[Federal Register Volume 62, Number 112 (Wednesday, June 11, 1997)]
[Rules and Regulations]
[Pages 31726-31732]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-15303]
[[Page 31726]]
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POSTAL SERVICE
39 CFR Part 233
Revision of Regulations Governing the Remission or Mitigation of
Forfeitures
AGENCY: Postal Service.
ACTION: Final rule.
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SUMMARY: This rule amends and adopts regulations that govern the
processing of petitions for remission and mitigation of forfeitures by
the United States Postal Inspection Service. The amendments are made in
an effort to ameliorate the harsh results in individual forfeiture
cases and to provide relief to innocent persons whose property is used
by others for criminal purposes. The revised regulations parallel those
promulgated by the Department of Justice at 62 FR 314-322 on January 3,
1997.
EFFECTIVE DATE: June 11, 1997.
FOR FURTHER INFORMATION CONTACT: Associate Counsel Maria D. Perez,
Postal Inspection Service, (202) 268-5477.
SUPPLEMENTARY INFORMATION: United States Postal Service regulations
pertaining to seizures and forfeitures conducted by the Postal
Inspection Service were promulgated by the Postal Service in 1987 and
are codified at 39 CFR 233.7, Forfeiture authority and procedures.
A grant of a petition for remission of forfeiture provides for the
return of forfeited property or the return of an appropriate property
interest to individuals who can show that they acted without willful
negligence. Mitigation provides for the partial or total relief from
forfeiture through the return of some or all of the property and/or the
imposition of monetary or other conditions.
This new rule establishes a comprehensive set of procedures,
understandable by individuals and their attorneys, that will govern the
handling and processing of petitions for remission or mitigation in the
overwhelming majority of Postal Service forfeiture cases.
In addition to establishing a consistent petition process, this new
rule seeks to: (1) Clarify provisions in existing rules; (2)
distinguish between the bases for the remission of forfeiture and the
mitigation of forfeiture; (3) address inadequacies that have been
detected in current rules due, in part, to the increased use of
forfeiture by federal law enforcement agencies; (4) promote consistent
and predictable decisions on petitions; and (5) recognize the interests
of victims of crime in forfeited moneys and other properties.
This rule amends 39 CFR 233.7(j) so the Postal Inspection Service
can transfer forfeited assets to victims of the offense or related
offenses underlying particular forfeiture actions. Under the current
regulations, standing to seek remission or mitigation is limited to
parties having a present legally cognizable interest in the forfeited
property (e.g., owners, lienholders), and unless a particular victim
has such an interest, forfeited assets cannot be used to restore
property to those victimized by the criminal conduct. The amendments
permit the agency to transfer certain forfeited assets to victims of
certain fraud-type offenses who lack a present ownership interest in
particular forfeited assets, but who are victims of the offense
underlying the forfeiture or related offense where the applicable
statutes allow such a transfer.
The current procedures in Sec. 233.7(j) permit remission and
mitigation to victims of crime when the property was forfeited under a
statute that specifically provides for the restoration or remission of
forfeited property to victims. An example of such a statute is 18
U.S.C. 1963(g), which authorizes the Attorney General to ``restore
forfeited property to victims of a violation of this chapter.'' Some
statutes, however, do not so provide, and instead adopt the provisions
of customs laws relating to remission. For example, 21 U.S.C. 881(d)
provides that ``[t]he provisions of law relating to the seizure,
summary and judicial forfeiture, and condemnation of property for
violation of customs laws; * * * the remission or mitigation of such
forfeitures; and the compromise of claims shall apply to seizures and
forfeitures incurred * * * under any of the provisions of this
subchapter.'' This new rule does not permit remission or mitigation to
victims where the forfeiture occurs under statutes that adopt the
provisions of the customs laws without including language specifically
authorizing restoration or remission to victims of crimes (e.g.,
forfeitures pursuant to the civil money laundering statute, 18 U.S.C.
981(a)(1)(A)). In such cases, the remission process is governed solely
by the customs laws (specifically, 19 U.S.C. 1613 and 1618), which do
not authorize remission to those who lack a legally cognizable interest
in the property. However, the amended rules will permit remission to
victims should the applicable forfeiture statutes be amended to provide
specifically for the restoration or remission of forfeited properties
to victims. At the present time, most of the criminal forfeiture
statutes as well as 18 U.S.C. 981(a)(1)(C), a civil forfeiture statute,
specifically provide for restoration or remission to victims and,
therefore, are covered by Sec. 233.7(j), as amended.
List of Subjects in 39 CFR Part 233
Administrative practice and procedure, Crime, Seizures and
forfeitures.
Accordingly, Title 39, part 233, of the Code of Federal Regulations
is amended as follows:
PART 233--[AMENDED]
1. The authority citation for part 233 continues to read as
follows:
Authority: 39 U.S.C. 101, 401, 402, 403, 404, 406, 410, 411,
3005(e)(1); 12 U.S.C. 3401-3422; 18 U.S.C. 981, 1956, 1957, 2254,
3061; 21 U.S.C. 881; Inspector General Act of 1978, as amended (Pub.
