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2290

Forfeiture Policy Directive 02-1—Guidelines and Procedures for Restoration of Forfeited Property to Crime Victims via Restitution in lieu of Remission

November 25, 2002

I. Purpose

The guidelines and procedures set forth in this policy directive are intended to expedite the transfer of forfeited property to the victims of the crimes underlying forfeitures, or related offenses, by releasing forfeited property, in appropriate cases, to satisfy victim restitution orders in forfeiture-related criminal cases in lieu of requiring such victims to petition the Attorney General for remission of the forfeited property.

II. Authority

With respect to property ordered forfeited under the criminal forfeiture statutes, the Attorney General has statutory authority to:

. . . grant petitions for remission or mitigation of forfeiture, restore forfeited property to victims of a violation of [the applicable chapter or subchapter], or take any other action to protect the rights of innocent persons which is in the interest of justice and which is not inconsistent with the provisions of [the applicable chapter or section] . . . .
18 U.S.C. §§ 1467(h)(1) (obscene material); 1963(g)(1), 2253(h)(1) (sexual exploitation of minors); 21 U.S.C. § 853(i)(1) (controlled substances); and by incorporation of 21 U.S.C. § 853(i)(1) by reference, 18 U.S.C. §§ 793(h)(3) and 794(d)(3) (espionage); 982(b)(1) (money laundering and other offenses).

In civil forfeitures also, the Attorney General is authorized to decide petitions for remission or mitigation. See, e.g., 18 U.S.C. § 981(d), 21 U.S.C. § 881(d). In addition, 18 U.S.C. § 981 authorizes the Attorney General, in section 981 civil forfeitures, to transfer the forfeited property "as restoration to any victim of the offense giving rise to the forfeiture, including, in the case of a money laundering offense, any offense constituting the underlying specified unlawful activity." 18 U.S.C. § 981(e)(6).

The authority of the Attorney General to grant petitions for remission or mitigation in criminal and civil judicial forfeitures is delegated to the Chief, Asset Forfeiture and Money Laundering Section, Criminal Division (AFMLS) by title 28, Code of Federal Regulations, Part 9 (28 CFR 9), at 28 CFR 9.1(b)(2). In addition, the Attorney General has delegated to the Chief, AFMLS, the authority pursuant to any civil or criminal forfeiture statute enforced or administered by the Department of Justice (e.g. 18 U.S.C. §§ 981(e)(6), 1963(g)(1) and 982(b)(1) (incorporating 21 U.S.C. § 853(i)(1)), "to restore forfeited property to victims or take other actions to protect the rights of innocent persons in civil or criminal forfeitures that are in the interest of justice and that are not inconsistent with the provisions of the statute." Attorney General Order No. 2088-97 (June 14, 1997). Accordingly, in appropriate cases, the Chief of AFMLS has discretionary authority to authorize the "restoration" of forfeited property to compensate victims by means of court-ordered restitution.

Pursuant to this "restoration" authority and applying the Guidelines for Restoration Decisions set forth in section III below and the Procedures for Restoration Decisions set forth in section IV below, the Chief of AFMLS, in appropriate cases, may authorize federally-forfeited property or proceeds to be transferred to the court for use in satisfaction of orders of restitution entered at sentencing pursuant to 18 U.S.C. § 3363 et seq. Such authority may be used by the Chief of AFMLS in lieu of the separate authority and procedures set forth at 28 CFR 9, governing Petitions for Remission or Mitigation of forfeited property to victims. However, insofar as is reasonably feasible, such authority will be used to accomplish results that are not inconsistent with the standards set forth at 28 CFR § 9.8 for determining remission of forfeited property to non-owner victims. Additionally, insofar as may be applicable and not inconsistent with the standards or procedures herein, the other provisions of 28 CFR Part 9 also shall apply.

