Management of Seized Assets and Evidence by the
Bureau of Alcohol, Tobacco, Firearms and Explosives
Audit Report 06-37
Office of the Inspector General
To determine the status of the transition and the planned schedule for completion of the process, we interviewed officials from DOJ’s AFMS and ATF’s Asset Forfeiture and Seized Property Branch. We reviewed ATF’s data management requirements for CATS, the FASTRAK requirements that CATS did not support, and actions necessary to resolve the unsatisfied requirements. Additionally, we reviewed DOJ policies and procedures that apply to seized and forfeited assets.
The Director of the AFMS informed the OIG that AFMS had been working with ATF management since its transfer to DOJ in 2003 to facilitate the migration of ATF’s seized and forfeited property data into the CATS system to meet the Deputy Attorney General’s mandate. In November 2005, the AFMS submitted a technical proposal to ATF requesting review and comments. The proposal offered to move ATF’s FASTRAK users to CATS in a phased migration, eliminating the need for ATF to enter the same data into the two separate asset management systems. The first phase proposed an electronic migration of all valued assets currently maintained in ATF’s FASTRAK system to CATS and to redirect all future valued asset data to it as well. FASTRAK users would then use CATS to manage and administer all valued assets, while continuing to use FASTRAK to manage and administer all non-valued assets. The second phase focused on the automated migration of non-valued asset data and the incorporation of the FASTRAK functions into CATS that were required by ATF but currently not satisfied by CATS. The proposal stated that work on the project would begin in December 2005.
ATF’s Asset Forfeiture and Seized Property Branch reviewed the draft technical proposal and the Assistant Director of the ATF’s Office of Management requested a meeting with AFMS to discuss the 99 unsupported requirements that needed to be resolved from the June 2005 ATF‑FASTRAK – Version 7.0.9/DOJ BBC Gap Analysis Summary 3.0. The unsupported requirements were ATF elements that are currently in the FASTRAK system but not in CATS. The AFMS and ATF are collectively analyzing the unsatisfied requirements. There were approximately 111 elements that were determined to be alternatively satisfied by other CATS applications or ultimately deemed unnecessary by ATF. The remaining 99 unsatisfied requirements were related to items such as cases, seizures, assets, firearms, forfeitures, disposition of items, and legal counsel information. Examples are the ability to enter and maintain an Agent ID and the ability to enter and maintain the item seizure number.
The AFMS and ATF Asset Forfeiture and Seized Property Branch worked together to ensure the new modules developed in CATS reflected ATF’s requirement specifications. As of June 14, 2006, 38 of the original 99 unsatisfied requirements remained unresolved. The AFMS and ATF Asset Forfeiture and Seized Property Branch expect the remaining 38 requirements to be resolved by October 2006.
A preliminary schedule to move FASTRAK data to CATS was agreed to by the AFMS and ATF on February 14, 2006, and the first phase of the FASTRAK migration to CATS began March 9, 2006. ATF and DOJ expect to complete this phase by September 21, 2006. The final conversion and migration of ATF data from FASTRAK to CATS is on schedule and expected to be completed by June 30, 2007.
Operating and maintaining FASTRAK cost DOJ $147,000 in FY 2004 and $210,000 in FY 2005. Additionally, $300,000 was funded for FASTRAK in FY 2006. As of August 26, 2006 ATF had expended approximately $76,000 and the balance will be obligated prior to the end of the fiscal year. As of June 2006, the requirements for FASTRAK still were not being met by CATS, and ATF continued to use its FASTRAK system.
As a result of the delay in migrating FASTRAK data into CATS, proceeds from the sale of forfeited seized assets remained on deposit with Treasury, rather than being deposited directly into the DOJ Asset Forfeiture Fund. ATF reported that Treasury was holding $21,166,103 in combined seized and forfeited funds due DOJ as of June 30, 2006.15 Of that amount, $16,164,234 represents seized currency pending forfeiture. The remaining balance of $5,001,869 has already been forfeited, and once it is deposited into the Asset Forfeiture Fund will be available for use by DOJ.
The table below shows a breakdown of the funds deposited at Treasury as of June 30, 2006, that are due DOJ.
