Treasury Forfeiture Fund

ACCOUNTABILITY REPORT 

Fiscal Year 2004

DEPARTMENT OF THE TREASURY 

WASHINGTON, D.C.
 

Message from the Director 

I am pleased to present the fiscal year (FY) 2004 Accountability Report for the Treasury 

Forfeiture Fund. While highlighting the Treasury Forfeiture Fund’s (the Fund’s) financial and 

operational performance over the past year, this report also focuses on some of the significant 

achievements and accomplishments made by our participating bureaus this year. FY 2004 was 

a robust and unprecedented revenue year for the law enforcement bureaus participating in the 

Treasury Forfeiture Fund, with revenue of over $335 million from all sources. 

This stellar performance of the Fund reflects the hard work of our law enforcement bureaus as 

well as Treasury Forfeiture Fund Management’s continued emphasis on major case initiatives, 

asset forfeiture program training and a focused approach regarding our performance measure 

which gauges revenue from high impact cases. The mission of the Treasury Forfeiture Fund 

is to affirmatively influence the consistent and strategic use of asset forfeiture by our law 

enforcement bureaus to disrupt and dismantle criminal enterprise. It is our view that the 

greatest damage to criminal enterprise can be affected through large forfeitures, hence we 

have set a target level of 75 percent of our currency forfeitures to be high impact forfeitures. 

Fund Management works through budgetary and policy means to emphasize high-impact 

cases, i.e., those cash forfeiture cases equal to or greater than $100,000 in value. For FY 

2004, we exceeded our target significantly with 84 percent of our cash forfeiture revenue 

stemming from high-impact cases. This is a credit to our law enforcement bureaus and their 

dedication to the fight against crime. 

During FY 2004, the Executive Office for Asset Forfeiture formulated two new training 

curricula for use nationwide and held six training seminars for participating bureau personnel 

with which to introduce valuable new investigative resources and techniques that can be 

applied to forfeiture initiatives. Our training strategy is aimed at fostering the cooperation 

between our participating agencies, as well as identifying and promoting their best 

investigative and forfeiture practices. 

The Treasury Forfeiture Fund continued in its capacity as a multi-Departmental Fund in FY 

2004, representing the interests of law enforcement components of the Departments of 

Treasury and Homeland Security. With enactment of the Homeland Security Act, Treasury’s 

Federal Law Enforcement Training Center (FLETC) and Secret Service were moved to the 

Department of Homeland Security, and the Immigration and Naturalization Service (INS) was 

reorganized with Customs into two agencies: Customs and Border Protection (CBP) and 

Immigration and Customs Enforcement (ICE). The U.S. Coast Guard was also reorganized 

into the Department of Homeland Security and continues its close working relationship with 

legacy Customs. 

As we enter FY 2005, the Fund remains focused on support for strategic investigative 

initiatives that will have the greatest impact on national and international criminal enterprise 

including continued emphasis on training and investigative or operational initiatives that 

emphasize high impact cases. 

 

 Eric E. Hampl, Acting Director 

 Executive Office for Asset Forfeiture 

 U.S. Department of the Treasury 
 

Table of Contents 

Section I: Overview 

Profile of the Treasury Forfeiture Fund......................................................................1 

Strategic Mission and Vision......................................................................................2 

Case Highlights...........................................................................................................3 

Program Performance ...............................................................................................28 

Financial Highlights..................................................................................................31 

Section II: Financial Statements

Independent Auditor’s Report on Financial Statements ...........................................35 

Financial Statements: 

Balance Sheets ....................................................................................................37 

Statements of Net Cost........................................................................................38 

Statements of Changes in Net Position...............................................................39 

Statements of Budgetary Resources....................................................................40 

Statements of Financing......................................................................................41 

Notes to Financial Statements.............................................................................42 

 

Section III: Other Reports 

Independent Auditor’s Report on Internal Control...................................................57 

Independent Auditor’s Report on Compliance with Laws and Regulations.............59 

Exhibit I 

 Reportable Condition..........................................................................................61 

Section IV: 

Required Supplemental Information...............................................................................63 

Section V: 

Other Accompanying Information..................................................................................65 
SECTION I - OVERVIEW 1

OVERVIEW 

Profile of the Treasury Forfeiture Fund 

The Treasury Forfeiture Fund (the Fund) is the receipt account for the deposit of non-tax forfeitures 

made pursuant to laws enforced or administered by law enforcement bureaus that participate in the 

Treasury Forfeiture Fund. The Fund was established in October of 1992 as the successor to the 

Forfeiture Fund of the United States Customs Service. When the enabling legislation for the Fund 

was enacted, 31 USC § 9703, it brought together all of Treasury law enforcement under a single 

forfeiture program. The Fund is a “special receipt account.” This means the Fund can provide 

money to other Federal entities toward the accomplishment of a specific objective for which the 

recipient bureaus are authorized to spend money and toward other authorized expenses. Use of Fund 

resources is governed by law, policy and precedent as interpreted and implemented by the 

Department of the Treasury which manages the Fund. A key precept for Fund management is longterm viability of the Fund in order to ensure that the Fund can support member-bureau seizure and 

forfeiture activities well into the future. The emphasis of Fund management is on high-impact cases 

that can do the most damage to criminal infrastructure. 

 

The original member law enforcement bureaus of the Treasury Forfeiture Fund were the U.S. 

Customs Service (Customs), the U.S. Secret Service (Secret Service), the Bureau of Alcohol, 

Tobacco and Firearms (ATF), and the Internal Revenue Service’s Criminal Investigation (IRS-CI). 

These Treasury bureaus were joined by the U.S. Coast Guard of the Department of Transportation, a 

member of the Fund as the result of a long-standing close law enforcement relationship with 

Customs. 

During FY 2003, with enactment of the Homeland Security Act legislation early that fiscal year, the 

Treasury Forfeiture Fund became a multi-Departmental Fund representing the interests of law 

enforcement components of the Departments of Treasury and Homeland Security. With enactment of 

this legislation, Treasury’s U.S. Customs Service and Secret Service were reorganized into new 

components of the Department of Homeland Security; Treasury’s Bureau of Alcohol, Tobacco and 

Firearms was reorganized into two new components, the revenue segment remaining at Treasury and 

the investigative segment assigned to the Department of Justice; and the Bureau of Immigration and 

Naturalization (INS), formerly of the Department of Justice, was reorganized into the former legacy 

U.S. Customs Service at the Department of Homeland Security joining their Treasury Forfeiture Fund 

colleagues. The U.S. Coast Guard was reorganized from the Department of Transportation to the 

Department of Homeland Security to continue that bureau’s close working relationship with legacy 

Customs. 

