GAO

United States General Accounting Office

Report to the Ranking Minority Member, 

Permanent Subcommittee on 

Investigations, Committee on 

Governmental Affairs, U.S. Senate

July 2001 CRIMINAL DEBT

Oversight and Actions 

Needed to Address 

Deficiencies in 

Collection Processes

GAO-01-664

Page 1 GAO-01-664 Criminal Debt Collection

Contents

Letter 5

Executive Summary 8

Chapter 1

Introduction

20

Background 22

Objectives, Scope, and Methodology 30

Chapter 2

Factors Contributing to 

the Growth in 

Uncollected Criminal 

Debt

32

Nature of the Debt 32

Assessment of Mandatory Restitution 34

Payment Schedules Set by Judges 36

State Laws 39

Chapter 3

Inadequate Criminal 

Debt Collection 

Processes and Lack of 

Coordination 

Contribute to Low 

Collection Rate

40

Financial Litigation Units 41

Probation Offices 54

Coordination Among the Entities Involved 60

Chapter 4

Oversight Roles of 

OMB and Treasury

66

Accounting For, Reporting, and Managing Criminal Debt 67

Referring Debt to Treasury 68

Chapter 5

Conclusions, 

Recommendations, 

and Agency Comments

70

Conclusions 70

Recommendations 70

Agency Comments and Our Evaluation 72
Contents

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Appendixes Appendix I: Scope and Methodology 80

Appendix II: History of Criminal Debt Collection Legislation 84

Appendix III: Comments From the Department of Justice 85

Appendix IV: Comments From the Administrative Office of the

U.S. Courts 104

Appendix V: Comments From the Department of the Treasury 114

Appendix VI: GAO Staff Acknowledgments 117

Related GAO Products 118

Tables Table 1: Guidance Provided to USAOs and U.S. Courts 25

Table 2: Terms Stipulated in JCCs Related to GAO’s Selected 

Cases 37

Table 3: Required Frequency of Review for Criminal Debts

in Suspense 48

Table 4: Examples of Inconsistencies in Applying Interest 51

Table 5: Average Number of Criminal Cases Per Staff, Fiscal Years 

1995 and 1999, for the Four FLUs We Visited 53

Table 6: Status of Offenders in GAO’s Selected Cases 57

Table 7: Details of Cases Selected 81

Table 8: Number of Occurrences by Selected District for Each Item 

Statistically Projected for the 140 Random Cases 82

Figures Figure 1: Growth in Outstanding Criminal Debt Since 1985 21

Figure 2: Total Reported Criminal Debt by Major Type as of 

September 30, 1999 23

Figure 3: Total Reported Criminal Debt by Major Type, as of 

September 30, 1999, at the Four Selected Districts 24

Figure 4: Process of Assessing Criminal Fines and Restitution 26

Figure 5: Typical Post-MVRA Criminal Debt Collection Process 28

Figure 6: Reported Criminal Debt Outstanding From 

September 30, 1995, Through September 30, 1999 32

Figure 7: Reported Federal Criminal Debt (Fines and Federal

Restitution) and Nonfederal Criminal Debt (Nonfederal 

Restitution) as of September 30, 1995 and 1999 35

Figure 8: Reported Criminal Debt Outstanding and Collected From 

September 30, 1995, Through September 30, 1999 41
Contents

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Figure 9: Age of Reported Criminal Debts Outstanding as of 

September 30, 1999 42

Abbreviations

AOUSC Administrative Office of the United States Courts

BOP Bureau of Prisons

DCIA Debt Collection Improvement Act of 1996

EOUSA Executive Office for United States Attorneys

FLU Financial Litigation Unit

IFRP Inmate Financial Responsibility Program

JCC Judgment in a Criminal Case

MOU memorandum of understanding

MVRA Mandatory Victims Restitution Act of 1996

NFC National Fine Center

OIG Office of the Inspector General

OMB Office of Management and Budget

SFFAS Statement of Federal Financial Accounting Standards

USAO United States Attorneys’ Offices

USSC United States Sentencing Commission
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United States General Accounting Office

Washington, D.C. 20548 Letr

July 16, 2001

The Honorable Susan M. Collins

Ranking Minority Member 

Permanent Subcommittee on Investigations

Committee on Governmental Affairs

United States Senate

Dear Senator Collins:

This report responds to your request that we review the federal 

government’s collection of criminal debt, primarily fines and restitution. 

The collection and management of such criminal debt has been a longstanding problem for the federal government. This report discusses the 

following factors that have an impact on the effectiveness of the criminal 

debt collection process:

• the nature of criminal debt, the assessment of mandatory restitution, 

interpretation of payment schedules set by judges, and limitations due 

to state laws;

• inadequate policies and procedures, and inadequate adherence to 

established procedures by the Department of Justice and the U.S. 

courts, and in the districts visited, a lack of coordination in assessing 

and collecting criminal debt; and

• the current oversight environment, which does not leverage the central 

agency roles of the Department of the Treasury and the Office of 

Management and Budget in the government’s collection of criminal debt.

We make recommendations related to these issues that, if successfully 

implemented, should improve the collection of criminal debt.

As arranged with your office, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days after the 

date of this report. At that time we will send copies to the Chairman of your 

subcommittee as well as the Chairman and Ranking Minority Member of 

the Committee on Governmental Affairs. We will also provide copies to the 

Attorney General, the Secretary of the Treasury, the Director, Office of 

Management and Budget, and the Director, Administrative Office of the 

United States Courts. Copies will also be made available to others upon 

request.
Page 6 GAO-01-664 Criminal Debt Collection

If you have any questions about this report, please contact me at (202) 512-

3406 or J. Lawrence Malenich, Assistant Director, at (202) 512-9399. GAO 

staff acknowledgments are listed in appendix VI.

Sincerely yours,

Gary T. Engel

Director

Financial Management and Assurance
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Executive Summary

Purpose This report responds to your request that GAO review the federal 

government’s collection of criminal debt, primarily fines and restitution.1

The collection and management of such criminal debt has been a longstanding problem for the federal government. As reported in the U.S. 

Attorneys’ statistical reports,2

 outstanding criminal debt more than doubled 

from about $5.6 billion as of September 30, 1995, to over $13 billion as of 

September 30, 1999. Approximately 66 percent of the reported amount as of 

September 30, 1999, is restitution owed to nonfederal victims, including 

individual victims and nonfederal entities (e.g., banks, organizations, and 

insurance companies), some of whom may be relying on the federal 

government for potential reimbursement.

As discussed with your staff, we set out to determine (1) the key reasons 

for the growth in reported uncollected criminal debt, (2) whether adequate 

processes exist to collect criminal debt, and (3) what role, if any, the Office 

of Management and Budget (OMB) and the Department of the Treasury 

(Treasury) play in overseeing and monitoring the government’s collection 

of criminal debt.

Scope and 

Methodology

To meet the objectives, we interviewed key officials, reviewed applicable 

policies and procedures, and selected cases for review. We reviewed all 44 

criminal debt cases3

 that were greater than or equal to $14 million at the 

four federal judicial districts with the largest amount of outstanding 

criminal debt as of September 30, 1999. These four districts—the Central 

District of California, the Eastern and Southern Districts of New York, and 

the Southern District of Florida—accounted for about $5.6 billion (or 

43 percent) of the over $13 billion of the reported outstanding criminal debt 

as of this date. At each of the four districts, we also selected and reviewed a

1

The courts assess fines as punishment, whereas restitution is intended to make identifiable 

victims whole.

2

United States Attorneys Annual Statistical Report for Fiscal Year 1999, U.S. Department 

of Justice. This is an unaudited annual report.

3

These debts relate to 42 debtors and are referred to as “high-dollar” cases throughout the 

report.
Executive Summary

Page 9 GAO-01-664 Criminal Debt Collection

stratified random sample of 35 criminal debt cases from a population of 

8,650 debts with a dollar value of $5,000 or greater but less than $14 million 

(for a total of 140 random cases).4

Background The collection of outstanding criminal debt has been a long-standing 

problem, with many of the problems that GAO has been reporting on since 

October 19855

 still remaining. Since that time, as reported in the U.S. 

Attorneys’ statistical reports, the balance of outstanding criminal debt has 

grown from $260 million to over $13 billion. The Congress attempted to 

address some of these problems through the Criminal Fines Improvement 

Act of 1987. This act transferred the responsibility for accounting for and 

processing criminal debt from the Department of Justice (Justice) to the 

courts and gave them the responsibility for establishing a centralized 

accounting system. In 1990, the Administrative Office of the United States 

Courts began developing a centralized entity, called the National Fine 

Center, to record, track, and report on federal criminal debt. The National 

Fine Center was expected to automate and centralize criminal debt 

processing for the 94 districts throughout the country and provide a 

management information system to replace the existing fragmented 

approach for receiving payments and to alleviate long-standing weaknesses 

in accounting for, collecting, and reporting on criminal monetary penalties 

imposed on federal criminals.

However, an independent consulting firm concluded that the task of 

developing a National Fine Center, involving several agencies in two 

branches of government, proved to be more complex than expected and 

that the needs of the districts could not be met through a centralized 

approach. Thus, with the consent of the Congress, the centralized approach 

was terminated. As a result, the criminal debt collection process continues 

to be fragmented, involving both judicial and executive branch entities in 

94 districts across the country.

4

Many of the results of our analysis of the stratified random sample of debts are presented 

throughout this report as percentage estimates that are expressed at a 95 percent 

confidence level. All percentage estimates have sampling errors of ± 9 percentage points or 

less. For estimates other than percentages, sampling errors associated with these estimates 

do not exceed 10 percent of the value of those estimates (See appendix I, “Scope and 

Methodology”).

5

After the Criminal Fine Enforcement Act of 1984—Some Issues Still Need to Be Resolved

(GAO/GGD-86-02, October 10, 1985). Also see “Related Products” at the end of this report.
Executive Summary

Page 10 GAO-01-664 Criminal Debt Collection

Currently, the receipting of collections and recordkeeping for criminal debt 

is primarily the responsibility of the U.S. courts, while Justice is 

responsible for collecting criminal debt (Justice has delegated this 

responsibility to its Financial Litigation Units within the 94 U.S. Attorneys’

offices). The criminal debt collection process typically begins when an 

offender is convicted and a judge orders the offender to pay a fine and/or 

restitution as stipulated in a Judgment in a Criminal Case. In addition to the 

Financial Litigation Units, caseworkers from Justice’s Bureau of Prisons 

and the U.S. courts’ probation officers may assist in collecting monies 

owed. Collections of fines are typically received by the courts and 

deposited into the Crime Victims Fund6

 whereas collections of restitution 

payments are received by both the courts and the Financial Litigation Units 

in 18 districts and disbursed to the applicable victims or entities as directed 

by the court.

Results in Brief According to Justice officials, and based on our observations, there are 

four key factors some of which are not within the Financial Litigation 

Units’ or probation offices’ control—that have contributed to the 

significant growth in the amount of uncollected criminal debt. These 

factors are (1) the nature of the debt, in that it involves criminals who may 

be incarcerated or deported or who have minimal earning capacity; (2) the 

assessment of mandatory restitution regardless of the criminal’s ability to 

pay, as required by the Mandatory Victims Restitution Act of 1996;7

(3) interpretation by the Financial Litigation Units of payment schedules 

set by judges which limit collection activities; and (4) state laws that may 

limit the type of property that can be seized and the amount of wages that 

can be garnished.

6

42 U.S.C. Section 10601 requires criminal fine payments to be deposited into the Crime 

Victims Fund except for payments for fines related to the Endangered Species Act, Lacey 

Act Amendments of 1981, Railroad Unemployment Insurance Act, Federal Water Pollution 

Control Act, Postal Service Fund, and county public schools. For these exceptions, the 

Treasury is entitled to use the funds collected, whereas funds deposited into the Crime 

Victims Fund are generally used to provide grants for victim assistance and compensation 

programs.

7

18 U.S.C. 3663A requires the court to order restitution for offenders convicted of (1) a crime 

of violence as defined by18 U.S.C. 16; (2) an offense against property under title 18 of the 

U.S.C. including any offense committed by fraud or deceit; or (3) an offense related to 

tampering with consumer products (18 U.S.C. 1365), in which an identifiable victim has 

suffered a physical injury or pecuniary loss. See also 18 U.S.C., secs. 2248, 2259, 2264, and 

2327.
Executive Summary

Page 11 GAO-01-664 Criminal Debt Collection

Also contributing to the growth of uncollected debt is the lack of adequate 

processes to collect such debt at the four districts visited. Specifically, the 

four Financial Litigation Units visited did not always follow their policies 

and procedures and could improve their policies and procedures to ensure 

that collection actions were prompt and adequate. In addition, the four 

probation offices we visited did not always follow their procedures that 

could have allowed for increased collections from offenders under 

supervision. Further, because the district entities involved with assessing, 

collecting, and accounting for criminal fines and restitution did not 

adequately coordinate their efforts or share financial information about 

offenders, they hindered the government’s ability to increase collections. 

Of the $3.76 billion of debt assessed in our high-dollar cases, there was 

approximately $148 million (or about 4 percent) in collections through 

September 30, 1999. In addition, we estimate that 4 percent of the judgment 

amounts for our sampled population had been collected through 

September 30, 1999.

Since the effort to centralize the collection process was terminated in 1996, 

collection responsibilities continue to be divided between Justice and the 

courts, with neither having a central management oversight role. Further, 

neither OMB nor Treasury has identified the need to take an active 

oversight role in the collection of the growing balance of outstanding 

criminal debt. Such oversight is needed, however, because the lack of 

coordination and cooperation among the many entities involved in the 

criminal debt collection process has been a long-standing problem. 

Oversight of the collection of such debt could be achieved by leveraging 

OMB’s and Treasury’s current respective central agency roles related to 

financial reporting and debt management.

Taking into account the factors that are not controllable, the present 

management practices and processes do not provide assurance that 

offenders are not afforded their ill-gotten gains and that innocent victims 

are compensated for their losses to the fullest extent possible. Until top 

management at Justice and the courts place a higher priority on ensuring 

that the entities involved in the criminal debt collection process more 

effectively and efficiently pursue collection efforts, the assessment of 

criminal fines and restitution as an effective punitive tool may be 

jeopardized, and valuable, limited resources will continue to be wasted on 

duplicative efforts.

Our recommendations are designed to increase the effectiveness and 

efficiency of the federal government’s criminal debt collection processes.
Executive Summary

Page 12 GAO-01-664 Criminal Debt Collection

Principal Findings

Factors Contributing to the 

Growth in Uncollected 

Criminal Debt

Justice officials have stated that criminal debt, by its very nature, is difficult 

to collect. Criminal defendants may be incarcerated or deported, with little 

earning capacity; they often spend money on attorneys, who are paid up 

front; and their assets acquired through criminal activity may be seized by 

the government prior to conviction. Thus, by the time fines or restitution 

are assessed, offenders may have no assets left for making payments on the 

assessments. In addition, regardless of its collectibility, most criminal debt 

must be pursued for 20 years plus the period of incarceration and cannot be 

“written off” unless the debtor is deceased or the debt is forgiven by a court 

order.

Before the passage of the Mandatory Victims Restitution Act in 1996, the 

courts could typically consider an offender’s ability to pay in deciding 

whether to assess restitution. However, the Mandatory Victims Restitution 

Act of 1996 reformed restitution law by requiring the court to order full 

restitution to each victim in the full amount of each victim’s losses, without 

regard to the offender’s economic situation. Consequently, the assessment 

of mandatory restitution has resulted in a dramatic increase in the balance 

of reported uncollected criminal debt. To illustrate, four of the cases we 

reviewed involved offenders convicted of bombing the World Trade Center. 

Each offender received a 240-year prison sentence and was ordered to pay 

$250 million in restitution plus a fine ranging from $250,000 to $4.5 million. 

These four cases alone increased the criminal debt balance by over 

$1 billion. As of May 2000, the four offenders had collectively paid 

approximately $3,000. Under these circumstances, there is very little, if any, 

chance that a significant portion of the $1 billion restitution owed by these 

offenders will be collected.

Another factor affecting collections is that, in some districts, judges are 

stipulating payment terms (e.g., $300 per month) in their judgments,8

 and 

the Financial Litigation Units that we visited are interpreting such terms as 

precluding them from making any collection efforts (other than filing a 

lien). In some districts, including three of the four districts we visited, 

8

The Second, Third, and Fifth Circuits require the sentencing court to set a payment 

schedule at sentencing. Some judges in the Ninth Circuit are also setting payment schedules, 

but they are not required to do so. 
Executive Summary

Page 13 GAO-01-664 Criminal Debt Collection

judges often stipulate payment terms because probation officers are not 

authorized to do so. However, according to a Chief Judge we interviewed in 

one of these districts, the terms were not intended to preclude the 

Financial Litigation Units from pursuing collection efforts, such as 

searching for and liquidating assets. As a result of the Financial Litigation 

Units’ interpretation, prompt collection efforts are not being pursued at 

these districts and the government may be potentially losing opportunities 

to collect criminal debt.

An additional factor affecting collections is state legislation, such as laws 

that limit the type of property that can be seized and the amount of wages 

that can be garnished. For example, some states, such as Florida, have 

unlimited homestead exemptions, prohibiting the seizure of a primary 

residence regardless of the amount of equity in the home.

Inadequate Criminal Debt 

Collection Processes and 

Lack of Coordination 

Contribute to the Low 

Collection Rate

At the four Financial Litigation Units that we visited, procedures for 

enforcing collection—such as filing liens, searching for offender assets, 

pursuing other legal remedies (such as wage garnishment or writs of 

execution9

), and issuing demand letters—did not exist or were not always 

being followed. Prompt action is essential for maximizing potential 

collections because the likelihood of collection decreases as debts age. For 

example, in most cases, Financial Litigation Units are required to promptly 

file liens to ensure that property that could be used toward payment of the 

debt is not transferred or sold. However, only one of the four Financial 

Litigation Units we visited had established a specific time frame for the 

filing of liens—within 45 days of the judgment being entered into the 

tracking system. In 10 percent of the high-dollar cases, there was no 

evidence that required liens were filed, and in the cases in which liens were 

filed, the Financial Litigation Units took an average of 410 days from the 

judgment date to file the lien. Based on our sample, we estimate that 

required liens were not filed for 30 percent of the sampled population. For

9

A writ of execution is issued by a court to enforce a judgment. For example, a writ of 

execution permits the U.S. Marshals Service to seize an offender’s property as complete or 

partial payment on a fine or restitution or the writ can be applied against an offender’s 

income or bank account in a process called garnishment.
Executive Summary

Page 14 GAO-01-664 Criminal Debt Collection

the random cases10 we reviewed in which liens were filed, the average 

number of days from the judgment date to the filing of a lien was 639 days.11

Not promptly filing liens or not filing them at all significantly increases the 

potential for offenders to liquidate their assets and not repay debts owed.

According to the U.S. Attorneys’ Manual, the Financial Litigation Units 

should “promptly and vigorously” perform asset discovery work. However, 

in 48 percent of the high-dollar cases and in an estimated 66 percent of the 

sampled population, we found little or no evidence of asset discovery work. 

We also found that the procedures did not (1) establish time frames or 

(2) require the Financial Litigation Units to document why such procedures 

were not used. Unless steps are promptly taken and documented to identify 

whether an offender has assets, the offender may have time to hide or 

liquidate assets that could have been available to pay toward the debt.

A critical element of any effective collection process is the human capital 

component. However, we found that a historical problem for the Financial 

Litigation Units, which still exists, is the lack of asset investigators and the 

limited number of debt collection staff. At the four Financial Litigation 

Units we visited, staffing levels for collecting criminal debt have only 

slightly increased from an average of 8.7 staff in 1995 to 9.3 in 1999, even 

though the number of assessments and debts pending has significantly 

increased. Specifically, the number of criminal debts pending for the four 

Financial Litigation Units we visited increased from an average of 4,406 to 

6,373 cases per district, or about 45 percent, and the average dollar amount 

of outstanding debts per staff increased by over 160 percent.

Probation officers are required to ensure that offenders’ financial 

information used to develop pre-sentence reports and installment 

schedules is adequately verified. However, in 20 of 42 high-dollar and 40 of 

10Because of certain circumstances (such as the offender was in prison), certain attributes 

for which we test were not applicable to all the cases in the stratified random sample. For 

example, some probation office procedures are required only once an offender’s period of 

probation begins. Therefore, in our testing of compliance with these procedures, if the 

offender was still in prison, the attribute being tested would not be applicable for that case. 

In circumstances in which attributes do not apply to all cases, estimating the results to an 

appropriate population would introduce significant sampling error intervals. Therefore, we 

have presented only the actual results for the applicable cases in each circumstance.