L. No. 95-452, as amended), 5 U.S.C. App. 3.
2. Section 233.7 is amended by revising paragraph (j) to read as
follows:
Sec. 233.7 Forfeiture authority and procedures.
* * * * *
(j) Remission or mitigation of administrative, civil, and criminal
forfeitures.--(1) Authority, purpose, and scope.--(i) Purpose. This
section sets forth the procedures for Postal Inspection Service
officials to follow when considering remission or mitigation of
administrative forfeitures under the jurisdiction of the Postal
Service. The purpose of these regulations is to provide a basis for
ameliorating the effects of forfeiture through the partial or total
remission of forfeiture for individuals who have an interest in the
forfeited property but who did not participate in, or have knowledge
of, the conduct that resulted in the property being subject to
forfeiture and, where required, took all reasonable steps under the
circumstances to ensure that such property would not be used, acquired,
or disposed of contrary to law. Additionally, these regulations provide
for partial or total mitigation of the forfeiture and imposition of
alternative conditions in appropriate circumstances.
(ii) Authority to grant remission and mitigation. (A) Remission and
mitigation functions in administrative forfeitures are performed by the
agency seizing the property. Within the Postal Inspection Service,
authority to grant remission and mitigation is delegated to the
Independent Counsel, Office of the Chief Inspector, Washington, DC.
(B) Remission and mitigation functions in judicial cases are within
the jurisdiction of the Criminal Division
[[Page 31727]]
of the Department of Justice. Within the Criminal Division, authority
to grant remission and mitigation has been delegated to the Chief,
Asset Forfeiture and Money Laundering Section.
(C) The powers and responsibilities within these regulations may be
redelegated to attorneys or managers working under the supervision of
the designated officials.
(D) The time periods and internal requirements established in these
regulations are designed to guide the orderly administration of the
remission and mitigation process and are not intended to create rights
or entitlements in favor of individuals seeking remission or
mitigation. These regulations will apply to all decisions on petitions
for remission or mitigation made on or after July 1, 1997. These
regulations will apply to decisions on requests for reconsideration of
a denial of a petition under paragraphs (j)(3)(x) and (3)(xi) of this
section only if the initial decision on the petition was made under the
provisions of this part effective July 1, 1997.
(E) This section governs any petition for remission or mitigation
filed with the Chief Postal Inspector and supersedes any Postal Service
regulation governing petitions for remission or mitigation to the
extent such regulation is inconsistent with this section.
(2) Definitions. As used in this part:
(i) The term administrative forfeiture means the process by which
property may be forfeited by an investigative agency rather than
through judicial proceedings.
(ii) The term appraised value means the estimated market value of
an asset at the time and place of seizure if such or similar property
was freely offered for sale between a willing seller and a willing
buyer.
(iii) The term Attorney General means the Attorney General of the
United States or his or her designee.
(iv) The term beneficial owner means a person with actual use of,
as well as an interest in, the property subject to forfeiture.
(v) The term general creditor means one whose claim or debt is not
secured by a specific right to obtain satisfaction against the
particular property subject to forfeiture.
(vi) The term judgment creditor means one who has obtained a
judgment against the debtor but has not yet received full satisfaction
of the judgment.
(vii) The term judicial forfeiture means either a civil or criminal
proceeding in a United States District Court that may result in a final
judgment and order of forfeiture.
(viii) The term lienholder means a creditor whose claim or debt is
secured by a specific right to obtain satisfaction against the
particular property subject to forfeiture. A lien creditor qualifies as
a lienholder if the lien:
(A) Was established by operation of law or contract;
(B) Was created as a result of an exchange of money, goods, or
services; and
(C) Is perfected against the specific property forfeited for which
remission or mitigation is sought (e.g., a real estate mortgage, a
mechanic's lien).
(ix) The term net equity means the amount of a lienholder's
monetary interest in property subject to forfeiture. Net equity shall
be computed by determining the amount of unpaid principal and unpaid
interest at the time of seizure, and by adding to that sum unpaid
interest calculated from the date of seizure through the last full
month prior to the date of the decision on the petition. Where a rate
of interest is set forth in a security agreement, the rate of interest
to be used in this computation will be the annual percentage rate so
specified in the security agreement that is the basis of the
lienholder's interest. In this computation, however, there shall be no
allowances for attorneys' fees, accelerated or enhanced interest
charges, amounts set by contract as damages, unearned extended warranty
fees, insurance, service contract charges incurred after the date of
seizure, allowances for dealer's reserve, or any other similar charges.