As the result of these numerous and complex changes, Fund management was heavily involved in 

efforts to ensure that transition of our participating law enforcement bureaus to their new 

Departmental homes was seamless in terms of impact on their ability to continue to conduct seizures 

and forfeitures and to properly account for the assets of the program. The robust revenue year for FY 

2003, which continued into FY 2004, suggests that these management initiatives were successful. 

The Executive Office for Asset Forfeiture (EOAF), which provides management oversight of the 

Fund, falls under the auspices of the Assistant Secretary for Terrorist Financing, U.S. Department of 

the Treasury. EOAF’s organizational structure includes the Fund Director, Legal Counsel, Assistant 

Director for Policy and Assistant Director for Operations. Functional responsibilities are delegated to 

various team leaders. EOAF is located in Washington, D.C., and currently has 20 full time 

equivalent positions. 
2 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004 

Strategic Mission 

The mission of the Treasury Forfeiture Fund is to affirmatively influence the consistent and strategic 

use of asset forfeiture by law enforcement bureaus that participate in the Treasury Forfeiture Fund to 

disrupt and dismantle criminal enterprises. 

Strategic Vision 

Fund management works to focus the asset forfeiture program on strategic cases and investigations 

that result in high-impact seizures. Management believes this approach affects the greatest damage to 

criminal organizations while accomplishing the ultimate objective – to disrupt and dismantle criminal 

enterprises. 
SECTION I - OVERVIEW 3

Case Highlights 

The following case highlights are intended to give the reader an idea of the types of investigative 

cases worked by the Fund’s law enforcement bureaus during FY 2004 that led to the seizure and 

forfeiture of assets. Such cases as those profiled below are consistent with the Strategic Mission and 

Vision of the Treasury Forfeiture Program, and that is to use asset forfeiture in high-impact cases to 

disrupt and dismantle criminal enterprise. 

Internal Revenue Service, Department of the Treasury 

Racketeering – Pong Keun Rhee and Joon Chol Rhee

 More than $14.6 million was generated from the auction of four commercial properties in Tacoma, 

Washington, forfeited by Pong Keun Rhee and Joon Chol Rhee who each pled guilty to engaging in 

racketeering charges. Pon K. Rhee’s charges related to conspiracy to distribute pseudoephedrine with 

the knowledge and reasonable cause to believe it would be used to manufacture methamphetamine 

and conspiracy to engage in money laundering. Joon C. Rhee’s charges related to conspiracy to 

manufacture methamphetamine and conspiracy to engage in money laundering. 

IRS Criminal Investigation seized the properties based on money laundering violations and operated 

the properties for more than two years through the Treasury Forfeiture Fund’s property contractor, 

EG&G Technical Services. Operation of the properties generated a positive cash flow of over 

$600,000 for the Treasury Forfeiture Fund. The businesses included a 13-acre commercial parcel 

operated as the Star-Lite Swap Meet; a 24-unit strip mall known as South Tacoma Village, containing 

restaurants and retail shops; a 2-unit retail/office building; and a 6-unit retail strip mall and detached 

automotive repair facility. 

The auction of these properties marked the end of an investigation of a multi-agency task force 

comprised of federal and local law enforcement agencies, including IRS Criminal Investigation, the 

Federal Bureau of Investigation (FBI), the Pierce County Sheriff’s Department, the Lakewood Police 

Department, and the Drug Enforcement Administration (DEA.) Active bidding by more than 100 

registered bidders, in a standing room-only crowd of approximately 300 people, drove the total sale 

revenue from the auction of these properties to 178 percent of the independent third party appraisal. 

“We all know how damaging narcotics trafficking is to our society,” said Timothy Marsh, Acting 

Special Agent in Charge of IRS Criminal Investigation in Washington. “But what most people don’t 

realize is that money laundering activities, such as the ones used in this investigation, assist narcotics 

traffickers in the continuation of their illegal actions and allow them to enjoy the fruits of their 

crimes.” 

Rhee was sentenced to eight years in prison and he forfeited the real estate identified above to the 

U.S. Government. 

27-Month Sentence for Conducting Financial Transactions for Criminal Racketeering 

Organization – Chun Hyong Lee, CPA

In a related case, a Lakewood, Washington, accountant, Chun Hyong Lee (Lee), was sentenced for 

structuring currency transactions with and on behalf of members of the Rhee Racketeering 

Organization. The Rhee Racketeering Organization was spearheaded by Pong Keun Rhee and his 
4 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004 

son, Joon Chol Rhee, whose crimes are described in the previous overview section. Lee was 

sentenced to 27 months’ imprisonment, following which he will be required: to participate in a 

substance abuse treatment program as instructed by his United States Probation Officer; to submit to 

a search of his person, residence, office, property, storage unit or vehicle by a probation officer; to 

provide his probation officer with access to financial information, including credit checks and Federal 

Income Tax Returns; to allow his probation officer to inspect computers owned or operated by Lee; 

and to notify his probation officer of all computer software used, purchased, or acquired. In addition, 

Lee was ordered to pay a fine of $7,500 and other fees. 

According to court documents, Lee was a Certified Public Accountant, and owned and operated Chun 

H. Lee Accounting Services in Lakewood, Washington. For some four years, Lee knowingly and 

intentionally structured and assisted in structuring currency transactions for the purpose of evading a 

financial institution’s statutory requirement to report currency transactions of more than $10,000. 

Lee also assisted co-defendant Pong Keun Rhee (Rhee) and his sons, Joon Chol Rhee and Joon Sur 

Rhee, in preparing false financial and income tax documents which were filed with the Internal 

Revenue Service (IRS). These false documents and records were intended to conceal the extent and 

source of the Rhee Family’s criminal proceeds. Lee was aware that the income tax documents he 

prepared on behalf of Rhee and Rhee’s sons, as well as their businesses, substantially understated the 

Rhee Family’s income. Rather than deposit all of the cash proceeds from pseudoephedrine sales in 

bank accounts, Rhee stored large quantities of cash in a safe at Joon’s Variety Store, in an effort to 

hide the funds from the IRS and to conceal the nature, source and existence of those funds. 