11We were unable to determine the date a lien was filed in four of the high-dollar cases and in 

12 random cases in which liens had been filed. Therefore, these cases were not used to 

calculate the average days.
Executive Summary

Page 15 GAO-01-664 Criminal Debt Collection

the 125 random12 cases we reviewed, probation officers had not taken 

adequate steps to verify an offender’s assets during the pre-sentence 

investigation. Also, similar to weaknesses we reported in June 1998,13

probation officers sometimes did not follow their guidelines for 

establishing installment schedules based on financial criteria or for 

reviewing subsequent changes in financial circumstances that could have 

allowed for increased installment payments. In response to GAO 

recommendations issued in the June report, the U.S. courts issued revised 

guidance in September 2000. If effectively implemented, this revised 

guidance should help address weaknesses related to the establishment of 

installment schedules by probation officers and should result in increased 

collections.

To facilitate the collection process and reduce duplication of efforts, the 

entities involved with assessing and collecting criminal debt (investigative 

agencies, prosecuting attorneys, and probation offices) should share 

financial information obtained about the offender with the Financial 

Litigation Units. However, in over half the cases we reviewed, we found 

little evidence of coordination among the entities involved in the criminal 

debt collection process and a lack of specific procedures to ensure that 

efforts are coordinated. For example, we found that investigating case 

agents and prosecutors do not always share financial information with 

Financial Litigation Units, hindering the Financial Litigation Units’ ability 

to assess an offender’s ability to pay. Specifically, in 52 percent of the highdollar cases and in an estimated 61 percent of the sampled population, we 

found little or no evidence of coordination through correspondence with 

case agents or prosecuting attorneys. In addition, we found that Financial 

Litigation Units typically were not monitoring the collection efforts of 

probation officers, as advised by the U.S. Attorneys’ Manual, and that, 

contrary to district procedures, probation officers were not always 

informing Financial Litigation Units of an offender’s upcoming release from 

probation. Furthermore, at the four districts we visited, the Financial 

Litigation Units and the clerks’ offices maintained separate databases to 

track criminal debt collections. This lack of coordination is a long-standing 

problem that has not been adequately addressed and has resulted in

12See footnote 10 in executive summary.

13Fines and Restitution: Improvement Needed in How Offenders’ Payment Schedules Are 

Determined (GAO/GGD-98-89, June 29, 1998). 
Executive Summary

Page 16 GAO-01-664 Criminal Debt Collection

inefficient processes and duplication of effort. Because of the many 

agencies and district offices involved in assessing and collecting criminal 

debt—including two branches of the federal government and 94 districts—

effective and efficient criminal debt collection hinges on the ability of these 

entities to work together.

Oversight Roles of OMB and 

Treasury

As previously noted, management oversight of the criminal debt collection 

process has been divided between the executive and judicial branches. The 

National Fine Center was an attempt to centralize the criminal debt 

collection process, a move that would have increased management 

oversight. However, since the effort to centralize and automate the 

collection process was terminated in 1996, the collection responsibilities 

continue to be divided between Justice and the courts, with neither having 

a central management oversight role.

Presently, neither OMB nor Treasury has identified the need to take an 

active role in overseeing the federal government’s process for collecting the 

billions of dollars of outstanding criminal debt. A primary function of OMB 

as a central agency is to evaluate the performance of federal programs and 

to serve as a catalyst for improving interagency cooperation and 

coordination. In its central role, OMB is also responsible for reviewing debt 

collection policies and activities.14 As such, OMB could work with Justice 

and other executive branch agencies that are due restitution to ensure that 

these entities report and disclose relevant criminal debt information in 

their financial statements and subject such information to audit. In 

implementing provisions of the Debt Collection Improvement Act of 1996 

(DCIA), Treasury, through its Financial Management Service, could assist 

Justice and the courts in identifying the types of delinquent criminal debt 

that would be eligible for referral to Treasury for collection actions. In turn, 

by better accounting for and reporting its delinquent criminal debt, Justice 

and the courts would enhance their own management oversight over this 

problem. Collectively, these efforts would place greater emphasis on the 

management of criminal debt and could increase collections.

14For example, OMB provides guidance to agencies to assist them in implementing 

legislation, such as the Debt Collection Improvement Act of 1996 (see OMB Circular No. A129, Policies for Federal Credit Programs and Non-Tax Receivables).
Executive Summary

Page 17 GAO-01-664 Criminal Debt Collection

Recommendations Our recommendations, detailed in chapter 5, are designed to increase the 

effectiveness and efficiency of the federal government’s criminal debt 

collection process. To help address the long-standing problems in this area, 

including fragmented processes and lack of coordination, we recommend 

that the key entities involved in the criminal debt collection process 

establish a joint task force to develop a strategic plan to improve the 

processes and coordination among all entities involved and to reduce the 

duplication of effort.

In the interim, to help improve collections and stem the growth in 

uncollected criminal debt, we make specific recommendations related to 

the following:

• establishing or revising procedures and processes for prioritizing, 

managing, and collecting criminal debt and reinforcing established 

criminal debt collection procedures that are not being adequately 

followed;

• revising the language in the Judgment in a Criminal Case forms to clarify 

that payment terms established by judges are minimum payments and 

should not prohibit or delay collection efforts;

• improving the coordination and sharing of information among the 

entities involved in the assessment and collection process; and

• having Treasury, in its role under the DCIA, assist Justice and the courts 

in identifying the types of delinquent criminal debt that would be eligible 

for referral to Treasury for collection actions.

Agency Comments and 

Our Evaluation

Justice and OMB agreed with our recommendation for working together in 

the form of a joint task force to develop a strategic plan to improve criminal 

debt collection processes and establish an effective coordination 

mechanism among all entities involved in the process. The Administrative 

Office of the United States Courts (AOUSC) and Treasury did not state 

whether they agreed or disagreed with the establishment of and their 

participation in this task force. We believe that the involvement of AOUSC, 

as well as Treasury, given its central agency role of preparing the federal 

government’s financial statements and implementing DCIA, is critical to the 

success of the task force.

Justice generally agreed with the premise of the report and recognized the 

need for improvements in the criminal debt collection area. Justice also 

agreed with 10 of our 12 recommendations specifically addressed to it and 
Executive Summary

Page 18 GAO-01-664 Criminal Debt Collection

partially agreed with the other 2. The AOUSC commented that most of our 

recommendations directed to it had already been implemented and that it 

is pursuing those related to working with Justice to refer eligible debt to 

Treasury and reduce duplication of the recordkeeping function. Treasury 

agreed with our recommendation specifically addressed to it regarding 

assisting Justice and the courts in identifying eligible delinquent debt for 

referral to Treasury.

Justice and the AOUSC both commented on the methodology used to 

develop the report findings. For example, Justice and AOUSC stated that 

closed cases (i.e., debts paid in full) should have been reviewed. We 

disagree. To address the requestor’s objectives of determining the key 

reasons for the growth in reported uncollected criminal debt and 

determining whether adequate processes exist to collect criminal debt, we 

selected cases that involved debt amounts outstanding as of September 30, 

1999. Reviewing closed cases would not have addressed why debts have 

not been collected nor would it have provided a sound basis for 

determining whether there are adequate processes for collecting criminal 

debt at the four districts visited. In addition, since we used debts 

outstanding as of September 30, 1999, many of which were more than 3 

years old, ample time for collection activity had passed before we reviewed 

the cases, enabling us to assess the level of collection efforts performed.

In addition to commenting on our methodology, the AOUSC stated that the 

effect of the Mandatory Victims Restitution Act of 1996 (MVRA) should 

have received greater attention in the report. We believe that we have 

provided sufficient balance in the report as evidenced by an entire chapter 

devoted to uncontrollable factors, such as MVRA, that contribute to the 

growth in outstanding criminal debt. See “Agency Comments and Our 

Evaluation” in chapter 5 of this report, for more discussion.
Page 19 GAO-01-664 Criminal Debt Collection
Page 20 GAO-01-664 Criminal Debt Collection

Chapter 1

Introduction Chapte1r

The collection of outstanding criminal debt has been a long-standing 

problem, with many of the issues that we have been reporting on since 

October 19851

 still remaining. Since that time, as reported in the U.S. 

Attorneys’ statistical reports, the balance of outstanding criminal debt has 

grown from $260 million to over $13 billion (see figure 1). The Congress 

attempted to address some of these problems through the Criminal Fines 

Improvement Act of 1987 when it transferred the responsibility for 

accounting for and processing criminal debt from Justice to the courts and 

gave them the responsibility for establishing a centralized accounting 

system (see appendix II, “History of Criminal Debt Collection Legislation”). 

In 1990, the Administrative Office of the United States Courts (AOUSC) 

began developing a centralized entity, called the National Fine Center 

(NFC) to record, track, and report on federal criminal debt. The NFC was 

expected to automate and centralize criminal debt processing for the 94 

federal judicial districts and provide a management information system to 

replace the existing fragmented approach for receiving payments and 

alleviate long-standing weaknesses in accounting for, collecting, and 

reporting on criminal monetary penalties imposed on federal criminals.

1

GAO/GGD-86-02, October 10, 1985. Also see “Related Products” at the end of this report.
Chapter 1

Introduction

Page 21 GAO-01-664 Criminal Debt Collection

Figure 1: Growth in Outstanding Criminal Debt Since 1985

Source: Unaudited Executive Office for United States Attorneys (EOUSA) data (presented in actual 

dollars). 

Note: MVRA, which requires that the assessment of restitution be based on actual loss and not on the 

offender’s ability to pay, was enacted in 1996.

However, after several years of developing a National Fine Center that was 

criticized by GAO2

 and the Congress, the AOUSC engaged an independent 

consulting firm in February 1996 to perform a full review of the project. 

The consulting firm concluded that the task of developing a National Fine 

Center, involving several agencies in two branches of government, proved 

to be more complex than expected and that the needs of the districts could 

not be met through a centralized approach. Thus, with the consent of the 

Congress, the NFC was terminated. As such, the criminal debt collection 

2

National Fine Center: Expectations High, but Development Behind Schedule

(GAO/GGD-93-95, August 10, 1993) and National Fine Center: Progress Made but 

Challenges Remain for Criminal Debt System (GAO/AIMD-95-76, May 25, 1995).

0

2

4

6

8

10

12

14 Dollars in billions

Fiscal year ended September 30

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Chapter 1

Introduction

Page 22 GAO-01-664 Criminal Debt Collection

process continues to be fragmented, involving both judicial and executive 

branch entities in 94 districts across the country.

Also, around the time of the consultant’s report, the Mandatory Victims 

Restitution Act of 1996 (MVRA) was enacted, requiring that restitution be 

assessed at the full amount regardless of an offender’s ability to pay. Since 

that time the balance of reported uncollected criminal debt has increased 

dramatically. Reported uncollected criminal debt has more than doubled 

from about $5.6 billion as of September 30, 1995, to approximately 

$13 billion as of September 30, 1999, with about 66 percent of that amount 

attributed to restitution owed to nonfederal parties. The collectibility rate 

however has not increased proportionally.

Background Criminal debt arises when a court orders an offender to pay fines and/or 

restitution as part of the punishment for violating a federal criminal law. 

Unless the offender immediately pays the debt, Justice is responsible for 

enforcing its collection. Justice has delegated this responsibility to its 

Financial Litigation Units (FLU) in the United States Attorneys’ Offices 

(USAO) across the country. As of September 30, 1999, the Executive Office 

for United States Attorneys (EOUSA) database reflected approximately 

$13.1 billion in reported outstanding criminal debt, of which about $5.6 

billion (or 43 percent) was accounted for by the four districts we visited 

(see figures 2 and 3 for a breakout of the major types of criminal debt 

involved).
Chapter 1

Introduction

Page 23 GAO-01-664 Criminal Debt Collection

Figure 2: Total Reported Criminal Debt by Major Type as of September 30, 1999

(Total Outstanding Criminal Debt = $13.1 Billion)

Source: Unaudited EOUSA data on outstanding criminal debt as of September 30, 1999.

1%

17%

16%

66%

Other

Fines

Federal Restitution

Nonfederal Restitution
Chapter 1

Introduction

Page 24 GAO-01-664 Criminal Debt Collection

Figure 3: Total Reported Criminal Debt by Major Type, as of September 30, 1999, at 

the Four Selected Districts

(Outstanding Criminal Debt = $5.6 Billion)

Source: Unaudited EOUSA data on outstanding criminal debt as of September 30, 1999.

Each of the 943 districts has a USAO, an executive branch agency, and a 

U.S. district court that includes district judges, a clerk’s office, and a 

probation office within the judicial branch of government. The districts 

operate independently from one another with guidance provided by the 

offices indicated in table 1.

3

There are 94 districts throughout the country, but the USAOs and probation offices for two 

of them are combined resulting in 93 USAOs and probation offices.

Other

Federal Restitution

Fines

Nonfederal Restitution

2%

11%

8%

79%
Chapter 1

Introduction

Page 25 GAO-01-664 Criminal Debt Collection

Table 1: Guidance Provided to USAOs and U.S. Courts 

In addition to general guidance provided by Justice, the Judicial 

Conference, and the U.S. Sentencing Commission (USSC), each district 

office develops supplemental guidance for criminal debt collection 

procedures. Within each district, the USAO, probation office, and the 

clerk’s office enter into a memorandum of understanding (MOU) that 

documents how criminal debt collection activities will be accomplished. 

Each of the USAOs also has a Financial Litigation Plan that details district 

guidance on collecting criminal debt. The following sections provide 

additional detail on (1) assessing criminal fines and restitution and 

(2) accounting for and collecting criminal debt in this currently 

decentralized and fragmented environment.

Assessing Criminal Fines 

and Restitution

Agencies such as Justice’s Federal Bureau of Investigation and the Drug 

Enforcement Administration investigate violations of federal law and refer 

the results of their investigations to a local USAO (see figure 4 for a general 

overview of the criminal debt assessment process). The country is divided 

into 94 federal judicial districts, with a federal district court in each district. 

Each of the 94 districts is located in one of 12 regional circuits, and each 

circuit has a Court of Appeals.

Entity

Centralized office/entity 

providing guidance Type of guidance provided

USAOs Justice’s Executive Office 

for United States Attorneys 

(EOUSA)

Provides general executive assistance, 

administrative support, and other 

operational support.

U.S. courts, 

probation offices, 

and clerk’s offices

The Judicial Conference of 

the United States

Policymaking body for the judiciary. 

Recommends to the various courts 

ways to promote uniform management 

procedures.

Administrative Office of the 

U.S. Courts (AOUSC)

Implements Judicial Conference 

policies and provides national 

standards and promulgates 

administrative and management 

guidance.

U.S. Sentencing 

Commission

Provides sentencing guidelines.
Chapter 1

Introduction

Page 26 GAO-01-664 Criminal Debt Collection

Figure 4: Process of Assessing Criminal Fines and Restitution

Note: JCC = Judgment in a Criminal Case.

After the USAO obtains the conviction of an offender, the court issues a 

Judgment in a Criminal Case (JCC), which details terms of the sentence 

and orders the payment of a fine and/or restitution, if applicable. To assist 

judges in determining the fine and/or restitution amount, a probation 

officer prepares and provides to the court a pre-sentence report that 

includes financial information related to an offender’s ability to pay a fine 

and information related to victims’ losses. In preparing the pre-sentence 

report, probation officers are to use financial information obtained from 

the investigating agency, the trial, and the offender. In deciding whether to 

assess a fine and, if so, the amount to assess, courts are to consider an 

offender’s income, earning capacity, and financial resources; the potential 

burden placed on an offender’s family; and any restitution or other 

obligations that the offender is required to make. For example, if large 

amounts of restitution are ordered, the assessment of fines is typically 

waived based on the offender’s inability to pay a fine.

USSC guidelines provide guidance on the minimum and maximum fine 

amounts for the U.S. courts to impose based on the offense. The statute 

requires the court to order the payment of a fine immediately unless, in the 

interest of justice, the court provides for payment on a date certain or in 

installments. According to the guidelines and the statute, judges may 

consider whether paying the fine in a lump-sum would have an unduly 

severe impact on the offender or any dependents, and if so, should 

establish an installment schedule for paying the fine. The installments 

should be in equal monthly payments over the period established by the 

court, unless the court establishes another schedule. The length of time 

USAO

seeks

conviction 

Court imposes

sentence and

issues JCC

Probation office

develops

pre-sentence

report 

Investigative

agency refers

violation

Clerk of the Court

distributes JCC 
Chapter 1

Introduction

Page 27 GAO-01-664 Criminal Debt Collection

over which scheduled payments should be made is the shortest time in 

which full payment can reasonably be made, generally not to exceed 12 

months. In addition, judges may waive fines if they believe that offenders 

will be unable to pay and are unlikely to become able to pay (e.g., if they 

are sentenced to life in prison or cannot afford to hire private counsel).

Judges may also order restitution to be paid to the victims of a crime. In 

accordance with statute, before MVRA was enacted in April 1996, the court 

typically waived or reduced the restitution amount based on the offender’s 

ability to pay. However, under MVRA, the court typically must order 

restitution to each victim in the full amount of each victim’s loss, without 

regard to an offender’s economic situation.4

 If the court believes that an 

offender cannot immediately or fully pay the restitution amount in the 

foreseeable future, the court can order the offender to make nominal 

installment payments.

In some districts, judges must set the payment schedules and document 

them in the JCC, and in other districts, judges can delegate to probation 

officers the authority to set payment schedules. However, within the last 

few years, more judges have been required to establish payment schedules 

as a result of several circuit court decisions that have affected policies in 

this area. For example, some circuit courts have held that courts are 

prohibited from ordering a defendant to pay criminal fines or restitution in 

accordance with a payment schedule set by a probation officer or a prison 

official because the setting of a payment schedule is an inherently judicial 

function that may not be delegated to others.5

 In addition, some circuit 

courts have prohibited the imposition of an immediate payment order of 

the entire amount unless the defendant can pay the entire amount 

immediately.6

 Finally, some circuit courts have interpreted the MVRA to

4

Exceptions include cases in which (1) the number of identifiable victims is so large that 

paying restitution would be impractical or (2) determining complex factual issues related to 

the cause or amount of the victims’ losses would complicate or prolong the sentencing 

process to a degree that the burden of the sentencing process would outweigh the need to 

provide restitution to the victim.

5

See, e.g., United States v. Porter, 41 F. 3d 68 (2d Cir. 1994); United States v. Mortimer, 94 F. 

3d 89 (2d Cir. 1996); United States v. Graham, 72 F. 3d 357 (3d Cir. 1995), cert. denied 516 

U.S. 1183 (1996); United States v. Miller, 77 F. 3d 71 (4th Cir. 1996); and, United States v. 

Pandiello, 184 F. 3d 682 (1999). 

6

See, e.g., United States v. Mortimer, 52 F. 3d 429, 436 (2d Cir. 1995).
Chapter 1

Introduction

Page 28 GAO-01-664 Criminal Debt Collection

require the court to set the payment schedule in all cases at sentencing.7

Criminal Debt Collection 

Process

After the assessment process, the criminal debt collection process varies 

depending on the other sentencing terms imposed on the offender. Figure 5 

shows the typical post-MVRA criminal debt collection process.

Figure 5: Typical Post-MVRA Criminal Debt Collection Process

Note: JCC = Judgment in a Criminal Case.

7

 See, e.g., United States v. Coates, 178 F. 3d 681 (3d Cir. 1999) and United States v. Myers,

198 F. 3d 160 (5th Cir. 1999).

Clerk of Court

distributes JCC

Judge orders

offender to pay

and issues JCC

Bureau of Prisons

sends payments

from incarcerated

offenders to Clerk

of the Court

Probation Office

schedules payment

Offender makes

payment

USAO FLU enters data into tracking system 

(including receipts), and enforces collections by filing 

liens, performing asset discovery work, etc.

Clerk of the Court enters receipts and disburses 

funds received to victims or applicable fund
Chapter 1

Introduction

Page 29 GAO-01-664 Criminal Debt Collection

The FLUs within the USAOs’ Civil Divisions have been delegated the 

responsibility for collecting criminal debt. After receiving a JCC, the FLU 

enters information from the JCC into the FLUs’ case tracking system and 

performs certain collection actions depending on such factors as the 

amount of the debt. The FLUs’ collection efforts include filing liens (based 

on debtor’s address or county of known residence), identifying debtor 

assets, garnishing debtor wages, and serving notice of late payments. To 

facilitate collection and reduce duplication of effort, the entities involved 

with assessing and/or collecting criminal debt (investigative agencies, 

prosecuting attorneys, and the courts) should share the financial 

information they have obtained about the offender with the FLUs.