(x) The term owner means the person in whom primary title is vested
or whose interest is manifested by the actual and beneficial use of the
property, even though the title is vested in another. A victim of an
offense as defined in paragraph (j) (2)(xxi) of this section may also
be an owner if he or she has a present legally cognizable ownership
interest in the property forfeited. A nominal owner of property will
not be treated as its true owner if he or she is not its beneficial
owner.
(xi) The term person means an individual, partnership, corporation,
joint business enterprise, estate, or other legal entity capable of
owning property.
(xii) The term petition means a petition for remission or
mitigation of forfeiture under these regulations. This definition
includes a petition for restoration of the proceeds of sale of
forfeited property and a petition for the value of forfeited property
placed into official use.
(xiii) The term petitioner means the person applying for remission,
mitigation, restoration of the proceeds of sale, or for the appraised
value of forfeited property under these regulations. A petitioner may
be an owner of forfeited property as defined in paragraph (j)(2)(x) of
this section; a lienholder as defined in paragraph (j)(2)(viii) of this
section; or a victim as defined in paragraph (j)(2)(xxi) of this
section subject to the limitations of paragraph (j)(8) of this section.
(xiv) The term Postal Service Fund means the United States Postal
Fund established under 39 U.S.C. 2003.
(xv) The term property means real or personal property of any kind
capable of being owned or possessed.
(xvi) The term record means a series of arrests for related crimes,
unless the arrestee was acquitted or the charges were dismissed for
lack of evidence; a conviction for a related crime or completion of
sentence within ten years of the acquisition of the property subject to
forfeiture; or two convictions for a related crime at any time in the
past.
(xvii) The term related crime as used in paragraphs (j)(2)(xvi) and
(6)(v) of this section means any crime similar in nature to that which
gives rise to the seizure of property for forfeiture. For example,
where property is seized for a violation of the federal laws dealing
with drugs, a related crime would be any offense involving a violation
of the federal laws relating to drugs or the laws of any state or
political subdivision thereof relating to drugs.
(xviii) The term related offense as used in paragraph (j)(8) of
this section means:
(A) Any predicate offense charged in a Federal Racketeer Influenced
and Corrupt Organizations Act (RICO) count for which forfeiture was
ordered; or
(B) An offense committed as part of the same scheme or design, or
pursuant to the same conspiracy, as was involved in the offense for
which the forfeiture was ordered.
(xix) The term Ruling Official means any official to whom decision
making authority has been delegated pursuant to paragraph (j)(1)(ii) of
this section.
(xx) The term seizing agency means the federal agency that seized
the property or adopted the seizure of another agency for federal
forfeiture.
(xxi) The term victim means a person who has incurred a pecuniary
loss as a direct result of the commission of the offense underlying a
forfeiture. A drug user is not considered a victim of a drug
trafficking offense under this definition. A victim does not include
one who acquires a right to sue the perpetrator of the criminal offense
for any loss by assignment, subrogation, inheritance, or otherwise from
the actual victim, unless that person has acquired an actual
[[Page 31728]]
ownership interest in the forfeited property.
(xxii) The term violator means the person whose use or acquisition
of the property in violation of the law subjected such property to
seizure for forfeiture.
(3) Petitions in administrative forfeiture cases.--(i) Notice of
seizure. The notice of seizure and intent to forfeit the property shall
advise any persons who may have a present ownership interest in the
property to submit their petitions for remission or mitigation within
thirty (30) days of the date they receive the notice in order to
facilitate processing. Petitions shall be considered any time after
notice until the forfeited property is placed into official use, sold,
or otherwise disposed of according to law, except in cases involving
petitions to restore the proceeds from the sale of forfeited property.
A notice of seizure shall include the title of the seizing agency, the
Ruling Official, the mailing and street address of the official to whom
petitions should be sent, and an asset identifier number.
(ii) Persons who may file. A petition for remission or mitigation
must be filed by a petitioner as defined in paragraph (j)(2)(xiii) of
this section or as prescribed in paragraphs (j)(9) (vii) and (viii) of
this section.
(iii) Contents of petition. (A) All petitions must include the
following information in clear and concise terms:
(1) The name, address, and social security or other taxpayer
identification number of the person claiming an interest in the seized
property who is seeking remission or mitigation;
(2) The name of the seizing agency, the asset identifier number,
and the date and place of seizure;
(3) A complete description of the property including make, model,
and serial numbers, if any; and
(4) A description of the petitioner's interest in the property as
owner, lienholder, or otherwise, supported by original or certified
bills of sale, contracts, deeds, mortgages, or other documentary
evidence.
(B) Any factual recitation or documentation of any type in a
petition must be supported by a sworn affidavit.
(iv) Releases. In addition to the contents of the petition for
remission or mitigation set forth in paragraph (j)(3)(iii) of this
section, upon request, the petitioner shall also furnish the agency
with an instrument executed by the titled or registered owner and any
other known claimant of an interest in the property releasing interest
in such property.
