B-198049.OM, JUL 17, 1980

B-198049.OM, JUL 17, 1980

DIGEST: TESTIMONY ON FORFEITURE OF ILLICITLY DERIVED ASSETS (FILE B-198049; CODE 186600)

GROUP DIRECTOR, GGD - TOM COLAN:

ATTACHED IS SUGGESTED LANGUAGE COVERING THE LEGAL ASPECTS OF THE TESTIMONY ON CRIMINAL FORFEITURE, TO BE DELIVERED JULY 22 BEFORE THE SUBCOMMITTEE ON CRIMINAL JUSTICE, SENATE COMMITTEE ON THE JUDICIARY.

THE LEGAL MATERIAL IS BROKEN DOWN INTO TWO SECTIONS. THE FIRST SECTION COVERS THE ORIGIN AND HISTORY OF FORFEITURE, AND PROVIDES AN OVERVIEW OF THE FORFEITURE AUTHORIZATIONS AVAILABLE FOR USE IN AN ORGANIZED CRIME CASE. THE SECOND SECTION DISCUSSES RECENT CASE LAW ON THE FORFEITURE AUTHORIZATIONS CONTAINED IN THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT (RICO), 18 U.S.C. SEC. 1963, THE CONTINUING CRIMINAL ENTERPRISE (CCE) STATUTE, 21 U.S.C. SEC. 848, AND THE PSYCHOTROPIC SUBSTANCES ACT OF 1978, 21 U.S.C. SEC. 881.

I UNDERSTAND THE COMMITTEE IS INTERESTED IN GAO'S TENTATIVE FINDINGS AND CONCLUSIONS ON, AMONG OTHER MATTERS, THE SUBSTANTIVE DEFECTS OF THE RICO AND CCE FORFEITURE AUTHORIZATIONS. ALLUDED TO IN THE DRAFT STATEMENT ARE DECISIONS OF THE FOURTH, FIFTH, AND NINTH CIRCUIT COURTS OF APPEALS THAT SEEM TO NARROW THE SCOPE OF CRIMINAL FORFEITURE, OR AT LEAST HAD THAT EFFECT IN THE CONTEXT OF A PARTICULAR CASE. FORFEITURE CASES NOW IN LITIGATION IN THESE AND OTHER CIRCUITS, HOWEVER, RAISE ANALOGOUS OR IDENTICAL ISSUES. IN THESE CASES, THE DEPARTMENT OF JUSTICE IS ARGUING THAT THE DESCRIBED OPINIONS DISALLOWING FORFEITURE EITHER ARE DECIDED INCORRECTLY OR ARE DISTINGUISHABLE ON THE FACTS. WE COULD BETTER DETERMINE WHETHER THERE IS A NEED FOR SPECIFIC REMEDIAL LEGISLATION WHEN THIS LITIGATION IS RESOLVED.

GAO TESTIMONY ON FORFEITURE OF ILLICITLY DERIVED ASSETS

DIGEST:

MEMORANDUM TO GENERAL GOVERNMENT DIVISION TRANSMITTING LEGAL SECTIONS OF TESTIMONY ON THE USE OF CRIMINAL FORFEITURE UNDER THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATION ACT (RICO), 18 U.S.C. SEC. 1963, AND DEA'S CONTINUING CRIMINAL ENTERPRISE (CCE) STATUTE, 21 U.S.C. SEC. 848. ALSO ADDRESSED ARE SUBSTANTIVE DEFECTS OF STATUTORY CRIMINAL FORFEITURE AUTHORIZATIONS, AS REFLECTED BY EMERGING CASE LAW. SEE CASES CITED.

TESTIMONY ON FORFEITURE

ONE STATED OBJECTIVE OF THE FEDERAL GOVERNMENT'S QUEST FOR MORE EFFECTIVE AND INNOVATIVE MEASURES TO COMBAT ORGANIZED CRIME IS THE USE OF FORFEITURE. FORFEITURE MEANS A JUDICIALLY REQUIRED DIVESTITURE OF PROPERTY WITHOUT COMPENSATION THEREFOR. EXCLUDED FROM THIS DEFINITION ARE FINES, BAIL AND BOND FORFEITURES, AND THE IMPOSITION OF CIVIL DAMAGES RESULTING FROM A LAWSUIT.