Offenders are encouraged to participate in the Bureau of Prisons (BOP) 

Inmate Financial Responsibility Program (IFRP). This program provides a 

means of collecting voluntary periodic deductions from inmates’ wages 

earned from a prison occupation. The amounts are generally small and are 

deducted periodically (e.g., monthly, quarterly, or semiannually). When 

released from prison or as ordered by the judge at sentencing, the offender 

is assigned to a probation officer. If the criminal debt has not been paid, the 

probation officer or the court, depending on the district, should establish 

an installment schedule for payment. Probation officers may restrict 

offenders from performing certain activities, such as traveling outside the 

district, if they are not making their required payments. Probation officers 

may also request that the court revoke supervision8

 (i.e., send an offender 

to prison) if the offender is willfully refusing to make payments.

Since, as noted above, the NFC effort did not succeed, the FLUs in each 

district maintain their own databases to meet their enforcement 

responsibilities. Restitution payments from offenders in most districts are 

submitted to the clerk’s office. The clerk’s office records these payments 

and provides a copy of the payment information to the FLUs so that they 

can update their databases. Most criminal fines are paid to the clerk’s office 

and deposited into Justice’s Crime Victims Fund, which provides grants for 

victim assistance programs and compensation to victims.

Payments for restitution assessed after MVRA are paid to and disbursed by 

the clerk’s office; however, the handling of payments and disbursements for 

pre-MVRA restitution vary by district. In 18 districts, the clerk’s office 

8

The term “supervision” incorporates the circumstances of an offender on probation or 

supervised release (i.e., from prison).
Chapter 1

Introduction

Page 30 GAO-01-664 Criminal Debt Collection

accepts only post-MVRA restitution payments; therefore, the FLUs in these 

districts maintain an additional system to receive pre-MVRA restitution 

payments from offenders and to disburse payments received to applicable 

victims. Restitution is often owed to many victims, and disbursements must 

be prorated based on the amounts owed to each victim. The clerk’s office 

disburses checks to victims, whereas the FLU uses an independent 

financial institution to receive payments and disburse checks to victims. 

AOUSC officials have indicated that they are working with the staff in the 

remaining districts to assist them in assuming the receipting of collections 

responsibilities for pre-MVRA payments.

Objectives, Scope, and 

Methodology

Our objectives, as agreed to by the subcommittee staff, were to determine 

(1) the key reasons for the growth in reported uncollected criminal debt, 

(2) whether adequate processes exist to collect criminal debt, and (3) what 

role, if any, the Office of Management and Budget (OMB) or the 

Department of the Treasury (Treasury) plays in overseeing and monitoring 

the government’s collection of criminal debt.

To determine the key reasons for the growth in reported uncollected 

criminal debt and whether adequate processes exist to collect criminal 

debt, we (1) interviewed officials from the Executive Office for United 

States Attorneys (EOUSA), the Administrative Office of the United States 

Courts (AOUSC), and five selected district offices,9

 (2) reviewed applicable 

policies and procedures for collecting criminal debt, (3) obtained a 

database from EOUSA of all outstanding criminal debt as of September 30, 

1999, and (4) reviewed all criminal debt cases greater than or equal to $14 

million at the four districts with the largest amount of outstanding criminal 

debt as of September 30, 1999. These four districts—the Central District of 

California, the Eastern and Southern Districts of New York, and the 

Southern District of Florida—accounted for $5.6 billion (or 43 percent) of 

the over $13 billion of outstanding criminal debt as of this date. At these 

four districts, we reviewed all 44 cases greater than or equal to $14 million, 

which accounted for $3.7 billion (or 66 percent) of the $5.6 billion. We also 

9

The five districts include the four districts with the largest amount of outstanding criminal 

debt as of September 30, 1999—the Central District of California, the Eastern and Southern 

Districts of New York, and the Southern District of Florida—and the Northern District of 

California, where we documented our initial understanding of the criminal debt collection 

process. For the purposes of this report, “the four districts we visited” refers to the four 

districts where we performed our detailed testing.
Chapter 1

Introduction

Page 31 GAO-01-664 Criminal Debt Collection

selected and reviewed 35 random criminal debt cases with a dollar value of 

$5,000 or greater but less than $14 million at each of the four districts (for a 

total of 140 random cases); thus, we had a total of 184 cases selected for 

our review. We did not independently verify the completeness or accuracy 

of these data or test information security controls over the system used to 

compile these data because that verification was not necessary to meet the 

objectives of this report.

To determine what role, if any, OMB and Treasury play in overseeing and 

monitoring the government’s collection of criminal debt, we interviewed 

officials from these entities and reviewed applicable laws and regulations.

We performed our work from April 2000 through April 2001 in accordance 

with U.S. generally accepted government auditing standards. We requested 

comments on a draft of this report from the respective agencies. These 

comments are discussed in the “Agency Comments and Our Evaluation”

section of the report and are reprinted in appendix III through appendix V.

See appendix I for a more detailed discussion of our scope and 

methodology.
Page 32 GAO-01-664 Criminal Debt Collection

Chapter 2

Factors Contributing to the Growth in 

Uncollected Criminal Debt Chapte2r

According to statistics from the EOUSA, the amount of criminal debt has 

grown significantly since fiscal year 1995 (see figure 6). Several factors 

contributing to the growth in reported uncollected criminal debt, some of 

which are not within the FLUs’ or probation offices’ control, include (1) the 

nature of the debt, including the government’s limited ability to write off 

certain debt deemed to be uncollectible, (2) the assessment of mandatory 

restitution, (3) interpretation of payment schedules set by judges, and 

(4) limitations due to state laws.

Figure 6: Reported Criminal Debt Outstanding From September 30, 1995, Through 

September 30, 1999

Source: Unaudited data provided by EOUSA.

Note: MVRA was enacted in 1996.

Nature of the Debt The nature of criminal debt, including how and why it is levied, can make 

the debt more difficult to collect. Criminals may not be willing to comply 

with the law, and forcing compliance is difficult because criminals are 

0

2

4

6

8

10

12

14

Fiscal year ended September 30

Dollars in billions

1995 1996 1997 1998 1999
Chapter 2

Factors Contributing to the Growth in 

Uncollected Criminal Debt

Page 33 GAO-01-664 Criminal Debt Collection

already convicted felons who may be serving time in prison or may have 

been deported. Moreover, offenders in prison have limited earning capacity, 

and so potential collections are limited. In 57 percent of the high-dollar 

cases we reviewed and in an estimated 20 percent of our sampled 

population, the offender was still in prison. Further, significant time may 

pass between an offender’s arrest and sentencing, giving offenders time to 

hide fraudulently obtained assets, such as funds in offshore accounts, shell 

corporations, or family members’ names and accounts.

Even though the courts are required to consider an offender’s ability to pay 

when assessing fines, collection cannot always be assured. Fines are 

sometimes assessed to make a statement about the nature of the crime and 

its impact on society. Restitution, as discussed below, is typically assessed 

without regard to an offender’s ability to pay; therefore, collection may be 

unrealistic.

Asset seizure and forfeiture are important components of law enforcement 

efforts to deprive criminals of the proceeds and instruments of their 

crimes. Several years may pass between an offender’s arrest and 

sentencing. Federal laws authorize agencies to seize assets before a 

criminal conviction, thereby potentially overcoming one difficulty in 

collecting fines and restitution—defendants diverting their assets before 

conviction. However, the FLUs are not permitted to pursue liquidation of 

assets for debt collection until after an offender is convicted and 

sentenced.

Proceeds from forfeiture are typically used to make owners (e.g., a 

mortgager) whole and to fund law enforcement activities, and are not 

necessarily used to fulfill restitution orders. Therefore, the use of 

forfeiture, as we reported in June 1994,1

 could decrease amounts that might 

otherwise be available for paying restitution to crime victims and reducing 

outstanding criminal debt. According to Justice statistics, of the estimated 

$536 million of forfeited cash and property2

 recovered during fiscal year 

1999, approximately $39 million (or 7 percent) was applied to restitution in 

victim-related offenses. The remaining amounts were either converted to 

cash and used for law enforcement purposes or retained for official law

1

Restitution, Fines, and Forfeiture: Issues For Further Review and Oversight (GAO/TGGD-94-178, June 28, 1994).

2

Not all of these seizures were related to cases in which fines or restitution was ordered.
Chapter 2

Factors Contributing to the Growth in 

Uncollected Criminal Debt

Page 34 GAO-01-664 Criminal Debt Collection

enforcement use. In our case reviews, only 2 of the 44 high-dollar cases 

provided that the proceeds from the sale of assets be used to pay 

restitution. None of the JCCs for the random cases stated such terms. In the 

2 high-dollar cases, the JCCs specifically stated that the proceeds of the 

sale of seized and forfeited assets should be used to pay victims.

Finally, according to 18 U.S.C. 3613, most criminal debts must remain “on 

the books” for 20 years plus the period of incarceration and cannot be 

“written off” until the statute of limitations expires, the debtor is deceased, 

or the court approves a petition of remission filed by the USAO. Therefore, 

even if Justice determines that certain debts are not collectible, these debts 

must remain “on the books,” and the FLUs must periodically reassess their 

collectibility in accordance with USAO policies (see chapter 3) regardless 

of the status of the offender or previous actions to collect these debts. For 

example, in accordance with USAO policies, a $30,000 debt must be 

reassessed annually even if the FLU was unsuccessful in previous attempts 

to identify assets and the offender is serving a sentence of life in prison.

The U.S. Attorneys’ Manual states that if the FLU determines that a fine will 

likely never be collected, it can seek a petition for remission3

 of all or part 

of a fine from the judge. According to the Manual, seeking remission is 

preferable to placing it “in suspense” and continuing to pursue collection. 

However, we found no evidence that the FLU had requested a petition for 

remission in the cases we reviewed, even though some cases appear to 

have met the criteria for remission. According to FLU officials, obtaining a 

court order to write off delinquent debt is a time-consuming process and is 

not considered a priority among the many other tasks (e.g., working on 

open cases) the FLUs must perform.

Assessment of 

Mandatory Restitution

Before the Mandatory Victims Restitution Act of 1996 (MVRA), the 

assessment of restitution, like the assessment of fines, was typically based 

on an offender’s ability to pay. However, MVRA requires that assessment of 

restitution be based on actual loss and not on the offender’s ability to pay. 

Assessments of restitution have significantly increased since the passage of 

the act. As of September 30, 1995, approximately $3.4 billion (102,158 

cases) in criminal debts was owed to the federal government in fines and 

federal restitution and about $2.2 billion (15,126 cases) was owed in 

3

The FLU can request that the judge approve a petition for remission of a debt, which 

thereby dismisses the debt and allows the FLU to write off such amounts.
Chapter 2

Factors Contributing to the Growth in 

Uncollected Criminal Debt

Page 35 GAO-01-664 Criminal Debt Collection

nonfederal restitution. Although federal and nonfederal criminal debt 

amounts have increased from September 30, 1995, to September 30, 1999, 

the increase for nonfederal debt (i.e., restitution) is far greater (see figure 

7).

Figure 7: Reported Federal Criminal Debt (Fines and Federal Restitution) and 

Nonfederal Criminal Debt (Nonfederal Restitution) as of September 30, 1995 and 

1999

Source: Unaudited USAO Statistical Reports.

When assessed amounts are not based on an offender’s ability to pay, the 

likelihood of collecting the full amount may be unrealistic. For example, in 

addition to each offender receiving a 240-year prison sentence, the four 

offenders convicted of bombing the World Trade Center were each ordered 

to pay $250 million in restitution plus fines ranging from $250,000 to 

0

2

4

6

8

10

Federal 

Nonfederal

Dollars in billions

1995 1999
Chapter 2

Factors Contributing to the Growth in 

Uncollected Criminal Debt

Page 36 GAO-01-664 Criminal Debt Collection

$4.5 million. These four cases alone increased the criminal debt balance by 

over $1 billion. All four offenders refused to provide financial information 

and, as of May 2000, these offenders had collectively only paid 

approximately $3,000. Under these circumstances, it is unlikely that a 

significant portion of the restitution owed by these offenders will be 

collected. In another example, an offender was convicted in March 1997 of 

conspiracy, mail fraud, and tax evasion; sentenced to 20 years 

imprisonment and 3 years of supervised release; and ordered to pay a fine 

of $1 million and restitution of over $475 million. FLU records show that as 

of September 30, 1999, the offender had paid only $25. FLU records also 

show the offender refused to participate in the Inmate Financial 

Responsibility Program. Before sentencing, the offender also refused to 

provide the probation officer with a personal financial statement that 

would identify income, expenses, assets, and liabilities. Other work by the 

probation officer, including obtaining a credit report, doing an online 

property search, and reviewing tax return information, did not disclose 

assets available to pay down the debt.

Payment Schedules Set 

by Judges

In some districts, the judges may delegate the authority to set payment 

terms to probation officers. In those districts where it has been held that 

the courts may not delegate the authority to set payment schedules 

(including two of the districts we visited), judges must include them in the 

JCC. We found that the payment schedules set by judges can significantly 

influence collection efforts. EOUSA and FLU officials we interviewed 

indicated they believe that when a judge orders specific payment schedules 

in the JCC, they are precluded from making any collection efforts (other 

than filing a lien), such as pursuing liquidation of assets, until an offender is 

released from probation. However, the view of AOUSC officials and the 

Chief Judge in one of these districts is that the inclusion of payment 

schedules in the JCC does not preclude the FLU from identifying and 

pursuing assets but merely sets a minimum amount that must be paid while 

an offender is under supervision. The EOUSA and FLU interpretation 

inhibits the FLUs from taking prompt collection efforts, and the 

government may lose opportunities to collect criminal debt.

In 16 of the 44 high-dollar and 41 of the 140 random cases we reviewed, 

judges stipulated terms in the JCCs regarding how or when fines or 

restitution should be paid; in the remaining cases, the fine or restitution 

was due immediately (see table 2 for terms stipulated in our selected 

cases). In the cases where judges stipulated payment terms, we found that 

the FLUs typically wait until after the offender is released from prison and 
Chapter 2

Factors Contributing to the Growth in 

Uncollected Criminal Debt

Page 37 GAO-01-664 Criminal Debt Collection

probation before performing collection actions (e.g., searching for and 

liquidating assets). As a result of such delays, opportunities to maximize 

collections may be missed.

Table 2: Terms Stipulated in JCCs Related to GAO’s Selected Cases 

a

In circumstances in which attributes do not apply to all cases, estimating the results to an appropriate 

population would introduce significant sampling error intervals. Therefore, we have presented only the 

actual results for the applicable cases in each circumstance. See footnote 10 in executive summary.

b

All but 6 of these offenders had been released from prison as of the time of our review.

Source: Data obtained from terms documented in JCCs.

As we reported in 1999,4 the payment schedules set by judges vary by 

district. For example, in 1 of the high-dollar cases and in 17 random cases, 

including 13 random cases selected from the Eastern District of New York, 

the judges stipulated that the amount was not due until the offender was 

released from prison. In these instances, the FLUs typically do not perform 

any collection actions other than filing a lien. In 2 high-dollar and 10 

random cases, 9 of which were from the Southern District of New York, 

judges established a payment schedule based on a percentage of gross 

income to be paid on a periodic basis (e.g., 10 percent of gross monthly 

income to be paid monthly). In 8 high-dollar and 3 random cases from the 

Central District of California, the judge established a minimum amount that 

must be paid on a periodic basis (e.g., at least $300 to be paid each month). 

We found that probation officers typically did not recommend an increase 

in payment amounts, and the FLUs typically did not attempt to increase 

them or pursue liquidation of assets, even if financial circumstances 

Terms High-dollar cases Random casesa

Due immediately—no additional payment terms 28 99

Due after release from prisonb 1 17

Percentage of gross income due on a periodic 

basis

2 10

A specific or equal amount due on a periodic 

basis

2 5

“At least” amounts due on a periodic basis 8 3

Other terms 3 6

4

Federal Courts: Differences Exist in Ordering Fines and Restitution (GAO/GGD-99-70, 

May 6, 1999).
Chapter 2

Factors Contributing to the Growth in 

Uncollected Criminal Debt

Page 38 GAO-01-664 Criminal Debt Collection

improved.5 The following examples show the effects of terms being 

stipulated in the JCCs.

• In one case, in February 1998, an offender was convicted of bank fraud 

and ordered to pay $113 million in restitution jointly and severally with 

coparticipants through quarterly payments of at least $2,400.6

 Since the 

payment schedule was specified in the order and the offender was 

making the minimum payments, neither the FLU nor the probation 

officer recommended or attempted to pursue the net proceeds of 

$80,000 from the sale of her house and $19,200 from the sale of two cars. 

While on probation, the offender was permitted to move to another 

country with court approval. As of February 2001, clerk records show 

that this offender had paid $28,800 and all coparticipants combined had 

paid less than $100,000.

• Another offender was convicted of wire fraud, sentenced in November 

1997 to 6 months of home detention to be served concurrently with 3 

years of probation and ordered to pay over $74 million in restitution 

jointly and severally with coparticipants. The judge ordered the 

defendant to make quarterly payments of at least $750 after she 

completed home detention. Based on financial statements the offender 

provided, her pre-sentence report showed that she had over $40,000 in 

unencumbered assets7

 and $5,000 of unsecured debt, resulting in a net 

worth of over $35,000. The probation office had not recommended the 

pursuit of liquidation, nor had the FLU attempted liquidation of any 

assets owned by the offender. According to the FLU, because the judge 

included the payment schedule in the judgment, the FLU will not pursue 

collection until after the offender is released from supervision. As of 

April 2000, the offender had paid $6,000.

• In April 1998, another offender in our selection was convicted of 

conspiracy to commit mail fraud and ordered to pay a $20,000 fine in 

quarterly installments over a 3-year probation period even though just 

before his sentencing, the offender reported $5,000 in cash, $12,400 in 

his checking account, and over $100,000 of equity in his home. In this 

example, it appears that the offender may have had the ability to pay his 

whole fine or a significant portion of it immediately; however, since the 

5

Probation officers do not have authority to pursue liquidation of assets, but they can 

recommend that the FLU pursue such liquidation.

6

A judge may order debtors to be individually liable or jointly liable with other offenders.

7

Assets not tied up by a legal claim and thus available for collection (i.e., no lienholder).
Chapter 2

Factors Contributing to the Growth in 

Uncollected Criminal Debt

Page 39 GAO-01-664 Criminal Debt Collection

judge set a payment schedule in the JCC, neither the FLU nor the 

probation office reassessed the offender’s ability to pay or pursued a 

lump-sum payment. According to clerk records, the offender had paid 

$14,400 as of June 2000.

State Laws According to EOUSA officials, state law can also restrict the FLU’s ability 

to perform certain collection efforts and therefore contribute to the growth 

in outstanding criminal debt. State law may limit the type of property that 

can be seized and the amount of wages that can be garnished. For example, 

certain states, such as Florida, have unlimited homestead exemptions, 

prohibiting the seizure of a primary residence regardless of the amount of 

equity in the home and thus prohibiting the FLU from requiring an offender 

to borrow against a primary residence.

During our case-file reviews, we found several instances in which real 

property and personal property were registered in the offender’s spouse’s 

name (or other family member). These assets may be difficult to liquidate 

unless the state is a “community property” state, such as California, in 

which each spouse is entitled to one-half interest in property owned or 

income earned by the other spouse.
Page 40 GAO-01-664 Criminal Debt Collection

Chapter 3

Inadequate Criminal Debt Collection 

Processes and Lack of Coordination 

Contribute to Low Collection Rate Chapte3r

Because of the many agencies and districts involved in the collection 

process, improving the rate of criminal debt collection, which has averaged 

about 7 percent for fiscal years ending September 30, 1995 through 1999, 

hinges in part on the ability of these entities to work together and to 

implement effective processes (see figure 8). The four FLUs we visited did 

not have effective policies and procedures or did not always follow their 

policies and procedures to ensure that collection actions were prompt and 

adequate for increasing the potential for collecting the maximum amount 

of criminal debt. In addition, the four probation offices we visited did not 

always follow their procedures that could have allowed for increased 

collections from offenders under supervision. Further, because the entities 

involved in the criminal debt collection process did not adequately 

coordinate their efforts or share financial information about offenders, 

they weakened the government’s ability to increase collections. Of the 

$3.76 billion of debt assessed in our high-dollar cases, approximately $148 

million (or about 4 percent) was collected through September 30, 1999. In 

addition, we estimate that 4 percent of the judgment amounts for our 

sampled population had been collected through September 30, 1999.
Chapter 3

Inadequate Criminal Debt Collection 

Processes and Lack of Coordination 

Contribute to Low Collection Rate

Page 41 GAO-01-664 Criminal Debt Collection

Figure 8: Reported Criminal Debt Outstanding and Collected From 

September 30, 1995, Through September 30, 1999

Source: Unaudited data provided by EOUSA.

Note: MVRA was enacted in 1996.