(v) Filing petition with agency. (A) A petition for remission or
mitigation of an administrative forfeiture by the Postal Inspection
Service shall be sent to the Chief Postal Inspector, United States
Postal Service, 475 L'Enfant Plaza SW, Washington, DC 20260-2100.
(B) The petition shall be sworn to by the petitioner or by the
petitioner's attorney upon information and belief, supported by the
client's sworn notice of representation pursuant to 28 U.S.C. 1746, as
set out in paragraph (j)(9)(vii) of this section.
(vi) Agency investigation. Upon receipt of a petition, the Postal
Inspection Service shall investigate the merits of the petition and
prepare a written report containing the results of that investigation.
This report shall be submitted to the Ruling Official for review and
consideration.
(vii) Ruling. Upon receipt of the petition and the agency report,
the Ruling Official shall review the petition and the report, and shall
rule on the merits of the petition. No hearing shall be held.
(viii) Petitions granted. If the Ruling Official grants a remission
or mitigation of the forfeiture, a copy of the decision shall be sent
by certified mail to the petitioner, or, if represented by an attorney,
to the petitioner's attorney. A copy of the decision shall also be sent
to the U.S. Marshals Service or other property custodian. The written
decision shall include the terms and conditions, if any, upon which the
remission or mitigation is granted and the procedures the petitioner
must follow to obtain release of the property or the monetary interest
therein.
(ix) Petitions denied. If the Ruling Official denies a petition, a
copy of the decision shall be sent by certified mail to the petitioner,
or, if represented by an attorney, to the petitioner's attorney of
record. A copy of the decision shall also be sent to the U.S. Marshals
Service or other property custodian. The written decision shall specify
the reason that the petition was denied. The decision shall advise the
petitioner that a request for reconsideration of the denial of the
petition may be submitted to the Ruling Official in accordance with
paragraph (j)(3)(x) of this section.
(x) Request for reconsideration. (A) A request for reconsideration
of the denial of the petition shall be considered if:
(1) It is postmarked or received by the office of the Ruling
Official within ten (10) days from the receipt of the notice of the
denial of the petition by the petitioner; and
(2) The request is based on information or evidence not previously
considered that is material to the basis for the denial or presents a
basis clearly demonstrating that the denial was erroneous.
(B) In no event shall a request for reconsideration be decided by
the same Ruling Official who ruled on the original petition.
(C) Only one request for reconsideration of a denial of a petition
shall be considered.
(xi) Restoration of proceeds from sale. (A) A petition for
restoration of the proceeds from the sale of forfeited property, or for
the appraised value of forfeited property when the forfeited property
has been retained by or delivered to a government agency for official
use, may be submitted by an owner or lienholder in cases in which the
petitioner:
(1) Did not know of the seizure prior to the entry of a declaration
of forfeiture; and
(2) Could not reasonably have known of the seizure prior to the
entry of a declaration of forfeiture.
(B) Such a petition shall be submitted pursuant to paragraphs
(j)(3)(ii) through (v) of this section within ninety (90) days from the
date the property is sold or otherwise disposed of.
(4) Petitions in judicial forfeiture cases.--(i) Procedure for
filing petition. If the forfeiture proceedings are judicial, a petition
for remission or mitigation of a judicial forfeiture shall be addressed
to the Attorney General; shall be sworn to by the petitioner or by the
petitioner's attorney upon information and belief, supported by the
client's sworn notice of representation pursuant to 28 U.S.C. 1746; and
shall be submitted to the United States Attorney for the district in
which the judicial forfeiture proceedings are brought. A petitioner
also shall submit a copy of the petition to the Chief Postal Inspector
if the Postal Inspection Service was the seizing agency.
(ii) Ruling. Department of Justice regulations on petitions for
remission or mitigation in judicial forfeiture cases are stated in 29
CFR 9.4.
(5) Criteria governing administrative remission and mitigation.--
(i) Remission. (A) The Ruling Official shall not grant remission of a
forfeiture unless the petitioner establishes that:
(1) The petitioner has a valid, good faith and legally cognizable
interest in the seized property as owner or lienholder as defined in
these regulations; and
(2) The petitioner is innocent within the meaning of the innocent
owner provisions of the applicable civil forfeiture statute, is a bona
fide purchaser for value without cause to believe that the property was
subject to
[[Page 31729]]
forfeiture at the time of the purchase, or is one who held a legally
cognizable interest in the seized property at the time of the violation
underlying the forfeiture superior to that of the defendant within the
meaning of the applicable criminal forfeiture statute, and is thereby
entitled to recover his or her interest in the forfeited property by
statute. (If the applicable civil forfeiture statute contains no
innocent owner defense, the innocent owner provisions applicable to 21
U.S.C. 881(a)(4) shall apply.) Unless otherwise provided by statute, in
the case of petitioners who acquired their interest in the property
after the time of the violation underlying the forfeiture, the question
of whether the petitioner had knowledge of the violation shall be
determined as of the point in time when the interest in the property
was acquired.
