; and: 

3. all other program operations expenses that include a total of 13 
expenditure categories such as asset management and disposal, the 
storage and destruction of drugs, and investigative expenses leading 
to a seizure. 

Table 1 shows the AFF's expenditures across all fiscal years, 
including payments to third parties, equitable sharing, and all other 
program operations expenses. 

Table 1: AFF's Expenditures across All Fiscal Years by Type of 
Expenditure: 

Third-party interests; 
Fiscal year: 2003: $44 million; 
Fiscal year: 2004: $49 million; 
Fiscal year: 2005: $82 million; 
Fiscal year: 2006: $66 million; 
Fiscal year: 2007: $558 million; 
Fiscal year: 2008: $248 million; 
Fiscal year: 2009: $173 million; 
Fiscal year: 2010: $333 million; 
Fiscal year: 2011: $376 million. 

Equitable sharing payments; 
Fiscal year: 2003: $218 million; 
Fiscal year: 2004: $268 million; 
Fiscal year: 2005: $271 million; 
Fiscal year: 2006: $324 million; 
Fiscal year: 2007: $400 million; 
Fiscal year: 2008: $437 million; 
Fiscal year: 2009: $396 million; 
Fiscal year: 2010: $388 million; 
Fiscal year: 2011: $445 million. 

All other program operations expenses; 
Fiscal year: 2003: $196 million; 
Fiscal year: 2004: $287 million; 
Fiscal year: 2005: $215 million; 
Fiscal year: 2006: $268 million; 
Fiscal year: 2007: $292 million; 
Fiscal year: 2008: $409 million; 
Fiscal year: 2009: $512 million; 
Fiscal year: 2010: $569 million; 
Fiscal year: 2011: $491 million. 

Total expenditures; 
Fiscal year: 2003: $458 million; 
Fiscal year: 2004: $604 million; 
Fiscal year: 2005: $568 million; 
Fiscal year: 2006: $658 million; 
Fiscal year: 2007: $1.250 billion; 
Fiscal year: 2008: $1.094 billion; 
Fiscal year: 2009: $1.081 billion; 
Fiscal year: 2010: $1.290 billion; 
Fiscal year: 2011: $1.312 billion. 

Source: GAO analysis of DOJ data. 

[End of table] 

Equitable sharing payments to state and local law enforcement agencies 
have generally increased since fiscal year 2003; in fiscal year 2003, 
equitable sharing payments totaled $218 million, and in fiscal year 
2011, equitable sharing totaled $445 million.[Footnote 18] Moreover, 
when compared with DOJ grant programs, equitable sharing is one of the 
largest DOJ programs providing funds to recipients in order to support 
state and local law enforcement activities. For example, in fiscal 
year 2010, the Victims of Crime Assistance (VOCA) Program was DOJ's 
largest grant program; DOJ distributed approximately $412 million in 
funds through the VOCA program. By way of comparison, equitable 
sharing in fiscal year 2010 provided a total of $388 million in 
equitable sharing payments to state and local law enforcement 
agencies. According to state and local law enforcement officials we 
met with, because most of their departmental budgets go toward 
personnel costs, the equitable sharing program is extremely important 
because it helps fund equipment, training, and other programs that 
they may otherwise not be able to afford. For example, one local law 
enforcement agency stated that salaries make up 96 percent of its 
annual budget. As a result, equitable sharing dollars allow them to 
purchase equipment they could not otherwise buy with the limited 
available annual budget. See appendix I for the total equitable 
sharing payments made to each state in fiscal year 2011. 

Equitable sharing has generally increased from 2003 through 2011; 
however, as a percentage of total expenditures, equitable sharing has 
decreased from 48 percent of total expenditures in 2003 to 34 percent 
in 2011. This percentage decrease began in fiscal year 2006, when 
another expenditure category--payments to third parties including 
lienholders and victims--increased from 10 to 44 percent of total 
expenditures. DOJ officials attribute the shift among these major 
expense categories in part to the increase in the prosecution of fraud 
cases with significant numbers of victims. Moreover, because large-
case deposits are generally the result of fraud and financial crime 
cases, they typically have a greater proportion of payments to victims 
than equitable sharing, a fact that may also contribute to the overall 
percentage decrease in equitable sharing.[Footnote 19] For example, in 
fiscal year 2007, as a result of a non-prosecution agreement with 
Adelphia Communications, over $700 million in cash and stocks was 
forfeited and liquidated.[Footnote 20] In fiscal year 2012, the net 
proceeds from these forfeitures, which totaled approximately $728 
million, were returned to victims. 

In addition to equitable sharing and third-party payments to victims 
and lienholders, the AFF is used to pay for a variety of program 
operations expenses. According to DOJ, the primary purpose of the AFF 
is to provide a stable source of resources to cover the costs of the 
Asset Forfeiture Program, including the costs of seizing, evaluating, 
inventorying, maintaining, protecting, advertising, forfeiting, and 
disposing of property seized for forfeiture.[Footnote 21] Among the 
program operations expenses covered by the AFF are costs associated 
with storing, maintaining, and disposing of forfeited assets. The AFF 
also funds case-related expenses including costs of managing 
paperwork, costs associated with the prosecution of forfeiture cases, 
costs associated with the execution of forfeiture judgments, and the 
costs of advertising.[Footnote 22] The AFF also funds a variety of 
investigative expenses associated with forfeiture, including payments 
to reimburse any federal agency participating in the AFF for 
investigative costs leading to seizures. Other investigative expenses 
may include awards for information, purchase of evidence, and costs to 
fund joint task force operations. For additional details regarding 
expenditure categories, see appendix II. 

DOJ Carries Over Funds Needed to Cover Anticipated Expenditures in the 
Next Fiscal Year, but Transparency Could Be Improved: 

At the end of each fiscal year, DOJ carries over funds in order to 
help ensure it has sufficient resources to cover all AFF expenses that 
may not be covered by the next year's revenues; however, the process 
DOJ uses to determine how much to carry over each year is not 
documented or outlined in its Congressional Budget Justifications. 
While DOJ officials stated that they cannot predict how much revenue 
will result from forfeitures in any given year, they attempt to 
estimate their anticipated revenues based on prior years' trends. They 
then carry over funds needed to cover anticipated expenses for the 
coming year including funds needed to cover the costs of pending 
equitable sharing and third-party payments as well as funds needed to 
ensure the Asset Forfeiture Program's solvency--including the 
anticipated costs associated with continuing forfeiture activities--at 
the start of the next fiscal year. Similar to the growth in revenues 
and expenditures, the funds DOJ carries over to cover these authorized 
expenses at the end of each fiscal year have grown since 2003. For 
example, at the end of fiscal year 2003, DOJ carried over 
approximately $365 million both to maintain solvency and to cover 
anticipated equitable sharing and third-party payments in fiscal year 
2004. In comparison, in fiscal year 2011, DOJ carried over a total of 
$844 million to cover these expenditures. Additionally, DOJ officials 
emphasized that because revenues from fraud and financial crime cases 
have increased, the funds needed to make third-party payments, 
including payments to victims, have also increased. The flow of funds 
into and out of the AFF is complex and involves an interaction among 
revenues, expenditures, and funds carried over to manage the AFF. The 
following illustrates how DOJ used revenues, expenditures, and 
carryover funds to manage the AFF in fiscal year 2010: 

* At the start of fiscal year 2010, DOJ carried over a total of $634 
million in funds from fiscal year 2009 to maintain the program's 
solvency and for pending equitable sharing and third-party payments. 
These funds were used at the start of fiscal year 2010 to continue 
operations, such as paying expenses for asset storage, and to cover 
pending equitable sharing and third-party payments. In addition to the 
$634 million, $207 million was reserved to cover DOJ's fiscal year 
2010 rescission. This rescission was proposed in the President's 
budget, and later passed by Congress and enacted into law. As a 
result, at the start of fiscal year 2010, DOJ carried over a total of 
$841 million in funds from fiscal year 2009, as shown in table 2 below. 

* In the course of fiscal year 2010, a total of approximately $1.58 
billion was deposited into the AFF, including revenues received from 
forfeitures.[Footnote 23] 

* Based on the total of $841 million that was carried over from fiscal 
year 2009 plus the $1.58 billion deposited into the AFF in fiscal year 
2010, DOJ then had approximately $2.42 billion in total available 
resources in fiscal year 2010. Of these resources, DOJ obligated $1.45 
billion in fiscal year 2010 and carried over $975 million into fiscal 
year 2011 to maintain solvency and reserves and to cover the proposed 
fiscal year 2011 rescission.[Footnote 24] 

* While DOJ had obligated $1.45 billion for the three main expenditure 
categories; equitable sharing, third-party interests, and all other 
program operations expenses, DOJ's actual expenditures in fiscal year 
2010 totaled $1.29 billion. The difference of $0.16 billion in fiscal 
year 2010 represents funds that had been obligated, but had not yet 
been spent. According to DOJ officials, there may be a lag between the 
funds obligated in a fiscal year and the actual expenditures, and 
therefore, it is not uncommon for the total obligations to be higher 
than the expenditures in a given fiscal year. Table 2 shows the total 
funds available for use in fiscal year 2010. 

Table 2: Total Funds Available for Use in Fiscal Year 2010: 

Carryover from fiscal year 2009[A]: $841 million. 

Plus deposits into the AFF during fiscal year 2010: $1.580 billion. 

Total resources: $2.420 billion. 

Less total obligations for fiscal year 2010: -$1.450 billion. 

Total funds carried over for fiscal year 2011[B]: $975 million. 

Source: GAO analysis of DOJ data. 

Note: Totals may not add due to rounding. 

[A] This amount includes funds to maintain solvency, cover pending 
equitable sharing and third-party payments, and funds needed to cover 
the fiscal year 2010 rescission. 

[B] According to DOJ officials, they had originally planned to carry 
over approximately $724 million into fiscal year 2011, but the actual 
amount carried over ($975 million) was higher due to the unpredictable 
dynamics of fund deposits. 