Lee assisted and/or counseled Rhee with respect to Rhee’s purchase of several properties, including 

three properties in Lakewood, a commercial warehouse building located at 9602 South Tacoma Way, 

the Korean Town Plaza also known as South Tacoma Village, and the Star Lite Theater also known 

as the Star-Lite Swap and Shop, as well as a piece of real estate located at Lake Geneva. Lee was 

aware that the funds used by Rhee to purchase these properties included funds that were not reported 

as income to the IRS. 

Rhee purchased the Korean Town Plaza with the proceeds of the Rhee Family’s pseudoephedrine 

trafficking. The actual purchase price paid by Rhee to the seller was $3,150,000. Lee arranged the 

transaction so that Rhee paid approximately $300,000 under the table cash to the seller. The 

purchase price reflected on the real estate contract was then falsely reported as $2,850,000. This 

enabled Rhee both to conceal the $300,000 cash and to reduce the annual taxes he would pay as the 

owner of the Korean Town Plaza. Lee further assisted Rhee in concealing approximately $150,000 

cash that was used as earnest money and the down payment for the purchase of the Korean Town 

Plaza. Rhee provided Lee with the cash, who, in turn, provided small quantities of this cash to 

several of his employees, relatives, and associates. At Lee’s direction, these employees, relatives, 

and associates deposited the cash in their bank accounts and issued personal checks and/or purchased 

cashier’s checks for the corresponding amounts. Subsequently, Rhee purchased the Star-Lite 

Theater with the proceeds of the Rhee Family’s Korean Town Plaza. Lee assisted Rhee in concealing 

approximately $450,000 cash that was used as the down payment for the purchase of the Star Lite. 

Rhee provided Lee with the cash, who, in turn, provided small quantities of this cash to several of his 

employees, relatives, and associates. At Lee’s direction, these employees, relatives and associates 

deposited the cash in their bank accounts, and issued personal checks and/or purchase cashier’s 

checks for the corresponding amounts. These checks were provided to Lee and were ultimately 

deposited by Rhee into the Sun Trading account at Twin County Credit Union. A check in the 

amount of $469,900 was then issued out of the Sun Trading account and was used as the down 

payment for the Star-Lite. In this manner, Lee assisted and counseled Rhee with structuring currency 

transactions involving Rhee’s purchase of the Korean Town Plaza and the Star Lite Theater. 
SECTION I - OVERVIEW 5

Insurance Fraud – Lester J. Simmons

The appellate court ruled in favor of the United States regarding the forfeiture of $1.2 million in a 

case involving a northern California chiropractor, Lester J. Simmons, who committed insurance fraud 

through the billing for services not rendered, “up-coding,” billings related to services performed, and 

billing for unnecessary services. Simmons owned and operated seven chiropractic clinics in the 

northern California area. Simmons created a management corporation over which he had total 

control but paid a doctor for the use of his name as the majority shareholder of the medical 

corporation so the transactions between the two corporations would appear as arms-length 

transactions and appear to be legitimate. 

Simmons also committed tax fraud as his tax returns reflected millions of dollars in deductions for 

consulting fees and bogus loan repayments allegedly paid to his common law wife’s deceased 

mother. Simmons amassed a fortune in excess of $8 million that included luxury vehicles, boats, 

bank accounts and real properties in Mexico and California. Simmons attempted to flee the country 

and when he was arrested at the Canadian border he had in excess of $3 million in negotiable 

instruments in his possession. The case netted a total of $2.2 million in forfeitures and in excess of 

$3 million in funds applied to Simmon’s tax liabilities. Simmons served 33 months in prison as a 

result of his fraud. This case was worked by IRS CI Agents. 

Bentley forfeited pursuant to the Simmons Case
6 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004 

Money Laundering – Americable International

Americable International, Incorporated, Miami, Florida; Americable International, Incorporated, New 

York, and Americable International Moffett, Incorporated, pled guilty to conspiring to defraud the 

United States. In addition, Americable International, Incorporated, the parent company, pled guilty 

to a money laundering conspiracy to launder proceeds of mail fraud. A final order of forfeiture was 

subsequently issued in favor of the United States for fraud proceeds totaling $8,075,445. 

This firm and other Americable companies provided cable service to customers in the United States 

and Japan. Proceeds due to networks for providing programming to Americable customers were 

diverted into the personal bank account of the company head, Charles Hermanowski. The scheme 

resulted in over $8 million of fraud proceeds being siphoned from the Americable companies into 

Hermanowski’s personal bank account. 

During the course of the investigation, Hermanowski fled the jurisdiction of south Florida and was 

later arrested in Australia. 

Mansion forfeited pursuant to the Simmons Case
SECTION I - OVERVIEW 7

Illegal Proceeds - Prostitution

In September 2003, the L.A. County Sheriff’s Department executed a search warrant at the home of 

two individuals in Rancho Palos Verdes, California. During the search, detectives found $2,434 in 

cash. Various bank accounts were also served with seizure warrants by the L.A. Sheriff’s 

Department, bringing the total amount of funds seized to $2,789,862. The couple operated a business 

known as Oriental Acupressure in Inglewood, California. Oriental Acupressure is a known house of 

prostitution and has engaged in acts promoting prostitution, which had ostensibly enabled the couple 

to attain large amounts of cash income. These alleged illicit proceeds were laundered and not 

reported as income on their personal income tax returns. 

The investigation started with an inquiry into JHJ Education College, following numerous complaints 

that the school had misrepresented student enrollments and completion of certified classes. An 

undercover agent enrolled in the college and attempted to obtain a diploma without attending classes. 

During the undercover operation, the owner of the school explained that they would give the agent a 

degree for a sum of money and also explained the agent should attend a class at the college because it 

was important that the agent at least know a little about massage/acupressure techniques so that she 

would not get in trouble with the police. The owner also told the agent that she would refer her to a 

location where she could make $20,000 per month performing acts of prostitution. The owner 

referred her to Oriental Acupressure. IRS CI agents were able to determine through analysis of 

financial records that Oriental Acupressure generated at least $1.2 million in illegal income during a 

calendar year. Based upon the analysis, IRS CI agents were able to determine that the couple had 

laundered the proceeds of their illegal activities through what appeared to be a legal business in order 

to conceal the source and nature of the funds. In June 2004, a seizure warrant was served on the 

$2,789,881 in U.S. currency seized from the couple. 

