The Drug Enforcement Administrationís Handling of Cash Seizures
Audit Report 07-06
Office of the Inspector General
The Drug Enforcement Administration’s (DEA) mission is to: (1) enforce the controlled substances laws and regulations of the United States; and (2) bring to justice those organizations and individuals involved in the growing, manufacture, or distribution of controlled substances.19 To ensure that criminal organizations and individuals do not benefit financially from their illegal acts, federal law provides that profits from drug-related crimes, as well as property used to facilitate certain crimes, are subject to forfeiture to the government. The Department of Justice (Department) established the Asset Forfeiture Program (AFP) to manage the Department’s efforts to seize assets, including cash, used in the illegal drug trade and to forfeit those assets to the government.
While the DEA is the primary Department component involved in the forfeiture of cash seized during drug enforcement investigations, state and local law enforcement agencies also seize cash during their drug enforcement operations. Those efforts are not part of the AFP, but assets seized solely through the efforts of state and local law enforcement agencies may be transferred for forfeiture to a federal agency such as the DEA that participates in the AFP. Transferred seizures are referred to as “adopted” seizures because the federal agency adopts the seizures made by the state or local agencies. The federal adoption of seizures is sometimes more advantageous to state and local law enforcement agencies because some state or local laws require that seized funds be returned to the agency’s general fund instead of being used directly by the state or local law enforcement agency. When a federal agency adopts the seizure, the state or local agency that conducted the seizure often receives a share of the funds seized and those funds must be used for law enforcement purposes. In adopted seizures, the state or local agency usually converts the seized cash to a cashier’s check and transfers the cashier’s check to the DEA.
The DEA’s policy is that its staff should promptly convert cash they directly seize to a cashier’s check and promptly transfer the cashier’s checks, including those adopted from state or local agencies, to the United States Marshals Service (USMS). According to 28 Code of Federal Regulations, Part 0, Subpart T, Section 0.111, (i), the USMS serves as custodian of seized and forfeited assets. The USMS also provides information and assistance to prosecutors to make decisions about assets targeted for forfeiture. To manage the disposal of seized cash or other seized assets that have been converted to cash, the USMS administers the Seized Asset Deposit Fund (SADF) and the Assets Forfeiture Fund (AFF).
The SADF serves as a repository for seized funds until the funds are either forfeited to the government or returned to the owner. Because seized funds held in the SADF are not government property, the funds cannot be spent by the government. Upon successful completion of forfeiture actions, the USMS transfers seized funds from the SADF to the AFF where the funds can be used to cover expenditures in support of the AFP. Allowable uses include:
asset management expenses incurred in connection with the seizure, inventory, appraisal, packaging, movement, storage, maintenance, security, and disposition of the assets;
investigation and prosecution-related expenses;
payments of third party interests against the seized asset, including those incurred in the payment of valid liens, secured mortgages, and debts owed to qualified general creditors;
equitable sharing payments to state and local agencies that participated in the law enforcement effort resulting in forfeiture; and
other program management expenses such as supplies, equipment, rent, travel, and other services.
The Department uses an information technology system called the Consolidated Asset Tracking System (CATS) to track assets seized by federal law enforcement agencies or those seized by state or local law enforcement agencies and adopted by the DEA. For each item seized by the DEA and other Department components, CATS contains data on the seizing agency, date of seizure, value at seizure, current value, agency with custody of the asset, custody start and end dates, and disposition date.
As shown in the following chart, the CATS data reflect that from October 1, 2003, through November 3, 2005, the DEA made or adopted 16,007 cash seizures totaling almost $616 million.
|Number and Dollar Value of Cash Seizures |
from October 1, 2003, through November 3, 2005
(in millions of dollars)20
[Image Not Available Electronically]
|Source: Consolidated Asset Tracking System|
Prior Audits, Inspections, and Reviews
General Accounting Office Report
In a November 1999 report, the General Accounting Office (GAO) reported on the DEA’s controls over seized drugs and weapons.21 While the GAO did not examine controls over seized cash, it addressed related controls over other forms of evidence and reported problems very similar to those we identify in this report. The GAO found that the DEA had established numerous policies and procedures to control and safeguard drug and weapon evidence in its custody. However, the GAO concluded that based on its work at four Division offices and laboratories and the results of the DEA’s internal inspections performed from March 1996 through August 1998, specific actions were needed to strengthen accountability over and safeguarding of drug and weapon evidence. The GAO stated that such actions would help reduce the potential for theft, misuse, or loss of drug and weapon evidence and the risk of evidence being compromised for federal prosecution purposes while in DEA custody.