[End of table] 

In order to identify the funds that will need to be carried over to 
cover anticipated expenses for the coming year, DOJ officials stated 
that they use reports generated from its asset-tracking system to 
identify pending equitable sharing and third-party payments.[Footnote 
25] These reports provide DOJ with information to determine carry over 
funds needed for the disbursements that must be paid in the next 
fiscal year.[Footnote 26] In addition, DOJ carries over funds needed 
to ensure the Asset Forfeiture Program's solvency at the start of the 
next fiscal year. According to DOJ officials, they consider a number 
of factors when calculating the funds needed to maintain solvency, 
such as historical data including information on the costs of past 
contracts, salary costs, and other expenses; known future expenses 
including salaries and contracts; and the costs of any potential new 
expenditures. 

DOJ officials explained the general factors they consider when 
carrying over funds needed to cover anticipated expenditures in the 
next fiscal year, but they do not specify in the AFF's Congressional 
Budget Justifications how they determine the total amounts carried 
over each year. Specifically, the Congressional Budget Justifications 
do not include information on how DOJ calculated the amounts carried 
over nor do they explain the significant variations from one year to 
the next in the amount of funds carried over for solvency. For 
example, in fiscal year 2007, DOJ carried over $188 million based on 
its estimates of what it needed to cover solvency. The amount carried 
over to cover solvency then increased to $402 million in fiscal year 
2009 and decreased to $169 million by fiscal year 2011. Figure 4 shows 
the variation in carryover funds retained in the AFF at the end of 
each fiscal year to cover solvency, equitable sharing, and third-party 
payments from fiscal years 2003 through 2011. 

Figure 4: Funds Carried Over at the End of the Fiscal Year to Cover 
Solvency, Equitable Sharing, and Third-Party Payments in the Next 
Fiscal Year: 

[Refer to PDF for image: stacked vertical bar graph] 

Fiscal year: 2003; 
Maintain AFF solvency: $282 million; 
Equitable sharing and third-party payments: $83 million; 
Total: $365 million. 

Fiscal year: 2004; 
Maintain AFF solvency: $180 million; 
Equitable sharing and third-party payments: $82 million; 
Total: $261 million. 

Fiscal year: 2005; 
Maintain AFF solvency: $188 million; 
Equitable sharing and third-party payments: $73 million; 
Total: $260 million. 

Fiscal year: 2006; 
Maintain AFF solvency: $197 million; 
Equitable sharing and third-party payments: $134 million; 
Total: $330 million. 

Fiscal year: 2007; 
Maintain AFF solvency: $188 million; 
Equitable sharing and third-party payments: $140 million; 
Total: $328 million. 

Fiscal year: 2008; 
Maintain AFF solvency: $257 million; 
Equitable sharing and third-party payments: $250 million; 
Total: $507 million. 

Fiscal year: 2009; 
Maintain AFF solvency: $402 million; 
Equitable sharing and third-party payments: $232 million; 
Total: $634 million. 

Fiscal year: 2010; 
Maintain AFF solvency: $290 million; 
Equitable sharing and third-party payments: $345 million; 
Total: $635 million. 

Fiscal year: 2011; 
Maintain AFF solvency: $169 million; 
Equitable sharing and third-party payments: $675 million; 
Total: $844 million. 

Source: GAO analysis of DOJ data. 

Note: The funds carried over to maintain AFF solvency include start-of-
year operational expenses such as asset storage. 

[End of figure] 

DOJ officials stated that a number of cost drivers may change the 
funds needed for solvency from year to year. These cost drivers 
include salaries for government employees, information systems costs, 
asset management and disposal contracts, and contracts for 
administrative support staff, among other things. According to DOJ, 
these categories comprise recurring operational costs of the Asset 
Forfeiture Program. While these expenses are generally funded by AFF 
revenues, DOJ carries over funds to ensure it has sufficient resources 
that may not be covered by the next year's revenues. Moreover, 
additional funds may need to be carried over to account for any number 
of program uncertainties.[Footnote 27] For example, the AFF could be 
responsible for making payments related to pending judicial actions, 
in the event that DOJ were to lose a forfeiture case in court. 
Therefore, DOJ may carry over more funds from one fiscal year to the 
next in order to cover these types of liabilities. DOJ officials 
stated that they estimate needed carryover funds by reviewing the cost 
drivers, as well as by assessing the risk that revenues may be less 
than projected. DOJ officials further noted that planning for AFF 
carryover and the actual carryover can differ due to the unpredictable 
dynamics of the fund. According to DOJ officials, there is no 
documented process used to determine the amount of funds that are 
carried over at the end of each fiscal year. 

Our prior work has emphasized the importance of transparency in 
federal agencies' budget presentations to help provide Congress the 
necessary information to make appropriation decisions and conduct 
oversight.[Footnote 28] The department provides a yearly budget 
justification to Congress that details the estimated revenues, 
expenses, and carryover requirements for the upcoming fiscal year as 
well as AFF-related performance information. Officials further noted 
that the Congressional Justification includes discussions of the 
various categories of fund expenses, but does not include a detailed 
discussion of the process used to estimate the amounts carried over. 
Without a clearly documented and transparent process that demonstrates 
how DOJ determines the amounts that will be carried over each year, it 
is difficult to determine whether DOJ's conclusions regarding the 
amounts that need to be carried over each year are well founded. 
Providing more transparent information as part of the AFF's annual 
budget process would better inform Congress' oversight of the AFF, by 
making it easier to evaluate whether the funds carried over to 
maintain Asset Forfeiture Program solvency and cover pending equitable 
sharing and third-party payments adequately reflect the AFF's needed 
resources. 

Since 2003, DOJ Has Retained Excess Balances in the AFF to Cover 
Yearly Proposed Rescissions, and These Rescissions Have Since 
Accumulated to Over Half a Billion Dollars: 

After revenues needed to cover expenses in the current and upcoming 
fiscal years have been carried over, DOJ reserves funds to cover 
rescissions. After these funds have been reserved, any funds 
determined to be in excess of these requirements (excess unobligated 
balances) may be declared as Super Surplus. While these Super Surplus 
balances may be used at DOJ's discretion for a variety of purposes, in 
recent years, these balances have been used as a means to supplement 
the funds reserved to cover yearly rescissions proposed in the 
President's budget, and later passed by Congress and enacted into law. 
[Footnote 29] Figure 5 provides a description of the process for 
identifying Super Surplus balances in any given fiscal year. 

Figure 5: Process for Identifying Excess Unobligated (Super Surplus) 
Balances: 

[Refer to PDF for image: illustration] 

A: Current year revenues; 
B: Current year expenditures; 
C: Remaining funds are carried over to cover expenses in the next 
fiscal year (solvency, equitable sharing and third party payments, and 
rescissions):  
* Excess unobligated balances (super surplus)-—after needed revenues 
to cover program expenses for forfeiture activities in the current and 
upcoming fiscal year have been identified, any remaining funds 
identified at the end of the fiscal year may be declared an excess 
unobligated balance (super surplus): 
- Any federal law enforcement activities; 
- Litigative and prosecutive activities; 
- Any other authorized purpose (i.e. additional funds needed for   
rescission coverage); 
D: The funds carried over to cover expenses in the next fiscal year 
are then combined with the next fiscal year's revenues to cover the 
next fiscal year's expenditures. 

Source: DOJ. 

[End of figure] 

Rescissions are legislative actions to reduce an agency's budgetary 
resources. For example, in fiscal year 2010, $387 million was 
rescinded from the AFF, and in fiscal year 2011, the enacted 
rescission totaled $495 million. Rescinded funds are generally taken 
from an agency and returned to the Treasury before they are obligated. 
However, per Office of Management and Budget (OMB) guidance, rescinded 
funds from the AFF have not been returned to the Treasury. Instead, 
DOJ has treated the funds as unavailable for obligation for the 
remainder of the fiscal year for which the rescission was enacted. 
[Footnote 30] At the beginning of each new fiscal year, DOJ would have 
made the rescinded funds available for obligation again, also in 
response to OMB guidance, had a new rescission not been enacted. With 
the enactment of a new rescission for the subsequent fiscal year, 
however, DOJ has continued to treat the rescinded funds as unavailable 
for obligation. For example, the $387 million that was rescinded from 
the AFF in fiscal year 2010 was treated as unavailable for obligation 
in fiscal year 2010, and was then used again to cover part of the 
enacted $495 million rescission in fiscal year 2011. To make up the 
difference needed to meet the $495 million rescission in fiscal year 
2011, DOJ used unobligated balances in the amount of $233 million. 
[Footnote 31] Table 3 shows the enacted rescissions for each fiscal 
year, as well as the unobligated balances used by DOJ in order to meet 
the rescissions. 

Table 3: Funds Reserved to Cover AFF's Annual Rescissions for Fiscal 
Years 2003 through 2011: 

1. Enacted rescission; 
2003: $51 million; 
2004: $62 million; 
2005: $102 million; 
2006: $102 million; 
2007: $170 million; 
2008: $240 million; 
2009: $285 million; 
2010: $387 million; 
2011: $495 million. 

2. Funds maintained in the AFF from previous rescissions[A]; 
2003: $45 million; 
2004: $51 million; 
2005: $62 million; 
2006: $102 million; 
2007: $102 million; 
2008: $170 million; 
2009: $240 million; 
2010: $285 million; 
2011: $387 million. 

3. Unobligated balances reserved to help cover rescission[B]; 
2003: $23 million; 
2004: $12 million; 
2005: $40 million; 
2006: $1 million; 
2007: $68 million; 
2008: $70 million; 
2009: $45 million; 
2010: $207 million; 
2011: $233 million. 

Source: GAO analysis of DOJ data. 

Notes: Rows 2 and 3 generally add up to the total enacted rescissions 
(as represented in row 1). However, in fiscal years 2003, 2010, and 
2011, DOJ reserved funds greater than the enacted rescission. 
According to DOJ officials, DOJ believed that future rescissions would 
increase and so a greater amount was reserved to ensure that DOJ could 
meet proposed future rescissions. 

[A] Funds from the prior years' rescission were used to help cover the 
new year's rescission. 

[B] According to DOJ officials, unobligated and excess unobligated 
balances (Super Surplus) are used to help cover the annual rescissions. 