Cocaine Trafficking/Money Laundering – Cruz and Connie Castro

IRS Criminal Investigation, San Antonio, is a member of a multi-agency, federal, state and local 

investigative bulk currency task force. On June 25, 2003, one of the local police departments of the 

task force developed an informant that led detectives to Cruz and Connie Castro, a husband and wife 

from Austin, Texas, who were involved in cocaine trafficking. State search warrants were executed 

at two commercial storage units in Del Valle, Texas. The storage units were in the names of Mr. 

Castro’s family members, however, it was established that Mr. Castro rented the units and maintained 

control of them. Searches yielded in excess of $1,300,000 in U.S. currency from one of the units and 

approximately eleven pounds of cocaine, numerous empty cocaine wrappers, product used to cut or 

dilute cocaine, and several cocaine presses from the other unit. 

Additional documentary and other evidence obtained from subsequent federal search warrants 

indicated that Mr. Castro was importing multi-kilogram quantities of cocaine from Phoenix, Arizona 

via chartered jet service. Previously gathered intelligence revealed Mr. Castro and others had been 

identified as potential smugglers of illegally controlled substances and that Mr. Castro utilized 

chartered jet services to transport extremely large amounts of currency. 

On July 18, 2003, Mr. Castro was interviewed and stated that he was a member of a cocaine 

importation/distribution and money laundering organization. He stated he had been traveling 

between Austin, Texas and Phoenix, Arizona, since approximately January 2000 and smuggling 

multi-kilogram quantities of cocaine and bulk currency from narcotics sales via chartered jet service. 

Since that time, Mr. Castro stated he transported in excess of 1000 kilograms of fronted cocaine and 

$14 million in U.S. currency derived from the sale of that cocaine. 
8 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004 

Mr. and Mrs. Castro, two of Mr. Castro’s brothers and Mr. Castro’s mother have cooperated with 

investigators and pled guilty to charges of narcotics distribution and money laundering. The 

investigation resulted in the forfeiture of several vehicles and in excess of $1,368,000 in U.S. 

currency. 

Illegal Prostitution – Ronald Grab

IRS Criminal Investigation, New York, in conjunction with the Suffolk County District Attorneys’ 

Office conducted an investigation of an illegal prostitution business, Exotic Escort Agency, co-owned 

and operated by Ronald Grab and his wife Melissa Grab. The Suffolk County District Attorneys’ 

Office initiated the investigation that led to the arrest of Ronald and Melissa Grab. As a result of 

consensual and court authorized search warrants, $1,020,824 was seized. These funds were turned 

over to the custody of the United States pursuant to an ex-parte order dated August 7, 2003. A Final 

Order of Forfeiture for these funds was entered with the United States District Court in the Eastern 

District of New York on March 4, 2004, pursuant to Title 18 USC § 981(a)(1)(C). 

The investigation into the Grab’s operation of the Exotic Escort Agency revealed that they were 

operating and soliciting an illegal and illegitimate prostitution business. In various conversations 

with the undercover detective, Ronald Grab revealed that the Exotic Escort Agency’s gross monthly 

income was $50,000. Mr. Grab stated he did not take the money to the bank but hid it. Mr. Grab also 

said he used the money to purchase money orders to pay bills associated with the Exotic Escort 

Agency so that the money could not be traced to him. 

“Cooperative Contractors” Forfeit $5 million for Role in Kickback Scheme – New York

As part of a $5 million forfeiture judgment, $547,027 was forfeited to the U.S. Government in 

October 2003. The subjects of this forfeiture ran three construction firms in the Freeport, New York 

area. The subjects pled guilty in November 2001 to participating in a tax fraud where nearly 

$1,000,000 in corporate checks were issued to their subcontractors to pay fraudulent invoices 

generated at their direction. In January 2002, these companies which had performed work for a 

number of U.S. Department of Transportation projects, were ordered by a U.S. District Court Judge 

in Central Islip, New York, to forfeit $5,000,000 for their part in the kickback scheme. 

Money Laundering Yields Forfeiture of Ranches, Bull Semen and Other Property

As a result of an investigation carried out by IRS and Immigration and Customs Enforcement in 

Sneads, Florida, the following property was forfeited in November 2003: a 912 acre ranch in Jackson 

County, Florida; a 776-acre ranch in Gadsden County, Florida; more than 630 head of cattle; 5,000 

units of bull semen and farm equipment. The owner and his two sons were involved with “The 

Company,” a Cuban-American-led cocaine operation that flourished in Miami in the 1980’s and 

1990’s. The father was a close associate of two notorious kingpins of The Company, which cleared 

more than $2 billion in profits from its cocaine-smuggling business. 

Not Groceries in the Brown Paper Shopping Bag – Narcotics Proceeds

IRS CI agents and detectives assigned to the Miami Task Force observed a suspect receive a package 

during a meeting in a supermarket parking lot. While the suspect was stopped in the parking lot, the 

agents asked the suspect if she was willing to speak to them. The suspect consented and when asked 

what was in the bag she received from the male, with whom she had met, she denied knowledge of 

what was in the bag. She stated she met with the man because another man in Medellin asked her to 
SECTION I - OVERVIEW 9

meet this person and receive a package from him. She consented to a search of her vehicle and the 

use of a narcotics dog. The narcotics dog, “Marco,” alerted positively to the presence of narcotics 

odor from a brown paper shopping bag containing two shoe boxes. The bag was open at the top and 

there was a round hole in the top of the shoe box revealing a stack of currency. The shoe boxes were 

opened and found to contain a large amount of U.S. currency wrapped in bundles with rubber bands. 

Subsequent to the vehicle search, consent was given to search the suspect’s residence with a drug 

dog. The dog alerted positively to an open box of U.S. currency wrapped in rubber bands. The 

currency from the vehicle and residence totaled $373,415. The currency was administratively 

forfeited by IRS CI in January 2004. 