The GAO recommended that the DEA take appropriate steps to reinforce its adherence to existing DEA policies regarding:
requiring that two signatures be recorded on evidence labels prior to acceptance by laboratory and division office evidence custodians;
maintaining complete and properly reviewed documentation in the laboratory seizure files; and
maintaining complete and accurate information in logbooks.
In its comments on the GAO report, the DEA agreed that the accountability and safeguarding of evidence is of critical importance, but stated that the GAO did not emphasize the significant actions that the DEA had taken to ensure its polices and procedures were followed. However, the DEA indicated that it would take the appropriate steps to reinforce its adherence to existing policies or to implement new policies as recommended by the GAO.
DEA’s Office of Inspections Reports
In a February 2001 review, the DEA Office of Inspections reported that the DEA’s problems with custodial accountability remained unresolved.22 The report found that: (1) evidence custodians received little or no training regarding proper handling of seized and recovered monies, (2) the DEA Agents Manual regarding when to record money on a Standard Seizure Form (SSF) or a DEA Form-7a was confusing and subject to different interpretations, and (3) evidence custodians had no point-of-contact to answer questions about handling seized monies.23 The DEA also found that agents were confused as to when they should use an SSF and when they should use a Form DEA-7a to submit evidence to evidence custodians for safekeeping.
The DEA Office of Inspections also performs cyclical inspections of Division field offices. These inspections cover key program areas, including the handling of seized and recovered cash. The DEA issues inspection reports outlining inspection findings and requires Division offices to take appropriate corrective actions. We requested that the DEA provide us with all DEA Division inspection reports since July 2002 that contained findings related to the handling of seized and recovered monies. In response to our request, the DEA provided us with 11 inspection reports covering the DEA Divisions of Atlanta, Boston, Chicago, Dallas, Denver, Houston, Miami, Newark, New York, San Diego, and Washington, D.C. The reports identified the following deficiencies related to the handling of seized and recovered cash.
In a June 2003 follow-up inspection in the Atlanta Division, inspectors reported that in several field offices a review of investigative case files revealed improper handling of evidence, incomplete or missing documentation, and poor record-keeping practices. The report also stated that the self-inspection conducted by the Atlanta Division reported “almost no deficiencies” or “minor deficiencies” in the program areas reviewed.
In the March 2005 inspection of the Dallas Division, evidence logbooks were not properly maintained, seized and recovered monies were not properly stored, and quarterly audits of currency evidence were not conducted.
In the January 2003 inspection of the San Diego Division, 21 evidence exhibits had been out of the custody of the evidence custodian for periods of 70 to 1,358 days without proper authorization. In addition, paperwork for 415 evidence exhibits was submitted from 30 to 180 days late.
In the September 2002 inspection of the Washington, D.C. Division, evidence custodians were not DEA employees as required by DEA policy, evidence logbooks were not properly maintained, seized and recovered monies were improperly stored, and inventories of monies were not being conducted.
In the June 2004 inspection of the Denver Division, the Resident Agent-in-Charge did not provide a safe in the non-drug evidence vault to store seized and recovered monies as required.
In the July 2004 inspection of the Houston Division, the quarterly and annual inventories were being conducted by the seized monies custodian instead of by two disinterested parties and the inventories were not being recorded in the seized monies logbook.
In the September 2001 inspection of the New York Division, the inspection found seized cash documents and $157 in seized currency unattended.
In the August 2002 inspection of the Boston Division, September 2004 inspection of the Chicago Division, March 2004 inspection of the Miami Division, and October 2003 inspection of the Newark Division, evidence logbooks were not properly maintained and quarterly audits of currency evidence were not conducted.
Department’s Office of the Inspector General Report
In a January 2004 inspection report that examined accountability for evidence held at DEA field divisions, the OIG reported that more than 4 years after the GAO report and more than 2 years after the DEA report, the DEA still had not corrected deficiencies including implementing program guidance, improving DEA headquarters support, or developing training. Consequently, some DEA field division staff continued to handle and store evidence improperly.24 The OIG report focused on seized drugs and monies and found instances of evidence loss that could compromise federal prosecutions.