[End of table] 

One effect of these rescissions is to reduce the department's 
discretionary spending in the year in which the rescission was 
enacted. This could ultimately decrease the size of the federal 
deficit, provided the decreased spending from the rescission is not 
offset by increased spending elsewhere. For example, in fiscal year 
2012, DOJ's discretionary budget authority was reduced to $27.4 
billion, due in part to the $675 million enacted AFF rescission. 

DOJ Could Enhance Controls and Oversight Mechanisms for Its Equitable 
Sharing Program: 

DOJ has established guidelines and oversight mechanisms for the 
equitable sharing program, but additional controls could enhance the 
consistency and transparency of the program. Moreover, DOJ has 
recently started conducting reviews of state and local law enforcement 
agencies that participate in the equitable sharing program to 
determine the extent to which they are complying with program policies 
as well as bookkeeping, accounting, and reporting requirements. 

DOJ Has Established Guidelines for Making Equitable Sharing 
Determinations, but Additional Controls Could Improve Consistency and 
Transparency: 

Guidelines Governing the Equitable Sharing Process: 

DOJ has established written guidelines governing how state and local 
law enforcement agencies should apply for equitable sharing.[Footnote 
32] Specifically, according to the guidelines, state and local law 
enforcement agencies must submit an application for equitable sharing 
in which they outline identifying information for their agency, 
information on the asset that was forfeited, how they intend to use 
the asset (or the proceeds of the asset), and the number of work hours 
their agency contributed to the investigation.[Footnote 33] 

In addition, DOJ has established mechanisms governing how DOJ agencies 
should make equitable sharing determinations. Specifically, the field 
office for the DOJ agency that served as the lead federal agency in 
the investigation is responsible for making an initial recommendation 
regarding the percentage of the proceeds of the forfeited asset that 
each participating agency should receive. According to forfeiture 
statutes governing the transfer of forfeited property to state and 
local law enforcement agencies, equitable sharing determinations must 
bear a reasonable relationship to the degree of direct participation 
of the requesting agency in the total law enforcement effort leading 
to the forfeiture.[Footnote 34] As a general rule, recommendations 
made by the field office are to be based on a comparison of the work 
hours that each federal, state, and local law enforcement agency 
contributed to the investigation. However, according to DOJ 
guidelines, further adjustments to sharing percentages may be made 
when work hours alone do not reflect the relative value of an agency's 
participation in an investigation. For example, if a state or local 
law enforcement agency contributed additional resources or equipment 
to an investigation, its sharing percentage might be adjusted upward 
from what it would be based on work hours alone. 

DOJ has also established mechanisms for ensuring that equitable 
sharing recommendations are reviewed and approved by the appropriate 
authorities within DOJ depending on the amount and type of forfeiture. 
Specifically, once state and local law enforcement agencies complete 
the application for equitable sharing, DOJ's written guidelines state 
that the field office for the DOJ agency that served as the lead 
federal agency in the investigation should document its sharing 
recommendations for each of the agencies that participated in the 
investigation.[Footnote 35] The field office is then required to 
forward both the application forms completed by state and local law 
enforcement agencies and sharing recommendations to investigative 
agency headquarters officials for review. The review process differs 
depending on the amount and type of the forfeiture, as follows: 

* For administrative forfeitures less than $1 million, agency 
headquarters officials are responsible for reviewing and approving the 
final sharing determination. 

* For judicial forfeitures less than $1 million, agency headquarters 
officials are to forward the recommendation to the USAO for final 
approval. 

* In any administrative or judicial forfeiture where the total 
appraised value of all forfeited assets is $1 million or more, in 
multidistrict cases, and in cases involving the equitable transfer of 
real property, the agency headquarters officials forward the 
recommendation to the USAO for review, which is then submitted to 
AFMLS officials for review. 

- Where the investigative agency, the USAO, and AFMLS concur in a 
sharing recommendation, the Assistant Attorney General makes the final 
equitable sharing determination.[Footnote 36] 

- Where the investigative agency, the USAO, and AFMLS do not all 
concur in a sharing recommendation, the Deputy Attorney General (DAG) 
determines the appropriate share. 

Figure 6 shows the steps involved in making equitable sharing 
determinations. 

Figure 6: Process for Making Equitable Sharing Determinations: 

[Refer to PDF for image: illustration] 

1. Application: 
State and Local Law Enforcement Agencies Submit Application Equitable 
Sharing. 

2. Recommendation: 
DOJ Field Office that Served as Lead Investigative Agency Makes 
Equitable Sharing Recommendations.  

3. Initial review: 
Applications and Recommendations are REviewed by HQ Officials for the 
DOJ Agency that Served as the Lead Investigative Agency. 

4. Final review and approval: 

Type of forfeiture: Administrative Forfeitures Under $1 million; 
Approving authorities: Agency HQ Officials. 

Type of forfeiture: Administrative Forfeitures Over $i million; 
Approving authorities: AFMLS and the Assistant Attorney General or 
Deputy Attorney General. 

Type of forfeiture: Judicial Forfeitures Under $1 million; 
Approving authorities: USAO. 

Type of forfeiture: Judicial Forfeitures Over $1 million; 
Approving authorities: AFMLS and the Assistant Attorney General or 
Deputy Attorney General. 

Note: In administrative and judicial forfeitures over $1 million where 
the investigative agency, the United States Attorney's Office (USAO), 
and Asset Forfeiture Money Laundering Section (AFMLS) concur in a 
sharing recommendation, the Assistant Attorney General reviews and 
approves the final equitable sharing decision. However, by delegation 
dated August 26, 2011, the Assistant Attorney General for the Criminal 
Division delegated his authority to determine equitable sharing 
matters between $1 and $5 million to the Chief of AFMLS, where the 
seizing agency, the USAO, and AFMLS all agree on the proposed sharing 
allocations. Where the investigative agency, the USAO, and AFMLS do 
not all concur in a sharing recommendation, the Deputy Attorney 
General (DAG) determines the appropriate share. 

Source: DOJ. 

[End of figure] 

Guidance for Making Adjustments to Equitable Sharing Percentages: 

While DOJ has established guidance indicating that adjustments to 
sharing percentages may be made when a state or local law enforcement 
agency's work hours alone do not reflect the value of its 
participation in an investigation, DOJ has not developed guidance 
regarding how to apply the qualitative factors that may warrant 
departures from sharing percentages. DOJ agencies currently make 
adjustments to sharing percentages based on a number of qualitative 
factors regarding the additional assistance or contributions state or 
local law enforcement agencies may have made during an investigation. 
According to DOJ's written guidelines, DOJ agencies must take these 
factors into account when determining whether to adjust an equitable 
sharing percentage beyond a strict work hour allocation. For example, 
according to DOJ guidelines, the deciding authority should consider 
such factors as the inherent importance of the activity, the length of 
the investigation, whether an agency originated the information 
leading to the seizure, or whether an agency provided unique and 
indispensable assistance, among others. In addition, DOJ's Equitable 
Sharing Guidelines state that each agency may use judgment when 
determining how these qualitative factors should be used to adjust 
sharing percentages. 

In the course of our review, DOJ officials provided examples of these 
qualitative factors. For example, if a state or local law enforcement 
agency provided a helicopter, drug-sniffing dog, or a criminal 
informant to an investigation, DOJ would consider these contributions 
to be unique or indispensable assistance. In one case we reviewed, a 
local law enforcement agency that participated in a joint 
investigation with federal agents would have received 7.4 percent in 
equitable sharing based on the work hours it contributed to the 
investigation. However, the agency also provided information obtained 
from a confidential source that led to the seizure and provided a 
helicopter for aerial surveillance. As a result, its final sharing 
determination was adjusted upward from 7.4 percent to 12 percent. If 
the net proceeds of the forfeiture are $1.6 million once all 
investigative and forfeiture-related expenses have been paid, the 
resulting equitable sharing payment made to the law enforcement agency 
will increase from $118,400 to $192,000.[Footnote 37] 

Standards for Internal Control in the Federal Government calls for 
significant events to be clearly documented in directives, policies, 
or manuals to help ensure operations are carried out as intended. 
AFMLS officials report that they have established "rules of thumb" 
based on historical knowledge or precedent when applying these 
qualitative factors to equitable sharing adjustments that are subject 
to their review, but have not issued guidance to the DOJ agencies. 
Further, headquarters officials for each of the DOJ agencies 
emphasized that they follow the guidelines issued by DOJ when making 
adjustments to sharing percentages. However, as previously discussed, 
these guidelines outline the qualitative factors that may be 
considered when making adjustments to sharing percentages, but they do 
not include any additional information regarding how qualitative 
factors should be used to adjust sharing percentages. As a result, 
agency headquarters officials stated that field office staff use their 
own judgment when determining how qualitative factors should be used 
to adjust sharing percentages. AFMLS officials state that adjustments 
to equitable sharing percentages based on qualitative factors should 
be made on a case-by-case basis because each investigation is unique 
and the facts and circumstances of each case must be considered in 
totality before making adjustments to sharing determinations. While we 
recognize the inherently subjective nature of evaluating each agency's 
unique contributions to a case based on facts and circumstances, 
additional guidance regarding how to apply the qualitative factors 
could help to improve transparency and better ensure consistency with 
which these qualitative factors are applied over time or across cases. 
This is particularly important given that these determinations 
represent DOJ's overall assessment of each agency's unique 
contributions to an investigation and are a key component of how DOJ 
makes decisions about how much to award each agency. 