Operation “Lobster Pot” – Narcotics Proceeds

Operation “Lobster Pot,” was worked by IRS CI with assistance from the Maine Drug Enforcement 

Agency, Rockland Police Department (who originated the case) and Waldo County Sheriffs 

Department. IRS CI agents documented a significant accumulation of assets by the suspect including 

the purchase of antique automobiles and motorcycles as well as the building and renovation of his 

personal residence and a rental property. The investigation also revealed the suspect had made 

substantial cash loans to third parties, which he used as a method of legitimizing his narcotics income 

by reporting interest income earned on his loan payments. The suspect started a construction 

company, purchasing expensive construction equipment that he then transferred to his solely owned 

corporation. The investigation traced hundreds of financial transactions in order to show that the 

suspect laundered over $1,400,000 in an effort to make his narcotics income appear legitimate. The 

suspect was charged in a 170-count indictment with 4 counts of tax evasion, 163 counts of money 

laundering, 1 count of drug conspiracy, 1 count of money laundering forfeiture and 1 count of 

narcotics forfeiture. The criminal forfeiture counts resulted in the forfeiture of assets valued at 

approximately $700,000 including antique automobiles, motorcycles, construction equipment, 

mortgages, stocks and three real properties. One of the forfeited assets, an E-Trade account held by 

the suspect, was liquidated and $130,007 was deposited to the Treasury Forfeiture Fund in January 

2004. 

Illegal Sports Betting – New York

Beginning in February 2000, IRS CI initiated an investigation into a multi-million dollar illegal 

sports betting operation operating in the metro New York area. During the course of the 

investigation, evidence was obtained regarding the identity of one of the organizers of this operation. 

Following a search warrant of the subject’s residence, currency, financial records and safe deposit 

box keys were seized as evidence. Analysis of the financial records revealed the subject had no 

legitimate source of income; no income other than that obtained from illegal sports betting. The 

subject used the proceeds of his illegal sports betting operation to purchase a house in East Hampton, 

New York; a condominium in Aventura, Florida; and a luxury pleasure boat. He also used proceeds 

to make extensive improvements to his East Hampton residence. The subject laundered the proceeds 

of the illegal sports betting operation through the use of bank accounts at J.P. Morgan Chase and 

Wachovia Bank as well as in the safe deposit box located at Wachovia Bank in Florida. Based upon 

the investigation, it was determined that the subject had engaged in an illegal gambling business and 

monetary transactions derived from specific unlawful activities. A Consent Order of Forfeiture dated 

June 18, 2003, awarded the United States Government a judgment in the amount of $150,000. 

Accountant Embezzles – Loses...

An accountant, hired in 1996 as the Chief Financial Officer of a successful firearms manufacturer, 

contracted with the company to pay him $125,000 per year plus a $3 million bonus for his assistance 
10 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004 

in acquiring an additional company. The accountant set up an account in the name of M&D 

Consulting and arranged to have his earnings deposited there as a way to avoid the detection of the 

IRS to whom he owed over $300,000. Shortly after being hired, the subject started using the 

accounts of the firearms manufacturer to pay for personal items for himself. He gradually increased 

the amounts he was embezzling from the company until he was transferring approximately $250,000 

per month into accounts he controlled. The subject frequently tried to make these transactions appear 

to be legitimate transfers by sending false bills to the company. Eventually, he purchased a $2 

million home in the exclusive San Diego community of Rancho Santa Fe, California using funds he 

transferred from the company to pay for the down payment. He wire transferred these funds from 

one account to another to conceal the true source and nature of the funds, which constituted moneylaundering violations. Following the exposure of the scheme, he was fired from the company and put 

his California home up for sale. IRS agents were able to establish probable cause that he had 

engaged in money laundering violations and obtained a seizure warrant for the proceeds of the 

escrow account established during the sale of the home in the San Diego area. The amount of 

$183,323 represents proceeds from the sale of the residence. 

Money Laundering and Bulk Currency Smuggling

The Treasury Forfeiture Fund places significant emphasis on investigative funding that spawns 

cooperation between Federal and State and local law enforcement agencies, and accordingly, 

provides significant funding to Joint Operations of its participating bureaus. Among the significantly 

productive joint operations funded through this initiative was the South Texas Asset Forfeiture and 

Money Laundering Task Force. IRS CI agents work closely with other law enforcement agencies of 

the South Texas Asset Forfeiture and Money Laundering Task Force to concentrate investigative 

efforts for the successful prosecution and dismantling of large-scale narcotics and money laundering 

organizations and the forfeiture of illegal assets. The following cases are examples of the South 

Texas Asset Forfeiture and Money Laundering Task Force activity: 

$992,632 seized for forfeiture

This seizure resulted from an investigation by IRS CI called to the scene by the Texas Department of 

Public Safety. A Texas Trooper pulled over a vehicle and observed that both occupants were visibly 

nervous and gave conflicting accounts of their activities and destination. The Trooper also noticed 

that when he tapped on the side of the vehicle to get the attention of the passenger, he heard a solid 

sound rather than a hollow sound customary when the quarter panel of this type of vehicle is tapped. 

The Trooper requested consent from the subject to search the vehicle and consent was granted. A 

canine called to the scene alerted to the quarter panel section and the driver’s door panel. The 

Trooper also noted that the screws attaching the quarter panel cover in place had been removed 

recently indicated by the fact that the screws had shiny tool marks on the sides. When the cover was 

removed, 42 bundles of shrink-wrapped cash were discovered in the cavities of the driver’s side and 

passenger doors. The cash totaled $992,632. The cash emitted a strong odor of marijuana. During 

an interview with the passenger, he admitted that he knew the money was in the vehicle and they 

were going to deliver the money to someone in Mexico. Based upon the investigation as summarized 

above, IRS CI agents were able to establish probable cause that the subject was engaged in money 

laundering violations, as well as committing the offense of Bulk Currency Smuggling. The currency 

was seized for forfeiture. 
SECTION I - OVERVIEW 11

$369,980 seized for forfeiture

On December 22, 2003, the Texas Department of Public Safety stopped a subject for speeding in a 

construction zone. The Trooper observed that the subject was extremely nervous and made 

conflicting statements regarding his activities. The Trooper became suspicious that the subject might 

be involved in criminal activity and asked for consent to search the vehicle and the consent was 

given. During the search, the Trooper noticed, similar to the previous case, that there were shiny 

marks on the bolts of the rear seat indicating that they seat may have been recently moved, unusual 

for a new vehicle. When the Trooper looked under the rear seat, he found a duct-taped bundle in a 

false compartment. The Trooper removed the bundle and observed U.S. currency in the bundle. The 

subject and the vehicle were moved to the Kleberg County Sheriffs Department for further 

investigation. A canine was brought in to search the vehicle and alerted to the rear passenger doors 

and rear seat area. When the rear seat cover was removed, five additional bundles of U.S. currency 

were discovered. The subject was arrested on state money laundering charges. IRS CI agents 

interviewed the subject’s wife who provided information that conflicted with the subject’s account of 

his activities. Based upon the investigation as summarized above, IRS CI agents were able to 

establish probable cause that the subject was engaged in money laundering violations as well as 

committing the offense of Bulk Currency Smuggling. The cash was seized for forfeiture. 