FUNDS AT TREASURY DUE DOJ
The Department’s AFMS and ATF’s Asset Forfeiture and Seized Property Branch established a comprehensive record to serve as the detailed accounting for all amounts due to DOJ and Treasury under the MOU. Until May 2006, there was disagreement between the two offices regarding the documentation provided by ATF. The Assistant Director of the AFMS informed the OIG that as of May 8, 2006, ATF had not provided adequate supporting documentation regarding the number of cases, gross amounts, and sources of expense and revenue attributable to the dollar amounts of each item included in the forfeited currency and sales activity through September 30, 2005. ATF’s Asset Forfeiture and Seized Property Branch staff disagreed and asserted that it had provided the AFMS with the necessary detailed accounting records.
In June 2006, the AFMS informed the OIG that ATF’s Asset Forfeiture and Seized Property Branch had provided it with the necessary documentation and certification of completeness so that it could start the process of the initial transfer of funds from Treasury. The initial transfer request sent to Treasury was for $2,361,907, based on data as of March 31, 2006. The two offices are still reconciling the remaining balance of $2,639,962 ($5,001,869 minus $2,361,907), and will initiate transfer of those funds once the reconciliation process is complete. Both offices expect ongoing reconciliations of any future funds that become available. The ongoing reconciliation will facilitate quarterly transfer requests to Treasury.
More than three years after being transferred into DOJ, ATF continues using its own asset management tracking system, FASTRAK, instead of the Department’s CATS. While ATF’s Asset Forfeiture and Seized Property Branch and the Department’s AFMS have been working to resolve ATF’s management tracking requirements, DOJ continues to spend additional funds for the maintenance of the two separate systems.
As a result of ATF’s delayed migration to CATS, $5,001,869 in forfeited funds has remained on deposit with Treasury rather than in the DOJ Asset Forfeiture Fund. The key problem – that ATF has not migrated its forfeited asset data to CATS – remains the underlying issue. In addition, the disagreement between the AFMS and ATF’s Asset Forfeiture and Seized Property Branch concerning the reconciliation and accounting for the funds at Treasury has resulted in those same funds remaining at Treasury. As a result, the net proceeds of forfeited asset funds are not available for immediate use by DOJ to fund the Asset Forfeiture Fund program operating costs and related law enforcement programs.
We recommend that ATF:
To assess the adequacy of ATF’s accounting for, storing, safeguarding, and disposing of seized assets and evidence in its possession, we reviewed its Critical Incident Management System (CIMS) handbooks and ATF Order 3400.1B. The CIMS establishes ATF guidelines, objectives, and procedures for managing major complex investigations or other designated operations and for responding to and resolving various kinds of critical incidents. It also describes ATF’s involvement in post-critical incident activities, such as continuing investigations, subsequent trials, and general recovery activities. The ATF Order 3400.1B prescribes basic procedures governing reporting and controlling of property taken into ATF custody and sets forth facility and equipment requirements, access requirements and restrictions, inventory procedures, and property control. We also met with ATF’s Asset Forfeiture and Seized Property Branch and respective Agents-in-Charge in the Gulf Coast region to determine whether a plan was in place that addressed safeguarding seized assets and evidence in the event of a natural disaster or other significant event. In addition, we conducted compliance testing for seized assets and evidence.
While ATF has a Critical Incident Management System, it does not specifically address how seized assets and evidence should be safeguarded in the event of a natural disaster or other significant event. We believe having a plan in place specifying how seized assets and evidence should be safeguarded in the event of a natural disaster or other significant event is a prudent management practice. If evidence were lost, in our opinion, ATF would not be able to fully support its mission and may result in ATF being unable to pursue a criminal case in federal court. During our May 10, 2006 follow-up work at ATF Headquarters, we asked the SAC of the Asset Forfeiture and Seized Property Branch why evidence security is not considered an essential function of the ATF. The SAC informed the OIG that she was not sure and that it would make sense to have evidence security as an essential function. Doing so would be directly related to supporting ATF’s mission. We also asked what would happen to a case if a seized item was lost, stolen, or damaged. ATF told the OIG that the worst case scenario would result in having a case excluded from being tried in Federal court. Lastly, the SAC agreed when the OIG asked whether ATF should have a plan in place that addresses safeguarding evidence in the event of a natural disaster or other significant event. Furthermore, ATF Order 3400.1B does not address safeguarding seized assets or evidence in preparation for or in response to a natural disaster. According to the Chief of the Security and Emergency Programs Division, “Seized evidence security is a component of ATF’s ability to successfully investigate firearms, arson, and explosives cases.” In meeting its mission during criminal investigations, ATF obtains seized evidence that requires close control and a high level of security.