Transparency of Equitable Sharing Determinations: 

Documentation of Work Hours: 

DOJ's written guidance also requires the DOJ agencies that are 
responsible for making equitable sharing determinations to use work 
hours as the primary basis for calculating sharing percentages; 
however, agencies do not consistently document the work hours each 
agency contributed to the investigation. According to DOJ officials, 
the work hours contributed by each of the local, state, and federal 
law enforcement agencies involved in the investigation should be added 
together by the DOJ agency leading the investigation to arrive at a 
total. Each law enforcement agency's individual work hours are then 
divided by the total in order to determine each agency's equitable 
sharing percentage. DOJ's guidance states that every agency 
participating in the investigation should report work hours on either 
the application for equitable sharing or on the equitable sharing 
decision form. While state and local law enforcement agencies record 
their work hours on their applications for equitable sharing, we found 
that the DOJ agencies did not consistently record their own hours or 
the total hours contributed by all participating agencies. Of the 25 
equitable sharing determinations we reviewed, 5 included supplemental 
memos provided by the DOJ agencies detailing the work hours provided 
by all of the agencies involved in the investigation. However, these 
memos are not required under existing DOJ guidance and were provided 
in only those investigations subject to AFMLS review. For the 
remaining 20 determinations, DOJ agencies did not document this 
information. Specifically, although work hours serve as the primary 
basis of calculating equitable sharing determinations, in 20 of the 25 
determinations we reviewed, neither the work hours contributed by DOJ 
agencies nor the total number of work hours contributed by all of the 
agencies involved in the investigation were recorded in the documents 
provided to agency headquarters officials for review. According to DOJ 
agency headquarters officials responsible for reviewing and approving 
equitable sharing determinations, they rely on agents in the field to 
calculate sharing percentages and as a result, they do not verify the 
work hours contributed by each agency involved in the investigation. 
In the absence of documented work hours, it is unclear how deciding 
authorities could verify whether equitable sharing determinations 
involving millions of dollars in assets were calculated in accordance 
with established guidance. 

Documentation of Rationale for Making Adjustments to Sharing 
Determinations: 

DOJ's guidance does not explicitly require DOJ agencies to record the 
rationale for making adjustments to sharing percentages when work 
hours alone do not reflect the value of an agency's participation in 
the investigation. In the 25 equitable sharing determinations we 
reviewed, state and local law enforcement agencies often reported 
basic information regarding their agency's role in a particular 
investigation in their applications for equitable sharing, but DOJ's 
rationale for making adjustments to sharing percentages was not 
consistently documented in each investigation. Specifically, agencies 
did not consistently document whether they believed the state or local 
law enforcement agency made additional contributions that warranted 
departures from standard sharing percentages. Of the 25 determinations 
we reviewed, 5 included supplemental memos provided by the DOJ 
agencies indicating whether adjustments from standard sharing 
percentages were warranted. In 3 of these 5 AFMLS determinations, 
adjustments to sharing percentages were made based on the additional 
contributions of the state and local law enforcement agencies involved 
in the investigation and the memos detailed the rationale for making 
the adjustment in each case. However, these memos are not required 
under existing DOJ guidance and were provided in only those 
investigations subject to AFMLS review. For the remaining 20 
investigations, DOJ did not document this information. Moreover, 
because work hours were not documented in these cases, it was not 
possible to determine whether further adjustments were made based on 
additional contributions made by each of the agencies involved in the 
investigation. 

According to DOJ agency headquarters officials responsible for 
reviewing and approving equitable sharing determinations, they rely on 
agents in the field to calculate sharing percentages and, as a result, 
they do not attempt to verify the adjustments that are made based on 
each agency's additional contributions to the investigation. 
Specifically, agency headquarters officials reported that the field is 
responsible for confirming state and local law enforcement's 
contributions to a case through a variety of means including face-to-
face meetings, telephone conversations, and e-mails. For example, one 
agency official noted that although the rationale for making 
adjustments to sharing percentages is not included in the documents 
provided to headquarters for review and approval, the field office is 
most familiar with the investigation and the contributions that each 
state and local law enforcement agency may have made in a given case. 
Therefore, headquarters considers the field office to be the best 
source of information for how qualitative factors should be taken into 
account when adjusting sharing percentages. Agency headquarters 
officials further noted that it is rare for them to question equitable 
sharing recommendations made by the field or to ask for more 
information regarding the rationale for adjustments to sharing 
percentages. While the field office may have firsthand knowledge of 
the contributions of state and local law enforcement agencies in a 
given investigation, in the absence of the rationale for adjustments 
to sharing percentages being documented, there is limited transparency 
over how and why agencies make adjustments to sharing determinations 
when work hours alone do not accurately represent an agency's 
contribution to an investigation. 

Standards for Internal Control in the Federal Government states that 
transactions should be promptly recorded to maintain their relevance 
and value to management in controlling operations and making 
decisions. This applies to the entire process or life cycle of a 
transaction or event from the initiation and authorization through its 
final classification in summary records. In addition, control 
activities help to ensure that all transactions are completely and 
accurately recorded. In the absence of consistently documenting work 
hours and the rationale for making adjustments to sharing percentages, 
it is unclear how the equitable sharing deciding authorities could 
evaluate the nature and value of the contributions of each of the 
agencies involved in the investigation. Establishing a mechanism to 
ensure that this information is documented by all DOJ agencies 
responsible for making equitable sharing determinations could enhance 
the transparency of equitable sharing decisions. 

Monitoring of Equitable Sharing Decisions: 

In the absence of documenting work hours or the rationale for making 
adjustments to sharing percentages, deciding authorities have limited 
means to verify the basis for equitable sharing decisions. Agency 
headquarters officials responsible for reviewing and approving 
equitable sharing determinations report that they review equitable 
sharing applications and decision forms to ensure that they are 
complete and that sharing determinations appear reasonable. However, 
headquarters officials for each of the DOJ agencies reported that they 
rely on field office staff to ensure that equitable sharing 
percentages were calculated correctly based on the work hours and the 
qualitative factors that each federal, state, and local law 
enforcement agency contributed to the investigation. However, because 
the information that serves as the basis for equitable sharing 
recommendations--including work hours and the qualitative factors used 
to make adjustments to sharing percentages--are not subject to review 
by agency headquarters officials, DOJ does not have reasonable 
assurance that the equitable sharing determinations are made in 
accordance with the established guidance. According to Standards for 
Internal Control in the Federal Government, controls should generally 
be designed to ensure that ongoing monitoring occurs in the course of 
normal operations. Such monitoring should be performed continually and 
ingrained in the agency's operations. This could include regular 
management and supervisory activities, comparisons, reconciliations, 
or other actions. Developing a mechanism to verify the work hours and 
qualitative factors that serve as the basis for equitable sharing 
determinations could improve DOJ's visibility over equitable sharing 
determinations and help promote confidence in the integrity of the 
equitable sharing program. Agency headquarters officials have reported 
that altogether, DEA, ATF, and FBI reviewed a total of 52,034 
equitable sharing requests in fiscal year 2011, and 113 of these 
requests went to AFMLS for review and approval. As a result, agency 
headquarters officials note that they have limited resources to verify 
the basis for each and every equitable sharing determination. We 
recognize that in the face of these limited resources, it may not be 
practical for agency headquarters officials to review all of the 
information used in support of all equitable sharing determinations. 
However, a spot check approach would allow headquarters officials to 
assess the extent to which equitable sharing decisions are made in 
accordance with established guidelines to help address resource 
constraints. 

DOJ Has Established Requirements Governing the Use of Equitable 
Sharing Funds and Began Conducting Compliance Reviews of These 
Agencies in 2011: 

Requirements Governing the Uses of and Controls over Equitably Shared 
Funds and Property: 

DOJ has established requirements governing the permissible uses of 
equitable sharing funds. Specifically, DOJ's guidelines state that 
equitably shared funds or assets put into official use shall be used 
by law enforcement agencies for law enforcement purposes only. Some of 
the permissible uses of equitable sharing funds include training, 
facilities, equipment, travel and transportation in support of law 
enforcement activities, as well as paying for the costs of asset 
accounting and auditing functions.[Footnote 38] Examples of 
impermissible uses of equitable sharing funds include payments to 
cover the costs of salaries or benefits and non-law enforcement 
education and training.[Footnote 39] DOJ's guidelines also state that 
agencies should use federal sharing monies prudently and in such a 
manner as to avoid any appearance of extravagance, waste, or 
impropriety. For example, tickets to social events, hospitality suites 
at conferences, or meals outside of the per diem are all considered 
impermissible uses of shared funds. 

DOJ's guidelines further state that equitable sharing funds must be 
used to increase or supplement the resources of the receiving state or 
local law enforcement agency and should not be used to replace or 
supplant the appropriated resources of the recipient. This means that 
equitable sharing funds must serve only to supplement funds they would 
normally receive and must not be used as a substitute for funds or 
equipment that would otherwise be provided by the law enforcement 
agency. For example, if city officials were to cut the police 
department's budget by $100,000 as a result of the police department's 
receiving $100,000 in equitable sharing funds, DOJ would consider this 
to be an example of improper supplantation, which is not an allowable 
use of equitable sharing funds. 

In addition to establishing requirements governing the permissible 
uses of equitably shared funds and property, DOJ has also established 
bookkeeping, internal controls, reporting, and audit requirements that 
state and local law enforcement agencies must follow in order to 
participate in the equitable sharing program. For example, state and 
local law enforcement agencies must establish mechanisms to track 
equitably shared funds and property, implement proper bookkeeping and 
accounting procedures, maintain compliance with internal controls 
standards, and meet defined reporting standards. Among other things, 
DOJ's equitable sharing guidance calls for participating agencies to 
avoid commingling DOJ equitable sharing funds with funds from any 
other source, maintain a record of all equitable sharing expenditures, 
and complete annual reports known as Equitable Sharing Agreement and 
Certification Forms. These Equitable Sharing Agreement and 
Certification Forms require agencies participating in the equitable 
sharing program to report annually on the actual amounts and uses of 
equitably shared funds and property.[Footnote 40] Among other things, 
agencies must detail the beginning and ending equitable sharing fund 
balance, and the totals spent on specific law enforcement activities 
(e.g., training, computers, weapons, and surveillance equipment). In 
submitting the form each year, agencies must certify that they will be 
complying with the guidelines and statutes governing the equitable 
sharing program. 

In addition to the requirements outlined by DOJ, state and local 
agencies that receive equitable sharing funds must also comply with 
the Single Audit Act as outlined by OMB guidance.[Footnote 41] The 
Single Audit Act requires state and local governments and nonprofit 
organizations that expend a cumulative total of $500,000 or more in 
federal awards in a fiscal year to complete a Single Audit. According 
to DOJ officials, based on these requirements, the substantial 
majority of equitable sharing participants are required to comply with 
the Single Audit Act.[Footnote 42] Under a Single Audit, an auditor 
must provide his or her opinion on the presentation of the entity's 
financial statements and schedule of federal expenditures, and on 
compliance with applicable laws, regulations, and provisions of 
contracts or grant agreements that could have a direct and material 
effect on the financial statements. 