$5,301,920 seized for forfeiture

In November 2003, the Texas Department of Public Safety conducted a traffic stop of a semi-trailer 

pursuant to a routine safety inspection. The driver waived his Miranda Rights and told the officer he 

was carrying a lot of money but he was unsure of how much. During a search, officers found 

$5,301,920 in currency. Both the currency and the semi-trailer were seized. The driver admitted that 

he had met two individuals who had offered him money to pick up and deliver a truck to Texas. 

After the delivery, he flew back to Chicago where he met with the two individuals again and they 

discussed the delivery of 2,000 pounds of marijuana. The suspect was charged with conspiracy to 

commit money laundering and both the currency and truck were forfeited. 

Company Owner and Founder Applies for Loans Using Job Applicants Information Indicted 

on Bank Fraud, Wire Fraud and Money Laundering Charges

 

In a joint investigation by the IRS and the FBI, the owner and founder of Amerifunding Inc., a 

Mortgage Brokerage in Westminister, Colorado, was indicted for fraudulently applying for loans 

using the identities of people who applied for employment at his company. He also allegedly 

submitted false W-2s to mortgage lenders, paid an individual $1,000 to falsely verify employment of 

loan applicants and made misrepresentations to acquire loans, among other offenses. 

Flagstar Bank, which advanced over $19 million to Amerifunding to fund 42 loans, confirmed that 

Amerifunding applied for and received loans in the names of six people without their authorization. 

At least two of those people had applied for jobs at Amerifunding, including one man who was 

contacted by Flagstar about a $529,000 home loan he knew nothing about. 

It is anticipated the funds seized will be returned to the victim lenders. 
12 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004 

Immigration and Customs Enforcement 

U.S. Reservation Bank & Trust (USRBT) Prime Bank Scam

On April 3, 2002, Judge Earl H. Carroll of the United States District Court for the District of Arizona 

granted a request for various emergency orders to halt a nationwide, $88 million investment scam, 

and to recover and conserve assets for the benefit of victims of the scam. The SEC filed complaint 

alleged that the USRBT, a non-incorporated entity granted business charters by the Rosebud Sioux 

based in Scottsdale, Arizona, and Global-Link Capital Markets, Ltd. (“Global Link”), a limited 

liability company headquartered in Houston, Texas, raised $78 million through sales of an investment 

combining a “Leveraged Profit Sharing Agreement” (“LPSA”) with an uninsured Certificate of 

Deposit (CD) issued by USRBT. According to the complaint, USRBT and Global-Link officials 

promised investors that their funds, while held in “safekeeping,” would be “leveraged” to fund 

participation in “trading programs” involving United States Treasury notes and “bank debentures.” 

The complaint further alleged that USRBT and Global-Link officials promised the investors that they 

would receive the greater of 20 percent of the profits from the trading programs or the interest on the 

USRBT-issued CD. 

The complaint indicated that in reality the USRBT never leveraged investor funds for investment in 

trading programs; rather, USRBT used most of the investor funds to make “Ponzi” payments of 

interest and principal to the investors. In addition, USRBT officials misused investor funds by 

spending over $4 million on salaries, commissions and personal and business expenses, including a 

horse racing stable and purported casino development company. 

The complaint alleged that in a USRBT spin-off scheme, Higher Investments Technologies, Inc. 

(“HIT”), a Nevada corporation headquartered in Mundelein, Illinois, fraudulently raised over $10.6 

million from at least six investors or investment groups. HIT offered investors an opportunity to 

participate in its “Capital Management Agreements” (“CMAs”) in which HIT, according to its 

representations to investors, would use their funds to trade in Treasury bond futures and then share 

the profits with the investors. In reality, HIT used only about 10 percent of the investors’ funds for 

such trading, and HIT misused most of the remaining investors’ funds by spending them on its office 

expenses, including rent, supplies, computers, office repairs, payroll, and travel, according to the 

complaint. 

The U.S. Attorneys Offices in Phoenix and Cincinnati filed civil forfeiture actions against USRBT 

and HIT, and seized $20 million and $10.2 million, respectively, against the two entities. The $20 

million forfeiture was recorded during FY 2004 and restitution will be made to victims. 

Adult Video Store Seized for Racketeering

The following case information is extracted from an article in The Brownsville Herald, entitled 

“Dollar Adult Video brings in last dollar,” dated October 1, 2004. 

The Dollar Adult Video Store in San Benito, Texas, is no longer bringing in the dollars. The video 

store and 27 other adult-oriented businesses in Texas, Arizona and New Mexico owned by John 

Kenneth Coil were seized during the week pursuant to an ICE investigation called “Operation 

Skimflick.” The seizures stem from a case against Mr. Coil who pleaded guilty on June 21, 2004, to 

federal charges of racketeering, obscenity, fraud and income tax evasion. As part of his plea 

agreement, the District Court ordered that Mr. Coil spend 63 months in prison, pay a $5,000 fine and 
SECTION I - OVERVIEW 13

forfeit $8.1 million in property which includes more than two dozen adult video stores. Mr. Coil was 

also ordered to spend an additional 42 months of supervised probation. 

Counterfeit Cigarette Traffickers Arrested in Los Angeles

Two San Gabriel Valley men were charged with conspiracy and trafficking in counterfeit cigarettes 

following their arrest by agents with U.S. Immigration and Customs Enforcement (ICE) agents. 

Geoffrey Liu of Rowland Heights and Xing Wu of San Gabriel were taken into custody on July 9, 

2004 in Los Angeles after delivering more than 8,000 cartons of counterfeit Marlboro Light cigarettes 

to a storage facility in El Monte. The arrests capped a year-long ICE undercover investigation. 

"These men were major local players in the trafficking of counterfeit cigarettes," said Kevin Kozak, 

Los Angeles ICE associate special-agent-in-charge, after the arrest. "This type of trafficking is a 

multi-billion dollar international industry that pumps incredible profits into criminal organizations. 

This illegal enterprise exposes a vulnerability to the American economy and a vulnerability to U.S. 

borders. The number of ICE investigations into tobacco smuggling has increased by roughly 300 

percent in the last three years." 

