In federal criminal prosecutions, forfeiture and restitution seem like they should go hand-in-hand: The government uses its broad authority to strip a criminal of his ill-gotten gains, and the court then enters an order mandating the payment of compensation to his victims. But as many practitioners—whether representing victims or defendants—learn to their dismay, the government has broad powers to seize a defendant’s property, but no obligation to direct forfeited funds to pay restitution. This article explores the apparent disconnect between the government’s forfeiture powers and the victim’s right to restitution, and provides some tips to help practitioners make the best of a difficult, contradictory system.
The modern incarnation of criminal forfeiture traces its roots back to 1970, when Congress passed the RICO Act and the Controlled Substances Act, which allowed law enforcement to seize property connected with organized crime, money laundering and illegal drug distribution. See 18 U.S.C. §1963(a)(3); 21 U.S.C. §§853, 881. Over time, forfeiture provisions spread throughout the federal criminal code and today a catch-all provision, authorizes—and, for many crimes, mandates—the procedure in connection with crimes involving a financial transaction or fraud. See 18 U.S.C. §982; 21 U.S.C. §853. Nearly any property, tangible or otherwise, can be subject to forfeiture so long as it was “used, or intended to be used” to commit a crime, or “derived from” or “obtained, directly or indirectly” from a crime. 21 U.S.C. §853(a)(1)-(2); see also 18 U.S.C. §982(a).
Across the justice system, asset forfeiture involves huge sums of money; in the past five years alone, federal law enforcement agencies have seized and forfeited more than $7.8 billion in total assets. See Office of the Inspector General, U.S. Department of Justice, Audit of the Assets Forfeiture Fund and Seized Asset Deposit Fund Annual Financial Statements Fiscal Year 2015 (2015) at 3. This property is pooled together and managed by the DOJ through its Asset Forfeiture Program (the AFP). Among the uses of these funds authorized under federal law, the DOJ is free to dip into the AFP to defray the administrative and operation costs of investigations, and to compensate cooperating state and local law enforcement through so-called “equitable sharing” payments. See 28 U.S.C. §524(c). In 2015 alone, equitable sharing payments topped $480 million. See Department of Justice, Fiscal Year 2015 Asset Forfeiture Fund Report to Congress (2015).
Restitution is part of a criminal sentence that obligates the defendant to compensate victims for losses caused by the defendant’s crime. In the past 20 years, Congress has twice sought to strengthen victims’ rights: In 1996, Congress made restitution a mandatory sentencing component for all crimes of violence or fraud, see 18 U.S.C. §3663A(c), and then in 2004, enacted the Crime Victims’ Rights Act (CVRA), which formally obligated DOJ personnel to “make their best efforts” to secure “full and timely restitution” to victims. See 18 U.S.C. §§3771(e)(2) and (c)(1). As a result of this legislation, restitution is now ordered routinely as part of most federal criminal sentences.
Despite these changes, the actual value of a restitution order to the victim depends on whether the defendant has assets to satisfy the obligation. In reality, defendants are often judgment-proof because their most valuable assets have been forfeited to the government long before the restitution order enters into effect.
Forfeited funds can be applied towards a defendant’s restitution obligations when he lacks other assets. But, from the government’s perspective, that is not the main purpose of forfeiture. Rather, the goal of the AFP is to starve criminals of resources while helping to defray the costs of administrative and investigative activity of law enforcement. See U.S. Department of Justice, Guide to Equitable Sharing for State and Local Law Enforcement Agencies at 1. As a DOJ victims’-assistance manual bluntly states: “If a defendant has sufficient assets to pay the restitution order without using property forfeitable to the government, the defendant must use those assets (not the forfeitable property) to satisfy the restitution order.” U.S. Department of Justice, Attorney General Guidelines for Victim and Witness Assistance (2011) at 45. Combined with the government’s incentive to keep forfeited property for its own benefit, this default view can leave victims with the choice between a restitution order’s limited enforcement powers, or else shouldering the considerable expense of an independent civil action against a defendant with limited resources.