Compliance Reviews of Equitable Sharing Participants: 

In April 2011, during the course of our review, AFMLS began conducting 
compliance reviews of state and local law enforcement agencies 
participating in the equitable sharing program to determine the extent 
to which they are complying with established requirements. 
Specifically, AFMLS established a Compliance Review Team and began 
conducting regular compliance reviews of equitable sharing 
participants in April 2011.[Footnote 43] According to AFMLS officials, 
the Compliance Review Team was established in order to ensure that 
there were adequate controls and oversight mechanisms of the equitable 
sharing program in place. AFMLS officials stated that the resources 
needed to establish the Compliance Review Team did not become 
available until December 2010, at which point AFMLS initiated a pilot 
of the compliance review program. Among other things, in selecting 
equitable sharing participants to include in compliance reviews, AFMLS 
monitors news briefs regarding potential misuse of asset forfeiture 
funds among equitable sharing participants and also responds to 
referrals from the DOJ Office of Inspector General (OIG) and from the 
U.S. Attorneys' Offices.[Footnote 44] AFMLS officials noted that, thus 
far, they have not yet found any instances of intentional abuse of 
funds in the course of their compliance reviews that were not already 
identified beforehand either through news reports or referrals from 
the U.S. Attorneys' Offices.[Footnote 45] 

AFMLS has established guidelines for conducting compliance reviews of 
equitable sharing participants in order to determine the extent to 
which agencies are following established equitable sharing guidelines. 
Among other things, they select a sample of the agency's expenditures 
in order to substantiate the agency's records and to confirm that the 
expenditure was consistent with established DOJ guidelines. AFMLS also 
determines whether the agency has established an appropriate system of 
internal controls for tracking and recording equitable sharing 
receipts and expenditures. Further, AFMLS determines whether the 
agency was subject to Single Audit requirements and if so, whether the 
Single Audit including reporting on equitable sharing funds was 
completed as required. 

As of December 2011, AFMLS had completed a total of 11 onsite audits 
of approximately 9,200 state and local law enforcement agencies that 
participate in the equitable sharing program.[Footnote 46] AFMLS 
reports it currently has limited staff (eight total) and resources to 
conduct compliance reviews of equitable sharing participants. As a 
result, AFMLS reported conducting risk assessments in order to select 
agencies for compliance reviews. In addition to monitoring news briefs 
regarding the potential misuse of funds among equitable sharing 
participants, some of the issues that AFMLS considers as part of these 
risk assessments include the amount of each agency's equitable sharing 
expenditures, whether a state or local law enforcement agency has 
reported spending a significant amount of money in a sensitive area, 
and whether a small law enforcement agency that may be unfamiliar with 
the equitable sharing program suddenly received a large equitable 
sharing payment. The 11 compliance reviews completed in 2011 revealed 
that participants do not consistently follow requirements to properly 
account for equitable sharing receipts and expenditures, do not 
consistently comply with the allowable uses of equitable sharing 
funds, and do not consistently complete Single Audits as required. 
AFMLS identified one or more areas for corrective action in 9 of the 
11 compliance reviews.[Footnote 47] Two of the state and local law 
enforcement agencies were determined to be in full compliance with all 
of the equitable sharing requirements. In May 2012, AFMLS officials 
reported that all of the agencies had fully addressed the corrective 
actions identified by AFMLS. See appendix III for the results of the 
11 compliance reviews AFMLS has completed as of December 2011. 

AFMLS has established a mechanism to systematically track and analyze 
the results of these reviews. Specifically, the findings from each 
compliance review are entered into a tracking report, and follow-up 
with each agency is completed to ensure that corrective actions are 
taken. AFMLS officials noted that they may follow up with an agency 
multiple times to ensure that items identified for corrective action 
are addressed. According to AFMLS, tracking frequencies and trends 
identified in the course of compliance reviews is an important tool in 
risk evaluations for both future audit selections and return audits to 
specific participants with particularly troublesome problems. Further, 
AFMLS officials have stated that they plan to use the results of 
compliance reviews in order to identify larger trends that may need to 
be addressed across all equitable sharing participants. For example, 
AFMLS has found through these reviews that equitable sharing 
recipients are not consistently reporting equitable sharing 
expenditures on Single Audits. AFMLS has reported that it is currently 
working with both equitable sharing recipients and the auditor 
community to address this issue. AFMLS's approach to conducting 
compliance reviews of equitable sharing participants is consistent 
with standards for internal control, which state that monitoring 
should assess the quality of performance over time and ensure that the 
findings of audits and other reviews are promptly resolved. 

Conclusions: 

With more than $1 billion in forfeited assets deposited into the AFF 
every year since 2006, the Asset Forfeiture Program generates 
substantial revenue for the Department of Justice. These funds are 
used to cover annual operating expenses, to compensate crime victims, 
or are shared with state and local law enforcement agencies that 
participate in investigations resulting in forfeiture. The significant 
amounts of money involved as well as the sensitive nature of asset 
forfeiture mean it is imperative to be vigilant in maintaining the 
transparency of the program. Since the Asset Forfeiture Program's 
operations are supported by annual revenues, DOJ faces a challenging 
task estimating future revenues and expenditures each year. The AFF's 
annual revenues have consistently exceeded annual expenditures, 
allowing DOJ to cover annual rescissions and to reserve funds for the 
next fiscal year. This allows DOJ to ensure that the AFF has 
sufficient resources at the start of each fiscal year to cover 
solvency and pending equitable sharing and third-party payments. 
However, the AFF's Congressional Budget Justification does not clearly 
outline the factors that DOJ considers when determining the total 
amounts that need to be carried over each fiscal year. As part of the 
AFF's annual budget process, documenting how DOJ determines the funds 
that need to be carried over at the end of each year and providing 
additional details on that determination to Congress would provide 
more transparency over the process and would help Congress make more 
informed appropriations decisions. 

In addition, the authorization to share federal forfeiture proceeds 
with cooperating state and local law enforcement agencies is one of 
the most important provisions of asset forfeiture. DOJ has established 
guidelines stating that adjustments to equitable sharing percentages 
should be based on qualitative factors; however, additional guidance 
regarding how to apply these factors could help to improve the 
transparency and better ensure consistency with which adjustments to 
sharing percentages are made over time or across cases. Additionally, 
there are gaps in the extent to which key information that serves as 
the basis for equitable sharing decisions is documented. In the 
absence of documenting the work hours used to calculate initial 
equitable sharing percentages--the primary means to determine each 
agency's share of forfeiture proceeds--it is unclear how equitable 
sharing deciding authorities could verify the relative degree of 
participation of each of the agencies involved in the case. Similarly, 
documenting information on DOJ's rationale for making adjustments to 
sharing percentages could help to improve transparency over whether 
equitable sharing decisions are being made in accordance with DOJ's 
guidance. Additionally, establishing a mechanism to verify that 
equitable sharing determinations are made in accordance with 
established guidance would provide DOJ with greater assurance that 
there are effective management practices in place to help promote 
confidence in the integrity of the equitable sharing program. 

Recommendations for Executive Action: 

We are making four recommendations to the Attorney General. 

To help improve transparency over the AFF's use of funds, we recommend 
that the Attorney General provide more detailed information to 
Congress as part of the AFF's annual budget process, clearly 
documenting how DOJ determines the amount of funds to be carried over 
into the next fiscal year. 

To help improve management controls over the equitable sharing 
program, we recommend that the Attorney General direct AFMLS to take 
the following three actions: 

* Develop and implement additional guidance on how DOJ agencies should 
apply qualitative factors when making adjustments to equitable sharing 
percentages. 

* Establish a mechanism to ensure that the basis for equitable sharing 
determinations--including the work hours contributed by all 
participating agencies and the rationale for any adjustments to 
sharing percentages--are recorded in the documents provided to agency 
headquarters officials for review and approval. 

* Develop a risk-based mechanism to monitor whether key information in 
support of equitable sharing determinations is recorded and the extent 
to which sharing determinations are made in accordance with 
established guidance. 

Agency Comments: 

We provided a draft of this report to DOJ for its review and comment. 
DOJ did not provide official written comments to include in our 
report. However, in an e-mail received on June 21, 2012, the DOJ 
liaison stated that the department appreciated the opportunity to 
review the draft report and that DOJ concurred with our 
recommendations. DOJ further noted that the department will develop a 
plan of corrective action in order to address the recommendations. DOJ 
also provided us written technical comments, which we incorporated as 
appropriate. 

We are sending copies of this report to the Attorney General, selected 
congressional committees, and other interested parties. In addition, 
this report is also available at no charge on the GAO website at 
[hyperlink, http://www.gao.gov]. 

If you or your staff have any further questions about this report, 
please contact me at (202) 512-9627 or maurerd@gao.gov. Contact points 
for our Offices of Congressional Relations and Public Affairs may be 
found on the last page of this report. Key contributors to this report 
are listed in appendix IV. 

Signed by: 

David C. Maurer: 
Director, Homeland Security and Justice Issues: 

List of Requesters: 

The Honorable Charles E. Grassley: 
Ranking Member: 
Committee on Judiciary: 
United States Senate: 

The Honorable Lamar Smith: 
Chairman: 
The Honorable John Conyers, Jr. 
Ranking Member: 
Committee on the Judiciary: 
House of Representatives: 

The Honorable Jim Sensenbrenner: 
Chairman: 
The Honorable Bobby Scott: 
Ranking Member: 
Subcommittee on Crime, Terrorism, and Homeland Security: 
Committee on the Judiciary: 
House of Representatives: 

The Honorable Frank R. Wolf: 
Chairman: 
The Honorable Chaka Fattah: 
Ranking Member: 
Subcommittee on Commerce, Justice, Science and Related Agencies: 
Appropriations Committee: 
House of Representatives: 

The Honorable Louie Gohmert: 
House of Representatives: 

[End of section] 

Appendix I: Equitable Sharing: 

State and local law enforcement agencies typically qualify for 
equitable sharing by participating directly with Department of Justice 
(DOJ) agencies in joint investigations leading to the seizure and 
forfeiture of property. Agencies may either receive a portion of the 
proceeds resulting from the sale of the forfeited asset or may request 
that a forfeited asset such as a vehicle be put into official use. Any 
property other than contraband or firearms may be transferred to a 
state or local agency for official use provided that it is used for 
law enforcement purposes. State and local law enforcement can receive 
equitable sharing payments after working on a joint case with one or 
more federal law enforcement partners or after participating in a case 
carried out by a federal law enforcement task force. Approximately 83 
percent of all equitable sharing determinations are the result of 
joint investigations. 