III. Guidelines for Restoration Decisions

  1. Representations. The Chief of AFMLS will grant restoration requests submitted in accordance with section IV. A. below only when the U.S. Attorney, or his or her delegee, has informed AFMLS of the following in writing:

    1. All known victims have been properly notified of the restitution proceedings and are properly accounted for in the restitution order;

    2. To the best of knowledge and belief after consultation with the seizing agency, the losses described in the restitution order have been verified and reflect all sources of compensation received by the victims, including returns on investments, interest payments, insurance proceeds, refunds, settlement payments, lawsuit awards, and any other sources of compensation for their losses;

    3. To the best of knowledge and belief after consultation with the seizing agency, reasonable efforts to locate additional assets establish that the victims do not have recourse reasonably available to other assets from which to obtain compensation for their losses, including, other assets owned or controlled by the defendant(s); and

    4. There is no evidence to suggest that any of the victims knowingly contributed to, participated in, benefitted from, or acted in a willfully blind manner toward the commission of the offenses underlying the forfeiture, or related offenses.

  2. Statutory Authority. The property to be restored must be forfeited pursuant to a statute that explicitly authorizes restoration or remission of forfeited property to victims. See, e.g., 18 U.S.C. § 981(e)(6); 18 U.S.C. 982(b)(1) (incorporating the provisions of 21 U.S.C. § 853(i)(1)); and 18 U.S.C. § 1963(g)(1).

  3. Pro-Rata. Restoration will be granted only to the victims and in the amounts described in the court's restitution order, or a pro-rata percentage based on such amounts.

  4. Allowed Losses. The losses allowed in the restitution order should primarily represent monetary losses directly caused by the illegal activities underlying the forfeiture. The Chief of AFMLS may refuse to grant restoration where a pro-rata distribution to the victims would be unduly skewed in favor of one or more victims who suffered non-monetary losses or losses associated with torts, physical injuries, interest foregone, or collateral expenses incurred to recover lost property or to seek other recompense (although such expenses may constitute some of the losses allowed in the restitution order).

  5. Priority. Restoration decisions must not prejudice the judicial or administrative claims of owners, lienholders, and federal financial institution regulatory agencies pursuant to the Memorandum of Understanding Governing Financial Institution Reform, Recovery, and Enforcement Act Forfeiture Cases (FIRREA MOU (USAM 9-119.500)). Such claims shall have the same priority over non-owner victims in the restoration process as in the remission process. Accordingly, Petitions for Remission or Mitigation based upon such claims must be decided by the seizing agency (in administrative cases) or the Chief of AFMLS (in judicial cases) pursuant to 28 C.F.R. Part 9 and (if granted) paid prior to payment of restoration decisions. Restoration payments will be made from the net proceeds remaining after payment of allowed costs, and the claims of owners, lienholders, and others recognized in the final order of forfeiture and/or through petitions for remission.

  6. Petitions for Remission or Mitigation. To expedite resolution of restoration requests, when necessary, decisions on restoration requests may be made subject to pending decisions on Petitions for Remission by owners, lienholders and federal financial institution regulatory agencies (as opposed to delaying a decision on the restoration request until after all Petitions for Remission or Mitigation are decided).
IV. Procedures for Restoration Decisions

  1. Restoration Requests. The U.S. Attorney's Office will forward a copy of the restitution order to the Chief of AFMLS along with a written request that property forfeited in the same and/or related civil, criminal, or administrative forfeiture proceedings be used to compensate the victims and losses specified in the restitution order. The written request must identify each asset involved including the seizing agency involved and, where applicable, the agency seizure number. The request and order shall be accompanied by the written representations required of the U.S. Attorney, or his or her delegee, by section III. A. above. In cases where an order of restitution is anticipated but has not yet been signed and entered, a draft restitution order may be submitted to AFMLS at any time for an informal advance decision, which AFMLS will formally finalize after receipt of a copy of the final restitution order entered. In addition, pursuant to section V. below, the U.S. Attorney, or his or her delegee, may place a 12-month "hold" on the final distribution of net proceeds of property subject to civil or administrative forfeiture pending issuance of a criminal restitution order. However, such holds will not apply to administrative forfeitures by non-Department of Justice seizing agencies unless the U.S. Attorney's Office obtains the written concurrence of the local agency SAC or other appropriate agency official.