THERE ARE IMPORTANT DISTINCTIONS BETWEEN THE CLASSES OF PROPERTY, AND THERE ARE FOUR OF THEM THAT ARE SUBJECT TO FORFEITURE. THE FIRST CLASS, REFERRED TO AS CONTRABAND PER SE, DESCRIBES PROPERTY WHICH IS CONSIDERED INHERENTLY DANGEROUS, AND THE POSSESSION OR DISTRIBUTION OF WHICH IS ITSELF USUALLY A CRIME. CERTAIN TYPES OF GUNS, CONTROLLED SUBSTANCES, LIQUOR, AND GAMBLING DEVICES QUALIFY AS CONTRABAND PER SE. THE SECOND CLASS, CALLED DERIVATIVE CONTRABAND, DESCRIBES PROPERTY SUCH AS BOATS, AIRPLANES, AND CARS THAT SERVE THE FUNCTION OF WAREHOUSING, CONVEYING, TRANSPORTING, OR FACILITATING THE EXCHANGE OF CONTRABAND PER SE. THE THIRD CLASS, CALLED DIRECT PROCEEDS, DESCRIBES PROPERTY SUCH AS CASH THAT IS RECEIVED IN EXCHANGE OR AS PAYMENT FOR ANY OF A VARIETY OF ILLEGAL TRANSACTIONS INVOLVING CONTRABAND. THE FOURTH CLASS, REFERRED TO AS SECONDARY OR DERIVATIVE PROCEEDS, DESCRIBES PROPERTY SUCH AS STOCK, LEGITIMATE BUSINESSES, AND THE LIKE THAT ARE PURCHASED, MAINTAINED, OR ACQUIRED, INDIRECTLY OR DIRECTLY, WITH THE PROCEEDS OF AN ILLEGAL TRANSACTION.

THE FEDERAL GOVERNMENT HAS NEARLY TWO CENTURIES OF EXPERIENCE WITH FORFEITURE OF CONTRABAND PER SE AND DERIVATIVE CONTRABAND. HOWEVER, THE FEDERAL GOVERNMENT'S EFFORTS TO CAUSE FORFEITURE OF DIRECT AND SECONDARY PROCEEDS HAVE BEEN LIMITED. WE WILL OUTLINE THE PRINCIPAL REASONS FOR THIS IN OUR TESTIMONY TODAY. BEFORE DOING SO, HOWEVER, WE WILL PROVIDE SOME GENERAL BACKGROUND ON THE AMERICAN LAW OF FORFEITURE, BOTH BEFORE AND AFTER 1970. A POSSIBLE REVOLUTION IN THE LAW OF FORFEITURE BEGAN IN 1970 WITH CONGRESS' ADOPTION OF THE COMPREHENSIVE DRUG PREVENTION AND CONTROL ACT, AND THE ORGANIZED CRIME CONTROL ACT.

FORFEITURES CAN BE ACCOMPLISHED CIVILLY OR CRIMINALLY, DEPENDING UPON THE NATURE OF THE PROPERTY INVOLVED, THE GUILT OR INNOCENCE OF THE PROPERTY HOLDER, AND THE FORFEITURE STATUTE UNDER WHICH THE GOVERNMENT ELECTS TO PROCEED. WE FIRST WILL DISCUSS THE ORIGIN AND USE OF CRIMINAL FORFEITURE.

