The government withholds funds stolen in criminal investigations

FBI seizures of suspected criminals’ funds regularly make headlines. For example, in September 2022, the FBI’s Albuquerque division was seized $1.8 million in cashas well as guns and drugs, during a gang investigation.

VERIFY reader Robin recently asked us if the federal government keeps money it seizes in investigations.

Does the federal government withhold confiscated funds during criminal investigations?

Yes, the federal government withholds the funds confiscated in criminal investigations.

Law enforcement agencies at all levels of government seize money and property during investigations through a process known as forfeiture. When the federal government seizes an individual’s property, it typically sells that property through public auctions and puts the money from those auctions, as well as money collected during the investigation, into special federal funds.

From these funds, law enforcement divides the confiscated assets for various needs and expenses. Generally, most of the proceeds go back to federal law enforcement to pay for future foreclosure operations. what may include training law enforcement and settling debts associated with confiscated property, the Justice Department says. But the proceeds from foreclosure operations exceed the costs of those operations, leaving some revenue.

A smaller portion of the proceeds from expiration goes to the Equal Sharing Programwhich allows federal law enforcement agencies to share with local and state law enforcement agencies up to 80% of assets seized from operations they are involved in or to which they are directed congress so that other federal agencies can use it. Some of the confiscated assets are returned or awarded to victims of the related crime or other third parties. Whatever income remains after all this stays in the fund.

Law enforcement agencies under the US Department of Justice, such as the FBI, US Marshals, and the Drug Enforcement Administration, place forfeited assets in a common fund called the Asset Forfeiture Fund (AFF). Law enforcement agencies at the US Treasury Department and US Department of Homeland Security place forfeited assets in another fund called the Treasury Future Fund (TFF).

The US Marshals Service administers the AFF for all Department of Justice agencies independent audit by KPMG, an accounting and tax firm, says. The US Marshals Service says it also manages confiscated property, including real estate, commercial businesses, financial instruments, vehicles, jewelry, art, antiques, collectibles, ships and aircraft. Once in their possession, the Marshals will sell property through auctions, both online and in person, to convert the property into cash.

Property confiscated by the Treasury Department is also auctioned off and managed by the Treasury Executive Office for Asset Forfeiture.

Property seized in the investigation includes a variety of items, e.g cars, airplanes or Jewelry to a Caterpillar tractor and a jet engine.

According to a 2023 Congressional Research Service Federal law enforcement reportedly puts more than $1.5 billion in assets into the two funds annually. Annual income exceeds expenses most years, allowing both funds to build up a large cash reserve over time.

At the end of fiscal 2022, the Assets Forfeiture Fund held $1.5 billion and the Treasury Forfeiture Fund held $1.8 billion, according to the audit by KPMG and A independent audit of the Treasury Forfeiture Fund by GKA, PC, an accounting firm.

Federal law enforcement officials may seize a person’s money and property through criminal confiscation when law enforcement officials are seizing money or property because the person possessing it has been convicted of a felony; or civil and administrative confiscation of assets, i.e. when law enforcement alleges that the money or property was used in a criminal offence Says the Justice Department.

The confiscation of civil and administrative property has been criticized by activists and members of Congress because the owner need not be arrested or involved in a crime to have his property confiscated, a Report of the Department of Justice of the Inspector General says. Without having to prove the owner is part of a crime, law enforcement can abuse these types of forfeits, taking a person’s property on the basis of flimsy arguments, critics like them say Institute of Justicea non-profit advocacy group that advocates for forfeiture reform.

The purpose of asset confiscation, according to the Justice and Treasury Departments, is to prevent crime.

“Asset confiscation serves to deprive criminals of the proceeds of their crimes, to break the financial backbone of organized crime syndicates and drug cartels, and to recover property that can be used to compensate victims and deter crime,” he said Says the Justice Department.

Each state has its own asset confiscation laws that govern how assets seized by local and state law enforcement agencies may be spent. It may go partially or fully to law enforcement in some states, while in others it is reserved for school funding.