  2. Time Limits. Restoration requests must be sent to AFMLS within 30 days of the entry of the restitution order in the Consolidated Asset Tracking System (CATS). The U.S. Attorney's Office must enter restitution orders in CATS within 5 days of sentencing.

  3. Evidentiary Basis. U.S. Attorneys' Offices should work closely with the Probation Office and the investigative agency for the criminal case in formulating restitution awards to ensure that the victims' losses are supported by documentary evidence, including invoices and receipts.

  4. Seizing Agency Investigation. The U.S. Attorney's Office may direct the investigative agency for the criminal case to investigate the merits of victims' claims, including, specifically, the claimed losses and the eligibility of the victims in accordance with section III. A. above. When requested, the investigative agency shall submit to the U.S. Attorney's Office a report of its investigation and its recommendation on whether the victims' claims should be recognized or opposed. The U.S. Attorney's Office shall forward a copy of the investigative agency's report and recommendation, if any, to the Chief of AFMLS along with the written request for restoration approval.

  5. Decision by AFMLS. Using the Guidelines for Restoration Decisions set forth above in section III, the Chief of AFMLS will determine, on a case-by-case basis, whether the restoration request will be granted. In cases involving assets forfeited administratively by a seizing agency other than a Department of Justice seizing agency, the Chief of AFMLS will need the concurrence of that agency in order to grant the restoration request as to those assets.

    If the Chief of AFMLS denies the restoration request, AFMLS will advise the U.S. Attorney's Office of the denial, and disposition of forfeited property to victims will be decided through the Petition for Remission process pursuant to 28 C.F.R. Part 9. If the Chief of AFMLS grants the restoration request, AFMLS will forward a copy of the restoration decision to the U.S. Attorney's Office, and to the U.S. Marshals Service headquarters (and/or to the appropriate property custodian for any forfeited property being restored that is not held by the U.S. Marshals Service), which will coordinate disbursement of the net proceeds of the subject forfeiture(s) (administrative, civil, and/or criminal), after satisfaction of allowed costs and any rulings on Petitions for Remission or Mitigation of Forfeiture filed by owners, lienholders and/or federal financial institution regulatory agencies under the FIRREA MOU, to the court for satisfaction of the restitution order. Restoration decisions shall apply to the net proceeds of any and all property forfeited in related administrative, civil, and/or criminal forfeiture proceedings not yet distributed to compensate victims of the offenses underlying the forfeiture, or related offenses.
V. Guidelines for Imposing 12-Month Hold Pending Entry of a Restitution Order

In appropriate cases (usually fraud cases with forfeited proceeds), the U.S. Attorney, or his or her delegee, may place a 12-month "hold" on the final distribution of net proceeds of property subject to civil forfeiture or to administrative forfeiture by a Department of Justice seizing agency pending entry of a restitution order.[FN1] The U.S. Attorney's Office will enter the "hold" in CATS as to each asset (including frozen, indicted, restrained, or encumbered assets) and the effective date of the "hold" will be the date of its entry in CATS by the U.S. Attorney's Office. The "hold" will remain in place for up to 12 months unless it is continued by the seizing agency or AFMLS at the end of the 12-month period pursuant to section V. B. below or released by the U.S. Attorney's Office at any time pursuant to section V.C. below. Once entered into CATS, the "hold" will prevent the seizing agency (in administrative forfeitures by Department of Justice seizing agencies) or the Chief of AFMLS (in judicial cases) from granting Petitions for Remission or Mitigation from non-owner victims. It will also prevent entry or execution of decisions on any official use or equitable sharing requests. The hold will have no effect on the forfeiture proceedings governing such property or the ability to liquidate the property once forfeited or to dispose of the property as otherwise ordered by the court. Holds will effectively override all requests for retention or transfer for official use. Further, the hold shall not prevent processing and, where appropriate, payment of Petitions for Remission or Mitigation filed by owners and lienholders (pursuant to 28 C.F.R. Part 9), and federal financial institution regulatory agencies (pursuant to the FIRREA MOU), or the payment of awards and property management expenses, and the hold will not prevent decisions to deny, withdraw, or extinguish Petitions for Remission or Mitigation, or requests for equitable sharing or official use.
In deciding whether to place a "12-month hold" on proceeds of related administrative or civil forfeitures, the U.S. Attorney, or his or her delegee, should consider whether it is more efficient to compensate all victims through the restoration process or to allow the seizing agency (in administrative cases) or the Chief of AFMLS (in judicial cases) to proceed with the remission process. In some cases, it might be better to use the remission process to provide the victims with at least partial compensation immediately, rather than to make them wait until completion of a criminal prosecution and entry of a restitution order to obtain any compensation. On the other hand, if a victim could use the remission process to obtain a greater percentage of compensation than similarly situated victims who chose to pursue only the restitution route, then it might be better to require all victims to be compensated through the restoration process.