During our field work and shortly after Hurricane Katrina hit the Gulf Coast, we contacted the Acting Special Agent-in-Charge of the Seized Assets and Forfeited Property Branch at ATF headquarters to determine the extent to which field office vaults containing seized evidence were impacted by the hurricane. He informed the OIG that the New Orleans, Louisiana; Biloxi, Mississippi; and Mobile, Alabama, field offices were affected to varying degrees, but he was not aware of any seized assets and evidence impacted by the hurricane.
Two of the three office buildings (in New Orleans and Mobile) sustained rain or flood water damage causing environmental issues with black mold or raw sewage. The third office in Biloxi lost the entire first floor of the building, and became structurally unstable. The following is a photograph of the Biloxi Field Office and the damage sustained.
Biloxi, Mississippi, Field Office
Since ATF did not have a contingency plan in place establishing alternate locations in which to house vault contents, seized assets and evidence had to be recovered from the structurally unstable Biloxi Field Office and relocated to various alternate sites that were not always approved storage facilities. Items recovered from the Biloxi vault included firearms, ammunition, electronic intercepts, drugs, silencers, documents, and arson evidence. ATF officials in the field told the OIG they originally moved firearms to the Biloxi Police Department’s evidence closet. ATF officials also told the OIG the firearms were subsequently moved, along with the remaining items left in the Biloxi field office vault, to Jackson, Mississippi where they were placed in a U-Haul trailer and parked in the federal building garage basement. The garage basement does not comply with federal storage security requirements. Therefore, we believe the facility presented a risk of loss. The remaining two moves for Biloxi items involved using a national contractor storage facility. By the time we conducted our testing for the Biloxi contents, the items had been moved from one national contractor location in Memphis, Tennessee to another in Mobile, Alabama. These four moves mentioned above required transporting the items approximately 795 miles. We conducted our verification of Biloxi ’s items in Mobile, Alabama. No risks were noted while on site at the national contractor storage facility being utilized in Mobile, Alabama. The New Orleans office did not originally move items from the vaults since the structure was in-tact. The only risk noted for New Orleans was related to black mold contamination, but the items were not affected. However, after securing a temporary office location and constructing a new temporary vault that met federal specifications, they moved all items to Covington, Louisiana without incident. All items tested were accounted for. The Mobile office did not move any items from the Mobile vault before or after Hurricane Katrina. All items tested were accounted for.
We asked the Special Agent-in-Charge (SAC) of the Asset Forfeiture and Seized Property Branch whether ATF had a written contingency plan in place prior to Hurricane Katrina. During our follow‑up work, the SAC confirmed that the plan used by ATF did not address securing seized assets and evidence in the event of a natural disaster or other significant event. However, we were informed that ATF had been utilizing the Critical Incident Management System (CIMS) since 1998 to handle critical incidents ranging from criminal enforcement to natural disasters.
ATF’s Chief of the Security and Emergency Programs Division and the SAC of the Asset Forfeiture and Seized Property Branch both stated that ATF followed the CIMS guidance in responding to Hurricane Katrina. The CIMS establishes ATF guidelines, objectives, and procedures for managing major complex investigations or other designated operations and for responding to and resolving various kinds of critical incidents. It also describes ATF’s involvement in post-critical incident activities, such as continuing investigations, subsequent trials, and general recovery activities. Other jurisdictional, legal, and media relations issues are addressed as well. The CIMS did not discuss specifically the topic of securing seized assets or evidence.
According to the CIMS, three levels of standardized responses exist within ATF. The first level is activated for critical incidents that have only local impact and limited sensitivity, such as conducting joint search and arrest warrants with other law enforcement agencies, exercising multiple arrest and search warrants over a diverse geographical area involving multiple ATF teams, conducting a long-term, relatively low profile investigation with other participating jurisdictions from within the field division area in an environment of increased risk and intensity. The second level of response is activated for critical incidents having a broader or more regional impact and possessing a higher degree of sensitivity or significance, such as requirements for a unified command group as opposed to a single incident commander, requirements for dedicated manpower and committed resources beyond that available to the division director, an increased potential for collateral problems requiring additional consideration (a second crisis site, crowd control, or increased media attention). The third level of response is activated for critical incidents that have national impact, a high degree of visibility and sensitivity, and for events that require a significant commitment of ATF resources and those of federal, state, and local agencies. The Deputy Assistant Director of Field Operations stated that the response to Katrina required a Level III response.16
We reviewed ATF Order 3400.1B because it prescribes the basic procedures governing the reporting and controlling of property taken into custody, from the time of initial acquisition to its final disposition.17
Although the Order outlines the seizing agent’s responsibilities when seizing or otherwise taking personal property into ATF custody, it does not provide guidance for safeguarding seized assets or evidence in the event of a natural disaster or other significant event.
