Profitability of Customs Forfeiture Program Can Be Enhanced

GAO discussed how effectively the U.S. Customs Service managed its noncash assets seized from criminal enterprises. GAO found that: (1) the volume of seized assets has increased 3,800 percent, to $1.3 billion, since 1979; (2) remission of property to the owners after payment of fines or penalties accounted for $301.8 million of the total property disposed, while sales, the next highest disposal category, accounted for $42.8 million; (3) Customs did not maintain information on liens paid, storage costs, or any other program costs, and understated revenues, because it did not collect data on fines and penalties collected in lieu of forfeiture; (4) in 1988, remissions expenses exceeded revenues by $3.2 million because Customs granted relief for innocent owners for all or a portion of storage costs; (5) Customs' guidelines on constructive seizures, which allowed owners to maintain but not sell or mortgage properties, applied only to actions taken against offenders carrying small amounts of drugs; (6) declining average property prices reduced revenues 57 percent between 1988 and 1989 because drug traffickers used low-value vehicles in an effort to hold down their overhead caused by Customs seizure and forfeiture; (7) Customs lost an average of $204 per vehicle due to storage and sale expenses because regulations provided that it could junk property appraised at less than $1,000; and (8) Customs' lack of internal controls has allowed the sale of property substantially below fair-market value without prior management approval.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: J. William Gadsby Team: General Accounting Office: General Government Division Phone: (202) 512-8387