(B) The knowledge and responsibilities of petitioner's
representative, agent, or employee in paragraph (j)(5)(i)(A)(2) of this
section are imputed to the petitioner where the representative, agent,
or employee was acting in the course of his or her employment and in
furtherance of the petitioner's business.
(C) The petitioner has the burden of establishing the basis for
granting a petition for remission or mitigation of forfeited property,
a restoration of proceeds of sale or appraised value of forfeited
property, or a reconsideration of a denial of such a petition. Failure
to provide information or documents and to submit to interviews, as
requested, may result in a denial of the petition.
(D) The Ruling Official shall presume a valid forfeiture and shall
not consider whether the evidence is sufficient to support the
forfeiture.
(E) Willful, materially false statements or information, made or
furnished by the petitioner in support of a petition for remission or
mitigation of forfeited property, the restoration of proceeds or
appraised value of forfeited property, or the reconsideration of a
denial of any such petition, shall be grounds for denial of such
petition and possible prosecution for the filing of false statements.
(ii) Mitigation. (A) The Ruling Official may grant mitigation to a
party not involved in the commission of the offense underlying
forfeiture:
(1) Where the petitioner has not met the minimum conditions for
remission, but the Ruling Official finds that some relief should be
granted to avoid extreme hardship and that return of the property
combined with imposition of monetary and/or other conditions of
mitigation in lieu of a complete forfeiture will promote the interest
of justice and will not diminish the deterrent effect of the law.
Extenuating circumstances justifying such a finding include those
circumstances that reduce the responsibility of the petitioner for
knowledge of the illegal activity, knowledge of the criminal record of
a user of the property, or failure to take reasonable steps to prevent
the illegal use or acquisition by another for some reason, such as a
reasonable fear of reprisal; or
(2) Where the minimum standards for remission have been satisfied
but the overall circumstances are such that, in the opinion of the
Ruling Official, complete relief is not warranted.
(B) The Ruling Official may in his or her discretion grant
mitigation to a party involved in the commission of the offense
underlying the forfeiture where certain mitigating factors exist,
including, but not limited to: The lack of a prior record or evidence
of similar criminal conduct; if the violation does not include drug
distribution, manufacturing, or importation, the fact that the violator
has taken steps, such as drug treatment, to prevent further criminal
conduct; the fact that the violation was minimal and was not part of a
larger criminal scheme; the fact that the violator has cooperated with
federal, state, or local investigations relating to the criminal
conduct underlying the forfeiture; or the fact that complete forfeiture
of an asset is not necessary to achieve the legitimate purposes of
forfeiture.
(C) Mitigation may take the form of a monetary condition or the
imposition of other conditions relating to the continued use of the
property, and the return of the property, in addition to the imposition
of any other costs that would be chargeable as a condition to
remission. This monetary condition is considered as an item of cost
payable by the petitioner, and shall be deposited into the Postal
Service Fund as an amount realized from forfeiture in accordance with
the applicable statute. If the petitioner fails to accept the Ruling
Official's mitigation decision or any of its conditions, or fails to
pay the monetary amount within twenty (20) days of the receipt of the
decision, the property shall be sold, and the monetary amount imposed
and other costs chargeable as a condition to mitigation shall be
subtracted from the proceeds of the sale before transmitting the
remainder to the petitioner.
(6) Special rules for specific petitioners. (i) General creditors.
A general creditor may not be granted remission or mitigation of
forfeiture unless he or she otherwise qualifies as a petitioner under
these regulations.
(ii) Rival claimants. If the beneficial owner of the forfeited
property and the owner of a security interest in the same property each
file a petition, and if both petitions are found to be meritorious, the
claim of the beneficial owner shall take precedence.
(iii) Voluntary bailments. A petitioner who allows another to use
his or her property without cost, and who is not in the business of
lending money secured by property or of leasing or renting property for
profit, shall be granted remission or mitigation of forfeiture in
accordance with the provisions of paragraph (j)(5) of this section.
(iv) Lessors. A person engaged in the business of leasing or
renting real or personal property on a long-term basis with the right
to sublease shall not be entitled to remission or mitigation of a
forfeiture of such property unless the lessor can demonstrate
compliance with all the requirements of paragraph (j)(5) of this
section.
(v) Straw owners. A petition by any person who has acquired a
property interest recognizable under these regulations and who knew or
had reason to believe that the interest was conveyed by the previous
owner for the purpose of circumventing seizure, forfeiture, or these
regulations, shall be denied. A petition by a person who purchases or
owns property for another who has a record for related crimes as
defined in paragraph (j)(2)(xvii) of this section, or a petition by a
lienholder who knows or has reason to believe that the purchaser or
owner of record is not the real purchaser or owner, shall be denied
unless both the purchaser of record and the real purchaser or owner
meet the requirements of paragraph (j)(5) of this section.