CRIMINAL OR COMMON LAW FORFEITURE

IN COMMON LAW ENGLAND, CONVICTION FOR A FELONY LED TO A FORFEITURE OF PROPERTY TO THE CROWN. UPON CONVICTION, FORFEITURE OF THE FELON'S PROPERTY FOLLOWED SWIFTLY AND AUTOMATICALLY. THIS TYPE OF COMMON LAW FORFEITURE, COMMONLY KNOWN AS CRIMINAL FORFEITURE OF ESTATE, WAS MERELY AN ADDED AUTOMATIC PENALTY IMPOSED IN PERSONUM AGAINST A FELON AS A CONSEQUENCE OF A JUDGMENT OF PERSONAL GUILT. SIGNIFICANTLY, IT WAS IRRELEVANT WHETHER THE PROPERTY SUBJECT TO FORFEITURE WAS USED IN COMMISSION OR FURTHERANCE OF A FELONY, OR WHETHER THE PROPERTY REPRESENTED PROCEEDS OF AN ILLEGAL TRANSACTION. PUT DIFFERENTLY, CONVICTION ALONE WOULD RESULT IN FORFEITURE, WITHOUT REGARD TO THE PROPERTY'S RELATIONSHIP, IF ANY, TO THE CRIME OF CONVICTION.

IN CONTRAST TO THE ENGLISH TRADITION, MOST REMNANTS OF WHICH VANISHED IN THE LATE 1800S, CRIMINAL FORFEITURE NEVER ENJOYED WIDESPREAD USE IN THE AMERICAN COLONIES. ABUSES OF FORFEITURE BY THE ENGLISH CROWN ARE OFTEN CITED AS THE PRINCIPAL REASON FOR THE EARLY AMERICAN AVERSION TO CRIMINAL FORFEITURE.

ARTICLE III OF THE CONSTITUTION PROVIDES THAT WHILE CONGRESS HAS THE POWER TO DECLARE THE PUNISHMENT OF TREASON, "NO ATTAINDER OF TREASON SHALL WORK *** A FORFEITURE, EXCEPT DURING THE LIFE OF THE PERSON ATTAINTED." THE FIRST CONGRESS WENT ONE STEP FURTHER AND ENACTED A STATUTE THAT SOME BELIEVE CODIFIES THE NEGATIVE IMPLICATION OF ARTICLE III THAT NO FORFEITURES ARE ALLOWED EXCEPT IN CASES OF TREASON. THIS STATUTE, WHICH HAS NEVER BEEN EXPRESSLY REPEALED, PROVIDES:

"NO CONVICTION OR JUDGMENT FOR ANY OF THE AFORESAID OFFENSES (CRIMINAL OFFENSES NOW CODIFIED IN TITLE 18) SHALL WORK *** A FORFEITURE OF ESTATE." 18 U.S.C. SEC. 3563.

WITH THE EXCEPTION OF THE CONFISCATION ACT OF 1862, WHICH AUTHORIZED THE PRESIDENT TO FORFEIT THE PROPERTY OF CONFEDERATE SYMPATHIZERS, CRIMINAL FORFEITURE IS BELIEVED TO HAVE BEEN UNKNOWN IN U. S. JURISPRUDENCE UNTIL 1970.

IN 1970, CONGRESS ENACTED THE ORGANIZED CRIME CONTROL ACT AND THE COMPREHENSIVE DRUG PREVENTION AND CONTROL ACT. TITLE IX OF THE ORGANIZED CRIME CONTROL ACT, ENTITLED THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATION ACT (RICO), PROVIDES IN GENERAL THAT UPON CONVICTION FOR RACKETEERING INVOLVEMENT IN AN ENTERPRISE, THE OFFENDER SHALL FORFEIT "INTERESTS" HELD IN THE ENTERPRISE OR OTHERWISE HELD IN CONTRAVENTION OF THE RICO STATUTE. 18 U.S.C. SEC. 1963. THE COMPREHENSIVE DRUG PREVENTION AND CONTROL ACT OF 1970 ALSO PROVIDES FOR CRIMINAL FORFEITURE OF, AMONG OTHER THINGS, ANY PROFITS DERIVED THROUGH A CONTINUING CRIMINAL ENTERPRISE (CCE) THAT TRAFFICKS IN CONTROLLED SUBSTANCES. 21 U.S.C. SEC. 848.