  1. Notification. The U.S. Attorney's Office will notify, in writing, the U.S. Marshals Service and the Department of Justice seizing agency (in administrative cases) or the Chief of AFMLS (in judicial cases) of the imposition of a 12-month hold. If the U.S. Attorney's Office wishes to place a hold on the proceeds of any non-Department of Justice agency's administrative forfeiture, it must notify the local SAC or other appropriate agency official in writing and obtain written concurrence. Upon entry of a hold decision, CATS will not allow decisions on non-owner victim petitions, equitable sharing, or official use requests to be entered for 12 months from the date of the hold decision, but will continue to allow entry of decisions on and payments of owner, lienholder, and federal financial institution regulatory agency petitions, property management expenses, and awards. The U.S. Attorney's Office will be responsible for monitoring the status of the hold. If the forfeited property has already been transferred to an owner, lienholder, or federal financial institution regulatory agency, placed into official use, or equitably shared, CATS will not accept entry of the hold decision and will notify the U.S. Attorney's Office.

  2. Release or Extension of Hold Period. If a restitution order is not issued within 12 months, the seizing agency headquarters (for administratively forfeited property) or the Chief of AFMLS (for judicially forfeited property), after consulting with the U.S. Attorney's Office, may decide either to continue holding the property pending entry of a restitution order or to proceed with the petition for remission process for non-owner victims. Entry of a restitution order in CATS will automatically extend a hold for 60 days.

    1. CATS will automatically release the hold if a restitution order is not issued (and entered into CATS by the U.S. Attorney's Office) or if the hold period is not extended by the seizing agency or AFMLS within 12 months from the date of the hold decision.

  3. At any time during the hold period (e.g., when restitution is denied, or the criminal case is dismissed), after consulting with the seizing agency or AFMLS, as the case may be, the U.S. Attorney's Office may release the hold on property to allow the seizing agency or AFMLS to proceed with the petition for remission process for non-owner victims (as well as equitable sharing and official use decisions).

  4. Official Use and Equitable Sharing Requests. Owners, lienholders, and federal financial institution regulatory agencies (pursuant to the FIRREA MOU) (in that order) shall have priority over non-owner victims, who in turn shall have priority over official use requests and equitable sharing requests. In appropriate cases, the U.S. Attorney, or his or her delegee, may exempt specific forfeited assets from a 12-month hold to allow for official use or equitable sharing requests to be granted. Such an exemption should be granted only where there will be sufficient proceeds from other forfeited assets to fully compensate any owners, lienholders, federal financial institution regulatory agencies (pursuant to the FIRREA MOU), and non-owner victims.

FN 1. The U.S. Attorney's Office's decision to forfeit property judicially rather than administratively should not be confused with the "hold," which refers only to the proceeds of a completed forfeiture.

[updated December 2002] [cited in USAM 9-114.200; USAM 9-119.500]