(vi) Judgment creditors. (A) A judgment creditor will be recognized
as a lienholder if:
(1) The judgment was duly recorded before the seizure of the
property for forfeiture;
(2) Under applicable state or other local law, the judgment
constitutes a valid lien on the property that attached to it before the
seizure of the property for forfeiture; and
(3) The petitioner had no knowledge of the commission of any act or
acts giving rise to the forfeiture at the time the judgment became a
lien on the forfeited property.
(B) A judgment creditor will not be recognized as a lienholder if
the property in question is not property of which the judgment debtor
is entitled to claim ownership under applicable state or other local
law (e.g., stolen property).
[[Page 31730]]
A judgment creditor is entitled under these regulations to no more than
the amount of the judgment, exclusive of any interest, costs, or other
fees including attorney's fees associated with the action that led to
the judgment or its collection.
(C) A judgment creditor's lien must be registered in the district
where the property is located if the judgment was obtained outside the
district.
(7) Terms and conditions of remission and mitigation.--(i) Owners.
(A) An owner's interest in property that has been forfeited is
represented by the property itself or by a monetary interest equivalent
to that interest at the time of seizure. Whether the property or a
monetary equivalent will be remitted to an owner shall be determined at
the discretion of the Ruling Official.
(B) If a civil judicial forfeiture action against the property is
pending, release of the property must await an appropriate court order.
(C) Where the government sells or disposes of the property prior to
the grant of the remission, the owner shall receive the proceeds of
that sale, less any costs incurred by the government in the sale. The
Ruling Official, at his or her discretion, may waive the deduction of
costs and expenses incident to the forfeiture.
(D) Where the owner does not comply with the conditions imposed
upon release of the property by the Ruling Official, the property shall
be sold. Following the sale, the proceeds shall be used to pay all
costs of the forfeiture and disposition of the property, in addition to
any monetary conditions imposed. The remaining balance shall be paid to
the owner.
(ii) Lienholders. (A) When the forfeited property is to be retained
for official use or transferred to a state or local law enforcement
agency or foreign government pursuant to law, and remission or
mitigation has been granted to a lienholder, the recipient of the
property shall assure that:
(1) In the case of remission, the lien is satisfied as determined
through the petition process; or
(2) In the case of mitigation, an amount equal to the net equity,
less any monetary conditions imposed, is paid to the lienholder prior
to the release of the property to the recipient agency or foreign
government.
(B) When the forfeited property is not retained for official use or
transferred to another agency or foreign country pursuant to law, the
lienholder shall be notified by the Ruling Official of the right to
select either of the following alternatives:
(1) Return of property. The lienholder may obtain possession of the
property after paying the United States, through the Ruling Official,
the costs and expenses incident to the forfeiture, the amount, if any,
by which the appraised value of the property exceeds the lienholder's
net equity in the property, and any amount specified in the Ruling
Official's decision as a condition to remit the property. The Ruling
Official, at his or her discretion, may waive costs and expenses
incident to the forfeiture. The Ruling Official shall forward a copy of
the decision, a memorandum of disposition, and the original releases to
the U.S. Marshals Service or other property custodian who shall
thereafter release the property to the lienholder; or
(2) Sale of Property and Payment to Lienholder--Subject to the
provisions of paragraph (j)(9)(i) of this section, upon sale of the
property, the lienholder may receive the payment of a monetary amount
up to the sum of the lienholder's net equity, less the expenses and
costs incident to the forfeiture and sale of the property, and any
other monetary conditions imposed. The Ruling Official, at his or her
discretion, may waive costs and expenses incident to the forfeiture.
(iii) If the lienholder does not notify the Ruling Official of the
selection of one of the two options set forth above in paragraph
(j)(7)(ii)(B) of this section within twenty (20) days of the receipt of
such notification, the Ruling Official shall direct the U.S. Marshal or
other property custodian to sell the property and pay the lienholder an
amount up to the net equity, less the costs and expenses incurred
incident to the forfeiture and sale, and any monetary conditions
imposed. In the event a lienholder subsequently receives a payment of
any kind on the debt owed for which he or she has already received
payment as a result of the granting of remission or mitigation, the
lienholder shall reimburse the Postal Service Fund to the extent of the
payment received.
(iv) Where the lienholder does not comply with the conditions
imposed upon the release of the property, the property shall be sold
after forfeiture. From the proceeds of the sale, all costs incident to
the forfeiture and sale shall first be deducted, and the balance up to
the net equity, less any monetary conditions, shall be paid to the
lienholder.
(8) Provisions applicable to victims.