State and local law enforcement agencies can also qualify for 
equitable sharing by requesting that federal partners adopt a case 
initiated at the state or local level. An adoptive forfeiture occurs 
when local police officials effectively hand a case over to federal 
law enforcement officials provided that the property in question is 
forfeitable under federal law. According to DOJ officials, many state 
and local law enforcement agencies will make seizures pursuant to 
their state laws. However, they may reach out to federal law 
enforcement agencies to adopt a forfeiture if they don't have a state 
or local statute that allows them to carry out a forfeiture. For 
example, in a particular case, there may be large amounts of cash 
involved but no drugs found or seized. Federal statute allows for the 
forfeiture of assets based on illegal activity even if there are no 
drugs seized, whereas the state or local statute might not allow for 
this type of forfeiture. Alternatively, state and local law 
enforcement agencies may request that DOJ adopt a forfeiture in those 
cases where federal coordination or expertise is needed in the case. 
Our analysis shows a slight decrease in adoptive versus non-adoptive 
equitable sharing payments since 2003. In 2003, adoptions made up 
about 23 percent of all equitable sharing payments, while in 2010, 
adoptions made up about 17 percent of all equitable sharing payments. 
According to DOJ, as more states have established their own forfeiture 
laws, they may rely less on DOJ to adopt forfeiture cases and may 
instead pursue forfeitures under state law when appropriate. Figure 7 
shows the equitable sharing payments made to each state in fiscal year 
2011. 

Figure 7: Equitable Sharing Payments across the United States in 
Fiscal Year 2011: 

[Refer to PDF for image: Interactive graphic] 

Directions: Place mouse over each state name for the total equitable 
sharing payments made to that state in fiscal year 2011. 

Alabama: $4,625,798; 
Alaska: $848,365; 
Arizona: $10,807,622; 
Arkansas: $2,819,592; 
California: $79,114,369; 
Colorado: $3,311,836; 
Connecticut: $2,078,901; 
Delaware: $1,162,460; 
District of Columbia: $531,940; 
Florida: $38,002,622; 
Georgia: $30,105,598; 
Hawaii: $515,904; 
Idaho: $211,324; 
Illinois: $16,974,873; 
Indiana: $5,153,647; 
Iowa: $4,112,276; 
Kansas: $6,677,935; 
Kentucky: $8,196,557; 
Louisiana: $6,681,329; 
Maine: $606,883; 
Maryland: $6,152,579; 
Massachusetts: $13,979,779; 
Michigan: $12,869,964; 
Minnesota: $1,939,220; 
Mississippi: $4,010,034; 
Missouri: $11,417,367; 
Montana: $324,653; 
Nebraska: $26,444; 
Nevada: $3,700,713; 
New Hampshire: $1,506,234; 
New Jersey: $7,900,881; 
New Mexico: $3,170,049; 
New York: $48,454,026; 
North Carolina: $10,769,222; 
North Dakota: $24,377; 
Ohio: $9,919,862; 
Oklahoma: $4,211,447; 
Oregon: $2,227,967; 
Pennsylvania: $9,041,573; 
Puerto Rico: $1,264,996; 
Rhode Island: $4,394,363; 
South Carolina: $6,443,847; 
South Dakota: $199,088; 
Tennessee: $4,982,219; 
Texas: $31,115,888; 
Utah: $959,970; 
Vermont: $520,560; 
Virgin Islands: $512,702; 
Virginia: $6,399,519; 
Washington: $2,301,231; 
West Virginia: $1,599;594; 
Wisconsin: $3,911,233; 
Wyoming: $250,286. 

Source: GAO analysis of DOJ data. 

[End of figure] 

Our analysis shows a strong positive association between the equitable 
sharing payments made to each state and the state's total population. 
However, our analysis found no correlation between per capita 
equitable sharing payments and arrest rates, once we corrected for 
population size. It is important to note that a number of other 
factors may influence the amount of equitable sharing payments a state 
receives in a given year. For example, if a state or local law 
enforcement agency participated in a joint investigation that resulted 
in a very large forfeiture, the agency might receive a significant 
amount of equitable sharing dollars, even if no arrests were made in 
conjunction with the case. Alternately, an agency may work several 
cases that generate multiple arrests, but no forfeitures, so no 
equitable sharing payments would be made. Finally, differences in 
equitable sharing between states may be influenced by whether state 
and local law enforcement agencies decide to pursue forfeitures under 
their state laws versus those cases where federal involvement may be 
warranted. 

[End of section] 

Appendix II: Assets Forfeiture Fund Expenditure Categories: 

1. Third-Party Payments: 

Third-party payments are payments to satisfy third-party interests, 
including lienholders and other innocent parties, pursuant to 28 
U.S.C. § 524(c)(1)(D); payments in connection with the remission and 
mitigation of forfeitures, pursuant to 28 U.S.C. § 524(c)(1)(E). 

2. Equitable Sharing Payments: 

These funds are reserved until the receipt of the final forfeiture 
orders that result in distributions to the participants. Equitable 
sharing payments represent the transfer of portions of federally 
forfeited cash and proceeds from the sale of forfeited property to 
state and local law enforcement agencies and foreign governments that 
directly assisted in targeting or seizing the property. Most task 
force cases, for example, result in property forfeitures whose 
proceeds are shared among the participating agencies. 

All other program operations expenses: 

3. Asset Management and Disposal: 

According to DOJ, the primary purpose of the Assets Forfeiture Fund 
(AFF) is to ensure an adequate and appropriate source of funding for 
the management and disposal of forfeited assets. Also, funding is 
required for the assessment, containment, removal, and destruction of 
hazardous materials seized for forfeiture, and hazardous waste 
contaminated property seized for forfeiture. The United States 
Marshals Service (USMS) has primary responsibility for the storage and 
maintenance of assets, while the Drug Enforcement Administration (DEA) 
and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) are 
responsible for the disposal of toxic and hazardous substances. 

4. Case-Related Expenses: 

Case-related expenses are expenses associated with the prosecution of 
a forfeiture case or execution of a forfeiture judgment, such as 
advertising, travel and subsistence, court and deposition reporting, 
courtroom exhibit services, and expert witness costs. In appropriate 
cases, the services of foreign counsel may be necessary. 

5. Special Contract Services: 

The AFF uses contract personnel to manage the paperwork associated 
with forfeiture, including data entry, data analysis, word processing, 
file control, file review, quality control, case file preparation, and 
other process support functions. 

6. Investigative Expenses Leading to Seizure: 

Investigative expenses are those normally incurred in the 
identification, location, and seizure of property subject to 
forfeiture. These include payments to reimburse any federal agency 
participating in the AFF for investigative costs leading to seizures. 

7. Contracts to Identify Assets: 

Investigative agencies use these funds for subscription services to 
nationwide public record data systems, and for acquisition of 
specialized assistance, such as reconstruction of seized financial 
records. According to DOJ, these resources are used to identify assets 
during the investigative stage of the case, where such research will 
enhance effective use of the asset forfeiture sanction. DOJ officials 
note that if the government can improve upon the identification of ill-
gotten assets, the nature of the criminal wrongdoing can be better 
demonstrated and reinforced before the jury. Such evidence results in 
greater penalties for criminals who may have avoided such penalties in 
the past by successfully concealing such assets. 

8. Awards for Information Leading to a Forfeiture: 

The Omnibus Consolidated Appropriations Act, 1997,[Footnote 48] 
amended the Justice Fund statute to treat payments of awards based on 
the amount of the forfeiture the same as other costs of forfeiture. 
Therefore, the amount available each year for expenses for awards no 
longer had to be specified in annual appropriations acts. 

9. Automated Data Processing: 

Recurring costs include telecommunications support, system and 
equipment maintenance, user support and help desk, software 
maintenance, user training, equipment, and data center charges in 
support of the Consolidated Asset Tracking System (CATS). All asset 
forfeiture activity for each asset is recorded in CATS. According to 
DOJ, CATS enables access for more than 1,000 locations to a central 
database to perform full asset forfeiture life-cycle tasks more 
efficiently. The system provides current information to field 
personnel on the status of cases, integrates financial analysis 
capabilities into the inventory management process, provides the 
estimation of program income and expenses, and provides the capability 
for agency and department managers to review and assess program 
activity. 

10. Training and Printing: 

This category funds expenses for training personnel on aspects of the 
federal forfeiture program as well as other training necessary to 
maintain the competency of federal and contractor personnel dedicated 
to performing federal forfeiture functions. Printing costs reflect the 
continuing need to provide current legal advice and support. Expenses 
include updating and distributing manuals and pamphlets directly 
related to forfeiture issues, policies, and procedures. 

11. Other Program Management: 

This category includes several types of expenses in support of the 
overall management of the Asset Forfeiture Program, including 
management analysis, performance assessment, problem analysis, 
requirements analyses, policy development, and other special projects 
designed to improve program performance. This funding is to provide 
travel and per diem funds for temporary duty assignments needed to 
correct program deficiencies. Other activities funded under this 
heading include the annual audit of the financial statements of the 
Assets Forfeiture Fund and the Seized Asset Deposit Fund by an 
independent accounting firm and special assessments and reviews. This 
category also finances the Asset Forfeiture Money Laundering Section 
(AFMLS), Asset Forfeiture Management Staff (AFMS), and, since 2001, 
USMS headquarters administrative personnel and non-personnel costs 
associated with the forfeiture program. In addition, the AFF funds 
Deputy U.S. Marshal salaries to enhance the legal and fiduciary 
responsibilities that are inherent in the seizure of personal and real 
property during the pendency of a forfeiture action. 