During the investigation, an undercover ICE agent met Liu, and purchased 900 cartons of counterfeit 

cigarettes from him. The agent told Liu that he could broker the purchase of another $100,000 worth 

of counterfeit cigarettes. Not long before the arrest, Liu told the agent that the delivery of that load 

would require three trips, and left to conduct the first delivery himself. Liu returned and told the agent 

that two drivers would deliver the remainder of the cigarettes. Under surveillance, Wu was observed 

in a Mercedes SUV following the delivery truck as it made two trips to the storage facility and 

emptied a storage locker there. After the final delivery, the ICE agent turned the $100,000 over to 

Liu, who was then arrested. Wu was taken into custody nearby at the same time. As a result of the 

operation, ICE agents seized more than 8,000 cartons of counterfeit cigarettes along with the delivery 

truck and Wu's Mercedes SUV. 

The potential illegal profits from cigarette smuggling are staggering. A carton of counterfeit 

cigarettes can cost as little as $2 to produce in Asia. That same carton can be sold on the streets of 

Los Angeles for $70 dollars or more. The smuggling of cigarettes into the United States evades 

customs duties, Federal excise taxes, state taxes, possibly local taxes, and reduces monies collected 

by 46 states pursuant to a Master Settlement Agreement between the states and cigarette 

manufacturers. 

ICE Dismantles Major Counterfeit Motion Picture Network

As reported on July 30, 2004 in Washington, D.C., ICE and Chinese authorities dismantled a major 

counterfeiting network. The first joint investigation resulted in six arrests; seizure of 210,000 pirated 

movie DVDs; and three motion picture counterfeiting warehouses destroyed in China. 

The Department of Homeland Security's U.S. Immigration and Customs Enforcement (ICE), the 

Chinese Ministry of Public Security (MPS) and the Motion Picture Association of America (MPAA) 

announced the results of the first-ever joint law enforcement investigation by ICE and Chinese 

authorities targeting a network that distributed counterfeit motion pictures worldwide. 

This landmark case illustrates the effectiveness of ICE's “Cornerstone” initiative, which targets the 

alternative financing mechanisms that terrorist and other criminal organizations could use to earn, 

move and store assets. Intellectual property rights violations provide a lucrative source of funding 

increasingly exploited by organized criminal groups. In recent years, intellectual property crime has 
14 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004 

grown exponentially due to the spread of enabling technology that allows for simple and low-cost 

duplication. High demand for consumer goods such as DVDs, CDs and computer software also feeds 

the problem. 

"The lure of high profit and a perceived lack of enforcement consequences has increasingly 

emboldened counterfeiters," said Michael J. Garcia, Assistant Secretary for ICE, Department of 

Homeland Security. "Through Cornerstone, ICE is working aggressively to change that perception. 

This joint enforcement action shows a major advance in fighting intellectual property crime around 

the world - from where it originates to where it flourishes." 

On July 1, 2004, officers from the Economic Crime Investigation Department of the Chinese MPS 

and the Shanghai Public Security Bureau carried out enforcement actions in China that resulted in the 

arrest of six individuals, including at least one American citizen. The arrested U.S. citizen is 

Randolph Hobson Guthrie III, a.k.a. Randy Guthrie, age 37, who has lived in Shanghai for nearly ten 

years and also lists addresses in New York, Miami Beach and Palm Beach. 

In addition, the enforcement actions in China led to the seizure of more than 210,000 counterfeit 

motion picture DVDs and approximately $67,000 in U.S. currency as well as 222,000 Chinese 

Renminibi (RNB). Chinese authorities also located and destroyed three warehouses that were being 

used to store counterfeit motion picture DVDs for distribution around the globe including the United 

States. 

The arrests and seizures are the product of a joint effort between ICE agents and Chinese law 

enforcement called "Operation Spring." Launched in September 2003 by the ICE Resident Agent-inCharge office in Gulfport, Mississippi, and investigated jointly with the Special Agent-in-Charge in 

Houston, Texas, the investigation grew to include the ICE Attaché in Beijing, China, the ICE Special 

Agent-in-Charge office in Houston and the ICE Intellectual Property Rights (IPR) Center in 

Washington, D.C. The U.S. Attorney's Office for the Southern District of Mississippi also played a 

key role in the investigation. 

In April 2004, agents assigned to the ICE Attaché in Beijing reached out to Chinese authorities and 

began sharing information on the investigation. The Economic Crime Investigation Department of the 

Chinese MPS assigned the Shanghai Public Security bureau to work with ICE on the case. After 

months of joint investigation with ICE, Chinese authorities were able to develop sufficient evidence 

against the suspects and their global counterfeit sales network to make arrests. The Shanghai Public 

Security Bureau launched its enforcement actions on July 1 and continued to investigate the case in 

conjunction with ICE. 

The MPAA provided crucial assistance and background information to U.S. and Chinese law 

enforcement agencies in this case. The MPAA has closely tracked the negative economic effects on 

member studios caused by this particular counterfeiting network and other accused intellectual 

property rights violators worldwide. In total, the MPAA estimates that the U.S. motion picture 

industry loses more than $3.5 billion annually in potential worldwide revenue due to piracy. 

At a press conference in Shanghai, the Chinese Ministry of Public Security noted, "Over the past few 

years, in the field of combating the piracy of intellectual property, China's Ministry of Public Security 

and U.S. Immigration and Customs Enforcement have enjoyed close cooperation. This case is a good 

example for future investigations on such criminal cases. It demonstrates the attention that both 

agencies give to intellectual property rights crimes and also shows that both sides can work together 
SECTION I - OVERVIEW 15

under the principle of understanding, trust, equality and cooperation. It also shows mutual respect for 

each other's national laws and regulations." 

"I applaud U.S. Immigration and Customs Enforcement for their strong leadership in engaging the 

Chinese Government in a successful joint effort to disrupt an international organized criminal 

network involved in optical disc piracy in China," said Jack Valenti, President and CEO of the 

Motion Picture Association of America, Inc. "When such raids are routinely followed by criminal 

prosecutions that result in deterrent jail sentences, then China will succeed in its fight against piracy. 

Vice Premier Wu Yi had pledged last April that China would significantly reduce its piracy levels by 

year's end. This raid is one important step toward redeeming those pledges. Piracy in China is at a 

crisis level with losses to our companies estimated at $178 million. Only the will of the Chinese 

Government at the highest level can turn the tide of piracy." 

Dunn Lampton, the U.S. Attorney for the Southern District of Mississippi, added: "The protection of 

intellectual property rights is of vital concern to our nation. Success in this arena will not be achieved 

without further coordinated investigations of this kind." 