RICO AND CCE CREATED UNIQUE NEW REMEDIES TO ADDRESS THE INFILTRATION OF ORGANIZED CRIME INTO COMMERCIAL ENTERPRISES, AND TO PERMANENTLY DESTROY THE ECONOMIC BASE OF ORGANIZED CRIMINAL ACTIVITY. STATUTORY CONSTRUCTION OF THE PRECISE REACH OF RICO AND CCE IS EXTRAORDINARILY DIFFICULT, HOWEVER, BECAUSE THERE ARE VERY FEW REPORTED CASES INVOLVING CRIMINAL FORFEITURE. IN FACT, CASE LAW IS JUST BEGINNING TO EMERGE ON THE BASIC OPERATION OF THE CCE AND RICO FORFEITURE PROVISIONS - A MATTER TO WHICH WE WILL ALLUDE LATER IN OUR STATEMENT. WE DO KNOW THAT CCE AND RICO CONTEMPLATE A HYBRID FORM OF CRIMINAL FORFEITURE OF ESTATE IN THAT THERE MUST BE SOME NEXUS BETWEEN THE PROPERTY TO BE FORFEITED AND THE CRIMINAL ACTIVITY IN WHICH THE OFFENDER ENGAGED. IN COMMON LAW ENGLAND, NO SUCH NEXUS WAS REQUIRED.

CIVIL FORFEITURE

THE STATUTORY FRAMEWORK WITHIN WHICH AMERICAN FORFEITURE LAW OPERATES ALSO INCLUDES CIVIL FORFEITURE.

CRIMINAL FORFEITURE IS BASED ON A DETERMINATION OF PERSONAL GUILT; THE RIGHT OF THE GOVERNMENT IN THE PROPERTY SUBJECT TO FORFEITURE STEMS FROM AN IN PERSONUM CRIMINAL JUDGMENT AGAINST THE OFFENDER. SEE UNITED STATES V. RUBIN, 559 F.2D 975 (5TH CIR. 1977). ALMOST ALL OTHER FORFEITURES ARE CONSIDERED CIVIL FORFEITURES. CIVIL FORFEITURE CASES USUALLY ARISE INCIDENT TO VIOLATIONS OF THE CUSTOMS, REVENUE, AND NAVIGATION LAWS; THE PROPERTY SUBJECT TO CIVIL FORFEITURE IS CONSIDERED "TAINTED." THE LEGAL PROCEEDING IN SUCH CASES IS THEORETICALLY AGAINST THE PROPERTY ITSELF; THE FORFEITURE STEMS FROM THE GUILT OF THE PROPERTY, OR THE PROPERTY'S USE IN ILLEGAL ACTIVITY. THE RIGHTS OF THE GOVERNMENT IN THE PROPERTY DERIVE FROM AN IN REM JUDGMENT AGAINST THE OFFENDING ARTICLES OF PROPERTY. CONVICTION OF THE PROPERTY HOLDER FOR A CRIME IS RARELY A PREREQUISITE FOR THE IMPOSITION OF CIVIL FORFEITURE. IF THE TAINT IN THE PROPERTY EXISTS, THE RIGHTS OF OTHERS IN THE PROPERTY, EVEN INNOCENT THIRD PARTIES, ARE THEREBY EXTINGUISHED. CALERO-TOLEDO V. PEARSON YACHT LEASING CO., 416 U.S. 663 (1974).

DEA'S CIVIL FORFEITURE STATUTE MAY BE FOUND IN SECTION 881 OF TITLE 21, UNITED STATES CODE. THE MOST FREQUENT APPLICATIONS OF THIS STATUTE HAVE BEEN AGAINST CONTRABAND PER SE AND DERIVATIVE CONTRABAND, NOT TO PROCEEDS OF CONTROLLED SUBSTANCE TRANSACTIONS.