The provisions of this section apply to victims of an offense
underlying the forfeiture of property, or of a related offense, who do
not have a present ownership interest in the forfeited property (or, in
the case of multiple victims of an offense, who do not have a present
ownership interest in the forfeited property that is clearly superior
to that of other petitioner victims). The provisions of this section
apply only with respect to property forfeited pursuant to statutes that
explicitly authorize restoration or remission of forfeited property to
victims. Victims who have a superior present legally cognizable
ownership interest in forfeited property may file petitions as other
owners, subject to the regulations set forth in paragraph (j)(7)(i) of
this section. The claims of such owner victims, like those of any other
owners, shall have priority over the claims of any non-owner victims
whose claims are recognized pursuant to this section.
(i) Qualifications to file. A victim, as defined in paragraph
(j)(2)(xxi) of this section, of an offense that was the underlying
basis for the criminal, civil, or administrative forfeiture of specific
property, or a victim of a related offense, may be granted remission of
the forfeiture of that property, if in addition to complying with the
other applicable provisions of this section, the victim satisfactorily
demonstrates that:
(A) A pecuniary loss of a specific amount has been directly caused
by the criminal offense, or related offense, that resulted in the
forfeiture, or by a related offense, and that the loss is supported by
documentary evidence including invoices and receipts;
(B) The pecuniary loss is the direct result of the illegal acts and
is not the result of otherwise lawful acts which were committed in the
course of a criminal offense;
(C) The victim did not knowingly contribute to, participate in,
benefit from, or act in a willfully blind manner towards the commission
of the offense, or related offense, that was the underlying basis of
the forfeiture;
(D) The victim has not in fact been compensated for the wrongful
loss of the property by the perpetrator or others; and
(E) The victim does not have recourse reasonably available to other
assets from which to obtain compensation for the wrongful loss of the
property.
(ii) Pecuniary loss. The amount of the pecuniary loss suffered by a
victim for which remission may be granted is limited to the fair market
value of the property of which the petitioner was deprived as of the
date of the occurrence of the loss. No allowance shall be made for
interest foregone or for collateral expenses incurred to recover lost
property or to seek other recompense.
(iii) Torts. A tort associated with illegal activity that formed
the basis for
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the forfeiture shall not be a basis for remission, unless it
constitutes the illegal activity itself, nor shall remission be granted
for physical injuries to a petitioner or for damage to a petitioner's
property.
(iv) Denial of petition. In the exercise of his or her discretion,
the Ruling Official may decline to grant remission where:
(A) There is substantial difficulty in calculating the pecuniary
loss incurred by the victim or victims;
(B) The amount of the remission, if granted, would be small
compared with the amount of expenses incurred by the government in
determining whether to grant remission; or
(C) The total number of victims is large and the monetary amount of
the remission so small as to make its granting impractical.
(v) Pro rata basis. In granting remission to multiple victims
pursuant to this section, the Ruling Official should generally grant
remission on a pro rata basis to recognized victims when petitions
cannot be granted in full due to the limited value of the forfeited
property. However, the Ruling Official may consider, among others, the
following factors in establishing appropriate priorities in individual
cases:
(A) The specificity and reliability of the evidence establishing a
loss;
(B) The fact that a particular victim is suffering an extreme
financial hardship;
(C) The fact that a particular victim has cooperated with the
government in the investigation related to the forfeiture or to a
related prosecution or civil action; and
(D) In the case of petitions filed by multiple victims of related
offenses, the fact that a particular victim is a victim of the offense
underlying the forfeiture.
(vi) Reimbursement. Any petitioner granted remission pursuant to
this section shall reimburse the Postal Service Fund for the amount
received to the extent the individual later receives compensation for
the loss of the property from any other source. The petitioner shall
surrender the reimbursement upon payment from any secondary source.
(vii) Claims of financial institution regulatory agencies. In cases
involving property forfeitable under 18 U.S.C. 981(a)(1)(C) or
(a)(1)(D), the Ruling Official may decline to grant a petition filed by
a petitioner in whole or in part due to the lack of sufficient
forfeitable funds to satisfy both the petition and claims of the
financial institution regulatory agencies pursuant to 18 U.S.C. 981
(e)(3) or (7). Generally, claims of financial regulatory agencies
pursuant to 18 U.S.C. 981(e)(3) or (7) shall take priority over claims
of victims.
(9) Miscellaneous Provisions--(i) Priority of payment. Except where
otherwise provided in this section, costs incurred by the Postal
Inspection Service and other agencies participating in the forfeiture
that were incident to the forfeiture, sale, or other disposition of the
property shall be deducted from the amount available for remission or
mitigation. Such costs include, but are not limited to, court costs,
storage costs, brokerage and other sales-related costs, the amount of
any liens and associated costs paid by the government on the property,
costs incurred in paying the ordinary and necessary expenses of a
business seized for forfeiture, awards for information as authorized by
statute, expenses of trustees or other assistants pursuant to paragraph
(j)(9)(iii) of this section, investigative or prosecutive costs
specially incurred incident to the particular forfeiture, and costs
incurred incident to the processing of the petition(s) for remission or
mitigation. The remaining balance shall be available for remission or
mitigation. The Ruling Official shall direct the distribution of the
remaining balance in the following order of priority, except that he or
she may exercise discretion in determining the priority between
petitioners belonging to classes described in paragraphs (j)(9)(iii)
and (9)(iv) of this section in exceptional circumstances:
(A) Owners;
(B) Lienholders;
(C) Federal financial institution regulatory agencies (pursuant to
paragraph (j)(9)(vi) of this section, not constituting owners or
lienholders); and
(D) Victims not constituting owners or lienholders (pursuant to
paragraph (j)(8) of this section).
