Michael Perez, a member of the AssetForfeitureWatch.com Editorial Board was the long-time manager of the U.S. Department of Justice's Assets Forfeiture Fund, and was the chief architect of the department's Consolidated Asset Tracking System, which monitors the billions of dollars of assets seized and forfeited every year.
Perez, who will be a featured speaker at the Asset Forfeiture 2009 Global Conference in April, is also the former director of the asset forfeiture management staff in the DOJ Justice Management Division. He is now a senior manager in the Alexandria, Va. offices of international accounting and consulting firm Grant Thornton LLP.
As one of the executives responsible for the federal
asset forfeiture program in the 1980s, Perez earned the nickname "Dr. No" for his strict adherence to the statutory limitations on how forfeited assets could be used by government agencies.
In this first of a two-part interview, Perez discusses some of the challenges that faced the
DOJ asset forfeiture program in the 1980s, some of the problems that are raised by improper spending requests, and the importance of a strong code of professional conduct in any
asset forfeiture operation, from the Department of Justice to a local police department.
Q: What were the major issues surrounding the Federal Assets Forfeiture Fund in the late 1980s?
A: Well it was a brand-new entity. It was a creature of statute. There were a lot of interpretation issues. There were some things that we had to work out: we had to work out procedures as to this new entity, we had to work out how money got into the fund, how the monies were accounted for, what happened to the monies, where they went.
One of the things that characterized the department's
asset forfeiture fund in the early years-probably for the first dozen or more years of its existence-was that Congress was making statutory changes to the fund's authority virtually every year. They were usually minor changes, but sometimes not so minor.
Some of those were at the request of the department, where the language that was in the statute was ambiguous or from an operational standpoint it may have omitted something. We would go forward and ask that they might amend the statute so that it would facilitate an efficient operation. And they've done that. We came up with a few other changes to the funds statute. In fact, I rewrote the entire fund statute and went out and sold it to the Attorney General and the staff on the Hill. That was enacted in the Anti-Drug Abuse Act of 1988, I believe. It was basically a re-work of the statute that made huge changes, and made it much more effective in terms of supporting the department's law enforcement mission.
Q: So, how did you get your nickname, "Dr. No?"
A: There were several things. When the fund was relatively new-and even down the road as personnel changed in the various agencies and they weren't familiar with the fund and what it could do and what it couldn't do-agencies would come in with requests that were often inconsistent with the statutory authority that we had or were inconsistent with the policy structure that the attorney general had established.
When the Executive Office for
Asset Forfeiture was created, one of the early things that we did was put together a set of Attorney General's guidelines on seized and forfeited
property. Those guidelines covered a lot of different aspects of the
forfeiture program but also included activities dealing with management of the
asset forfeiture fund.
As the executive who was responsible for the
asset forfeiture fund, I had to ensure that all spending was consistent first of all with our statutory authority and second of all with the policy structure that the attorney general had established.
Now, I lived the
asset forfeiture fund day in and day out. And I understood it in great depth. It is a creature of statute. It is not like a normal appropriation that an agency receives. If you're working for the FBI, you're working for the Drug Enforcement Administration, you're working for the Internal Revenue Service, you get an annual appropriation from the Congress. And for the most part you have fairly significant latitude in how you can use those funds to support your law enforcement mission.
The
asset forfeiture fund statute was not written in that way. With respect to how the fund can support the
forfeiture process itself: paying for the costs of maintaining the
property, securing the
property, marketing the
property, storing it, transporting it, that sort of thing, the fund was extremely broad in its authority, and we were able to provide a lot of funds to agencies to do those things.
However, a lot of the requests that came in were not directly related to executing the
forfeiture function. They were requests that were related to helping the agency accomplish its general law enforcement mission. And in that context the
asset forfeiture fund authorities were very narrowly drawn because Congress created that fund to support the
forfeiture program. They didn't create the fund to be a supplement for law enforcement generally.
So agencies would come in and say, 'Gee, we'd like to have money from the fund to buy aircraft. It wasn't something that the fund was meant to do. I would have to say no.
I think the 'Dr. No' bit became kind of a joke. But I felt too, it would be better for me to tell the agency, 'No, we can't fund this,' than to have its own people in the
forfeiture program telling their management, 'No, you can't have this.' Because the people that are in the
forfeiture program have to represent the agency they should be advocating for the agency with the central authority.
Sometimes what we've had to do is go forward and get new policies established, and in some cases we had statutory changes put through that would enable us to do things that we previously weren't able to do. So it wasn't that we were unable to use the fund but we had to be very careful to make sure everything we used those monies for were strictly in compliance with our statutory authority and our policy guidelines. And the reason for that was that
asset forfeiture funds were one of the most highly reviewed fund sources in the department. Everybody was watching what was going on with the
asset forfeiture fund. People on the Hill were watching, the public was watching, the defense bar was watching. We were audited annually.