DEA’s Office of Professional Responsibility Case Reports
The DEA’s Office of Professional Responsibility (OPR) receives allegations of misconduct by agents and other DEA personnel, including the theft or loss of defendants’ property such as seized cash. We requested that the DEA provide us with documentation of all OPR investigations related to the handling of seized and recovered monies since October 1, 2003. In response to our request, the DEA provided us with documentation from 33 OPR investigations from October 1, 2003, through July 14, 2005, involving allegations of theft or loss of defendants’ property. We reviewed the documentation and noted that in 11 instances the OPR case reports noted that agents did not properly handle, process, or dispose of the evidence. The OPR investigations found that agents: (1) did not immediately count the currency in five cases, (2) counted the currency without a witness in one case, (3) did not give the subject a receipt for the currency in two cases, (4) transported the currency to the bank alone in two cases, and (5) lost the evidence bag or the defendant’s possessions while the defendant was in custody in four cases. Some of the cases involved multiple violations of DEA policies. Only 1 of the 11 case reports showed that an agent was counseled or disciplined for not following the established procedures.
In response to these prior reports from the GAO, OIG, and its own staff, the DEA has issued additional guidance and training on the handling of seized evidence. The DEA:
developed a comprehensive classroom training program in 2005 for evidence custodians;
added a Frequently Asked Questions segment about the handling of evidence including seized and recovered monies to the DEA’s electronic library in 2005;
required field offices, effective January 1, 2005, to begin using High-Value Seized and Recovered Monies Ledgers with pre-printed column headings to account for the receipt and disposition of non‑drug evidence, high-value seized and recovered monies, and the temporary overnight storage of evidence;25 and
revised the procedures for handling and processing currency and other high-value items in the DEA Agents Manual, Section 6682, Currency and High-Value Items. These procedures became effective April 5, 2005, and superseded similar policies contained in the DEA Agents Manual, Section 6681, Non-Drug Property.
A controlled substance is a drug which has been declared by federal or state law to be illegal for sale or use, but may be dispensed under a physician's prescription. The basis for control and regulation is the danger of addiction, abuse, physical and mental harm (including death), the trafficking by illegal means, and the dangers from actions of those who have used the substances.
This chart presents for each DEA Division office the number and amount of adopted cash seizures (in red), the number and amount of DEA cash seizures (in blue), and the number and amount of total cash seizures (numbers only in black). The totals may differ slightly from the sum of the adopted and DEA amounts due to rounding. All data shown is for the period October 1, 2003, through November 3, 2005, except for the Washington Division data which is for the period October 1, 2003, through September 30, 2005.
General Accounting Office, Report Number AIMD-00-17, Seized Drugs and Weapons: DEA Needs to Improve Certain Physical Safeguards and Strengthen Accountability, November 1999. On July 7, 2004, the General Accounting Office was renamed the Government Accountability Office.
Drug Enforcement Administration, Office of Inspections. Review of Custodial Accountability for: Drug Evidence, Non-Drug Evidence, Seized Monies, Recovered Monies, and Technical Equipment, February 2001.
The Form DEA-7a, Acquisition of Non-Drug Property, is used to document the acquisition of non-drug property held by the DEA in excess of 5 working days. This form is also used to: (1) record the receipt or delivery of non-drug evidence or high-value items to the evidence custodians; (2) submit recovered “buy money” into evidence; (3) request analysis by a DEA laboratory; (4) document entry of non-drug evidence into the Enhanced Non-Drug Evidence Database System; and (5) support high-value item balances reported quarterly on the High-Value Evidence and Safekeeping Report (HVESR), formerly known as the Non-Drug Evidence Report. The Standard Seizure Form (SSF) is a 5-page form that includes case and asset information, names and addresses of potential claimants, and other details such as probable cause and chain-of-custody information. Agents are required to complete the SSF within 10 working days of seizure. Information from the SSF is entered into CATS for assets that will be forfeited.
Department of Justice, Office of the Inspector General, Report Number I‑2004‑003, Review of the Drug Enforcement Administration’s Custodial Accountability for Evidence Held at Field Divisions, January 2004.
The DEA defines a high-value item as anything valued in excess of $1,000 that is readily convertible to currency. The three categories of high-value items are property, cash and other monetary instruments, and recovered Official Advanced Funds (OAF). Property includes jewelry, precious metals, computers, and phones. Cash and other monetary instruments include certificates of deposit, stocks, traveler’s checks, and cashier’s checks. Recovered OAF is DEA appropriated monies previously expended for the purchase of evidence or lost through theft during undercover or similar operations that was recovered by the DEA.
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