(ii) Sale or disposition of property prior to ruling. If forfeited
property has been sold or otherwise disposed of prior to a ruling, the
Ruling Official may grant relief in the form of a monetary amount. The
amount realized by the sale of the property is presumed to be the value
of the property. Monetary relief shall not be greater than the
appraised value of the property at the time of seizure and shall not
exceed the amount realized from the sale or other disposition. The
proceeds of the sale shall be distributed as follows:
(A) Payment of the government's expenses incurred incident to the
forfeiture and sale, including court costs and storage charges, if any;
(B) Payment to the petitioner of an amount up to his or her
interest in the property;
(C) Payment to the Postal Service Fund of all other costs and
expenses incident to the forfeiture;
(D) In the case of victims, payment of any amount up to the amount
of his or her loss; and
(E) Payment of the balance remaining, if any, to the Postal Service
Fund.
(iii) Trustees and other assistants. In the exercise of his or her
discretion, the Ruling Official may use the services of a trustee,
other government official, or appointed contractors to notify potential
petitioners, process petitions, and make recommendations to the Ruling
Official on the distribution of property to petitioners. The expense
for such assistance shall be paid out of the forfeited funds.
(iv) Other agencies of the United States. Where another agency of
the United States is entitled to remission or mitigation of forfeited
assets because of an interest that is recognizable under these
regulations, or is eligible for such transfer pursuant to 18 U.S.C.
981(e)(6), such agency shall request the transfer in writing, in
addition to complying with the provisions of paragraphs (j)(3) through
(5) of this section. The decision to make such transfer shall be made
in writing by the Ruling Official.
(v) Financial institution regulatory agencies. A Ruling Official
may direct the transfer of property under 18 U.S.C. 981(e) to certain
federal financial institution regulatory agencies or an entity acting
in their behalf, upon receipt of a written request, in lieu of ruling
on a petition for remission or mitigation.
(vi) Transfers to foreign governments. A Ruling Official may
decline to grant remission to any petitioner other than an owner or
lienholder so that forfeited assets may be transferred to a foreign
government pursuant to 18 U.S.C. 981(i)(1), 19 U.S.C. 1616a(c)(2), or
21 U.S.C. 881(e)(1)(E).
(vii) Filing by attorneys. (A) A petition for remission or
mitigation may be filed by a petitioner or by his or her attorney or
legal guardian. If an attorney files on behalf of the petitioner, the
petition must include a signed and sworn statement by the client-
petitioner stating that:
(1) The attorney has the authority to represent the petitioner in
this proceeding;
(2) The petitioner has fully reviewed the petition; and
(3) The petition is truthful and accurate in every respect.
(B) Verbal notification of representation is not acceptable.
Responses and notification of rulings shall not be sent to an attorney
claiming to represent a petitioner unless a written
[[Page 31732]]
notice of representation is filed. No extensions of time shall be
granted due to delays in submission of the notice of representation.
(viii) Consolidated petitions. At the discretion of the Ruling
Official in individual cases, a petition may be filed by one petitioner
on behalf of other petitioners, provided the petitions are based on
similar underlying facts, and the petitioner who files the petition has
written authority to do so on behalf of the other petitioners. This
authority must be either expressed in documents giving the petitioner
the authority to file petitions for remission, or reasonably implied
from documents giving the petitioner express authority to file claims
or lawsuits related to the course of conduct in question on behalf of
these other petitioners. An insurer or an administrator of an employee
benefit plan, for example, which itself has standing to file a petition
as a ``victim'' within the meaning of paragraph (j)(2)(xxi) of this
section, may also file a petition on behalf of all its insured or plan
beneficiaries for any claims they may have based on co-payments made to
the perpetrator of the offense underlying the forfeiture or the
perpetrator of a ``related offense'' within the meaning of paragraph
(j)(2)(xviii) of this section, if the authority to file claims or
lawsuits is contained in the document or documents establishing the
plan. Where such a petition is filed, any amounts granted as a
remission must be transferred to the other petitioners, not the party
filing the petition; although, in his or her discretion, the Ruling
Official may use the actual petitioner as an intermediary for
transferring the amounts authorized as a remission to the other
petitioners.
Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 97-15303 Filed 6-10-97; 8:45 am]
BILLING CODE 7710-12-U