12. Storage, Protection, and Destruction of Controlled Substances: 

These expenses are incurred to store, protect, or destroy controlled 
substances. 

13. Joint Federal, State, and Local Law Enforcement Operations: 

Under 28 U.S.C. § 524(c)(1)(l), the AFF has authority to pay for 
"overtime, travel, fuel, training, equipment, and other similar costs 
of state or local law enforcement officers that are incurred in a 
joint law enforcement operation with a federal law enforcement agency 
participating in the Fund." 

14. Awards for Information and Purchase of Evidence: 

Awards payable from the AFF directly support law enforcement efforts 
by encouraging the cooperation and assistance of informants. The AFF 
may also be used to purchase evidence of violations of drug laws, 
Racketeering Influenced and Corrupt Organizations (RICO), and criminal 
money laundering laws. According to DOJ, payment of awards to sources 
of information creates motivation for individuals to assist the 
government in the investigation of criminal activity and the seizure 
of assets. 

15. Equipping of Conveyances: 

This category provides funding to equip vehicles, vessels, or aircraft 
for law enforcement functions, but not to acquire them. Purchased 
equipment must be affixed to and used integrally with the conveyance. 
This funding is used for emergency and communications equipment, voice 
privacy and surveillance equipment, armoring, and engine upgrades and 
avionic equipment for aircraft. According to DOJ, it is only through 
AFF resources that many of these surveillance vehicles are available 
to the field districts that need them. DEA uses various surveillance 
techniques, including stationary and mobile platforms to conduct 
surveillance and gather intelligence, the cornerstone of cases against 
most major drug violators. In addition, evidence obtained through the 
use of such surveillance often provides the audio and video 
documentation necessary for conviction. 

[End of section] 

Appendix III: Results of Asset Forfeiture and Money Laundering Section 
Compliance Reviews Completed as of December 2011: 

DOJ's Asset Forfeiture and Money Laundering Section completed a total 
of 11 compliance reviews of equitable sharing participants in 2011. 
Table 4 shows the results of the 11 compliance reviews. 

Table 4: Results of Compliance Reviews of Equitable Sharing 
Participants: 

Results of 11 compliance reviews: Four agencies did not complete 
Annual Equitable Sharing Agreement and Certification Forms on time; 
Example of finding: AFMLS found that one agency submitted its 
Equitable Sharing Agreement and Certification Form late for 2 
consecutive years. In 2009, the form was submitted 126 days after the 
end of the fiscal year and in 2010, the form was submitted 118 days 
after the end of the fiscal year; 
Recommendation by AFMLS: Per section X.A of the Guide to Equitable 
Sharing for State and Local Law Enforcement Agencies, state and local 
law enforcement agencies must submit the Equitable Sharing Agreement 
and Certification Form within 60 days after the end of the agency's 
fiscal year. The law enforcement agency should submit the Equitable 
Sharing Agreement and Certification Form within the time frame 
specified. 

Results of 11 compliance reviews: Five agencies did not complete 
Annual Equitable Sharing Agreement and Certification Forms accurately; 
Example of finding: AFMLS found differences between one agency's 
fiscal year 2010 equitable sharing general ledger and its fiscal year 
2010 Equitable Sharing Agreement and Certification Form. Specifically, 
AFMLS found the total the agency reported spending on communications 
and computers was understated by $1,097.18. Similarly, AFMLS found 
that the total spent on electronic surveillance equipment was 
overstated by $4,376.20; 
Recommendation by AFMLS: The police department should restate its 
fiscal year 2010 Equitable Sharing Agreement and Certification Form to 
reflect the differences noted. 

Results of 11 compliance reviews: Six agencies did not complete Single 
Audits (or document equitable sharing funds in the Single Audit's 
schedule of federal expenditures) as required; 
Example of finding: AFMLS found that although one of the city's 
financial statements was subject to Single Audits under OMB A-133, the 
city police department's equitable sharing activity was not reviewed 
and reported on the Single Audit's schedule of federal expenditures; 
Recommendation by AFMLS: Per section X.B of the Guide to Equitable 
Sharing for State and Local Law Enforcement Agencies, agencies that 
received federally shared cash, proceeds, or tangible property are 
required to perform an audit consistent with the Single Audit Act 
Amendments of 1996 and OMB Circular A-133. Equitable Sharing Program 
activity should be reviewed and should be included on the schedule of 
expenditures of federal awards for fiscal year 2011 and future years 
as part of the city's annual audit. 

Results of 11 compliance reviews: Three agencies did not comply with 
AFMLS guidelines regarding permissible uses of equitable sharing 
funds[A]; 
Example of finding: In the course of one compliance review, AFMLS 
found that the law enforcement agency used $2,000 in equitable sharing 
funds to pay a legal settlement related to injuries suffered by an 
individual who was involved in a car accident with a vehicle driven by 
a police department official. AFMLS determined the use was 
impermissible and required the agency to reimburse the equitable 
sharing account for the amount of the settlement; 
Recommendation by AFMLS: Per section VIII of the Guide to Equitable 
Sharing for State and Local Law Enforcement Agencies, equitably shared 
funds shall be used by enforcement agencies for law enforcement 
purposes only. As legal settlement expenses are not listed in the 
guide as a permissible use, the police department should reimburse the 
equitable sharing account for the amount of the settlement. 

Results of 11 compliance reviews: Three agencies did not employ 
adequate internal controls over equitable sharing transactions and 
balances; 
Example of finding: In the course of AFMLS's review of one agency's 
equitable sharing transactions, the reviewers found that 21 out of 30 
invoices in support of purchases made with equitable sharing funds 
contained no evidence of approval prior to payment; 
Recommendation by AFMLS: Per section IX of the Guide to Equitable 
Sharing for State and Local Law Enforcement Agencies, all 
participating agencies must implement standard accounting procedures 
and internal controls to track equitably shared monies and tangible 
property. The law enforcement agency should ensure that approval 
control is being performed. This approval can be evidenced by a 
signature or initial on the final invoice received from each vendor. 

Results of 11 compliance reviews: Three agencies did not have 
appropriate bookkeeping and accounting procedures in place; 
Example of finding: AFMLS determined that one law enforcement agency 
was improperly commingling equitable sharing funds with other funds in 
its accounting system; 
Recommendation by AFMLS: The law enforcement agency should include 
expenditures of DOJ equitable sharing funds in the summary of shared 
monies spent section of the Equitable Sharing Agreement and 
Certification Form. Additionally, per section IX.A.1 of the Guide to 
Equitable Sharing for State and Local Law Enforcement Agencies, law 
enforcement agencies must establish a separate revenue account or 
accounting code for the proceeds of the program. The law enforcement 
agency should establish and maintain a separate accounting code to 
track DOJ equitable sharing funds. 

Source: GAO's analysis of DOJ data. 

Notes: Some agencies had more than one violation, which is why 
violations do not total to 11. 

[A] While AFMLS found that these three agencies did not strictly 
comply with the permissible use of funds as outlined in the Guide to 
Equitable Sharing for State and Local Law Enforcement Agencies, it did 
not identify any instances among these three agencies of intentional 
misuse or abuse of equitable sharing funds. 

[End of table] 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

David C. Maurer, (202) 512-9627 or maurerd@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Sandra Burrell and Dawn Locke 
(Assistant Directors), Sylvia Bascope, Samantha Carter, Raymond 
Griffith, Mike Harmond, Shirley Hwang, Valerie Kasindi, and Jeremy 
Manion made key contributions to the report. Also contributing to this 
report were Lydia Araya, Benjamin Bolitzer, Frances Cook, Katherine 
Davis, Richard Eiserman, Janet Temko, Mitchell Karpman, Linda Miller, 
Jan Montgomery, Bintou Njie, Robert Lowthian, Cynthia Saunders, and 
Jerry Seigler. 

[End of section] 

Footnotes: 

[1] Once a seized asset is officially forfeited, it becomes the 
property of the U.S. government. DOJ also seizes illegal drugs and 
counterfeit items that have no resale value to the federal government. 
These items are typically held by the agencies until they are approved 
for destruction. According to DOJ, forfeited firearms generally must 
be destroyed in a way that prevents them from ever being put back 
together and used. 

[2] Pub. L. No. 98-473, tit. II, § 310, 98 Stat. 1976, 2052 (codified 
as amended at 28 U.S.C. § 524(c)). 

[3] These authorized uses of these revenues are enumerated in 28 
U.S.C. §524(c)(1). The amount of fund revenues that can be spent on 
certain types of expenses, such as the purchase of evidence of a drug 
offense, is to be specified in annual appropriations acts, but 
revenues can be used without limitation for all other authorized 
purposes. Before 1985, the costs of forfeiture activities were paid 
out of agency operational funds. 

[4] Obligated balance refers to the amount of obligations already 
incurred for which payment has not yet been made. Unobligated balance 
is the portion of obligational authority that has not yet been 
obligated. 

[5] These Super Surplus balances may be allocated at the discretion of 
the Attorney General for "…any Federal law enforcement, litigative/ 
prosecutive, and correctional activities, or any other authorized 
purpose of the Department of Justice" pursuant to 28 U.S.C. § 
524(c)(8)(E). 

[6] 21 U.S.C. § 881(e)(1)(A) and (e)(3), 18 U.S.C. § 981(e)(2) 
authorize the Attorney General to share federally forfeited property 
with participating state and local law enforcement agencies. 

[7] We first reported on the Department of Justice's Asset Forfeiture 
Program as a high-risk area in 1990 because of shortcomings in the 
management of and accountability for seized and forfeited property. In 
2003, actions taken by DOJ resulted in the AFF being removed from 
GAO's high-risk list. See GAO, High-Risk Series, An Update, 
[hyperlink, http://www.gao.gov/products/GAO-03-119] (Washington, D.C.: 
Jan. 1, 2003). 