None of the three field offices proactively identified alternate storage locations to safeguard seized assets and evidence in the event primary locations became unavailable. Although not included in ATF Order 3400.1B, or any other ATF Directive or Order, the SAC of the Asset Forfeiture and Seized Property Branch stated using another evidence vault within this division would be left up to the field division SAC.18 In order to better safeguard seized evidence from theft, loss, or destruction, we believe ATF should have a contingency plan in place to proactively identify alternate storage locations where seized assets and evidence can be stored in the event of a natural disaster or other significant event.
To provide insight into ATF’s management of seized property, we reviewed eight field offices, eight vaults, and six explosive storage bunkers within three field divisions. Our testing was designed to determine if ATF had effective controls over storing and safeguarding seized assets and evidence, including vault construction security requirements and tracing firearms through the National Tracing Center.19 We randomly selected items from ATF’s inventory system and compared those with the items in the vaults. We also judgmentally selected items in the vaults and compared them to the vault inventory system listings. We then selected items approved for disposal and traced them through the process to final disposition.
The results of testing did not disclose any material weaknesses in ATF’s storing of seized assets and evidence, but did reveal two significant issues listed below. Appendix IV contains the comprehensive results of our testing.
Minimum Security Structure Requirements
One of the eight evidence vaults tested ( Beaumont, Texas) did not meet minimum security structure requirements.20 A wire‑mesh barrier above the chain-link fence to prevent unauthorized entry from the ceiling was not installed. Although local management raised concerns regarding the vault meeting the minimum security vault requirements, ATF has not taken corrective action. This condition was also noted as an exception to the requirements of ATF Order 3400.1B in 1997, 2000, and 2003 ATF Office of Field Operations inspection reports. The condition leaves the vault vulnerable to unauthorized entry and increases the risk of theft of seized property and evidence.
National Tracing Center
Effective July 2005, every firearm coming into ATF custody or being investigated by ATF is required to be traced through the ATF National Tracing Center. We found 6 of 130 firearms we tested, or 5 percent were not traced through the National Tracing Center.
During our field work, we determined that the seizing agents either did not request a trace of the seized firearms through the National Tracing Center or traced them with an incorrect serial number. All firearms manufactured in 1968 or after have unique serial numbers. Not tracing a firearm or submitting a wrong serial number through the National Tracing Center equates to not accounting for the correct firearm. Further, this situation prevents the correct information from being received in an accurate and timely manner. It also potentially prevents ATF from linking a suspect to a firearm in a criminal investigation; identifying potential traffickers; detecting intrastate, interstate, and international patterns in the sources and kinds of firearms used in crimes; thus increasing the risk to the public until the individual allegedly responsible for the crime is identified and taken into custody. This issue was corrected by ATF during our field work by requesting a new trace on the 6 firearms through the National Tracing Center.
ATF lacks a proactive contingency plan that specifically addresses accounting for, storing, and safeguarding seized assets and evidence in the event of a natural disaster or other significant event. After Hurricane Katrina impacted the Gulf Coast region, items contained in the Biloxi Field Office vault had to be moved multiple times before reaching their current location in Mobile, Alabama. In our judgment, ATF was fortunate that no significant damage to seized assets and evidence was sustained. Therefore, we believe additional direction for preparedness should be developed to ensure that all ATF field components have the necessary written guidance for safeguarding seized assets and evidence.
ATF management did not fully enforce ATF Order 3400.1B which prescribes the basic procedures governing the reporting, controlling, and safeguarding property taken into custody, from the time of initial acquisition to its final disposition. One vault did not meet the minimum security requirements and all firearms taken into ATF custody were not traced through the National Tracing Center.
We recommend that ATF:
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