Financial Litigation 

Units

As stated in Standards for Internal Control in the Federal Government,

1

transactions should be promptly and accurately recorded to maintain their 

relevance and value to management in controlling operations and making 

decisions. Also, collection actions must be promptly performed, because, 

as industry statistics have shown, the likelihood of recovering amounts 

owed decreases dramatically with the age of delinquency. Many of the 

0

2

4

6

8

10

12

14 Dollars in billions

Collected for the fiscal year ended September 30

Outstanding balance as of September 30

1995 1996 1997 1998 1999

1

Standards for Internal Control in the Federal Government (GAO/AIMD-00-21.3.1, 

November 1999).
Chapter 3

Inadequate Criminal Debt Collection 

Processes and Lack of Coordination 

Contribute to Low Collection Rate

Page 42 GAO-01-664 Criminal Debt Collection

outstanding debts as of September 30, 1999, were over 3 years old (see 

figure 9).

Figure 9: Age of Reported Criminal Debts Outstanding as of September 30, 1999

Source: Unaudited EOUSA data.

In reviewing our selected cases at the four FLUs we visited, we found that 

the FLUs did not always follow their established procedures or lacked 

procedures for performing the following actions in a timely manner:

• entering cases into their tracking systems;

• filing liens;

• performing asset discovery work, such as researching asset databases;

• using other enforcement techniques, such as wage garnishment;

• monitoring and reassessing cases;

• sending demand, delinquent, or default letters; and

• assessing interest and penalties.

0

1

2

3

4

5

6

7

8 Dollars in billions

Less than 1 1 to 3 Over 3

Years from judgment date
Chapter 3

Inadequate Criminal Debt Collection 

Processes and Lack of Coordination 

Contribute to Low Collection Rate

Page 43 GAO-01-664 Criminal Debt Collection

We also found that the lack of asset investigators, as well as the limited 

number of collection staff, a historical problem for the FLUs, weakens their 

ability to aggressively follow up on and enforce collections. In addition, we 

found that the FLUs’ tracking systems do not capture certain data, such as 

court-ordered terms or status of offender, that are needed to effectively 

assist in managing the debt portfolio.

Entering Cases into the 

FLUs’ Tracking Systems

The EOUSA Resource Manual, along with local guidance for the four FLUs 

we visited, outlines the procedures that should be followed once the FLU 

receives a JCC. According to this guidance, the FLUs are to enter criminal 

debts into their collection tracking systems in a “timely fashion,” but no 

later than 14 days after receiving the JCC. Although procedures exist for 

entering the data, we noted during our reviews that no policies or 

procedures existed to ensure that a copy of the JCC is promptly sent to the 

FLUs.

18 U.S.C. Sec. 3612(b)(2) requires the clerk’s office to transmit a certified 

copy of the JCC to the Attorney General (i.e., USAO) within 10 days after 

the judgment or order. However, according to FLU officials, this copy is 

typically sent to the prosecuting attorney within the USAO’s Criminal 

Division and not to the FLU within the USAO’s Civil Division. The 

prosecuting attorney is to then forward a copy to the FLU. Since the FLUs 

we visited were not required to, and did not typically, stamp the date they 

received a copy of the JCC, we were unable to determine when they 

received the copy and how long they had the copy before entering the 

criminal debt information into their systems.

The average length of time for entering the 44 high-dollar cases was 288 

days; for the sampled population, we estimate that the length of time was 

289 days.2

 For most cases, FLU officials could not provide us with 

explanations as to why these cases were not entered into their tracking 

systems within 303

 days of the JCC date. Unless the FLUs promptly receive 

a copy of the JCC and promptly enter the data into the tracking systems, 

2

Because the FLUs did not typically stamp the date that they received the copy of a JCC, we 

could only determine the time that had passed between the judgment date and the entry of 

the data.

3

The figure of 30 days was calculated by adding the 10 days authorized for the clerk to 

provide the JCC to the USAO plus the 14 days allowed by FLU guidance to enter JCC 

information into its tracking system, plus 6 nonbusiness days. 
Chapter 3

Inadequate Criminal Debt Collection 

Processes and Lack of Coordination 

Contribute to Low Collection Rate

Page 44 GAO-01-664 Criminal Debt Collection

time-sensitive collection actions, such as filing liens and performing asset 

discovery work, are delayed and opportunities to maximize collections 

may be missed.

Filing Liens FLUs are required to file notices of liens on offenders’ properties, pursuant 

to 18 U.S.C. Sec. 3613, to establish the government’s claims on these assets 

and to prevent the sale or transfer of such property. The first liens filed by 

the FLU are typically filed according to the offender’s home address; 

additional liens should be filed if the FLU identifies assets in other 

locations. The U.S. Attorneys’ Manual specifies that liens are required to be 

filed in all cases over $650 but does not establish a specific time frame for 

filing. Only one of the FLUs in the four districts we visited—the Southern 

District of Florida—had established a time frame for filing a lien; this 

district requires liens to be filed within 45 days of the judgment date. 

Instead of specifying a time frame, the other three districts require that 

liens be filed to “guarantee enforcement to the fullest extent of the law.”

However, during our reviews we found that liens often were not filed or not 

filed promptly.

Specifically, we found that required liens had not been filed in 10 percent of 

the high-dollar cases and in an estimated 30 percent of the sampled 

population. In another 27 high-dollar cases and 684

 random cases, we found 

that over 60 days5

 elapsed between the judgment date and when the lien 

was filed. The filing of liens is further delayed if judgments are not 

promptly received and entered into the collection tracking system. For the 

38 high-dollar and 966

 random cases in which liens had been filed, the 

average number of days from the date the case was entered into the system 

until a lien was filed were 142 and 356 days, respectively; and from the 

judgment date to filing were 410 and 639 days, respectively.

In most cases, the FLUs were not able to determine why a lien was not filed 

or not promptly filed. Not promptly filing liens or not filing them at all 

4

See footnote 10 in executive summary.

5

The figure of 60 days was calculated by using the 45 days established by the Southern 

District of Florida plus 15 days.

6

See footnote 10 in executive summary. Also, we were unable to determine the date a lien 

was filed in four high-dollar and 12 random cases in which liens had been filed. Therefore, 

these cases were not used to calculate the average days.
Chapter 3

Inadequate Criminal Debt Collection 

Processes and Lack of Coordination 

Contribute to Low Collection Rate

Page 45 GAO-01-664 Criminal Debt Collection

significantly increases the potential for offenders to liquidate their assets 

and avoid repaying debts owed to the government. For example, an 

offender in our selection was fined $25,000 in 1989. During 1991, the 

offender reported receiving net proceeds of $180,000 from selling a home 

and $18,000 from selling a boat (the offender did not specify whether the 

proceeds from the sale of the boat were gross or net). The offender’s last 

payment was received in 1995. As of May 2000, no lien had been filed, and 

the offender owed over $15,000 plus over $13,000 of interest. According to 

FLU officials, the file does not indicate why the lien was not filed. Had the 

FLUs promptly filed a lien, the proceeds from these sales might have been 

applied towards payment of the fine.

Performing Asset Discovery 

Work

The U.S. Attorneys’ Manual specifies that the USAO should “execute on”

(i.e., seize) an offender’s property as soon as possible after sentencing. 

According to this manual, in order to identify property owned by the 

offender, the USAO should “promptly and vigorously” perform asset 

discovery work, which includes procedures such as reviewing the presentence report, requesting financial statements and tax returns from the 

debtor, obtaining credit reports, and researching on-line property locator 

services. However, we found that the four FLUs we visited performed very 

limited asset discovery work and that established procedures did not 

specifically identify when these procedures were required to be performed. 

For example, in 48 percent of the high-dollar cases and in an estimated 

66 percent of the sampled population we found no evidence that the FLU 

attempted to identify the debtor’s assets. According to USAO officials, asset 

discovery work is performed only if the FLU believes, based on its 

judgment, that the offender may have assets. Moreover, there is no 

requirement to document these judgments or whether they were made.

Not promptly identifying whether an offender has assets increases the risk 

that the offender may have time to hide or liquidate assets that could have 

been available to pay toward the debt. For example, an offender was 

convicted of tax fraud, sentenced in 1994, released from supervision in 

1995, and ordered to pay about $344,000 in restitution. As of May 2000, the 

offender had paid only $750. Our review of the FLU file showed that the 

FLU did not perform asset discovery work before May 2000. Since this 

offender had been selected for our review, the FLU performed an asset 

search to identify assets that could possibly be liquidated and also 

scheduled a deposition with the offender to determine whether there were 

assets that could be liquidated. However, over 6 years has passed since the 
Chapter 3

Inadequate Criminal Debt Collection 

Processes and Lack of Coordination 

Contribute to Low Collection Rate

Page 46 GAO-01-664 Criminal Debt Collection

offender was sentenced; therefore, the offender could have previously 

liquidated or hidden his assets.

We also found that district guidance at the four FLUs we visited specifies 

that asset discovery work should be performed, but the guidance does not 

(1) establish time frames for performing the work or (2) prioritize debt 

cases based on factors that indicate increased potential for collections. 

Lack of time frames and prioritization increases the risk of delays in 

performing asset discovery work and thereby the potential for missing 

opportunities to maximize collections. In addition, asset discovery work is 

further delayed if the judgment is not promptly received and the 

information is not promptly entered into the case tracking system. Factors 

that could help prioritize collection efforts include the type of crime or the 

type of victim. For example, collection rates tend to be higher for offenses 

related to white-collar crimes than for those related to violent crimes. Or 

cases involving hundreds of nonfederal victims may take higher priority 

over those with a relatively insignificant fine amount owed to the federal 

government.

Using Other Enforcement 

Techniques

The U.S. Attorneys’ Manual states that USAOs are to “litigate vigorously” to 

enforce the collection of debts “to the fullest extent of the law” and that the 

“government should execute on an offender’s property as soon as 

practicable after sentencing.” FLUs are authorized by law to perform a 

wide range of enforcement techniques, such as wage garnishment and 

asset seizure, to collect criminal debt. If offenders willfully do not pay their 

criminal debt, FLUs can summon them to appear in court. In court, 

offenders can be ordered to answer questions under oath or in writing 

about their financial status or explain why they have not complied with the 

court’s order for paying a debt. FLUs can also obtain a court order, called a 

writ of execution, that permits the U.S. Marshals Service to seize an 

offender’s property as complete or partial payment of a fine or restitution. 

Writs of execution can also be applied against an offender’s income or bank 

account in a process called garnishment.

In October 1985, we reported7

 that the FLUs we visited rarely used the 

techniques we have just discussed due to several factors, including limited 

resources. Based on our reviews at the four districts we visited, the FLUs 

7

GAO/GGD-86-02, October 10, 1985. The FLUs were referred to as collection units when this 

report was issued. 
Chapter 3

Inadequate Criminal Debt Collection 

Processes and Lack of Coordination 

Contribute to Low Collection Rate

Page 47 GAO-01-664 Criminal Debt Collection

are still rarely using any of these enforcement techniques, and the guidance 

does not specify when and how frequently these techniques should be 

used. For example, we found only one case in which the FLU garnished 

wages. According to FLU officials, enforcement techniques are not pursued 

until the FLU determines that an offender has assets or sufficient earnings 

and is willfully not paying amounts owed. However, as noted above, the 

FLU is performing limited asset discovery work to determine whether 

assets do exist that could be pursued, as indicated in the example where 

the FLU performed an asset search in May 2000, 5 years after the offender’s 

release from supervision, and only after the case had been selected for our 

review. Based on that search, the FLU scheduled a deposition with the 

offender to determine whether there were assets that could be liquidated. 

In another example, an offender was convicted of embezzlement, false 

imprisonment, and tax evasion and was sentenced in 1998 to 20 months of 

imprisonment and 3 years of probation. The offender was also ordered to 

pay approximately $67,000 in restitution in monthly installments of at least 

10 percent of gross monthly income. After sentencing, but before 

surrendering for incarceration, the offender sold property and realized a 

profit of about $13,000. According to FLU officials, the FLU could have 

forfeited the property, but they could not explain why this option was not 

pursued.

Monitoring and Reassessing 

Cases

The FLUs use event codes8 in their collection tracking systems to 

document actions taken to pursue collection and the status of cases. 

According to the U.S. Attorneys’ Manual, criminal debts that are placed in 

suspense must be periodically reviewed to determine whether the 

offender’s status has changed and to reassess the offender’s ability to pay 

(see table 3). For example, the code “DDNL” is used to place an account in 

suspense when a debtor cannot be located. This policy allows FLUs to keep 

criminal debts “open” as legally required while limiting the time and effort 

to be spent on a case. According to the manual, debts placed in suspense 

must be periodically reviewed to reassess an offender’s ability to pay.

8

An event code is a code entered into the FLU database that identifies a collection action 

(e.g., lien filed) or why a debt should be placed in suspense (e.g., no ability to pay).
Chapter 3

Inadequate Criminal Debt Collection 

Processes and Lack of Coordination 

Contribute to Low Collection Rate

Page 48 GAO-01-664 Criminal Debt Collection

Table 3: Required Frequency of Review for Criminal Debts in Suspense

Source: U.S. Attorneys’ Manual.

In September 1993, Justice’s Office of the Inspector General (OIG) reported 

that the FLUs were not adhering to the prescribed policies for reviewing 

debts in suspense. During our reviews, we also found that the FLUs we 

visited were still not consistently using the event codes, including suspense 

codes, and they were not following their prescribed procedures for 

reassessing an offender’s ability to pay. Specifically, we found that the 

event code as of September 30, 1999, was inconsistent with the information 

in the case file for 14 percent of the high-dollar cases and for an estimated 

20 percent of the sampled population. For example, an offender was fined 

$100,000 in October 1989. The offender reported over $420,000 in net worth 

on a personal financial statement dated September 1989 and was making 

payments towards the fine until September 1997, at which time the 

offender still owed $82,000 plus interest and penalties. However, the FLU 

had not reviewed the case from September 1997 through April 2000, well 

over the 1-year frequency-of-review guidelines for debt over $25,000.

In addition, the FLUs did not promptly monitor cases and update their 

records, resulting in an inaccurate principal balance in EOUSA records. In 

40 percent of the high-dollar cases and for an estimated 65 percent of the 

sampled population, the FLU had not revisited the case within established 

time frames. For example, an offender in our selection was ordered to pay 

restitution of $20 million in November 1991. The offender had paid over 

$50,000 before his death in 1993. However, as of September 30, 1999 (over 6 

years after the offender’s death), the FLU was showing that the offender 

still owed a balance of over $19.9 million. Had the FLU revisited this case in 

a timely manner, this amount would have been written off.

We found that the September 30, 1999, balance for GAO-selected cases was 

overstated by more than $450 million. Five of the high-dollar cases we 

reviewed involved one case with several defendants who were jointly and 

severally liable for all or some parts of the total restitution owed. To avoid 

double counting in joint-and-several cases, the FLUs are to open one record 

Debt amount Frequency of review (at a minimum)

Greater than $25,000 Each year

$25,000 to greater than $10,000 Every 2 years

$10,000 or less Every 3 years
Chapter 3

Inadequate Criminal Debt Collection 

Processes and Lack of Coordination 

Contribute to Low Collection Rate

Page 49 GAO-01-664 Criminal Debt Collection

for the lead defendant and track all other codefendants or coparticipants 

under the lead defendant’s record. However, the FLU inappropriately 

opened separate records for these defendants, thereby overstating the 

amount owed as of September 30, 1999, by more than $430 million.

Sending Demand, 

Delinquent, and Default 

Letters

The EOUSA Manual requires the FLUs to send a demand letter to offenders 

“as soon as” a case is entered into the criminal tracking system, notifying 

offenders of their debt and the consequences of not paying the debt (i.e., 

interest and penalties would be assessed). While three of the four districts 

in our review have incorporated this guidance into their local procedures, 

local procedures for the fourth, the Central District of California, state that 

the FLU should not send demand letters to an offender who is under the 

supervision of a probation officer.

In October 1985, we reported that demand letters were sent in only 17 

percent of the cases reviewed in five districts, and of those sent, the 

average number of days the FLUs took to send the letters was 143.9

 Not 

sending or not promptly sending demand letters continues to be a problem 

for the USAOs. The problem could be attributed, in part, to the lack of 

specific guidance as to when demand letters should be sent. For example, 

EOUSA guidance states that demand letters be sent “as soon as” a case is 

entered into the criminal tracking system; however, it does not address 

situations that may not be applicable to this guidance, such as debts 

entered into the tracking system that are not yet due.

We found that the FLUs had not sent demand letters required by the 

EOUSA Manual in 69 percent of the high-dollar cases and in an estimated 

45 percent of the sampled population. Sending demand letters is further 

delayed by the amount of time it takes the FLUs to receive the judgments 

and enter information from them into their tracking systems. For the highdollar and random cases for which demand letters were sent, the average 

number of days the FLUs took to send the first letter from the date the 

judgment was entered into the tracking system, was 163 and 43310 days, 

respectively. Also, for those same high-dollar and random cases, the

9

GAO/GGD-86-02 , October 10, 1985.

10See footnote 10 in executive summary.
Chapter 3

Inadequate Criminal Debt Collection 

Processes and Lack of Coordination 

Contribute to Low Collection Rate

Page 50 GAO-01-664 Criminal Debt Collection

average number of days the FLUs took, from the judgment date, to send the 

first letter was 481 and 71211 days, respectively.

In accordance with 18 U.S.C. 3612(d), delinquency notices should be sent 

within 10 working days after a fine or restitution is determined to be 

delinquent (i.e., a payment more than 30 days late). A payment that is not 

made within 90 days after it is determined to be delinquent is in default, and 

a default notice should be sent within 10 working days. However, we found 

that neither delinquency nor default notices were sent in 21 of the 24 highdollar cases and 58 of the 101 random cases12 in which the debt was 

determined to be delinquent or in default. Failing to promptly inform an 

offender of the penalties for not making payments diminishes the incentive 

for the offender to make prompt payments.

Assessing Interest and 

Penalties

In accordance with 18 U.S.C. 3612(f), interest and penalties are required to 

be assessed on unpaid fines or restitution13 over $2,500 unless the court 

waives this requirement (i.e., if the judge specifically states in the JCC that 

interest and/or penalties are waived). The law also permits the Attorney 

General to waive interest and penalties if it is determined that efforts to 

collect are not likely to be effective. However, according to the U.S. 

Attorneys’ Manual, a determination of whether to waive interest and 

penalties should be considered only after the principal has been paid.

In September 1993, the Justice OIG reported that 8 of the 10 offices they 

visited did not pursue penalties and that 2 had waived both interest and 

penalties for all delinquent debts. The OIG recommended that the EOUSA 

emphasize the need for assessing interest and penalties. However, we 

found that the four FLUs we visited still were not consistently assessing 

interest and penalties. While in some instances, the FLUs assessed required 

interest, in 4 out of 7 high-dollar and in 1214 out of 49 random cases that 

required interest and penalties to be assessed, the FLUs had not done so. 

Moreover, the FLUs generally do not assess penalties. EOUSA officials

11See footnote 10 in executive summary.

12See footnote 10 in executive summary.

13Prior to MVRA, interest and penalties were not required to be assessed on restitution 

debts. 

14See footnote 10 in executive summary.
Chapter 3

Inadequate Criminal Debt Collection 

Processes and Lack of Coordination 

Contribute to Low Collection Rate

Page 51 GAO-01-664 Criminal Debt Collection

believe that assessing interest and penalties is not productive because the 

principal debt itself is often difficult to collect. As shown in table 4, 

inconsistently applying interest and penalties leads to inconsistent data and 

an understated balance.

Table 4: Examples of Inconsistencies in Applying Interest 

Source: Data obtained from FLU files and unaudited EOUSA data.

According to the EOUSA database, as of September 30, 1999, the 

outstanding debt balance included over $400 million of interest and 

penalties assessed by the FLUs. However, because the FLUs do not 

consistently assess interest and penalties, the reported amounts do not 

accurately represent how much total principal, interest, and penalties are 

due. In addition, failure to assess interest and penalties reduces the amount 

that could be recovered and passed along to victims or the federal 

government and eliminates a tool designed to provide debtors an incentive 

for prompt payments.

Human Capital Issues Effective and prompt collection actions are affected by the adequacy of 

human resources. We recently designated human capital a governmentwide 

high-risk area,15 emphasizing that an organization’s people—its human 

capital—are its most critical asset in managing for results. Our high-risk 

report explains that human capital problems lead to programmatic 

problems and risks and that human capital shortfalls are eroding the ability 

of many agencies to effectively, efficiently, and economically perform their 

mission. In addition, according to the Comptroller General’s Standards for 

Internal Control in the Federal Government,

16 only when the right 

personnel for the job are on board and are provided the right training, 

Judgment date

Judgment

amount Interest applied

Payments

received

Balance as of

September 30, 1999

April 15, 1993 $13,250,000 $23,174,496 $200 $36,424,296

August 22, 1997 $37,372,826 $0 $0 $37,372,826

15High-Risk Series: An Update (GAO-01-263, January 2001).