DEA'S CIVIL FORFEITURE STATUTE WAS AMENDED IN 1978 AND, IF READ LITERALLY, SEEMS TO HAVE APPROXIMATELY THE SAME REACH IN TERMS OF CLASSES OF PROPERTY SUBJECT TO FORFEITURE AS THE CCE CRIMINAL FORFEITURE AUTHORIZATION. SINCE 1978, SECTION 881 HAS ON OCCASION BEEN USED, IN SOME CASES SUCCESSFULLY, IN AN ATTEMPT TO REACH THE IMMEDIATE CASH PROCEEDS OF DRUG TRANSACTIONS; TO OUR KNOWLEDGE, IT HAS NEVER BEEN APPLIED TO DERIVATIVE OR SECONDARY PROCEEDS. FROM A LEGAL POINT OF VIEW, THE EXTENSION OF CIVIL FORFEITURE TO REACH PROCEEDS RAISES A WIDE VARIETY OF QUESTIONS ABOUT THE EXTENT TO WHICH THE GOVERNMENT PROPERLY MAY USE THE CIVIL PROCESS TO ADMINISTER SANCTIONS AVAILABLE UNDER A CRIMINAL STATUTE, AND TO ACCOMPLISH A PROCEEDS FORFEITURE WITHOUT REGARD TO THE CONSTITUTIONAL SAFEGUARDS APPLICABLE TO CRIMINAL PROCEEDINGS.

ALTHOUGH SECTION 881 REPRESENTS THE CIVIL COUNTERPART TO THE CCE CRIMINAL FORFEITURE AUTHORIZATION, THE CIVIL COUNTERPART TO THE RICO FORFEITURE AUTHORIZATION ONLY AUTHORIZES DIVESTITURE. 18 U.S.C. SEC. 1964. UNDER THE RICO CIVIL SCHEME, THE OFFENDER MAY BE ORDERED TO DIVEST HIMSELF OF HOLDINGS, AND MAY RECEIVE COMPENSATION UPON THE SALE OF THE DIVESTED PROPERTY INVOLVED.

FINALLY, CASE LAW IS BEGINNING TO EMERGE ON THE OPERATION OF THE RICO AND CCE FORFEITURE AUTHORIZATIONS. QUESTIONS RAISED BY SEVERAL COURTS GO TO THE HEART OF FORFEITURE LAW, AND SUGGEST A NEED FOR A CLOSE EXAMINATION OF THE ADEQUACY OF FORFEITURE STATUTES IN THE ORGANIZED CRIME CONTEXT. WOULD LIKE TO CALL THE SUBCOMMITTEE'S ATTENTION TO FIVE OF THE MORE SIGNIFICANT AND RECURRING AREAS OF CONCERN.

FIRST, THE PRECISE SCOPE OF THE RICO AND CCE FORFEITURE AUTHORIZATIONS IS NOT KNOWN. THE CCE AUTHORIZATION SPEAKS IN TERMS OF FORFEITURE OF, AMONG OTHER THINGS, "PROFITS" - A TERM WHICH IN ORDINARY USAGE MEANS THE GROSS PROCEEDS OF A TRANSACTION LESS ITS COST. SINCE CCE DOES NOT EXPLICITLY DEFINE "PROFIT," QUESTIONS HAVE BEEN RAISED WHETHER PROCEEDS ALLOCABLE TO THE COST OF NARCOTICS TO THE DEALER ARE "PROFITS," AND HENCE FORFEITABLE IN CRIMINAL LITIGATION. RICO, ON THE OTHER HAND, DOES NOT EXPLICITLY MENTION PROFITS, BUT SPEAKS IN TERMS OF FORFEITING "INTERESTS" IN AN ENTERPRISE. SEVERAL COURTS HAVE QUESTIONED WHETHER PROFITS GENERATED BY A RICO VIOLATION QUALIFY AS AN INTEREST IN AN ENTERPRISE, THUS SUBJECTING THE PROFITS TO FORFEITURE. SEE UNITED STATES V. MARUBINI, CRIM. NO. 79-1327, 9TH CIR., DECIDED JANUARY 10, 1980; UNITED STATES V. MEYERS, 432 F. SUPP. 456 (W.D. PA. 1977). A RELATED POINT OF CONTROVERSY IS WHETHER RICO CAN REACH ANY OF A DEFENDANT'S ILL-GOTTEN GAINS WHEN A DE FACTO COMBINATION OF INDIVIDUALS CONSTITUTES THE ENTERPRISE THROUGH WHICH THE DEFENDANT ENGAGED IN RACKETEERING ACTIVITY. RICO COVERS FORFEITURE OF "INTERESTS IN THE ENTERPRISE," BUT A DE FACTO ENTERPRISE LACKS THE ATTRIBUTES OF A CORPORATE ENTITY, AND HENCE, IS NOT CAPABLE OF OWNING, PURCHASING, HOLDING, OR TRANSFERRING ANY PROPERTY IN ITS OWN RIGHT. THIS RAISES THE VERY TROUBLESOME ISSUE WHETHER THERE EXISTS ANY INTEREST IN A DE FACTO ENTERPRISE THAT ADMITS OF FORFEITURE UNDER RICO. SEE UNITED STATES V. THEVIS, 474 F. SUPP. 134 (N.D.GA. 1979); WEINER, RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS, ANNUAL PROSECUTORS WORKSHOP P. 287, 302 (P.L.I. 1976).