When you think about the
asset forfeiture program-this really goes to one of my central tenets about the absolute need for extremely high personal integrity in the
forfeiture program-is that
asset forfeiture in a way cuts against our concept of the American way in that it takes people's
property away from them. It cuts against people's grain that the government can go out and take people's
property, and so when you're involved in a program that does this and has that type of knee-jerk reaction that 'there must be something wrong with this,' you have to be very circumspect. You have to be as clean as Caesar's wife. Otherwise you give people an opportunity and a reason to attempt to curtail or interfere with the government's ability to use this very important sanction to achieve very important law enforcement and public policy objectives.
So I think my focus through my entire career dealing with the fund was that integrity was number one. We did not do anything that we could not clearly relate to either an expressed statutory authority or the policy guidance implementing that authority.
Q: What did you find were the biggest misuses? What sort of requests did you have to turn down? A: I will separate the two things. Frankly a lot of the people who are in the agencies who are seeking funds are not very familiar with the
asset forfeiture funds' authorities, and so they had the tendency to ask for things that they thought were great and were important for the agency. They might be the highest mission priority of the agency•but they don't really understand that that type of request may be totally outside the authority of the
asset forfeiture fund.
I think there is a general tendency of the operating agencies to try to find monies to augment their operations. Once they receive the
asset forfeiture fund monies one of the problems that they face is those funds often place restrictions on the agencies that they don't face in managing their own monies.
One of the problems that I was aware of, and often brought to people's attention for corrective action on, is that the agencies sometimes did not put into place appropriate internal controls to make sure the monies were being used consistent with the restrictions on those funds.
There was more of a tendency to basically lump those monies in with their appropriated monies and basically just use them as the appropriated monies were being used. To the extent that agencies erred too much in that direction they often ended up with a problem and in some cases had to return monies that had been spent, which was often very traumatic. It didn't happen very often because frankly the department of justice, the folks that I dealt with through the years, were generally very, very good at monitoring the use of the funds and insuring that if they started being used inappropriately that they would raise those issues themselves internally.
I think when you look at state and local law enforcement, it's the same issue. Under state statutes, under federal law where we share funds with state and locals, those monies come with restrictions on them. If the state or local takes those funds and drops them in a general pot and finances their operations, chances are they're going to end up with an adverse audit finding or bad publicity at some point.
This is in the Code of Professional Ethics. The funds need to be accounted for, they need to be transparent in how they're used, it has to be subject to an annual audit, so that there is that level of assurance-not only for the law enforcement leadership but for the civilian leadership of the government and also the public-that those funds are being used in a conscientious manner consistent with law and policy.
When you have agencies that take those monies and just treat them as a cash cow to finance whatever they'd like to do, or to get around what they can't do under state and local statutes, that's where they end up in trouble.
Q: I wanted to ask you about the 10-point National Code of Professional Conduct. A: That was one of the early documents that we produced out of the national office for
asset forfeiture in Justice. Early on we had a sense that if this program was going to grow and be successful there had to be a sense of integrity that permeated it. Otherwise, if this were seen as a program that is an under-the-table way of getting money to law enforcement and that they were never publicly accountable for those funds, that that would be destructive to the program and the potential of the
forfeiture sanction. So that's why we created the Code of Conduct.
The whole intent was to try to put together some basic professional criteria to assist the program in being operated in a manner that would withstand scrutiny from a number of different perspectives. One of the things included that's very important is that no prosecutor or law enforcement officer would have their salary dependent on the level of seizures or forfeitures. The reason that was in there is that we wanted to avoid that concept that
asset forfeiture is a bounty hunt or that law enforcement is out there seizing
property because that's going to put money in their pocket, that that's somehow going to benefit them-a
conflict of interest-which would undercut the legal integrity of all of these
forfeiture actions. So we were very strong about trying to avoid that whole idea that a prosecutor or a sworn officer would somehow benefit personally from their forfeitures.
When you have a set of policies in place that make law enforcement officers base their judgment on
forfeiture on whether or not that
forfeiture is going to help them operate their office you have a problem. It's even more egregious if it's their personal financial situation. Even though we have the legal authority to use
asset forfeiture fund monies to pay the salaries of attorneys and agents that were involved in the program, our long-standing policy in the department was not to permit that. We also didn't because we felt that the government should provide in its normal appropriations process the funding to provide for its normal staffing. We felt that they should be making the commitment in their annual appropriations process that they should provide the funding to support that workforce, so that that workforce is never at risk of unemployment based on the level of
forfeiture that's achieved. And to the extent that you're funding personnel with
forfeiture money that you cannot guarantee will be there every year, if there's a decrease you've created a management problem for yourself because you don't have the money to pay for your people. That creates an environment where you're creating pressure on them to find money to keep themselves employed, and that's inconsistent with the code of professional conduct.
Q: What is the importance of that in terms of public perception? A: Again, I think the bounty hunter issue. The public is uneasy with the government taking people's stuff, especially when you have civil
forfeiture authority for taking people's
property without convicting them of a crime. If you add into that mix the fact that you might have law enforcement officers who are somehow benefiting from those
forfeiture actions that just creates a very, very poor perception of what this
forfeiture program is about. And it undermines respect not only for the
forfeiture program but for law enforcement and law generally.