16GAO/AIMD-00-21.3.1, November 1999.
Chapter 3

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Processes and Lack of Coordination 

Contribute to Low Collection Rate

Page 52 GAO-01-664 Criminal Debt Collection

tools, structure, incentives, and responsibilities is operational success 

possible.

The lack of asset investigators and the limited number of collection staff 

have presented a historical problem for the FLUs. In October 1985, we 

reported that debt collection, especially criminal debt collection, receives 

low priority and suffers from staffing problems.17 In that report, we stated 

that personnel spent more time on accounting for criminal fines than on 

enforcing collection. We also reported that the FLUs, who are responsible 

for civil and criminal collections, were staffed with one attorney and from 1 

to 10 collection clerks, depending on the size of the district (generally the 

same staffing levels as in 1999). In July 1990, we reported that FLUs stated 

that they have insufficient trained staff to aggressively follow up on and 

enforce collections.18 In September 1993, the Justice OIG reported that as 

data entry responsibilities increase, less time is spent on actual criminal 

debt collection actions.

Staffing levels for the four FLUs we visited have only slightly increased 

from an average of 8.7 individuals during 1995 to 9.3 individuals during 

1999, even though the number of assessments and debts pending have 

significantly increased. Specifically, the number of debts pending for the 

four FLUs we visited increased from an average of 4,406 to 6,373 cases per 

district, or about 45 percent, and the average dollar amount of outstanding 

debts per staff increased by over 160 percent. Table 5 reflects the average 

number of criminal cases compared with the average number of staff (i.e., 

workload) for fiscal years 1995 and 1999 for the four FLUs we visited. In 

addition to the criminal case workload data presented in table 5, the FLUs 

are also responsible for collecting civil debt that other federal agencies 

refer to them. The number of outstanding civil debts for all FLUs increased 

from 44,786 debts as of the end of fiscal year 1995 to 146,421 at the end of 

fiscal year 1999.

17GAO/GGD-86-02, October 10, 1985. 

18U.S. Department of Justice: Overview of Civil and Criminal Debt Collection Efforts

(GAO/T-GGD-90-62, July 31, 1990).
Chapter 3

Inadequate Criminal Debt Collection 

Processes and Lack of Coordination 

Contribute to Low Collection Rate

Page 53 GAO-01-664 Criminal Debt Collection

Table 5: Average Number of Criminal Cases Per Staff, Fiscal Years 1995 and 1999, 

for the Four FLUs We Visited

Source: EOUSA.

Further, none of the four FLUs we visited had full-time resources 

dedicated19 to or specializing in performing searches to identify hidden 

assets, and they had few resources available for enforcing collections. 

When assets are not promptly identified, offenders have more time to hide 

fraudulently obtained assets, such as funds in offshore accounts, shell 

corporations, or family members’ names and accounts. Once assets are 

identified, the FLUs should pursue collection through the use of 

enforcement techniques (i.e., legal remedies); however, most of the 

individuals assigned to the FLUs we visited were not attorneys or 

paralegals, whose skills are needed to pursue such techniques.

EOUSA officials have historically recognized the need for additional 

training and staff, but they indicate that budget constraints limit the FLUs’

ability to provide the additional training or hire additional staff that would 

enable them to collect debt more effectively. In addition, an official from 

the FLU in the Southern District of New York in Manhattan indicated that 

this district often has difficulty in filling its lower-paying positions, such as 

those for debt collection agents.

In conjunction with documenting our initial understanding of the debt 

collection process, we visited the Northern District of California. During 

this visit, we were briefed on a project that this district had initiated in 1999 

to employ dedicated asset investigators. According to the EOUSA, the 

project, which provided for one full-time and four part-time former 

criminal investigators, has been very successful. The district reported that 

over 1,000 cases were investigated and over $10 million has been or is in 

the process of being recovered as a result of those investigations. As noted

Fiscal year

Number of

cases

Number of

staff

Average number

of cases per

staff

Average dollar amount

of cases per staff

1995 4,406 8.7 506 $57.2 million

1999 6,373 9.3 685 $150.9 million

19One of the FLUs we visited had individuals from the U.S. Marshals Service assist in asset 

discovery work on a part-time basis.
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above, three of the four districts where we performed our testing did not 

have dedicated asset investigators, and the collection staff was not 

performing significant asset discovery work.

FLU Tracking Systems The FLUs’ tracking systems do not capture key information needed for the 

FLUs and EOUSA to effectively manage the debt portfolio. As we reported 

in June 1994,20 the FLUs’ tracking systems do not indicate the terms of the 

fine or restitution orders. This continues to be a problem for the FLUs we 

visited. For example, although a JCC may state that an offender owes at 

least a certain amount on a periodic basis, this information would not be 

reflected in the systems. The tracking systems also do not capture an 

offender’s expected release dates from prison and probation, information 

that could assist the FLUs in determining time frames for reassessing an 

offender’s ability to pay. In addition, the systems do not permit the FLUs to 

allocate outstanding debts between amounts likely to be collected and 

those not likely to be collected. For example, even if an offender is making 

monthly installment payments, the FLU must either put the entire balance 

in suspense or none of the balance in suspense.

Probation Offices The four probation offices we visited did not consistently adhere to certain 

policies and procedures for developing pre-sentence reports and collecting 

criminal debt. The AOUSC provides guidance to probation officers for (1) 

developing pre-sentence reports, (2) establishing installment schedules, 

and (3) monitoring installment schedules. However, we found that the 

probation offices we visited were not always following these procedures, 

thereby decreasing the usefulness of financial information in pre-sentence 

reports and the potential for maximizing criminal debt collections. In June 

1998,21 we recommended that the AOUSC establish, as policy, specific 

guidance on how probation officers should determine how offenders 

should pay their fines and restitution, including criteria establishing what 

types of assets should be considered for immediate lump-sum payments or 

substantial payments, how installment schedules should be established, 

and the type and amount or range of expenses that should ordinarily be 

considered necessary when determining the amount of payments under 

20GAO/T-GGD-94-178, June 28, 1994. 

21Fines and Restitution: Improvement Needed in How Offenders’ Payment Schedules Are 

Determined (GAO/GGD-98-89, June 29, 1998).
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installment schedules. To address these recommendations, the AOUSC 

issued revised guidance in September 2000 that, if properly implemented, 

should help address the reported weaknesses. However, as the AOUSC and 

we pointed out in that report, unless probation officers effectively 

implement these guidelines, such weaknesses will continue to exist.

Developing Pre-Sentence 

Reports

Prior to sentencing, probation officers perform “financial investigations” of 

offenders’ financial condition for inclusion in pre-sentence reports. This 

includes collecting, verifying, and analyzing financial information regarding 

the offender. Probation officers depend on offenders to provide certain 

financial information; however, offenders are not always cooperative. In 10 

of the 42 high-dollar and 18 of the 125 random cases22 we reviewed, the 

offender did not provide this information, thus decreasing the usefulness of 

the pre-sentence report for debt collection purposes.

Regardless of whether the offender provides this information, probation 

officers are responsible for taking steps to determine an offender’s ability 

to pay, such as obtaining pay stubs, reviewing tax returns, searching for 

assets, and running credit reports. However, in 20 of the 42 high-dollar and 

40 of the 125 random cases,23 we found that probation officers did not take 

adequate steps to develop the financial condition section of the presentence report. For example, one probation officer included information 

provided by the offender and obtained a credit report to verify liabilities 

but did not take the steps needed to identify assets or verify income. In 

another case, the offender did not provide information, and there was no 

evidence in the file that the probation officer attempted to obtain financial 

information by other means. The probation officer for another case 

obtained prior years’ income tax returns to verify income information 

provided by the offender but did not take the steps needed to identify 

assets. Since the offender most likely would not report income obtained 

through criminal activities on his tax returns, other steps should have been 

taken to assess the reasonableness of reported income versus the 

offender’s lifestyle.

Probation officials indicated that they often have limited time frames for 

preparing the pre-sentence reports and have to obtain the offender’s 

22See footnote 10 in executive summary.

23See footnote 10 in executive summary.
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consent and cooperation to obtain certain information and documents 

(e.g., tax returns). Further, probation officials have indicated that their 

investigations focus on analyzing information provided by the offender and 

not necessarily on identifying unreported assets.

Establishing Installment 

Schedules

According to 18 USC 3572(d), offenders should pay their fines and 

restitution “immediately, unless, in the interest of justice, the court 

provides for payment on a certain date or in nominal installments.” As 

noted earlier, depending on the district, installment schedules are 

established by a judge and documented in the JCC or by probation officers 

while an offender is under their supervision. Therefore, once a probation 

officer is supervising an offender, the officer either (1) monitors the courtordered installment schedule or (2) establishes and then monitors the 

installment schedule. Probation officers were required to establish 

installment schedules in 10 of the 42 high-dollar cases and in 72 of the 125 

random cases. However, probation officers did not establish installment 

schedules in 3 of the 10 high-dollar cases and 15 of the 72 random cases24 as 

required. In the other cases, the probation officers were not required to 

establish an installment schedule because the (1) offender was still in 

prison or (2) the court stipulated an installment schedule. As discussed in 

chapter 2, judges may stipulate payment terms in the JCC. These terms can 

influence actions taken by probation officers and the FLUs to collect 

criminal debt. See table 6 for the status of offenders in our selected cases 

as of May 2000.

24See footnote 10 in executive summary.
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Table 6: Status of Offenders in GAO’s Selected Cases

a

In circumstances in which attributes do not apply to all cases, estimating the results to an appropriate 

population would introduce significant sampling error intervals. Therefore, we have presented only the 

actual results for the applicable cases in each circumstance. See footnote 10 in executive summary.

Source: Data obtained from probation files.

Unless a court has set a payment schedule, probation officers should 

establish installment schedules (or reassess court-established schedules) 

to collect outstanding criminal debt from offenders once they are released 

to their supervision. Probation officers should recommend that offenders 

make a full lump-sum or a significant one-time partial payment based on 

their ability to pay and establish an installment schedule for the balance not 

paid. The guidelines require probation officers to request that offenders 

periodically report on their financial circumstances by preparing personal 

financial statements listing their assets—such as bank accounts, securities, 

and real estate—that could be used for lump-sum payments against their 

fines and restitution. The FLU should be notified if lump-sum payments are 

made, and identified assets should be reported to the FLU so it could 

pursue collection. According to AOUSC guidelines, probation officers 

should set an installment payment schedule based on the offender’s 

monthly cash flow if full payment is not possible. The monthly cash flow is 

determined by deducting necessary monthly expenses from monthly 

income. Necessary expenses are broadly defined as those for the offender’s 

continued employment and for the basic health and welfare of the 

offender’s dependents, which could include home rent or mortgage, 

utilities, groceries and supplies, insurance, transportation, medical 

treatment, and clothing.

We found deficiencies in the establishment of installment schedules, 

including inadequate recommendations for significant partial payments, in

Status High-dollar cases Random casesa

In prison 24 28

Under probation 8 32

Released from prison and 

probation

8 64

Other (e.g., fugitive, deported, 

died)

2 16
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3 of 7 high-dollar and 16 of 57 random cases25 in which installment 

schedules were established. Specifically, we found that probation officers 

did not consider an offender’s reported assets, such as bank accounts and 

second homes that might have been available for full or partial payment of 

a fine or restitution. Instead, probation officers typically established 

installment schedules and did not recommend lump-sum payments or 

liquidation of assets. For example, an offender was convicted of tax fraud 

in September 1994, sentenced to 5 months in prison and 1 year probation, 

and ordered to pay approximately $344,000 in federal restitution. Although 

the offender reported having significant assets on his financial submission 

for use in preparing the pre-sentence report, the probation officer did not 

recommend a significant partial payment. Instead, the probation officer 

established a $25-per-month installment schedule which the offender 

stopped paying after he was released from probation. Even if the offender 

had continued to make these payments, it would have taken over 1,000 

years for the debt to be paid off.

We also found that probation officers used arbitrary methods, such as 

negotiated amounts and good-faith payments, to establish the installment 

payment schedules, instead of linking them to income, expenses, or other 

financial criteria as required. For example, an offender who was ordered to 

pay $5,900 in restitution entered into a payment agreement with the 

probation office that called for $10 monthly payments, even though 

financial submissions indicated that the offender had a positive monthly 

cash flow (income minus necessary monthly expenses) of about $360. At a 

rate of $10 a month, it would take the offender over 49 years to pay off the 

debt.26

Monitoring Installment 

Schedules

Offenders under supervision are to submit to their probation officers

(1) monthly supervision reports listing income and necessary expenses and 

(2) on a less frequent basis, updated personal financial statements. 

Probation officers are required to scrutinize these reports, including the 

type and amount of offender-reported “necessary expenses.” In addition, 

probation officers may request that offenders increase or decrease 

installment payment amounts if their ability to pay changes (with court 

25See footnote 10 in executive summary.

26According to FLU guidance, monthly payments should be at least $60 in order for them to 

be cost effective. 
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approval if the court set the payment schedule). However, we found that 

probation officers did not follow their guidelines for reviewing an 

offender’s financial circumstances. Following the guidelines could have 

allowed for increased installment payments for 1 of the 13 high-dollar and 

12 of the 77 random cases27 in which an installment schedule had been 

established by either the probation officer or the judge. We also found that 

in the cases in which the judge set a minimum amount that must be paid or 

set other payment terms, probation officers typically did not recommend 

increased payment amounts or liquidation of assets, even if an offenders’

financial circumstances improved (see examples and related discussion in 

chapter 2).

For example, for the offender with the $25-per-month payment, the 

probation officer did not attempt to increase the amount even though the 

offender reported (1) significant assets on his financial submission for use 

in preparing the pre-sentence report, (2) ownership of two vehicles (a 1990 

Lexus and a 1991 Ford Bronco), (3) a net positive cash flow on his monthly 

reports, and (4) bank accounts without listed balances. In another 

example, an offender was convicted of mail fraud, sentenced in 1998 to 3 

years of probation, and ordered to pay restitution in the amount of $12,000. 

The judge ordered restitution to be paid in $100 quarterly payments (i.e., 

$33 per month) unless modified by the probation officer. For the July 1999 

reporting period, 9 months after being sentenced, the offender reported a 

positive monthly cash flow of over $1,500; however, the probation officer 

did not recommend that the payment amount be increased. Not adequately 

monitoring an offender’s financial circumstance results in missed 

opportunities to seek an increase in an offender’s installment payments.

Probation officers have considerable leverage over an offender under 

supervision and can take actions if offenders are not making agreed-upon 

installment payments. For example, probation officers can withhold 

consent for a debtor to travel outside the district, or they can seek to 

revoke probation. Even though installment payments typically range from 

$25 to $100 per month, offenders do not always make the agreed-upon 

installment payments. In several cases, we found no evidence that 

probation officers took action to enforce the installment schedules (i.e., 

sought to revoke probation and send the offender back to prison) when the 

offender failed to make agreed-upon installment payments. Probation 

officers indicated that they must prioritize their time in light of the number 

27See footnote 10 in executive summary.
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of offenders they are supervising. They stated that their first priority is to 

ensure that offenders do not engage in criminal activity or violate other 

terms of probation (e.g., are not using drugs during the probation period).

However in a couple of instances, we found that when probation officers 

recommended against an offender being released from probation based on 

nonpayment of criminal debt in accordance with an established installment 

schedule, the judges rejected the recommendations. For example, in April 

1999, a judge for one of our sample cases granted an offender an early 

release from probation even though the probation office had recommended 

against the release stating that the offender, who had been convicted of 

mail fraud in April 1997 and ordered to pay $175,000 in restitution, had not 

made sufficient restitution payments. Before his release, the offender had 

paid only $600. As of June 2000, the last payment from this offender was for 

$50 received in May 1999.

Coordination Among 

the Entities Involved

In over half the cases we reviewed at the four districts visited, we found 

little evidence of coordination among the entities involved in assessing and 

collecting criminal debt and a lack of policies and procedures to ensure 

that efforts are coordinated. For example, we found little evidence that 

prosecutors and probation officers had shared financial information with 

FLUs, thus potentially weakening the FLUs’ ability to assess an offender’s 

ability to pay. In addition, we found that FLUs typically were not 

monitoring the collection efforts of probation officers, as advised by the 

U.S. Attorneys’ Manual, and that, contrary to district procedures, probation 

officers were not informing FLUs of an offender’s upcoming release from 

probation. Furthermore, at the four districts we visited, the FLUs and the 

clerks’ offices maintained separate databases to track criminal debt 

collections. This lack of coordination is a long-standing problem that has 

not been adequately addressed. The failure to adequately address this 

problem results in inefficient processes and duplication of efforts. Because 

of the many agencies and districts involved in assessing and collecting 

criminal debt—including two branches of the federal government and 94 

districts—enhancing the effectiveness and efficiency of criminal debt 

collection hinges on these entities working together.

Sharing Financial 

Information With FLUs

Investigating agencies and prosecuting attorneys typically obtain 

substantial financial information concerning criminal debtors during the 

investigation of a case and prosecution of offenders. However, no national 

requirements exist for sharing financial information with the FLUs, and 
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only two of the four districts we visited have incorporated specific (but 

different) procedures for sharing financial information in their MOUs.

The Justice OIG reported in September 1993 that (1) prosecuting attorneys 

(who are on the criminal side of the USAOs) did not always provide the 

FLUs (who are on the civil side of the USAOs) with available financial data 

on a regular, systematic basis and (2) no formal requirement exists for 

attorneys to provide this financial information to the FLUs. The OIG 

recommended that a formal national requirement be established for 

prosecuting attorneys to provide debtor financial information to the FLU 

staff after an offender has been sentenced. However, based on our case file 

reviews, we found that sharing financial information with the FLUs 

continues to be a problem in the four districts we visited. Specifically, in 

52 percent of the high-dollar cases and in an estimated 61 percent of the 

sampled population, we found no evidence in the FLU files of 

correspondence with the investigating case agents or prosecuting 

attorneys. According to FLU officials, this type of correspondence may 

have occurred but was not documented in the case file. As stated in the 

Standards for Internal Control in the Federal Government,

28 internal 

control and all transactions and other significant events need to be clearly 

documented and the documentation should be readily available for 

examination.

After an offender is sentenced, district guidance requires the FLUs to 

obtain a copy of the financial information contained in the pre-sentence 

report from either the probation officers or the prosecuting attorney. In 

October 1985, we reported that guidance did not exist for probation offices 

to share information with the FLUs and that probation officers did not 

routinely provide such information to the FLUs. In September 1993, the 

Justice OIG reported that 154 of 185 FLU files they reviewed did not 

contain a copy of the pre-sentence report. Recently issued guidance now 

specifically requires probation officers to share financial information from 

pre-sentence reports with the FLUs.

In most of the high dollar and random cases reviewed, we found no 

evidence in the FLU files that the FLUs had reviewed a copy of the presentence report. As a result of this lack of coordination, the FLUs do not 

have valuable financial information needed to assess an offender’s ability to 

pay, to enforce collections, and to reduce duplication of effort in identifying 

28GAO/AIMD-00-21.3.1, November 1999.
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assets. For example, an offender in our sample reported over $420,000 of 

net worth in a personal financial statement dated September 1989 that was 

used by the probation office to prepare the pre-sentence report. In another 

example, prior to sentencing, an offender provided a bank statement 

showing a balance of over $73,000; however, there was no evidence that 

actions were taken to pursue these funds. In both examples, there was no 

evidence in the FLU’s files that the FLU had obtained a copy of the presentence report. If the information had been shared with the FLUs, they 

could have used this report as a starting point for performing asset 

discovery work.

Communication Between 

FLUs and Probation Offices

In October 1985, we reported that although the U.S. Attorneys’ Manual 

advises the FLUs to monitor the collection efforts of probation offices, 

there was little involvement by the FLUs in probation office collections.29

The guidance requires the FLUs to maintain contact with probation offices 

regarding the offender’s compliance or failure to pay criminal debt. 

However, district guidance for the four districts we visited states that the 

FLUs are to assist the probation offices, if requested. During our reviews, 

we found that the FLUs typically did not monitor collection efforts of 

probation officers and that probation officers rarely requested assistance 

or notified the FLUs before an offender was released from probation. In 

general, the FLUs did not pursue collection until they determined that an 

offender had been released from probation.