Forfeited funds can be made available for restitution through a process called “restoration.” See 28 U.S.C. §524(c)(E); Department of Justice, Returning Forfeited Assets to Crime Victims: An Overview of Remission and Restoration at 4. But because forfeited property belongs to the government, the decision of whether to apply forfeited funds towards restoration is purely discretionary, leaving the victim as a supplicant to the prosecuting U.S. Attorney’s office for assistance. See id. And even if there is a sympathetic ear at the U.S. Attorney’s Office, restoration is a slow, opaque intra-agency process: First, the local USAO must wait for the entry of a final order of forfeiture, and for all seized assets to be liquidated into cash. Only then can the USAO apply to the DOJ for approval to use the forfeited assets towards restitution, which may be denied. Id. at 5. If approved, forfeited funds are deposited with the clerk of the court where the defendant was convicted and distributed to victims. Id. at 4. Depending on the property involved, this process can take anywhere from months to more than a year.
Despite billions seized through forfeiture, victim restitution can often seem like an unfulfilled promise. As it currently stands, this system frequently does not deliver victims the “full and timely restitution” that they are supposedly guaranteed under the Crime Victims’ Rights Act. See 18 U.S.C. §§3771(a) and (c). But until the next round of Congressional reform efforts, practitioners must make the best of the system as it currently exists.
Guidance for Practitioners
When representing a criminal defendant:
• Don’t assume that forfeited funds will be available to satisfy your client’s restitution obligations.
• When negotiating your client’s plea deal, ask the government to name the victims of your client’s crime in the restitution order and to agree that forfeited funds will be available to satisfy that restitution order.
When representing a victim seeking forfeited funds:
• Be a “Squeaky Wheel.” When representing victims, early and frequent communication with the U.S. Attorney Office’s assigned to prosecute the case is essential to getting results. Above all else, make sure your client is named in the restitution order. Do not make the mistake of limiting yourself to the prosecutor—you should also seek out the civil AUSA assigned to oversee the forfeiture aspect of the case and (perhaps most importantly) the paralegal or other office staffer who actually does the day-to-day work of coordinating with the DOJ. Call them regularly to check on the status of the forfeiture proceeding.
• Keep an Eye on Forfeited Property. Do not ignore any developments related to forfeiture. In all likelihood, the only pool of assets that will be available for restitution is property the government has frozen and forfeited. Ask for updates about the status of any sales or liquidations; ask for information about the value of the forfeited property; and make sure you know which agency has physical custody of particular assets. In the enormous system of the AFP, it can be easy to lose track of property. There is a limited time in which the government is obligated to maintain forfeited property for potential use towards restitution—do not let the forfeited property disappear.
• Know Your Victims’ Rights. Under the CVRA, the DOJ must use “best efforts” to provide timely access to restitution. An individual victim’s standing to be involved in a criminal proceeding is limited, but includes the right to confer with the government’s attorneys and the right to be involved and heard at sentencing. 18 U.S.C. §3771(d) permits victims to make a motion to enforce their CVRA rights and, if necessary, move to be heard before action is taken as to forfeited property on the grounds it could impact the right to restitution. See id. §3771(a)(6).
• Understand the Restoration Process in Your Local USAO. Given the discretionary nature of restoration, it is vital to understand the inter-agency application process. The best source of information about the process are often the office staffers who actually process the paperwork, not necessarily the AUSA assigned to the case. Understand that restoration often depends on the final forfeiture and liquidation of all seized property subject to a particular forfeiture order, which can mean that the distribution of substantial sums of victims’ compensation could be held up pending the auction of a single item of jewelry. Although difficult, it may be worth advocating for separate forfeiture orders for cash, securities or other easily liquidated assets, apart from more illiquid assets like real or personal property.