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, the second part of a two-part interview, Perez discusses the vital issue of pre-seizure planing, the prospects for the federal forfeiture program under the new leadership at the Justice Department, and the sort of changes to the federal asset forfeiture infrastructure that he thinks are needed.
Q: Please explain pre-seizure planning.
A: Let me start off with another basic concept that I think a lot of people miss. That is: when the government seizes property, the government doesn't own it. It still belongs to someone else. So the government has a fiduciary responsibility to preserve that property and to ensure that it maintains its value, so that if it has to be returned, it is in [the same] condition as when it was seized.
Now if you're seizing that property because of a suspicion of a crime that has victims, you want to make sure that you're preserving that property as best you can so upon forfeiture and liquidation you have as much as possible to return to those victims. So what does that mean? That means that when we have identified property that is subject to seizure and forfeiture we have to think about not only taking the property away from the bad guys, but how we are going to preserve this property. What actions are we going to take to ensure preserving the value of the property?
The answer to that question varies widely depending on where that property is and the volume of the property, etc. That's where pre-seizure planning is so important. You need to be thinking about, is this property unique? Is this property something that's going to require special expertise in order to secure it, in order to preserve it, and in order to maintain it? If so, where are we going to get that expertise? If you ignore those kinds of questions you can find yourself in a very rapidly deteriorating situation very quickly. It can lead to extremely poor press, plus it will basically convert the seizure into an economic loss for the government.
With pre-seizure planning there are a number of questions. Some of the questions you need to focus on in pre-seizure planning are: Do I have the legal authority to make this seizure? Am I on solid ground here? When and how am I going to accomplish this seizure? What special services do I need? What special capabilities do I need in order to deal with this seizure?
And another question that comes up in pre-seizure planning is, 'Should I seize this property?' There are ways to accomplish our law enforcement objectives other than seizing the property. And in some cases maybe that's a better solution. One of the factors that you might look at is, is it an asset or is it a liability? Is this the kind of thing where let's say it's a bar where it's a front for a drug operation. If you took the drug money, the drug cash flow out of that bar, is that bar going to be a viable business? Or basically is it just going to collapse and go out of business? So that kind of due diligence inquiry is often appropriate when you're looking at businesses or properties that are involved in illegal activity.
I'm the last one to say that you shouldn't seize property if it's an economic loser. There are often very legitimate public policy reasons why we would want to seize an economic loss property.
For example, the property may be an inner city crack house or a run-down tenement. The only way we can maybe put that crack house out of business is to seize and forfeit the building and perhaps raze it. That's going to represent an economic loss to whatever entity seizes and forfeits that property. Where does pre-seizure planning come in? Pre-seizure planning comes in to figure out what are the implications of seizing this property. How are we going to respond to address those implications? Are there tenants in the building that need to be moved? Are there environmental issues that need to be addressed? You basically look and say, okay, we have an economic loser. Your obligation is how do we mitigate the loss?
Q: Do you have any war stories that taught lessons about pre-seizure planning?
A: There have been a number that we learned from. There were some that ended up in the press, such as a home that we forfeited and we went out to have it appraised and it had burned down and we didn't know it. There was a vessel that we had forfeited and we went out to get the vessel to market it and all we could see was the mast sticking out of the water. It had sunk sometime earlier. There are a number of those kinds of issues that we learn from. Those are more from the early years of this forfeiture program. There were some very complicated assets, business-type assets, which created a lot of issues for us. And I don't know that I would say we shouldn't have seized the property, but sometimes you get into situations where there really is a great difficulty coming out with a winning strategy.
But one of the major strengths of pre-seizure planning is an ability to mitigate some of the adverse consequences. Sometimes you're looking at a piece of real property and if you did your due diligence and you found that the title on that property was hopelessly clouded you might elect not to seize and forfeit that property because you would never be able to market it, never be able to sell it. So you'd basically be stuck with custody of that property in perpetuity. So that's probably not something you'd want to take on. So it's good to be looking for other alternatives to seizure and forfeiture, while trying to still accomplish your law enforcement objectives.
Q: I wanted to ask you about the new Attorney General, Eric Holder, and asset forfeiture.
A: I think that Mr. Holder is very knowledgeable about the power of asset forfeiture. I believe he is supportive of the appropriate use of asset forfeiture as a law enforcement tool. When he was Deputy Attorney General he addressed the annual conference of the Organized Crime Drug Enforcement Task Force program as their keynote speaker, and he was talking to them about a recent evaluation of the organized crime/drug enforcement task force program. He basically told them that the evaluation had found that they were very effective in many parts of their program however there were two parts that they needed to improve in-one was conducting more financial investigations and the second was to make a greater use of asset forfeiture in the prosecution of their cases.
That was an extremely important message for him to deliver because the program focused on the major drug trafficking organizations internationally. In my opinion, they had gotten away from a more strategic perspective on how to attack these organizations. Asset forfeiture is one of the tools that are part of the strategic arsenal. In my opinion it is greatly underutilized in that role. We need to be looking at how we use asset forfeiture in an aggressive, proactive, strategic powerful way to attack these organizations.