In commenting on our June 1998 report related to establishing offender’s 

payment schedules,30 the AOUSC stated that greater emphasis should be 

placed on Justice’s role in collecting fines and restitution because Justice 

has primary responsibility for collecting criminal debt. We believe that the 

current district guidance, which states that FLUs should assist if requested, 

adversely affects the FLUs’ ability to enforce debt collection and puts them 

in a reactive instead of a proactive role.

For example, in March 1989, an offender was ordered to pay $26 million in 

restitution to hundreds of investors who had invested in the offender’s 

fraudulent company. In April 1995, the offender was released from prison 

and in 1997 made several payments before moving to a different district. In

29GAO/GGD-86-02, October 10, 1985.

30GAO/GGD-98-89, June 29, 1998.
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April 1999, he agreed to make $500 monthly payments to one of the 

financial institutions he owed money to plus 50 percent of the income from 

future speaking engagements and 100 percent of the income from the 

“movie rights” he sold pertaining to a published novel he wrote. As of June 

2000, the FLU had not pursued collection because, according to the FLU, 

the offender is “under the supervision of probation,” and the probation 

office had not requested its assistance. There have been no recorded 

payments since 1997. An Internet search that we performed revealed that 

the offender is involved in many activities from which he is most likely 

deriving additional income, including publications, a spot on a radio 

program, and a full-time salary.

Several months before an offender is to be released from probation with an 

outstanding debt, procedures at the four districts we visited require 

probation officers to notify the applicable FLU. However, there was rarely 

evidence of such notification in the FLU’s files. As we reported in chapter 3, 

the FLU’s tracking system does not adequately track the status of an 

offender; consequently, unless the probation officer notifies the FLU, the 

FLU will not always know when an offender is scheduled to be released 

from supervision. In 3 high-dollar and 731 random cases we reviewed, the 

offenders stopped making installment payments when they were released 

from supervision. In these instances, there was no indication in the file that 

the probation officer notified the FLU of the offender’s release or the status 

of the offender’s criminal debt obligations, including the terms of the 

installment agreement. For example, an offender was sentenced in October 

1989 to 2 years in prison and 5 years of probation for income tax evasion. 

The offender was also ordered to pay a $100,000 fine. During supervision, 

the offender made over $17,000 in payments, with the last payment 

occurring in September 1997, 1 month before the offender’s release from 

supervision. There was no evidence in the FLU file that it had been notified 

of the release, and no collection actions were taken by the FLU for this 

case until it was selected for our review in April 2000.

Lack of communication between the FLUs and the probation offices about 

offenders’ installment schedules, assets, and release dates hinders timely 

notification of the status of an offender’s compliance with payment 

arrangements and related events, thus decreasing the potential for 

collections.

31See footnote 10 in executive summary.
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Databases for Tracking 

Collections and 

Disbursements

In each of the four districts we visited, the clerk’s office and the FLU 

maintain separate databases to account for criminal debt collections, 

resulting in duplicative and inefficient data entry for both entities. Although 

the courts are responsible for processing collections and disbursements for 

most criminal debt, clerk’s office officials have stated that they do not have 

the systems in place to calculate required interest. Instead, the clerk’s 

offices rely on the FLUs’ tracking systems to calculate interest, if assessed. 

Posting information to these databases typically requires the exchange of 

hardcopy information between the clerk and the FLU so that both 

databases can be updated to properly reflect collections and 

disbursements. The National Fine Center (NFC) was supposed to eliminate 

this duplication; however, since the NFC effort failed (as noted in chapter 

1), both entities continue to maintain separate systems for tracking 

collections and disbursements.

Highlighting this inefficiency is the fact that each month both entities must 

post payments received from offenders participating in the Bureau of 

Prisons (BOP) Inmate Financial Responsibility Program (IFRP), in which a 

portion of prisoners’ earnings is used to pay their outstanding debt. 

Hundreds of inmates typically participate in the program. Monthly or 

quarterly payments received from each inmate are generally small dollar 

amounts, but they are collectively large in volume. For example, a typical 

monthly report from BOP for the Eastern District of New York contains 

about 400 inmate debt payments. Since both the FLU and the clerk’s office 

track payments, each entity must determine what debt balance (i.e., special 

assessment,32 fine, or restitution) to apply these 400 payments to and then 

post each payment. If the payment is for restitution, amounts collected 

must be prorated to the victims (sometimes hundreds of victims) before 

checks can be disbursed.

Maintaining these separate, nonintegrated systems also places greater 

emphasis on the need for timely coordination and communication so that 

data in these systems are accurate and the information is timely. For the 

cases we reviewed in which payments had been collected, there was 

typically a delay between the time that the clerk posted a payment and the 

time that the FLU posted the same payment. We also found that the FLUs 

typically did not inform the clerk of payments they received, resulting in

32Special assessments are fixed amounts assessed for each count on which the defendant is 

convicted, typically ranging from $5 to $200 per count. Payments received from offenders 

apply first to special assessments, then to restitution, and then fines.
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several significant differences in the payment records. For example, an 

offender was convicted of Racketeer Influenced and Corrupt Organizations 

Act (RICO) violations, wire fraud, and bribery and was sentenced in 1996 to 

60 months of incarceration and 3 years of supervised release. The offender 

was ordered to make restitution in the amount of $412 million. According 

to clerk’s office records, $3,050 had been paid as of September 30, 1999, 

while FLU records showed that over $11.7 million had been paid as of the 

same date. District guidance at the four districts we visited did not 

specifically require the FLUs to notify the clerk’s offices of payments they 

received or require the FLUs and the clerks to periodically reconcile 

payment data recorded in the two systems. Without timely notification of 

payments received or periodic reconciliations, differences between the two 

systems will continue to exist.

We also identified inefficient practices involving the processing of 

disbursements to victims. In 76 districts, the clerk’s offices are receiving all 

types of criminal debt payments from offenders and disbursing checks to 

restitution victims; however, in 18 of the 93 USAOs, the FLUs receive 

restitution payments from offenders for offenses that occurred before the 

MVRA and are disbursing checks for restitution only to pre-MVRA victims. 

Having these two entities in 18 of the districts perform similar functions 

results in wasted resources. According to AOUSC officials, they are 

working with the remaining clerk’s offices to process pre-MVRA restitution. 

In addition, the four clerk’s offices we visited generally set a low or no 

threshold amount for disbursing a check to a victim. As a result, we found 

instances in which the clerk’s office issued checks for less than $10 to 

victims ranging from individuals to large financial institutions. In one 

example, restitution was owed to several companies ranging from $500 to 

$75,000. Once every month or so, checks were being disbursed to these 

companies. In October 1998, 12 checks were issued ranging from 20 cents 

to $62, and 4 of these checks were returned as undeliverable, including one 

for 20 cents and another for 53 cents. Disbursing such small amounts is not 

cost-effective unless these are the final checks to be issued (i.e., the 

offender most likely will not be submitting additional payments).
Page 66 GAO-01-664 Criminal Debt Collection

Chapter 4

Oversight Roles of OMB and Treasury Chapte4r

Historically, management oversight of the criminal debt collection process 

has been divided between the executive and judicial branches with Justice 

responsible for enforcing collections and the courts responsible for 

receipting and disbursement of collections. This condition still exists today. 

In 1984, there was recognition of the increased need for centralized 

management of the collection process, and in 1987 efforts to establish the 

National Fine Center (NFC) began. The NFC was an attempt to automate 

and centralize the criminal debt collection process, which would have 

increased management oversight. However, since that effort was 

terminated in 1996, as noted in chapter 1, the collection responsibilities 

continue to be fragmented between Justice and the courts, with neither 

having a central management oversight role.

Moreover, neither OMB nor Treasury has identified the need to take an 

active role in overseeing the federal government’s process for collecting the 

billions of dollars of outstanding criminal debt. While the collection of such 

debt has been a long-standing problem, the substantial growth in the 

outstanding balance is a relatively recent development. Because serious 

coordination and cooperation problems among the fragmented entities 

involved continue to exist and because of the low collection rates, such 

oversight is needed.

Effective oversight of the collection of criminal debt could be achieved by 

leveraging OMB and Treasury’s current respective central agency roles. For 

example, a primary function of OMB as a central agency is to evaluate the 

performance of executive branch programs and serve as a catalyst for 

improving interagency cooperation and coordination. In its central role, 

OMB is also responsible for reviewing debt collection policies and 

activities. For example, OMB provides guidance to agencies in the form of 

circulars to assist them in meeting enacted legislation, such as the Debt 

Collection Improvement Act of 1996 (DCIA).1

 As such, OMB could work 

with Justice and certain other executive branch agencies to ensure that 

these entities report and/or disclose relevant criminal debt information in 

their financial statements and subject such information to audit. In 

implementing provisions of the DCIA, Treasury, through its Financial 

Management Service, could assist Justice in identifying the types of 

delinquent criminal debt that would be eligible for reporting and referral to 

Treasury for collection actions. In turn, by better accounting for and 

reporting its delinquent criminal debt, Justice would enhance its own 

1

OMB Circular No. A-129, Policies for Federal Credit Programs and Non-Tax Receivables.
Chapter 4

Oversight Roles of OMB and Treasury

Page 67 GAO-01-664 Criminal Debt Collection

management oversight of this problem. Collectively, these efforts would 

place greater emphasis on the management and collection of criminal debt.

Although Justice and the courts develop unaudited annual statistical data 

for informational purposes,2

 neither entity is accounting for any of these 

debts as receivables, disclosing the debts in financial statements, or having 

the receivable information subjected to audit. In addition, neither entity is 

referring eligible criminal debt to Treasury for collection. Having Justice 

and the courts properly account for, report, and manage criminal debts, 

with assistance from OMB and Treasury, would heighten management 

awareness and ultimately result in a more effective collection process.

Accounting For, 

Reporting, and 

Managing Criminal 

Debt

According to Statement of Federal Financial Accounting Standards 

(SFFAS) No. 1, Accounting for Selected Assets and Liabilities, and SFFAS 

No. 7, Accounting for Revenue and Other Financing Sources and 

Concepts for Reconciling Budgetary and Financial Accounting, a 

receivable should be recognized once amounts that are due to the federal 

government are assessed, net of an allowance for uncollectible amounts. 

Also, in accordance with this OMB Circular No. A-129, Policies for Federal 

Credit Programs and Non-Tax Receivables, agencies are to (1) service and 

collect debts in a manner that best protects the value of the federal 

government’s assets and (2) provide accounting and management 

information for effective stewardship, including resources entrusted to the 

government (e.g., for nonfederal and federal restitution). Although both the 

courts and Justice have tracking systems in place, neither entity performs 

an analysis of criminal debts to estimate how much of the outstanding 

amounts are uncollectible (i.e., neither entity establishes an allowance for 

uncollectible accounts for amounts due to the federal government). 

Justice’s tracking system allows for amounts to be recorded as “in 

suspense”; however, these amounts do not necessarily represent amounts 

that are uncollectible.

In EOUSA’s unaudited fiscal year 1999 annual statistical report, the FLUs 

classified as “in suspense” about $9.9 billion of the approximately 

$13.1 billion, or 75 percent of the reported uncollected criminal debt 

2

The Annual Statistical Report summarizes and presents data related to criminal 

prosecutions and civil litigation conducted by the U.S. Attorneys for each fiscal year. The 

courts also generate annual statistics related to sentences imposed (e.g., type of crime and 

prison terms).
Chapter 4

Oversight Roles of OMB and Treasury

Page 68 GAO-01-664 Criminal Debt Collection

balance as of September 30, 1999. However, since the collectibility of 

outstanding criminal debt has not been assessed, the amount in suspense 

does not represent an estimate of the amount that is expected to be 

uncollected (see chapter 3). Unless FLUs or the courts assess the 

collectibility of this debt, set expectations as to the amount of debt that can 

be collected, and compare expectations against actual collections, 

management cannot effectively monitor program performance in debt 

collection.

OMB oversees implementation of the Chief Financial Officers Act, as 

expanded by the Government Management Reform Act of 1994, which 

requires audited financial statements for the U.S. government, as well as 

the 24 major federal executive branch agencies and departments, including 

Justice. Justice prepares audited financial statements, but is not recording 

or disclosing receivables for relevant criminal debt in them, and the U.S. 

courts are not required to prepare financial statements or to disclose this 

information. Therefore, criminal debt is not being reported in the U.S. 

government’s financial statements. Financial statement disclosure by 

Justice would increase oversight of the process because reported amounts 

would be subject to audit under these acts. Such audits would include 

assessments of internal control and compliance with applicable laws and 

regulations related to the criminal debt process. Disclosure by the U.S. 

courts would also increase oversight, but the reported amounts would 

currently not be subject to audit.

Referring Debt to 

Treasury

The DCIA requires executive, judicial, and executive branch agencies to 

transfer eligible nontax debt or claims3

 over 180 days delinquent to 

Treasury for collection actions. Although referring delinquent criminal debt 

could increase collections and oversight of such debt, neither Justice nor 

the courts are currently referring delinquent criminal debts to Treasury. 

During our reviews, we found that prior to DCIA, the FLUs referred certain 

debts to the former Tax Refund Offset Program and were successful in 

collecting payments. For example, an offender was ordered in December 

1987 to pay a $10,000 fine and $24,700 in restitution. For tax years 1993 

through 1995, the FLU referred this debt to the offset program. In March 

1996, the offender’s 1995 tax refund of $1,756 was offset and applied toward 

payment of the fine.

3

Claims include debts owed to the United States or debts being collected by the United 

States on behalf of others.
Chapter 4

Oversight Roles of OMB and Treasury

Page 69 GAO-01-664 Criminal Debt Collection

Justice officials believe that the courts should be responsible for referring 

criminal debt to Treasury because the law specifies that the courts are 

responsible for accounting for criminal debt collection activities. Court 

officials indicated that they do not currently have the systems in place—

and may not be aware of other collection actions or legal remedies being 

pursued by the FLUs—that could prohibit referral. The courts’ tracking 

systems are not complete because the courts (1) rely on the FLUs’ tracking 

systems to calculate interest due, (2) do not track pre-MVRA restitution 

cases in 18 of 94 districts, and (3) do not always record a debt (i.e., 

establish a receivable) until the first payment is received from an offender.

Treasury officials stated that they rely on the agencies to notify them of 

delinquent debts that should be referred for collection. Justice has not been 

reporting this debt on its Report on Receivables4

 and is not accounting for 

criminal debts as receivables or reporting them on its financial statements 

or other financial submissions. Treasury officials have stated that Treasury 

is willing to assist Justice and the courts in identifying types of criminal 

debts that would be eligible for referral and having the debt referred to 

Treasury for collection actions.

4

Executive branch agencies are required to periodically submit to Treasury a Report on 

Receivables, which details the status of such agencies’ receivables. 
Page 70 GAO-01-664 Criminal Debt Collection

Chapter 5

Conclusions, Recommendations, and Agency 

Comments Chapte5r

Conclusions The collection of criminal debt has been a long-standing problem for the 

federal government. Efforts over the past 15 years to centralize and 

automate the process have not been successful. Outstanding amounts 

continue to increase partly because many of the problems we reported on 

as far back as 1985 still exist. However, a dramatic increase in the balance 

of reported uncollected criminal debt is primarily attributable to the 

Mandatory Victims Restitution Act of 1996 (MVRA), which requires that 

restitution be assessed regardless of the ability of the offender to pay or the 

potential for collection.

Major continuing problems are that the many entities involved in assessing 

and collecting criminal debt (1) do not always use available enforcement 

techniques or (2) do not coordinate efforts so that resources are used most 

effectively. Without additional high-level oversight and cooperation 

between the entities, criminal debt collection is likely to remain ineffective. 

Further, the assessment of criminal fines and restitution as an effective 

punitive tool may be in jeopardy.

Recommendations Addressing the long-standing problems in the collection of outstanding 

criminal debt—including fragmented processes and lack of coordination—

will require a united strategy among the entities involved with the 

collection process. Therefore, we recommend that

• the Attorney General, the Director of the Administrative Office of the 

U.S. Courts (AOUSC), the Director of the Office of Management and 

Budget (OMB), and the Secretary of the Treasury work together in the 

form of a joint task force to develop a strategic plan to improve the 

criminal debt collection processes and establish an effective 

coordination mechanism among all entities involved in these processes. 

The strategy should address managing, accounting for, and reporting 

criminal debt. This strategy includes determining an approach for 

assessing the collectibility of outstanding amounts so that a meaningful 

allowance can be reported and used for measuring debt collection 

performance and having OMB work with Justice and certain other 

executive branch agencies to ensure that these entities report and/or 

disclose relevant criminal debt information in their financial statements 

and subject such information to audit.
Chapter 5

Conclusions, Recommendations, and Agency 

Comments

Page 71 GAO-01-664 Criminal Debt Collection

In the interim, while the task force is being established, we are making the 

following specific recommendations to the entities involved in criminal 

debt collection:

To help improve collections and stem the growth in reported uncollected 

criminal debt, we recommend that

• the Secretary of the Treasury, through the Department of Treasury’s 

(Treasury) Financial Management Service, assist the Department of 

Justice and the courts in identifying the types of delinquent criminal 

debt that would be eligible for referral to Treasury for collection actions;

• the Attorney General and the Director of the AOUSC continue to work 

together to (1) reduce duplication of data entry for collections and 

disbursements, (2) require the Financial Litigation Units (FLUs) and the 

courts to periodically reconcile payment data recorded in their separate 

tracking systems, and (3) revise district guidance so that the FLUs can 

take a more proactive role in monitoring collection efforts of probation 

offices;

• the Attorney General

• establish policies and procedures that require Justice investigating 

case agents and prosecuting attorneys to share relevant financial 

information with the FLUs within an established time frame after an 

offender is sentenced,

• require FLUs to document correspondence with case agents and 

prosecuting attorneys in the FLU files, including whether and why 

efforts were not coordinated,

• require FLUs to use collectibility analyses to prioritize criminal debt 

collection efforts on debt types deemed through historical 

experience to be more collectible,

• reinforce current policies and procedures for entering cases into 

criminal debt tracking systems; filing liens; issuing demand letters, 

delinquent notices, and default notices; performing asset discovery 

work; using other enforcement techniques; and using event codes, 

including suspense codes,

• revise current policies for issuing demand letters, specifying when a 

demand letter should be sent and within what time frames,

• require FLUs to establish time frames for procedures related to 

criminal debt collection activities that do not currently have 

established time frames,
Chapter 5

Conclusions, Recommendations, and Agency 

Comments

Page 72 GAO-01-664 Criminal Debt Collection

• require FLUs to document in their files instances where asset 

discovery work was not performed and why it was not performed,

• establish a policy for the FLUs to date stamp when Judgments in a 

Criminal Case are received,

• revise interest and penalty policies so that interest and penalties are 

consistently assessed and reported,

• adequately measure criminal debt collection performance against 

established goals,

• revise the FLU’s databases to (1) capture needed information such as 

terms of fine and restitution order, status of offender (expected 

release date from prison or probation) and (2) allow FLUs to allocate 

outstanding amounts between amounts likely to be collected and 

those that are not likely to be collected, and

• perform an analysis to assess whether the FLU’s human capital 

resources and training are adequate to effectively perform their 

collection activities; and 

• the Director of the Administrative Office of the U.S. Courts

• ensure and monitor effective implementation of guidance for 

(1) developing pre-sentence reports, (2) establishing and monitoring 

offenders’ compliance with installment schedules, (3) providing 

financial information reported in the pre-sentence report to the FLUs 

within an established time frame after sentencing, and (4) notifying 

FLUs within an established time frame before an offender is released 

from supervision,

• revise guidance to encourage the clerk’s office to provide a copy of 

the Judgment in a Criminal Case to both the FLU and the prosecuting 

attorney within the established time frame,

• continue to work with the clerk’s offices to process all pre-MVRA 

restitution so that the same entity in all districts is responsible for 

receiving and disbursing pre- and post-MVRA restitution,

• revise the language in the Judgment in a Criminal Case forms to 

clarify that payment terms established by judges are minimum 

payments and should not prohibit or delay collection efforts, and

• establish cost-effective thresholds for disbursements made by check 

to victims for restitution payments.

Agency Comments and 

Our Evaluation

A draft of this report was provided to Justice, AOUSC, OMB, and Treasury 

for their review and comment. The following discussion highlights these 

agencies’ most significant comments and our evaluation. Letters from 
Chapter 5

Conclusions, Recommendations, and Agency 

Comments

Page 73 GAO-01-664 Criminal Debt Collection

Justice, AOUSC, and Treasury are reprinted in the appendixes. OMB 

provided oral comments, which are incorporated into this section. Justice 

and the courts also provided us with technical comments that we 

considered and addressed, where appropriate.

