The USMS is responsible for ensuring the safe and secure conduct of judicial proceedings; protecting more than 2,000 federal judges and approximately 5,250 other court officials at more than 400 court facilities while providing security systems at nearly 900 facilities; arresting federal, state, and local fugitives; protecting federal witnesses; transporting federal prisoners; managing assets seized from criminal enterprises; and responding to major national events, terrorism, and significant high-threat trials. The USMS Director and Deputy Director work with 94 U.S. Marshals to direct approximately 5,675 employees at 316 locations throughout the 50 states, Guam, Northern Mariana Islands, Puerto Rico, U.S. Virgin Islands, Mexico, Jamaica, and the Dominican Republic.
The OIG issued a report finding significant deficiencies in how the USMS managed complex assets, including those seized as part of financial crime cases, between 2005 and 2010. These deficiencies increased the Government’s risk of mismanagement of the administration and disposition of forfeited assets. Since 2005, the Complex Asset Team — responsible for helping USMS district offices manage and dispose of unique and complicated assets that have been seized or forfeited to the federal government — has disposed of over $130 million in complex assets, including business and financial interests seized during investigations into several multi-million dollar financial crimes perpetrated by individuals including Ponzi-scheme operator Bernard Madoff, investment lawyer Scott Rothstein, banker and political fundraiser Hassan Nemazee, and organized crime figure James Galante.
The OIG found that the USMS did not have adequate procedures for managing, supervising, tracking, and keeping records on seized and forfeited complex assets. In the Bernard Madoff case, these inadequacies resulted in a loss of confidence in the USMS by prosecutors and others involved with the case. The audit found multiple instances in which a member of the Complex Asset Team valued and sold the same asset by himself, therefore having the final authority on many significant asset decisions with little or no oversight. Ultimately, the government hired external contractors to restart the disposition process for two Madoff assets, and all remaining Madoff assets administered by the Complex Asset Team were removed from the Team’s responsibility.
In the Galante case involving organized crime, the USMS seized 25 waste disposal businesses that had outstanding tax liabilities unknown by the USMS at the time of seizure. These liabilities hindered the USMS’s ability to sell the assets, which increased the time these assets were under seizure and in turn increased the risk that the assets would lose value.
The OIG also found that the Complex Asset Team did not consistently document or conduct pre-seizure planning prior to seizing assets. The USMS’s lack of planning exposed the government to unnecessary risk, such as seizing assets with significant liabilities or limited equity, or becoming involved in protracted litigation with third parties who have interests in the assets. In addition, inadequate tracking of assets administered led to discrepancies in the count between the USMS’s physical records and its inventory of assets.
The report made 19 recommendations to help the USMS better manage and account for seized and forfeited complex assets. These recommendations included that the USMS should develop and implement formal procedures regarding the disposition of complex assets, ensure standardized and accurate recordkeeping procedures, conduct pre-seizure planning in collaboration with U.S. Attorneys' Offices and other investigative agencies, and bolster the legal, accounting and valuation knowledge of asset management staff. The USMS concurred with the recommendations and has begun to implement recordkeeping, reporting, and valuation procedural improvements. The report also made one recommendation to JMD to update the Consolidated Asset Tracking System so that local USMS district offices and the USMS Asset Forfeiture Division can use it to identify whether an asset is a complex asset that is being managed by the Complex Asset Team. JMD responded that it would coordinate with the USMS to implement this recommendation.
During this reporting period, the OIG received 252 complaints involving the USMS. The most common allegations made against USMS employees included official misconduct, waste and mismanagement, off-duty violations, and force, abuse, and rights violations. The majority of the complaints were considered management issues and were provided to the USMS for its review and appropriate action.
During this reporting period, the OIG opened 11 investigations and referred 2 allegations to the USMS’s Office of Internal Affairs for action or investigation. At the close of the reporting period, the OIG had 30 open cases of alleged misconduct against USMS employees.
The following are examples of cases involving the USMS that the OIG’s Investigations Division investigated during this reporting period:
- In our March 2011 Semiannual Report to Congress, the OIG reported on an investigation that led to the arrest and guilty plea of a former USMS administrative officer to theft of $104,000 in government funds. The former administrative officer admitted that she unlawfully used a USMS credit card for personal expenses, created a fictitious employee in the USMS payroll system and submitted falsified time and attendance records for the employee, facilitated the issuance of checks, and disguised the theft with fraudulent business invoices. Prior to this investigation, the former administrative officer had left the USMS in November 2008 and obtained employment with the DEA in a similar capacity. During this reporting period, the former USMS administrative officer was sentenced in the U.S. District Court for the District of Columbia, Washington, D.C., to 21 months’ imprisonment followed by 36 months’ supervised release and ordered to pay $104,000 in restitution.
- In our March 2011 Semiannual Report to Congress, the OIG reported on an investigation that led to the arrest of a former Supervisory Deputy U.S. Marshal, previously assigned to the USMS Northern District of Illinois, Chicago Office, based on an indictment returned in the Northern District of Illinois charging him with making false statements to the OIG. The investigation by the OIG’s Chicago Field Office determined that the Supervisory Deputy U.S. Marshal provided criminal history, motor vehicle, and driver license information obtained from restricted law enforcement databases to a friend who was under investigation by the FBI for staging fake accidents to collect insurance proceeds. The Supervisory Deputy U.S. Marshal provided false and misleading information regarding these actions during his OIG interview. During this reporting period, the Supervisory Deputy U.S. Marshal was sentenced to 36 months’ probation and fined $5,000 pursuant to his guilty plea to charges of making false statements to the OIG. The Supervisory Deputy U.S. Marshal retired from the USMS.
The OIG is reviewing the USMS’s policies and practices for awarding and administering contracts. The OIG seeks to determine whether the USMS complies with the Federal Acquisition Regulation, Department policies, and internal USMS policies in its award and administration of contracts; whether USMS internal controls ensure adequate contract oversight; and whether the USMS properly manages vendors to ensure contract requirements are met and contractor billings are accurate and complete.