Way, way too often the way forfeiture is used is to grab what's in front of you, to grab what's easy, and not be thinking about how this fits into the overall scheme of what this organization needs to maintain its operational capability. It's great we've convicted this particular individual, he may be an important member of this drug organization and he has a big house and he has a fancy car and we've seized his property and we've forfeited it. But I would dare say that his house and his cars are not important assets to that criminal organization in the sense of what they need in order to continue to function.
So we shouldn't stop there. I have no problem with forfeiting the bad guy's house and his cars but I want to be thinking about what are the critical assets, what are the critical infrastructure assets, that allow this organization to function, and how do we take them out. And that's going to require a more thoughtful use of the law. It's going to require a more thoughtful use of investigative resources, of intelligence resources. I'm convinced we can do it, but there are no quick success stories with that approach. It takes time to develop that capability. So when you bring it down, you bring it down with a bang.
I think there are a number of examples where we have done a much more effective job and certainly put certain criminal organizations out of operation virtually entirely. Unfortunately I think they tend to be the exception. Part of the issue that you have when you're dealing with major drug organizations is that they're international in scope so in order for us to effectively disrupt them it requires a lot of international cooperation. And that raises its own challenges. I think we are working towards that. We're improving in that area.
Q: Is there anything you'd like to see changed on the national level in terms of forfeiture or forfeiture programs?
A: I think the national program has made tremendous strides in the last 20 years, it really has. But I would say one of the things we really need to be focusing on is the strategic use of the forfeiture sanction. We need to be pooling our resources-our intelligence resources, our investigative resources, our legal resources-and figuring out how to attack these criminal organizations in a way that is basically going to attack their operational capability. And that might require new statutes. I think that's where the legal minds need to be involved. Our law enforcement jurisprudence has focused on going after the individual, but going after the individual is not going to cripple organizations for the most part. We have to be able to go after their critical infrastructure. We have to continue working on that, moving toward that, we've had some successes and we need to continue that press. We need to move forward on that.
The other thing is the department developed a strategic plan for asset forfeiture in 2007, and that was a big milestone. And I think that strategic plan needs to be integrated more fully into the Department of Justice's overall strategic plan. And that means basically having that plan integrated into the FBI strategic plan, the DEA strategic plan, the US Attorneys' strategic plan, and into the department's overall strategic plan.
Janet Reno started this push many years ago, to try to integrate asset forfeiture into every significant investigation where it made sense. And it was a big struggle to try to change that culture, and we've been chipping away at it for a number of years. I think Department of Justice's strategic plan includes that. We need to have this forfeiture sanction developed, reviewed, and integrated into every major investigation. And we need to press that forward if we're going to have a chance of making these successes where we're disrupting or bringing down criminal organizations-making that the rule as opposed to the exception.
I take my hat off to Rich Weber and the folks who manage the asset forfeiture fund. They are working together to find ways to use those funds in more effective ways to attack criminal organizations. I applaud that.
Q: What haven't I asked about that you would like to add?
A: I think in the state and local community there is a preoccupation with how much they can get out of asset forfeiture. I think we need to go back to the basic reason that we're doing asset forfeiture. We're doing asset forfeiture to improve public security and safety by reducing crime, and the way we reduce crime is by attacking those organizations that are perpetuating the crime. So the question about whether or not we get involved with asset forfeiture, it's a tough question for state and local law enforcement because they have so many other responsibilities on their agenda. But the basic question is how can they improve services to their community and one of the ways is through use of this sanction.
There is an economic side to asset forfeiture there's no doubt about that but I think we need to focus more on the benefits that we can deliver to our communities and less on what we're going to get for it, from the financial perspective. And that's a dialogue that really needs to involve mayors and city councils and governors and legislators, not just police officials or sheriffs or district attorneys.
In terms of the Department of Justice Program, there are two other major benefits that need to be pursued. One is to fully integrate the department's financial accounting system with the consolidated asset tracking system, which is the computer system that tracks property that's been seized. That would achieve many significant benefits in terms of efficient management of the program-eliminate data redundancy, resolve a lot of conflicts and reconciliations in data between different reporting systems. Right now the Department probably has the best program, but there's still a lot that can be improved.
And the other thing that needs to be done is to implement digital signature authority within the consolidated asset tracking system so that the equitable sharing process can be executed entirely electronically. There are just too many delays in the system as paper is moved from one location to another location as different steps in the approval process are executed. If that could be done electronically...equitable sharing decisions could be reached so much more quickly, and that means that the funds could get back to state and local law enforcement more rapidly. Those are two areas of management improvement areas that I think would be very beneficial in terms of the Department's program. And I think those are both areas that are addressed in the strategic plan. There's another reason that I think it's so important that the Department's strategic plan be elevated and integrated and implemented.