Establishment of a Task 

Force

Justice and OMB agreed with our recommendation that they work together 

in a joint task force to develop a strategic plan to improve criminal debt 

collection processes and establish an effective coordination mechanism 

among all entities involved in the process. We recommended that this task 

force also address managing, accounting for, and reporting criminal debt, 

as well as developing an approach for assessing the collectibility of 

outstanding amounts so that a meaningful allowance can be reported and 

used for measuring debt collection performance. AOUSC and Treasury did 

not state whether they agreed or disagreed with the establishment of and 

their participation in this task force. We believe that the involvement in the 

task force of AOUSC and Treasury—given Treasury’s central agency role of 

preparing the federal government’s financial statements and implementing 

DCIA—is critical to the success of the task force.

We recommended that one of the responsibilities of the task force be to 

address issues in accounting for and reporting criminal debt. As we note in 

the report, accounting standards require a receivable to be recognized once 

amounts due to the federal government are assessed, net of an allowance 

for uncollectible amounts. In addition, OMB guidance requires agencies to 

provide accounting and management information for effective 

stewardship, including resources entrusted to the government (e.g., 

nonfederal restitution). Treasury and OMB agreed that criminal debt 

should be reported on either Justice’s or the court’s financial statements. 

The courts did not specifically address accounting and reporting issues, 

and Justice stated that it would not be proper to report criminal debt 

receivables on Justice’s financial statements and that it believes 

administration and possession of the receivables is the responsibility of the 

courts. Justice’s comments related to this issue, plus the lack of a response 

from AOUSC regarding their position on this issue, illustrate the need for 

cooperation and coordination in the criminal debt collection area.

We also recommended that OMB work with Justice and other executive 

branch agencies, while the task force is being established, to report and/or 

disclose criminal debt information in the agencies’ financial statements and 

to subject such information to audit. OMB disagreed with this 

recommendation, stating that these reporting issues would be better 
Chapter 5

Conclusions, Recommendations, and Agency 

Comments

Page 74 GAO-01-664 Criminal Debt Collection

handled by the task force. In light of Justice’s and OMB’s responses, we 

have deleted the recommendation for OMB to work with Justice and other 

executive branch agencies, while the task force is being established, and 

incorporated this recommendation into the task force recommendation.

Agency Specific Comments Justice generally agreed with the premise of the report and recognized the 

need for improvements in the criminal debt collection area. Justice also 

agreed with 10 of our 12 recommendations specifically addressed to it and 

partially agreed with the other 2. The AOUSC commented that most of our 

recommendations directed to it had already been implemented and that it 

is pursuing those related to working with Justice to refer eligible debt to 

Treasury and reduce duplication of the recordkeeping function. Treasury 

agreed with our recommendation specifically addressed to it regarding 

assisting Justice and the courts in identifying eligible delinquent debt for 

referral to Treasury.

Justice and the AOUSC also commented on the methodology used to 

develop the report findings. In addition, the AOUSC commented on the 

focus of the report and on the lack of recognition given to actions the 

courts have taken to improve the criminal debt collection process.

Justice and AOUSC’s Comments 

on Our Methodology

Justice and AOUSC, in commenting on the methodology we used to select 

and review cases, stated that closed cases (i.e., debts paid in full) should 

have been reviewed and that many of the cases reviewed had already been 

determined by Justice to be uncollectible debt and had been placed “in 

suspense.” We disagree. To address the requestor’s objectives of 

determining the key reasons for the growth in reported uncollected 

criminal debt and whether adequate processes exist to collect criminal 

debt, we selected cases that involved debt amounts outstanding as of 

September 30, 1999. Since we used debts outstanding as of September 30, 

1999, many of which were more than 3 years old, ample time for collection 

activity had passed before we reviewed the cases, enabling us to assess the 

level of collection efforts performed. Reviewing closed cases or focusing 

on those cases that had not been placed in suspense by the FLUs would not 

have addressed why debts have not been collected nor would it have 

provided a sound basis for determining whether there are adequate 

processes for collecting criminal debt at the four districts visited.

The amount of outstanding criminal debt continues to grow and has grown 

substantially over the past several years. However, the collection rate for 

fiscal years ending September 30, 1995 through 1999, has averaged about 7 
Chapter 5

Conclusions, Recommendations, and Agency 

Comments

Page 75 GAO-01-664 Criminal Debt Collection

percent. The report clearly points out that this is partly due to the 

uncontrollable factors discussed in chapter 2, but also to the lack of 

(1) adequate collection processes, (2) coordinated efforts to collect such 

debt, and (3) management oversight. Thus, to determine why outstanding 

amounts continue to increase, we selected and reviewed cases with the 

largest outstanding debt balances as of September 30, 1999, at the four 

districts with the largest amounts of outstanding debt including debts in 

suspense as well as debts not in suspense. In addition, we reviewed a 

stratified randomly selected sample of 35 cases in each of the four districts. 

Selecting closed cases or cases that had not been placed in suspense would 

have provided anecdotal information about successful collections, but 

would not have addressed our objectives of determining the reasons for the 

growth and determining whether adequate processes exist, especially given 

the overall low collection rate.

We also found that debts recorded as “in suspense” do not necessarily 

represent amounts that are uncollectible. For example, even if offenders 

were making monthly installment payments, the FLU must put either the 

entire debt balance in suspense or none of the balance in suspense. In 

addition, to determine why amounts had not been collected, regardless of 

whether they were in suspense, we assessed the collection efforts that had 

been performed and found that adequate steps, such as performing asset 

discovery work, were not always taken or documented prior to the FLU’s 

placing such debts in suspense. Further, we found little evidence that 

prosecutors and probation officers had shared financial information with 

FLUs, thus potentially weakening the FLUs’ ability to assess an offender’s 

ability to pay (i.e., determine collectibility).

Justice also commented that many of the cases we reviewed involved 

incarcerated debtors and pre-date existing criminal debt policies. We point 

out in chapter 2 that incarceration may limit an offender’s ability to pay 

while in prison, however the high dollar cases we reviewed typically 

involved debtors who had defrauded innocent victims of millions of 

dollars, resulting in the large restitution amounts being owed. Although the 

offender’s earning potential may be limited while incarcerated, other debt 

collection techniques such as identifying and pursuing assets, should be 

performed. Further, as we point out in the report, only about 20 percent of 

the stratified randomly selected cases involved offenders who were 

incarcerated at the time of our review.

In chapter 3 we point out that much of the outstanding criminal debt as of 

September 30, 1999, involved cases that were over three years old. 
Chapter 5

Conclusions, Recommendations, and Agency 

Comments

Page 76 GAO-01-664 Criminal Debt Collection

However, many of the procedures that should be used are typical debt 

collection tools (e.g., filing liens, issuing demand letters) that should be 

applied to effectively collect criminal debt. We found that the FLUs were 

not always performing these procedures. In addition, we found that the 

FLUs we visited were not always following their prescribed procedures for 

reassessing an offender’s ability to pay. Had these cases been revisited as 

required, any new policies could have been applied to outstanding debts at 

that time.

Finally, AOUSC also questioned why cases under $5,000 were not reviewed. 

Our review focused on the largest–dollar cases ($14 million or greater) as 

well as a stratified randomly selected sample of cases between $5,000 and 

$14 million. We excluded those under $5,000, which, as shown in table 7 in 

appendix I, comprised only $8.9 million of the $5.6 billion of outstanding 

debt at the four districts visited, or less than 0.2 percent of the total dollar 

amount of outstanding debt at such districts, an amount that we deemed 

immaterial.

Justice Justice agreed with 10 of the 12 recommendations specifically addressed to 

it. In addition, Justice partially agreed with the other 2 recommendations, 

which related to (1) requiring FLUs to use collectibility analyses to 

prioritize criminal debt collection efforts on debt types deemed through 

historical experience to be more collectible, and (2) adequately measuring 

criminal debt collection performance against established goals. Justice 

indicated that it is already performing the recommended functions, 

however we believe that the intent of these 2 recommendations should be 

further discussed so that additional improvements can be made in these 

areas. As to performing a collectibility analysis, Justice stated that it is 

already performing an analysis in accordance with its suspense policies. 

However, we found that the FLUs’ suspense policies are not the same as 

performing an effective collectibility analysis since debts may be placed in 

suspense without performing an adequate assessment of collectibility. 

Also, having historical collectibility analyses would allow the FLUs to 

prioritize new debts based on factors that indicate increased potential for 

collections.

Justice also stated that it is already measuring criminal debt collection 

performance against established goals. However, it is our understanding 

that these efforts focus on reporting collection activity and analyzing 

collection practices, not on establishing goals and measuring performance 

against such goals, as we recommend. In addition, we believe that 
Chapter 5

Conclusions, Recommendations, and Agency 

Comments

Page 77 GAO-01-664 Criminal Debt Collection

performing a collectibility analysis is an essential first step in adequately 

setting goals and measuring performance.

Administrative Office of the U.S. 

Courts

In addition to commenting on our methodology, the AOUSC commented 

that the effect of the Mandatory Victims Restitution Act of 1996 (MVRA) 

should have received greater attention in the report and that the report 

should give greater recognition to actions that the courts have already 

taken to improve criminal debt collection. We believe that we have 

provided sufficient balance in the report as evidenced by an entire chapter 

devoted to uncontrollable factors, such as MVRA, that contribute to the 

growth in outstanding criminal debt. This chapter precedes chapters 

devoted to procedural and coordination issues so that the reader is made 

aware of the significance of uncontrollable factors and the context in 

which the adherence to required policies and procedures and coordination 

of efforts take place. In addition, mandatory restitution is listed as a factor 

in the transmittal letter at the beginning of this report and is discussed in 

many places throughout the report.

The AOUSC also commented that more recognition should be given to 

actions it has taken to improve criminal debt collection. One such action 

includes a comprehensive policy and procedural manual issued in 

September 2000, several months after our district visits, and not widely 

distributed until December 2000. In our report we point out that if the 

AOUSC effectively implements its revised guidance related to 

(1) developing pre-sentence reports, (2) establishing and monitoring 

offenders’ compliance with installment schedules, (3) providing financial 

information reported in the pre-sentence report to the FLUs within an 

established time frame after sentencing, and (4) notifying FLUs within an 

established time frame before an offender is released from supervision, 

then reported weaknesses in these areas are likely to be addressed. Since 

the guidance was issued after our visits, we were not able to assess 

whether these policies have been effectively implemented and have 

therefore recommended that AOUSC ensure that such policies are 

effectively implemented.

Finally, AOUSC stated that it had implemented most of our 

recommendations; however, the letter did not specifically address each 

recommendation. While we recognize that the revised guidance should 

help improve collections, the policies must be effectively implemented 

before our recommendation is satisfied. The policy and procedural manual 

does not address our recommendations to (1) revise the language in the 

Judgment in a Criminal Case forms to clarify that payment terms 
Chapter 5

Conclusions, Recommendations, and Agency 

Comments

Page 78 GAO-01-664 Criminal Debt Collection

established by judges are minimum payments and should not prohibit or 

delay collection efforts and (2) establish cost-effective thresholds for 

disbursements made by check to victims for restitution payments. In 

addition, we were not provided with details of additional actions taken by 

the courts to address such recommendations.
Page 79 GAO-01-664 Criminal Debt Collection
Page 80 GAO-01-664 Criminal Debt Collection

Appendix I

Scope and Methodology ApApenednxidexiIs

To accomplish our objectives (see chapter 1), we obtained an 

understanding of the collection processes by interviewing officials from the 

Executive Office for United States Attorneys (EOUSA) and the 

Administrative Office of the United States Courts (AOUSC) and reviewing 

applicable policies and procedures they provided. In addition, we visited 

the Northern District of California to “walk through” the collection process 

at the district level. This included (1) interviewing USAO and district court 

officials, (2) obtaining and reviewing supplemental policies and procedures 

developed by the district, including their memorandum of understanding 

(MOU) and Financial Litigation Plan, and (3) reviewing several collection 

case files. Based on this visit and our review of applicable guidance, we 

developed a data collection instrument to be used to document the results 

of our testing.

To determine the key reasons for the growth in reported uncollected 

criminal debt, we held discussions with the EOUSA, AOUSC, and district 

officials. We also analyzed data that the EOUSA provided to us related to 

criminal debt, including the database of outstanding criminal debt as of 

September 30, 1999. We did not independently verify the completeness or 

accuracy of this data or test information security controls over the system 

used to compile this data because that verification was not necessary for 

the purposes of this report.

To determine whether adequate processes exist to collect criminal debt, we 

obtained a database from the EOUSA of all outstanding criminal debt as of 

September 30, 1999, and selected a sample of cases to review. As agreed 

with the subcommittee staff, to obtain significant dollar coverage, we 

selected a sample of outstanding criminal debts at the four districts with 

the largest amounts of outstanding criminal debt as of September 30, 1999. 

These districts were the Central District of California, the Eastern and 

Southern Districts of New York, and the Southern District of Florida. 

Combined, they accounted for about $5.6 billion (or 43 percent) of the 

approximately $13 billion outstanding balance as of that date. At each of 

the four districts, we held discussions with representatives of the USAO, 

probation office, and clerk’s office to reconfirm the understanding of the 

collection process that we obtained during our walk-through of the 

Northern District of California. We also requested and reviewed 

documentation relating to the procedures for collecting criminal debt 

within each of the four districts.

To ensure that we obtained significant dollar coverage within these four 

districts, we selected all cases greater than or equal to $14 million. In 
Appendix I

Scope and Methodology

Page 81 GAO-01-664 Criminal Debt Collection

addition, we selected, at each office, a stratified random sample of 35 

criminal debt cases from a population of all cases $5,000 or greater but 

under $14 million. We did not review cases under $5,000 because they were 

deemed to be immaterial. In total, we selected 184 cases for review (see 

table 7 for details regarding our selection).

Table 7: Details of Cases Selected

Source: Unaudited EOUSA data.

For each case selected, we reviewed the files maintained by the FLU, 

probation office, and clerk’s office to determine whether their policies and 

procedures were followed. At the USAOs, we reviewed the FLU files to 

determine whether the FLUs followed their own procedures for

(1) entering cases into their tracking systems, (2) enforcing collections 

(e.g., filing liens and issuing demand letters), and (3) assessing an 

offender’s ability to pay. At the probation offices, we reviewed the 

probation files to determine whether probation officers followed their 

policies and procedures for (1) assessing an offender’s ability to pay and 

(2) establishing, monitoring, and enforcing installment schedules. We also 

compared the payment records maintained by the FLUs with those 

maintained by the clerk’s offices to determine whether these payment 

amounts agreed. Further, we reviewed the files at the three entities to 

determine whether evidence existed that the federal entities involved in 

assessing and collecting criminal debt coordinated collection efforts. The 

results of these reviews were documented in a data collection instrument. 

Groups

Number of

cases per

stratum

Dollar

amount per

stratum

Items tested 

in each 

stratum

Justification for 

number of items 

tested in each stratum

$14 million or 

greater

44 $3.7 billion All items To obtain significant 

dollar coverage

$5,000 or greater 

but less than $14 

million

8,650 $1.9 billion 35 at each of 

the 4 districts 

selected (140 

in all)

To provide coverage of 

the rest of the 

population of criminal 

debt at the four 

locations

Less than 

$5,000

16,718 $8.9 million None Average amount of 

strata ($532) was 

deemed to be 

immaterial 

Total 25,412 $5.6 billion
Appendix I

Scope and Methodology

Page 82 GAO-01-664 Criminal Debt Collection

When we found errors, we developed and submitted questions to the FLUs, 

probation offices, and clerk’s offices regarding instances of noncompliance 

with policies and procedures identified during our reviews. In addition, we 

obtained and analyzed these entities’ written responses to our questions. 

Also, see table 8 for number of occurences by selected district for items 

projected throughout the report.

Table 8: Number of Occurrences by Selected District for Each Item Statistically 

Projected for the 140 Random Cases 

To determine what role, if any, OMB and Treasury play in overseeing and 

monitoring the government’s collection of criminal debt, we interviewed 

OMB and Treasury officials.

Central

District of

California

Southern

District of

Florida

Eastern

District of

New York

Southern

District of

New York

Population 2,476 2,733 1,785 1,656

Sample size 35 35 35 35

Number of occurences for items 

projected

FLU had not filed required liens 6 11 15 12

Little or no evidence that FLU 

attempted to identify the 

debtor’s assets

21 25 22 25

No evidence of correspondence 

with case agents or prosecuting 

attorneys was found in the FLU 

files

18 26 20 20

Event code as of September 

30, 1999, was inconsistent with 

the information in the case file

5 3 11 13

FLU had not revisited the case 

within established time frames

18 26 21 26

FLU had not sent the required 

demand letters

22 18 14 5

Status of the offender (in 

prison)

4 888
Appendix I

Scope and Methodology

Page 83 GAO-01-664 Criminal Debt Collection

We performed our work from April 2000 through April 2001 in accordance 

with U.S. generally accepted government auditing standards. We requested 

comments on a draft of this report from the Attorney General, the Director 

of the Administrative Office of the U.S. Courts, the Director of the Office of 

Management and Budget, and the Secretary of the Treasury, or their 

designees. These comments are discussed in the “Agency Comments and 

Our Evaluation” section and are reprinted in appendix III through appendix 

V.
Page 84 GAO-01-664 Criminal Debt Collection

Appendix II

History of Criminal Debt Collection 

Legislation ApendxiI

Over the past two decades, Congress has enacted legislation related to the 

collection of criminal debt. The table below presents legislation 

significantly affecting the assessment and collection of such debt.

Law Purpose

Victim and Witness 

Protection Act of 1982 

(P.L. 97-291, 96 Stat. 

1248)

• Reflects desire of Congress to establish restitution as an 

important remedy in federal law.

• Establishes court’s ability, when sentencing a defendant 

convicted of a federal offense, to order, in addition to or in 

lieu of any other penalty authorized by law, that the 

defendant make restitution to any victim of the offense.

Victims of Crime Act of 

1984 (P.L. 98-473, 98 

Stat. 2170)

• Provides that certain federal fines and forfeitures owed by 

offenders be allocated to crime victims.

• States that certain payments were to be deposited into the 

Crime Victims Fund and distributed by Justice as grants to 

eligible crime victim compensation programs and to states 

for eligible crime victim assistance programs. 

Criminal Fine 

Enforcement Act of 1984 

(P.L. 98-596, 98 Stat. 

3134)

• Establishes the Attorney General as the responsible party 

for receiving payments on criminal fines and for establishing 

a criminal fine collection process.

• Requires defendants to pay interest and penalties in certain 

situations.

• Requires clerk’s offices to provide to Justice a certified copy 

of judgments for fines exceeding $500.

Criminal Fine 

Improvements Act of 1987 

(P.L. 100-185, 101 Stat. 

1279)

• Transfers the responsibility for receiving criminal fine and 

assessment payments from Justice back to the courts.

• Addresses the need to establish procedures and 

mechanisms within the judicial branch for processing 

criminal debt.

• Provides that the Director of the AOUSC may specify that 

payment be made to the clerk of the court or in the manner 

provided for under section 604(a)(18) of title 28. 

Mandatory Victims 

Restitution Act of 1996 

(P.L. 104-132, Title II, 110 

Stat. 1227)

• Effective April 24, 1996, restitution must be ordered as part 

of a sentence for certain offenses in cases with an 

identifiable victim regardless of the offender’s economic 

circumstances. 

• The financial circumstances should be considered in how 

the offender will pay the restitution (e.g., establishment of an 

installment payment plan).

• Enacted as part of the Antiterrorism and Effective Death 

Penalty Act of 1996. 
Page 85 GAO-01-664 Criminal Debt Collection

Appendix III

Comments From the Department of Justice ApendxiI

Note: GAO Comments

supplementing those in

the report text appear at

the end of this appendix.

See comment 1.
Appendix III

Comments From the Department of Justice

Page 86 GAO-01-664 Criminal Debt Collection

See comment 1.

See comment 1.

See comment 2.

See comment 1.
Appendix III

Comments From the Department of Justice

Page 87 GAO-01-664 Criminal Debt Collection

See comment 3.

See comment 4.
Appendix III

Comments From the Department of Justice

Page 88 GAO-01-664 Criminal Debt Collection

See comment 1.

See comment 5.

See comment 6.
Appendix III

Comments From the Department of Justice

Page 89 GAO-01-664 Criminal Debt Collection

See comment 7.

See comment 8.

See comment 9.
Appendix III

Comments From the Department of Justice

Page 90 GAO-01-664 Criminal Debt Collection

See comment 10.

See comment 1.

See comment 11.
Appendix III

Comments From the Department of Justice

Page 91 GAO-01-664 Criminal Debt Collection

See comment 12.

See comment 13.
Appendix III

Comments From the Department of Justice

Page 92 GAO-01-664 Criminal Debt Collection

See comment 14.
Appendix III

Comments From the Department of Justice

Page 93 GAO-01-664 Criminal Debt Collection

See comment 15.