SECOND, THERE IS CONFUSION ABOUT THE DEGREE TO WHICH ASSETS MUST BE FOLLOWED TO THEIR ILLICIT ORIGIN TO BE SUBJECT TO FORFEITURE. UNLIKE THE FORMS OF CRIMINAL FORFEITURE KNOWN IN ENGLAND, RICO AND CCE BOTH REQUIRE A NEXUS OTHER THAN MERE OWNERSHIP BETWEEN A DEFENDANT'S CRIMINAL MISCONDUCT AND THE PROPERTY TO BE FORFEITED. IF THE FORFEITABLE PROPERTY INTEREST REPRESENTS THE DIRECT PROCEEDS OF AN ILLICIT TRANSACTION AND IS HELD IN THE FORM IN WHICH ORIGINALLY RECEIVED, THERE IS LITTLE DIFFICULTY IN SHOWING THE ORIGIN OF THE PROPERTY TO BE FORFEITED. SERIOUS IDENTIFICATION PROBLEMS MAY ARISE, HOWEVER, IF THE PROPERTY SUBJECT TO FORFEITURE HAS CHANGED HANDS IN MULTIPLE TRANSFERS, OR CHANGED FORM, OR BOTH. IN SEVERAL JURISDICTIONS, THE GOVERNMENT HAS OBTAINED CASH FORFEITURES THROUGH A NET WORTH ANALYSIS SHOWING THAT A DEFENDANT'S NET WORTH WAS NECESSARILY SWOLLEN AS A RESULT OF SPECIFIC CRIMINAL ACTIVITY. OTHER JURISDICTIONS HAVE REQUIRED A MORE DIRECT CONNECTION, MEANING THAT THE GOVERNMENT MUST SHOW THAT THE SPECIFIC PROPERTY TO BE FORFEITED WAS ITSELF PURCHASED, ACQUIRED, OR MAINTAINED WITH ILLICITLY DERIVED FUNDS. COMPARE UNITED STATES V. RUBIN, 559 F.2D 975 (5TH CIR. 1977) WITH UNITED STATES V. COMPANALS, 518 F.2D 352 (9TH CIR. 1975). RICO AND CCE PROVIDE VERY LITTLE GUIDANCE ON THE QUANTUM OF TRACING NECESSARY TO SUSTAIN A CRIMINAL FORFEITURE.

