Note 7. Deposit Fund

The SADF is a holding account established for the temporary deposit and control of nonevidentiary cash subject to forfeiture and includes seized cash, proceeds from preforfeiture sales of seized property, and income from property under seizure. The funds are held in the form of U.S. currency with the U.S. Treasury or as investments in U.S. Treasury securities until the U.S. Marshals Service receives a declaration of forfeiture or other court order directing the U.S. Marshals Service as to the disposition. The Deposit Fund liability account offsets the value of seized cash included in the SADF balance with the U.S. Treasury and in investments in U.S. Treasury securities.

Note 8. Net Position

Net Position is the equity of the U.S. Government in the Asset Forfeiture Program. The AFF, which is a Special Fund, accounts for all amounts presented within Net Position. The BCCI Investment Income (see Note 9) is subject to court order and may be used to pay claims of victims of the BCCI fraud. The income is recorded as revenue and the contingent liability is shown separately, for presentation purposes, within Net Position on the Statement of Financial Position. Of the $219.1 million in Net Position, $28.6 million represents undelivered orders. To the extent that services and/or supplies classified as undelivered orders are delivered during FY 1997, obligations pursuant to those orders will be expensed during FY 1997.

Note 9. Investment Income

The FY 1996 Investment Income was derived from investment of the AFF and SADF in U.S. Treasury securities. The earnings on BCCI funds held by the SADF and AFF are tracked separately due to special disposition requirements (see Note 8). Of the total BCCI investment income for 1996 (see below $15.5 million), U.S. Fund interest earned for FY 1996 totals $10.7 million and BCCI interest earned totals $4.8 million. Of the total interest earned in FY 1995, $21,082,041 was refunded to the Worldwide Victims Fund.

The following schedule presents the composition of Investment Income for FYs 1996 and 1995.

Dollars in Thousands 1996 1995
Investment Income from AFF $12,252 $16,378
Investment Income from SADF 14,965 12,892
Investment Income from BCCI 15,452 25,561
Total Investment Income $42,669 $54,831

Note 10. Forfeited Cash

Forfeited Cash includes $173,539,291 in FY 1996 and $233,046,761 in FY 1995 from assets forfeited pursuant to the BCCI Plea Agreement. These amounts generally are not available because of special disposition requirements (i.e., court order).

Note 11. Forfeited Property Revenue

The Federal Accounting Standards Advisory Board's Statement of Federal Financial Accounting Standards Number 3, Accounting for Inventory and Related Property, requires that revenue associated with property not disposed of through sale be recognized upon approval of distribution. During FYs 1996 and 1995, the property was distributed pursuant to the Attorney General's authority to share forfeiture revenues with state and local law enforcement agencies that participated in the forfeiture that generated the property, and pursuant to the Department's authority to place forfeited property into official use by the Government. The amounts for the respective property distributions are as follows:

Dollars in Thousands 1996 1995
Property Transferred to the USMS $314 $516
Property Transferred to State or Local Agencies 2,107 5,044
Property Transferred to Federal Agencies 7,656 7,077
Total Forfeited Property Revenue $10,077 $12,637

Note 12. Return of Forfeiture Income

Included in the line item "Return of Forfeiture Income" on the Statement of Operations and Changes in Net Position are the following amounts:

  1996 1995
Payments to individuals or organizations for proceeds from assets forfeited and deposited into the AFF and subsequently returned to them through a settlement agreement or by court order $5,481,900 $7,395,655
Return of forfeiture income to the Treasury Forfeiture Fund for its participation in seizure which led to forfeiture 7,333,967 13,160,232
Return of forfeiture income to the Resolution Trust Corporation, the Federal Deposit Insurance Corporation, or other Federal financial institutions or regulatory agencies for monies recovered under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) 663,323 468,214
Return of forfeiture income to the U.S. Postal Service for its participation in seizure which led to forfeiture 2,156,002 914,862
Return of forfeiture income to other Federal agencies for their participation in seizure which led to forfeiture 444,083 731,107
BCCI Distributions to the Asset Forfeiture Fund 6,671,404 0
BCCI Distributions to victims and other permanent court-
ordered distributions
223,793,813 254,128,802
Return of forfeiture income to the Treasury Forfeiture Fund (TFF) from the sale of TFF assets in the custody of the USMS (22,579) 61,621
Total Return of Forfeiture Income $246,521,913 $276,860,493