See comment 1.
Appendix III

Comments From the Department of Justice

Page 94 GAO-01-664 Criminal Debt Collection

See comment 16.

See comment 1.
Appendix III

Comments From the Department of Justice

Page 95 GAO-01-664 Criminal Debt Collection
Appendix III

Comments From the Department of Justice

Page 96 GAO-01-664 Criminal Debt Collection

See comment 1.
Appendix III

Comments From the Department of Justice

Page 97 GAO-01-664 Criminal Debt Collection

See comment 17.
Appendix III

Comments From the Department of Justice

Page 98 GAO-01-664 Criminal Debt Collection
Appendix III

Comments From the Department of Justice

Page 99 GAO-01-664 Criminal Debt Collection

GAO Comments 1. See “Agency Comments and Our Evaluation” section.

2. We disagree that many of the Judgment in a Criminal Case (JCC) forms 

that we reviewed require payments to be made after an offender is 

released from incarceration. As noted in table 2 of the report, judges 

stipulated that debt amounts were not due until the offender was 

released from prison in only 18 of the 184 JCCs that we reviewed (1 of 

the high-dollar and 17 of the random cases). Also, as noted in the table, 

all but six of these debtors had been released from prison as of the time 

of our review. As such, the FLU’s collection efforts for most of these 

cases should not have been limited.

3. We found delays in the filing of liens in all four districts we visited. 

Some of the random cases we reviewed in the one district noted were 

opened prior to 1992. However, either a lien had not been filed in these 

cases or the cases were opened within two and a half years prior to that 

date. Therefore if the liens were promptly filed during 1992, this delay 

should not have significantly affected the average number of days to 

file a lien. If a lien was not filed, then the case was not included in 

determining the average number. In addition, as noted under “Agency 

Comments and Our Evaluation,” filing liens is a typical debt collection 

procedure that should be expected even without a specific policy. Also, 

Justice points out that, prior to 1992, the FLU in this one district would 

only file a lien if there was a reason to believe the defendant owned 

property. As noted in the report, we found that the FLUs did not always 

perform adequate procedures to determine whether defendants owned 

property.

4. We recognize in the report that one of the factors contributing to the 

growth in uncollected debt is that most debts cannot be written off for 

a significant period of time, usually 20 years plus the period of 

incarceration. We also state in the report that only fines can be remitted 

and that seeking a petition for remission of all or part of a fine from the 

judge is preferable to placing it in suspense and continuing to pursue 

collection. However, as we point out, we found no evidence that the 

FLU had requested a petition for remission in the cases we reviewed, 

even though some of the debts involving fines appear to have met the 

criteria for remission.

5. Throughout the report we recognize that mandatory restitution is a key 

factor contributing to the growth in uncollected criminal debt. Most of 
Appendix III

Comments From the Department of Justice

Page 100 GAO-01-664 Criminal Debt Collection

the high-dollar cases we reviewed involved offenders convicted of 

white-collar crimes that included defrauding innocent victims and 

resulted in large amounts of restitution being owed to these victims. We 

included the criminal debt arising from the conviction of the World 

Trade Center defendants to illustrate the impact of mandatory 

restitution (i.e., assessing full restitution based on victims’ losses 

regardless of ability to pay). In the World Trade Center cases, the losses 

were calculated to compensate victims injured by the bombings. Most 

of the restitution cases we reviewed involved offenders who defrauded 

victims of significant assets.

6. As we point out in our report, the FLU’s interpretation of payment 

terms in JCCs is limiting FLU collection efforts. As such, we include the 

listing of payment schedules in JCCs as a factor contributing to the 

growth of criminal debt. However, the view of the AOUSC officials and 

the Chief Judge in one district we visited is that the inclusion of 

payment schedules in the JCC was not intended to preclude the FLU 

from identifying and pursuing assets, but merely sets a minimum 

amount that must be paid while an offender is under supervision. 

Although the EOUSA disagrees with this view, it does acknowledge that 

the FLUs could seek modification of a court order if assets were 

identified. However, we found that in those cases in which terms were 

included, the FLUs typically would not perform collection actions 

(such as searching for assets) until after the offender was released from 

supervision and as a result, opportunities to maximize collections may 

have been missed. If the courts, as we recommended, revise the 

language in the JCCs to clarify that payment terms established by 

judges are minimum payments and should not prohibit or delay 

collection efforts, this problem is likely to be addressed.

7. This percentage does not accurately reflect the percentage of cases 

where payment terms were set forth in the JCC. Collection efforts 

should not be limited in those cases where the judge set an “at least”

amount that must be paid. Further, as noted in table 2, all but six of the 

debtors in cases where the JCCs stated that the debt was not due until 

the offender was released from prison had been released from prison as 

of the time of our review. As such, the FLU’s interpretation of the 

payment terms would only have been a factor in those six cases where 

the offender was still in prison.

8. We clearly point out in the report that part of the problem related to 

issuing demand letters is the lack of specific guidance on when demand 
Appendix III

Comments From the Department of Justice

Page 101 GAO-01-664 Criminal Debt Collection

letters should be sent. For example, EOUSA guidance states that 

demand letters should be sent “as soon as” a case is entered into the 

criminal tracking system; however, it does not address situations that 

may not be applicable to this guidance, such as debts entered into the 

tracking system that are not yet due. As such, our reported finding 

relates to the issue of whether demand letters were sent in accordance 

with available guidance. Further, if the intent of the demand letter is to 

notify offenders of their debt and the consequences of not paying the 

debt (i.e., interest and penalties), then a demand letter should be issued 

as soon as possible regardless of whether the offender has entered into 

a payment agreement. If, however, the FLU explained why a demand 

letter was not appropriate, we did not consider it to be an error even 

though it may have been required by their current policies and 

procedures.

9. If the FLU explained why certain actions (e.g., filing liens) were not 

appropriate (e.g., the offender was deported), we did not consider it to 

be an error, even though it may have been required by their current 

policies and procedures.

10. We did not consider the lack of certain actions as errors if the FLU 

explained why the action (e.g., assessing interest and penalties or 

issuing delinquent and default notices) was not appropriate (e.g., not 

applicable prior to MVRA or for fines imposed prior to 1985). In fact, we 

specifically state in a footnote that assessment of interest and penalties 

was not required for pre-MVRA restitution debts. We also specifically 

point out that the court has the authority to waive interest and that the 

law also permits the Attorney General to waive interest and penalties if 

it is determined that efforts to collect are not likely to be effective. 

However, according to the U.S. Attorneys’ Manual, a determination 

about whether to waive interest and penalties should be considered 

only after the principal has been paid. The intent of the discussion is to 

illustrate the effects of failing to consistently apply interest and 

penalties irrespective of whether they may be subsequently waived.

11. We are encouraged that resources (e.g., the Internet) to perform debt 

collection actions (e.g., identifying assets) are more readily available 

today, however we found that the FLUs typically were not using these 

resources on the cases we reviewed, including more recently opened 

cases. Further, if the FLUs had been following their procedures for 

revisiting cases, the FLUs could have used resources currently 

available to pursue collection.
Appendix III

Comments From the Department of Justice

Page 102 GAO-01-664 Criminal Debt Collection

12. The lack of coordination among the entities involved in assessing and 

collecting criminal debt has been a historical problem for the federal 

government and continues to be a problem based on our reviews at the 

four largest districts. As Justice states on page 7 of its letter, the 

memorandums of understanding set forth the responsibilities of each 

office, but they do not necessarily facilitate coordination. For example, 

as noted in our report, the FLUs are to assist probation offices in their 

collection responsibilities only if requested, putting the FLU in a more 

reactive than proactive role.

13. We note in our report that there was no evidence of a pre-sentence 

report in most of the files we reviewed. Justice commented in footnote 

4 of its letter that pre-sentence reports were redacted from the FLU 

files. EOUSA officials stated during our first district visit that, if a presentence report was removed from the files, a note would be included 

in the file stating that the report was removed. During our reviews, we 

found a few notes in the files indicating that copies of the pre-sentence 

reports had been reviewed, but typically there was no evidence that a 

copy of the pre-sentence report had been obtained or reviewed. As it 

related to cases opened prior to 1990, had the FLUs been revisiting 

cases as required, pre-sentence reports could have been obtained for 

these cases.

14. We disagree and believe that the FLUs should work with probation 

officers to collect debts and not wait for assistance to be requested. We 

agree that the probation officer’s monthly contact with debtors can 

help in assessing collectibility. However, we also point out that 

probation officers’ first priority is to ensure that offenders do not 

engage in criminal activity or violate other terms of probation. Further, 

installment payments accepted by probation officers typically range 

from $25 to $100 per month, and we found in the applicable cases we 

reviewed that the probation officers typically did not recommend that 

larger amounts be paid, even if the offender appeared capable of 

making larger payments.

15. We did not specifically state that criminal debts should be referred to 

Treasury for purposes of cross-servicing, but that criminal debt should 

be referred to Treasury for collection actions. We recommended that 

Treasury work with Justice and the courts to identify the types of 

delinquent debt that would be eligible for referral to Treasury and 

believe that the task force should also address referral issues.
Appendix III

Comments From the Department of Justice

Page 103 GAO-01-664 Criminal Debt Collection

16. We believe that Justice’s current policies and procedures encourage 

information sharing, but they do not specifically require case agents 

and prosecuting attorneys to provide financial information to the FLUs 

in a timely manner. As such, we recommended that these other 

components of Justice be required to provide information within an 

established time frame. We are encouraged that EOUSA, to the extent 

necessary, will work with other components within Justice to develop 

policies and procedures consistent with our recommendation. Also, we 

believe that if AOUSC implements our recommendation for revising the 

language in the JCC, Justice’s collection efforts should no longer be 

limited by its interpretation of payment terms in JCCs.

17. Justice points out that the $13 billion of outstanding criminal debt does 

not accurately reflect “real” potential recoveries. We agree and point 

out throughout the report that there are many factors contributing to 

the growth in outstanding criminal debt. However, based on our 

reviews at the four largest districts, we believe that more needs to be 

done to improve criminal debt collection processes. This includes 

ensuring that criminal debt receivables are appropriately accounted for, 

net of an allowance for uncollectible amounts, based on an adequately 

performed collectibility analysis. As such, we recommended that a task 

force be established to address criminal debt collection issues, 

including debt reporting. Also, although Justice may have collected 

over $1.1 billion in fiscal year 1999, amounts collected during a given 

fiscal year do not necessarily reflect actions taken by the FLUs to 

collect on such debt, but also include collections by other offices (e.g., 

probation offices or debts immediately paid to clerks’ offices). In 

addition, $500 million of the stated $1.1 billion collected during fiscal 

year 1999 related to one case involving an antitrust violation. As noted 

in our report, collections over the past 5 years have averaged about 7 

percent—an indicator that more should be done to increase collections.
Page 104 GAO-01-664 Criminal Debt Collection

Appendix IV

Comments From the Administrative Office of 

the U.S. Courts ApendxiIV

Note: GAO Comments

supplementing those in

the report text appear at

the end of this appendix.

See comment 1.
Appendix IV

Comments From the Administrative Office of 

the U.S. Courts

Page 105 GAO-01-664 Criminal Debt Collection

See comment 2.

See comment 1.
Appendix IV

Comments From the Administrative Office of 

the U.S. Courts

Page 106 GAO-01-664 Criminal Debt Collection

See comment 1.

See comment 3.
Appendix IV

Comments From the Administrative Office of 

the U.S. Courts

Page 107 GAO-01-664 Criminal Debt Collection

See comment 4.

See comment 5.

See comment 6.
Appendix IV

Comments From the Administrative Office of 

the U.S. Courts

Page 108 GAO-01-664 Criminal Debt Collection

See comment 7.

See comment 8.

See comment 9.

See comment 10.
Appendix IV

Comments From the Administrative Office of 

the U.S. Courts

Page 109 GAO-01-664 Criminal Debt Collection

See comment 11.
Appendix IV

Comments From the Administrative Office of 

the U.S. Courts

Page 110 GAO-01-664 Criminal Debt Collection

GAO Comments 1. See “Agency Comments and Our Evaluation” section.

2. We are unsure how the AOUSC calculated that over 85 percent of all 

federal criminal defendants are indigent at the time of their arrest. 

However, as we point out in table 7 of the report, the majority of debts 

(about 65 percent) outstanding as of September 30, 1999, for the four 

districts we visited, were for amounts less than $5,000 and represent 

only $8.9 million (less than 1 percent) of the $5.6 billion outstanding 

balance for these districts. We did not review any cases with 

outstanding debt amounts below this threshold because they were 

deemed immaterial. Criminal fines should be based on ability to pay. As 

such, debt arising from indigent debtors typically would involve fines of 

less than $5,000 and therefore were not selected for review. Restitution 

amounts are based on actual losses typically resulting from the 

conviction of white-collar crimes, involving offenders who have 

defrauded victims of significant assets. As we point out in figure 3 of 

our report, 87 percent of the total amount outstanding in the four 

districts we visited were nonfederal and federal restitution debts and 

only 11 percent were debts involving fines.

3. We commend the efforts of the 76 clerks’ offices that voluntarily agreed 

to accept pre-MVRA restitution payments. However, as we point out in 

our report, having two entities in 18 districts responsible for accepting 

pre-MVRA restitution payments results in wasted resources. In 

addition, at each of the four districts we visited, the clerk’s offices and 

the FLUs maintain separate databases to account for criminal debt 

collections, resulting in duplicative and inefficient data entry. Posting 

information to these databases typically requires the exchange of 

hardcopy information between the clerk and the FLU so that both 

databases can be updated to properly reflect collections and 

disbursements. As the AOUSC points out, the posting of hundreds of 

small-dollar-amount payments from inmates is a time-consuming and 

labor-intensive task, a task also being performed by Justice. Therefore, 

as we recommended, it is important that AOUSC continue to work with 

the 18 districts to accept pre-MVRA payments and for AOUSC and 

Justice to continue to work together to reduce the duplication of data 

entry for collections and disbursements.

4. As we point out in our report, the collection of criminal debt has been a 

long-standing problem for the federal government, and efforts over the 

past 15 years to centralize and automate the process have not been 
Appendix IV

Comments From the Administrative Office of 

the U.S. Courts

Page 111 GAO-01-664 Criminal Debt Collection

successful. The National Fine Center (NFC) was supposed to eliminate 

the need for the clerks’ offices and the FLUs to maintain separate 

databases to account for criminal debt collections. However, an 

independent consulting firm concluded that the task of developing a 

national fine center, involving several agencies in two branches of 

government, proved to be more complex than expected and that the 

needs of the districts could not be met through a national approach. 

Thus, with the consent of the Congress, the centralized approach was 

terminated. Since the NFC effort was terminated, both entities continue 

to maintain separate systems for tracking collections and 

disbursements, resulting in duplicative and inefficient data entry. We 

commend the efforts under way to improve coordination, including the 

planned implementation of a national integrated financial accounting 

system with a criminal accounting module, as discussed in the AOUSC’s 

comments, by fiscal year 2004. However, based on our reviews at the 

four districts that had the largest amount of outstanding criminal debt 

as of September 30, 1999, more needs to be done in the interim to 

reduce the duplication of efforts and enhance coordination. We 

therefore recommended that Justice and AOUSC work together to 

improve such coordination.

5. Our report points out that we found little involvement by the FLUs in 

probation office collections and that district guidance for the four 

districts we visited stated that the FLUs are to assist the probation 

offices, if requested. This results in the FLUs’ taking a reactive instead 

of a proactive role. During our reviews, we found little evidence that 

the FLUs typically monitored collection efforts of probation officers or 

that probation officers requested assistance or notified the FLUs before 

an offender was released from probation. As such, notification may 

have occurred, but it was not documented in the files. And in at least 10 

instances, including 4 from the Southern District of Florida, the 

offenders stopped making installment payments when they were 

released from supervision.

6. We do not criticize the courts for the lack of pre-sentence reports in the 

FLU files but note that in many cases there was no evidence that the 

pre-sentence reports were in the FLU files. We also point out that the 

FLUs are required to obtain a copy of the financial information 

contained in the pre-sentence report from either the probation officer 

or the prosecuting attorney. Similarly, we do not criticize the courts for 

failing to make copies of the judgments available to the FLUs but state 

that the judgment is typically sent to the prosecuting attorney within 
Appendix IV

Comments From the Administrative Office of 

the U.S. Courts

Page 112 GAO-01-664 Criminal Debt Collection

the USAO’s Criminal Division and not to the FLU within the USAO’s 

Civil Division. The prosecuting attorney is to then forward a copy to the 

FLU. We are encouraged that the recently issued guidance requires the 

courts to provide copies of pre-sentence reports and judgments directly 

to the FLUs. Therefore, we recommended effective implementation of 

these policies to help address reported weaknesses in this area.

7. We believe that “providing a mechanism to electronically receive offset 

payments from Treasury” is a significant role. We point out in our report 

that the FLUs referred certain debts to the former Tax Refund Offset 

Program and were successful in collecting payments but that neither 

Justice nor the courts are currently referring delinquent criminal debts 

to Treasury. We also believe that since the courts (1) order defendants 

to pay criminal debt (i.e., initiate a receivable) and (2) are responsible 

for the receipting and recordkeeping for criminal debt, they must also 

play a role in identifying the types of debts that are eligible for referral 

and in determining how collections will be disbursed.

8. Probation offices can and should play a role in assessing collectibility 

for offenders under their supervision. As Justice points out in its 

comments, probation officers have a relatively smaller caseload and 

have monthly contact with the debtor. As such, probation officers are in 

a good position to assess a debtor’s ability to pay while the debtor is 

under their supervision. In addition, since the clerk’s offices are 

responsible for receipting and recordkeeping, they play a role in 

determining when and what debt has been paid, factors that are 

necessary for assessing collectibility.

9. We did not review the court’s procedures in the Southern District of 

Florida for setting targets for the assessment of collectibility. However, 

it is our understanding that these targets were based on what probation 

officers expected to receive from the offenders (e.g., $50 per month per 

an established payment plan) and were not necessarily based on an 

assessment of the offender’s ability to pay amounts in excess of these 

established payments. Also, the assessment does not include an 

assessment of collectibility for the entire district, but only for probation 

officers.

10. A note was added to figures 1, 6, and 8 to remind the reader of the 

MVRA enactment date, and MVRA is discussed throughout the report as 

a key factor in the increase of uncollected criminal debt. Figure 4 

depicts the assessment process as it relates to the criminal debt 
Appendix IV

Comments From the Administrative Office of 

the U.S. Courts

Page 113 GAO-01-664 Criminal Debt Collection

collection process, including the fact that the probation office assists 

the court by preparing the pre-sentence report. It is not intended to be 

all-inclusive. Figure 5 was revised to reflect additional collection 

responsibilities of the FLUs, and the title was changed to more 

accurately reflect the contents of the figure. The entities listed in table 1 

are centralized offices that prepare and issue guidance related to 

criminal debt. We did not add the Congress to the table, because its 

function is to mandate, through legislation, actions that these 

centralized offices are required to take.

11. The four districts we visited had the largest amount of outstanding 

criminal debt as of September 30, 1999. Specifically, these four districts 

represented about $5.6 billion (or 43 percent) of the reported $13.1 

billion of total outstanding criminal debt as of that date. Given the 

historical problems in this area and the conditions we found at these 

four districts, we believe that we can conclude that major 

improvements are needed in criminal debt collection processes.
Page 114 GAO-01-664 Criminal Debt Collection

Appendix V

Comments From the Department of the 

Treasury ApendxiV

Note: GAO Comments

supplementing those in

the report text appear at

the end of this appendix.

See comment 1.

See comment 2.

See comment 3.
Appendix V

Comments From the Department of the 

Treasury

Page 115 GAO-01-664 Criminal Debt Collection
Appendix V

Comments From the Department of the 

Treasury

Page 116 GAO-01-664 Criminal Debt Collection

GAO Comments 1. See “Agency Comments and Our Evaluation” section.

2. Treasury correctly points out that Justice and the courts may have to 

address internal financial management issues related to ensuring that 

debts referred are legally enforceable and that debt balances are 

accurate and up-to-date before being referred to Treasury. However, we 

believe that delinquent debts could be certified on a case-by-case basis 

so that the referral process for eligible debts could begin.

3. Treasury commented that criminal debt should be reported separately 

from administrative nontax debts. We believe that the task force should 

address this as one of the reporting issues.
Page 117 GAO-01-664 Criminal Debt Collection

Appendix VI

GAO Staff Acknowledgments ApendxiVI

Bill Boutboul, Richard Cambosos, Dean Carpenter, Paul Foderaro, Kate 

Francis, David Grindstaff, Sophia Harrison, Casey Keplinger, and Dan 

Mesler made key contributions to this report.
Page 118 GAO-01-664 Criminal Debt Collection

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