[8] After revenues to cover program expenses have been carried over, 
any funds that remain in the AFF at the end of the fiscal year may be 
identified as excess unobligated balances. 

[9] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: November 1999). 

[10] We received sample equitable sharing determinations from each of 
the DOJ agencies responsible for making equitable sharing 
recommendations. These were the Asset Forfeiture Money Laundering 
Section, ATF, DEA, FBI, and the United States Attorney's Office. 
Although the results of our review of equitable sharing determinations 
cannot be generalized to all equitable sharing determinations, we 
gained a critical understanding of how each of the DOJ agencies makes 
sharing recommendations as well as the process for reviewing and 
approving final equitable sharing determinations. 

[11] During the course of our work, we experienced delays in obtaining 
certain data and documents from DOJ. This information was critical to 
the completion of our work. 

[12] Probable cause for an administrative forfeiture is defined as a 
reasonable ground for belief of guilt, supported by less than prima 
facie proof, but more than mere suspicion. 

[13] A rescission is a law that "cancels the availability of budget 
authority previously enacted before the authority would otherwise 
expire." GAO, A Glossary of Terms Used in the Federal Budget Process, 
[hyperlink, http://www.gao.gov/products/GAO-05-734SP] (Washington, 
D.C.: Sept. 1, 2005). Budget authority refers to authority provided by 
federal law to enter into financial obligations that will result in 
immediate or future payments involving federal government funds. 
Cancellation of this authority makes the funds involved no longer 
available for obligation. 

[14] DOJ's 2007-2012 Strategic Plan highlights the Asset Forfeiture 
Program under several of the department's strategic objectives, 
including combating public and corporate corruption, fraud, economic 
crime, and cybercrime, and reducing the threat, trafficking, use, and 
related violence of illegal drugs. As outlined in the Strategic Plan, 
prosecutors only recently have had the legal tools to directly forfeit 
the proceeds of white collar crime. DOJ's Asset Forfeiture 2008-2012 
Strategic Plan also describes the enhanced focus on financial 
investigations. 

[15] The large growth in revenues in fiscal year 2007 is attributed to 
the large case deposits such as the Adelphia Communications 
investigations, which resulted in approximately $728 million, or 44 
percent of the total revenues. 

[16] Transfers from the TFF or other federal agencies include DOJ's 
share of forfeited assets resulting from investigations initiated by a 
non-DOJ law enforcement agency. Over this 9-year period, these sources 
of income have not, individually, exceeded more than 4 percent of 
revenues, and combined have not exceeded 9 percent. One exception is 
in fiscal year 2011, when the other sources of income totaled nearly 
16 percent of total revenues due to the transfer of funds from the 
TFF, which totaled approximately $270 million, or 15 percent of 
revenues. 

[17] Prior to 2006, DOJ officials did not maintain data on large-case 
deposits because there were few to no forfeitures of this size and 
scope. 

[18] When compared with all 15 expenditure categories in the AFF, 
equitable sharing was the largest expenditure category in all fiscal 
years except in 2007, when third-party payments were the largest 
expenditure category due to an increase in fraud and financial crimes 
cases that involved a larger proportion of payments to lienholders and 
victims. 

[19] No funds are shared with state and local law enforcement partners 
until victims or other third parties have been fully compensated for 
their financial losses, and forfeiture costs have been recovered. 

[20] Non-prosecution agreements generally require companies to comply 
with a set of terms for a specified duration in exchange for 
prosecutors deciding not to prosecute. These terms have included 
restitution to victims, forfeiture of criminal proceeds, and monetary 
penalties, among other things. 

[21] Under current regulations, the department must advertise each 
administrative seizure 3 consecutive weeks in a newspaper of general 
circulation. Judicial forfeitures are advertised on [hyperlink, 
http://www.forfeiture.gov]. In addition, the department must also 
incur the cost of providing personal notice, by certified mail or 
other means, to all individuals or entities identified as having a 
potential legal interest in the property. 

[22] Program operational expenses for managing the paperwork 
associated with forfeiture, include costs for data entry, data 
analysis, word processing, file control, file review, quality control, 
case file preparation, and other process support functions. 

[23] The total deposited in the AFF includes the revenues resulting 
from forfeitures, prior year rescissions restored to the AFF, current 
year rescission, and recovery/refund of prior year obligations. If 
obligations are ultimately lower than anticipated, funds previously 
obligated are "refunded" to the AFF. These funds are referred to as 
"recoveries/refunds of prior year obligations." 

[24] According to DOJ officials, they had originally planned to carry 
over approximately $724 million into fiscal year 2011, but the actual 
amount carried over ($975 million) was higher due to the unpredictable 
dynamics of fund deposits. Specifically, according to DOJ officials, 
while DOJ makes some determinations about what is required for 
carryover, the actual carryover can differ from the anticipated levels 
due to the timing of deposits into the fund. 

[25] DOJ's Consolidated Asset Tracking System (CATS) is used to track 
the life cycle of forfeited assets from seizure to disposition. 

[26] DOJ officials noted that they may have large victim pay-outs and 
expenses in the coming year that cannot be anticipated. 

[27] According to DOJ officials, program uncertainties may include 
several risk factors such as uncertain revenue streams, unanticipated 
program expenses, pending congressional actions on rescissions, and 
pending judicial actions prior to final order of forfeiture. 

[28] GAO, Veterans Disability: More Transparency Needed to Improve 
Oversight of VBA's Compensation and Pension Staffing Levels, 
[hyperlink, http://www.gao.gov/products/GAO-05-47] (Washington, D.C.: 
Nov. 15, 2004). 

[29] Prior to 2008, these excess unobligated balances were also used 
to fund departmental priorities. However, because rescissions from the 
AFF have been greater than the existing balance since fiscal year 
2008, the funds have been unavailable for departmental priorities in 
recent years. 

[30] See OMB Circular No. A-11, Sec. 20 & App. F (2011). 

[31] For fiscal years 2003, 2010, and 2011, DOJ officials reported 
that the unobligated balance reserved to cover the rescission was 
higher than needed in those fiscal years because a portion of the 
balances was reserved to cover current and future rescissions. 

[32] Within DOJ, AFMLS is responsible for oversight of the equitable 
sharing program. 

[33] The amount of equitable sharing revenues shared with state and 
local law enforcement agencies is based on the degree of the agencies' 
direct participation in the investigation. For example, if one agency 
contributed three officers to an investigation, it might receive a 
greater portion of the equitable sharing proceeds than an agency that 
contributed only one officer's time to the investigation. The 
application for equitable sharing is titled Application for Transfer 
of Federally Forfeited Property and is commonly referred to by DOJ 
officials and state and local law enforcement agencies as the DAG-71. 

[34] See 21 U.S.C. §881(e)(3); 18 U.S.C. §981(e). 

[35] DOJ's recommendations are documented in the Decision Form for 
Transfer of Federally Forfeited Property, which is commonly referred 
to by DOJ officials and state and local law enforcement agencies as 
the DAG-72. 

[36] By delegation dated August 26, 2011, the Assistant Attorney 
General for the Criminal Division delegated his authority to determine 
equitable sharing matters between $1 million and $5 million to the 
Chief of AFMLS, where the seizing agency, USAO, and AFMLS all agree on 
the proposed sharing allocations. 

[37] In the cases we reviewed, the net proceeds had not yet been 
determined. Until the asset has been sold, and all forfeiture 
expenses--such as storage and advertising--have been paid, DOJ does 
not know the net proceeds that will ultimately be paid in each case. 
For this reason DOJ agencies identify a percentage (as opposed to a 
dollar amount) when making equitable sharing recommendations. 

[38] The same restrictions apply to equitably shared assets such as 
vehicles that are put into official use. DOJ guidelines state such 
property must be used for law enforcement purposes only. 

[39] According to DOJ's equitable sharing guidelines, the reason that 
equitable sharing funds should not be used to pay for salaries and 
overtime is to protect the integrity of the asset forfeiture and 
equitable sharing programs. Specifically, DOJ wants to ensure that the 
prospect of receiving equitable sharing monies does not influence, or 
appear to influence, law enforcement decisions. 

[40] AFMLS maintains a compliance database that tracks whether 
agencies have submitted their Equitable Sharing Agreement and 
Certification Forms for the current fiscal year. Agencies that are not 
in compliance are not eligible to receive equitable sharing funds. 

[41] Office of Management and Budget, "Audits of States, Local 
Governments and Non-Profit Organizations," A-133, June 27, 2003. 

[42] The Single Audit Act, enacted in 1984 and amended in 1996, is 
intended to, among other things, promote sound financial management, 
including effective internal controls, with respect to federal awards 
administered by state and local governments and nonprofit 
organizations. Single Audit Act Amendments of 1996, Pub. L. No. 104-
152, § 1(b), 110 Stat. 1396, 1396. As part of the Single Audit, 
auditees must prepare a Schedule of Expenditures of Federal Awards in 
order to show the activity of all federal awards programs within the 
period covered by the auditee's financial statements. 

[43] AFMLS officials reported that pilot testing of the compliance 
review process was started in December 2010, but the compliance review 
team did not start on a full-scale basis until April 2011. 

[44] DOJ's Office of Inspector General also conducts audits of 
equitable sharing participants and completes approximately 3 or 4 
audits of state and local law enforcement agencies each year. Since 
2010, DOJ OIG has completed a total of 10 audits of equitable sharing 
participants. 

[45] An example of a misuse of funds that was identified beforehand 
includes a case in 2011 involving a sheriff that allegedly used 
$10,000 in equitable sharing funds for personal use. The money in the 
account was to be used for vehicles, equipment, and specialized 
training, but the prosecutor noted during an opening statement at 
trial that the sheriff had used the money "like a personal checking 
account." 

[46] Of the 9,200 state and local law enforcement agencies that 
participate in the equitable sharing program, approximately 4,500 
agencies receive equitable sharing payments in any given year. 

[47] All 11 agencies complied with at least one of the requirements 
evaluated by AFMLS. 

[48] Pub. L. No. 104-208, div. A, § 114, 110 Stat. 3009, 3009-22 
(1996). 

[End of section] 

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