Note 13. Operating Expenses/Distribution of Revenues

Expenses incurred as shown in the Statement of Operations and Changes in Net Position are classified by major type of program versus object classification. Operating expenses, including distributions of revenue, by object classification are shown in the following schedule:

Dollars in Thousands 1996 1995
Personnel Compensation and Benefits $986 $1,202
Travel and Transportation of Persons and Things 2,250 4,760
Rent, Communications, and Utilities 9,483 13,014
Printing and Reproduction 2,070 410
Consulting and Other Services 270,374 422,012
Supplies and Materials (501) 2,961
Equipment (2,381) 2,044
Grants, Subsidies, and Contributions 29 3
Insurance Claims and Indemnities 14 107
Forfeited Property 10,077 12,637
Interest and Dividends 401 503
Total Expenses and Distribution of Revenues by Object Classification $292,802 $459,653

Note 14. Allocation of Prior Year Surplus

28 U.S.C. 524(c)(9)(E), provides authority for the Attorney General to use excess end-of-year monies, without fiscal year limitation, in the AFF for Federal law enforcement, prosecution, correctional activities, and related training requirements. The following schedule includes unexpended allocations of Super Surplus funding totaling $6,807,758 in the FY 1995 column.

Dollars in Thousands 1996 1995
Asset Forfeiture Management Staff $0 $(43)
Asset Forfeiture and Money Laundering, Criminal Division 0 1,596
United States Attorneys 0 1,600
National Institute of Justice 0 125
Bureau of Prisons 0 3,607
Community Relations Service 0 0
Civil Rights Division 0 0
Federal Bureau of Investigation 0 (4,226)
Drug Enforcement Administration 0 (404)
Immigration and Naturalization Service 0 4,990
United States Marshals Service 0 5
United States Postal Service 0 0
United States Food and Drug Administration 0 0
Department of Health and Human Services, Inspector General 0 0
Internal Revenue Service (3,000) 0
Total Allocations $(3,000) $7,250
1991 Capital Surplus $0 $0
1992 Super Surplus 0 (166)
1993 Super Surplus (3,000) 7,416
Total Allocations $(3,000) $7,250

Note 15. Transfers

Transfers differ from expenses in that transfers are cash flows out of the AFF to another appropriation account of the Treasury. Such transfers of cash require statutory authority. From there, expenses are recorded by the recipient organization against its own appropriation. Expenses are outflows of funds recorded as obligations directly against the AFF. The AFF receives its transfer authority from Public Law No. 100-690, as amended. The transfer from the AFF to the DOJ Working Capital Fund will be reversed in FY 1997. During FYs 1996 and 1995, funds were transferred from the AFF as follows:

Dollars in Thousands 1996 1995
Drug Enforcement Administration $(15) $0
U.S. Marshals Service (1) 0
Immigration and Naturalization Service (515) 0
Working Capital Fund 55 0
Bureau of Alcohol, Tobacco and Firearms (15) 0
Total Transfers $(491) $0
Transfers from FY 1991 Surplus $(546) $0
Transfers from Working Capital Fund 55 0
Total Transfers $(491) $0

Note 16. Commitments and Contingencies

The AFF is committed under obligation for goods and/or services which have been ordered but not yet received (undelivered orders) at FY end. The total undelivered orders for all AFF activities amounted to $28.6 million and $9.3 million as of September 30, 1996 and 1995, respectively.