A THIRD PROBLEM AREA DEALS WITH THE STATUS OF ASSETS THAT WOULD OTHERWISE BE SUBJECT TO FORFEITURE, BUT WHICH, FOR ANY OF A VARIETY OF REASONS, ARE TRANSFERRED BEFORE FORFEITURE CAN BE ACCOMPLISHED. SEE E.G., UNITED STATES V. MANDEL, 408 F. SUPP. 679 (D.MD. 1976), VACATED, 591 F.2D 1347 (4TH CIR.), REVERSED ON OTHER GROUNDS, 602 F.2D 653 (4TH CIR. 1979). THESE TRANSFERS MAY OCCUR IN THREE BASIC WAYS. ONE WAY IS FOR THE PROPERTY TO BE TRANSFERRED TO A THIRD PARTY WITH OR WITHOUT CONSIDERATION. THE DIFFICULTY WITH TRANSFERS OF THIS TYPE IS THAT A CRIMINAL TRIAL UNDER RICO AND CCE DETERMINE THE GUILT OR INNOCENCE OF THE DEFENDANT AND, BY IMPLICATION, THE DEFENDANT'S RIGHTS IN THE PROPERTY. ONCE THE PROPERTY IS TRANSFERRED, THERE ARE CONCEPTUAL AND LEGAL DIFFICULTIES IN REQUIRING THE DEFENDANT TO FORFEIT PROPERTY HE NO LONGER HAS OR, ALTERNATIVELY, IN REQUIRING THIRD PARTIES TO FORFEIT PROPERTY WITHOUT A TRIAL. A SECOND TYPE OF TRANSFER OCCURS WHEN A DEFENDANT PLACES ILL-GOTTEN GAINS IN FOREIGN DEPOSITORIES BEYOND THE JURISDICTION OF THE UNITED STATES, YET RETAINS SO-CALLED "CLEAN" MONEY IN DOMESTIC DEPOSITORIES AND DOMESTIC INVESTMENTS. NEITHER RICO NOR CCE MAKE EXPLICIT PROVISION FOR FORFEITURE OF CLEAN ASSETS IN SUBSTITUTION FOR ILLICIT ASSETS, THE LATTER BEING BEYOND THE REACH OF THE UNITED STATES. YET A THIRD TYPE OF TRANSFER IS FOR A LIEN TO BE FILED AGAINST THE PROPERTY BY, FOR EXAMPLE, THE DEFENDANT'S ATTORNEYS. AFTER DEFENSE COUNSEL'S FEES ARE DEDUCTED, THE REMAINDER OF THE PROPERTY IS FORFEITED TO THE GOVERNMENT.

A FOURTH PROBLEM AREA DEALS WITH THE PROCEDURES THAT MUST BE FOLLOWED TO ACCOMPLISH A CRIMINAL FORFEITURE. THE FEDERAL RULES OF CRIMINAL PROCEDURE WERE AMENDED IN 1970 TO MAKE PROVISION FOR THE INCLUSION IN THE INDICTMENT OF A FORFEITURE COUNT, AND THE RETURN OF A SPECIAL JURY VERDICT ON SUCH COUNT. SEE FEDERAL RULES OF CRIMINAL PROCEDURE, RULES 7(C)(2), 31(E), 32(B)(2). IF THE INDICTMENT DOES NOT CONTAIN A FORFEITURE COUNT, CRIMINAL FORFEITURE AUTOMATICALLY CEASES TO BE AN AVAILABLE REMEDY. UNITED STATES V. HALL, 521 F.2D 406 (9TH CIR. 1975). ONCE AN INDICTMENT IS OBTAINED, RICO AUTHORIZES THE COURT WHERE THE ACTION IS PENDING TO ISSUE A RESTRAINING ORDER PROHIBITING THE TRANSFER OF ASSETS SUBJECT TO FORFEITURE. 18 U.S.C. SEC. 1963(B).

BEYOND THESE BASIC PROCEDURES, RICO AND CCE DIRECT THE USE OF CUSTOMS FORFEITURE PROCEDURE FOR MATTERS RELATING TO THE DISPOSITION OF THE FORFEITED PROPERTY, PROCEEDS FROM THE SALE THEREOF, REMISSIONS, AND THE COMPROMISE OF CLAIMS. CUSTOMS PROCEDURES ARE SOMEWHAT DIFFICULT TO APPLY IN THE ORGANIZED CRIME SETTING BECAUSE THEY WERE INTENDED TO COVER FORFEITURE IN REM, WHERE IT IS THE GUILT OF THE PROPERTY THAT IS AT ISSUE - NOT THE GUILT OF THE PROPERTY HOLDER. SEE SUPPLEMENTAL RULES FOR CERTAIN ADMIRALTY AND MARITIME CLAIMS, RULES C-F, FEDERAL RULES OF CIVIL PROCEDURE. THIS HAS RESULTED IN SEVERAL CASES THAT AUTHORIZE CONVICTED RICO DEFENDANTS TO BUY BACK INTERESTS OF AN ENTERPRISE THAT WERE ORDERED FORFEITED. SEE E.G., UNITED STATES V. HUBER, 603 F.2D 387 (2D CIR. 1979).