Moluccan Church Fraud Scheme

A church that was supposed to invest funds in providing assistance to refugees invested more than 

$25 million in a fraud scheme instead. The investigation began with the seizure of approximately 

$25 million from a bank account in London in 1998. In January of 2002, the Federal Court in New 

York forfeited the funds to the United States, which balance was held on deposit pending the 

conclusion of all appeals. There were several victims in this case and in March 2004, final 

determinations were made as to the amounts that victims would receive in restitution and restitution 

was made which totaled approximately $30 million including interest earned prior to September 

2002. 

Customs and Border Protection 

Marijuana in Border-Crossing Tractor Trailer

On November 11, 2003, U.S. Customs and Border Protection (CBP) officers at the World Trade 

Bridge in Laredo, Texas, seized more than a ton and a half of marijuana hidden in a tractor-trailer. 

The driver was arrested. A CBP officer examining a tractor-trailer hauling a load of welded utility 

fence noted some discrepancies in the manifest, but the driver left the scene before the officer could 

refer him to secondary inspection. CBP officers stopped the driver at the exit gate and referred the 

tractor-trailer for a non-intrusive imaging system scan. The scan indicated anomalies within the 

merchandise. CBP canine “Miaka” also alerted to the odor of marijuana in the trailer. Upon further 

examination, CBP officers discovered 67 bundles containing a total of 3,164 pounds of marijuana 

with an estimated street value of $3.1 million. 

The driver, Jose Alberto Perez-Aranda, 34, a Mexican national from Nuevo Laredo, Tamaulipas, 

Mexico, was arrested on federal charges of importation and possession with intent to distribute a 

controlled substance. 

Agriculture Inspector finds 3 Kilos of Cocaine in Luggage of “Nervous” Passenger

On November 4, 2003, Agriculture inspectors discovered three kilos of cocaine in a wooden box. A 

CBP agriculture inspection (AI) technician was questioning a courier from TACA Airlines at the port 

of Los Angeles. The AI technician referred the passenger to agricultural secondary inspection, as he 
16 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004 

seemed very nervous responding to questions. In secondary inspections, an AI inspector x-rayed the 

luggage and spotted an unusual image inside a wooden box. Inside the box were three kilos of 

cocaine. 

Heroin and Cocaine in Frozen Fish from Panama

On November 7, 2003, a CBP antiterrorism-contraband enforcement team (AT-CET) found cocaine 

and heroin hidden in frozen fish. In Charleston, South Carolina, an AT-CET targeted a vessel 

arriving from Panama. The targeting team identified 51 containers that had landed in Panama from 

Costa Rica for several days before being laden aboard the vessel. Physical examination revealed a 

blue suitcase among frozen fish. The suitcase contained six packages shaped like the soles of shoes. 

Inspection of the packages produced a substance that field-tested positive for heroin. A further 

inspection of 43 additional “bricks” and “tubes” found in the suitcase produced a substance that fieldtested positive for cocaine. In total, 8 pounds of heroin and 82.5 pounds of cocaine were seized. 

Tunnel Swallows Border Patrol Vehicle

In November 2003, the second time in two months, law enforcement officials with the Department of 

Homeland Security, uncovered a cross-border tunnel that apparently ran from Mexicali, Mexico to a 

flood basin in Calexico, California. The tunnel was just 200 yards east of another tunnel unearthed in 

September 2003. Authorities’ suspicions were aroused after a vehicle driven by a CBP Border Patrol 

Officer plunged into a sinkhole while the officer was patrolling along the border fence. CBP officials 

returned to the scene to investigate and discovered what appeared to be a tunnel about 15 feet 

underground. ICE Agents dispatched to initiate a formal investigation found the tunnel largely 

flooded, hampering efforts to locate its terminus on the United States side. South of the border, 

Mexican authorities have traced the tunnel’s origin to a large brick building occupied by a ceramic 

tile business. The city of Calexico furnished heavy machinery and equipment operators and 

excavated the tunnel. Authorities determined that this tunnel, like the previous one, had a 

sophisticated lighting and ventilation system. 

Sport Utility Vehicles Comes with Homemade Compartment and $995,500.00

Customs and Border Protection officers in Champlain, New York, conducted an enforcement 

operation at the Rouses Point, New York, Port of Entry. A female subject attempted to enter the 

United States form Canada in a sport utility vehicle. Further examination of the trunk area of the 

vehicle resulted in the discovery of several duct-taped packages hidden in a homemade compartment 

in the rear cargo area. In total, ICE agents seized $995,500.00. 

Nogales Inspectors Find $464,436 in lieu of $100 Declaration

Customs and Border Protection Inspectors assigned to the Port of Nogales, Arizona, selected a 

vehicle for inspection at the Nogales Port of Entry. Inspectors explained the currency reporting 

requirements to the sole occupant of the vehicle. The occupant stated that he was carrying only 

$100.00 in U.S. currency, however a canine alerted to the presence of currency in the vehicle. The 

“rocker panels,” of the vehicle were then inspected revealing hidden U.S. currency. Upon further 

inspection, additional hidden compartments containing numerous packages of U.S. currency wrapped 

in cellophane were discovered. ICE agents were called and the occupant admitted knowledge of the 

currency totaling $464,436. The $464,436 was subsequently forfeited to the U.S. Government. 
SECTION I - OVERVIEW 17

$700 Declared, $991,400 Found

On March 14, 2004, Customs and Border Protection Inspectors assigned to the Rouses Point, New 

York Port of Entry (POE) selected a vehicle for inspection. An examination of the vehicle led to the 

discovery of taped packages concealed inside a homemade hidden compartment. The occupant of the 

vehicle stated that she was transporting $700 U.S. dollars. In total, CBP Inspectors seized $991,400. 

ICE agents were contacted and conducted an investigation. On July 29, 2004, the $991,400 in U.S. 

currency was administratively forfeited to the U.S. Government. 

$518,461 In U.S. Currency Inbound

In February 2004, CBP Inspectors at the Eagle Pass, Texas Port of Entry examined a vehicle being 

driven from Mexico into the United States. Upon examination of the vehicle, a CBP canine alerted 

positive to the floor of the vehicle. Further examination led to the discovery of $518,461 in U.S. 

currency. On July 29, 2004, the $518,461 In U.S. currency was forfeited to the U.S. Government for 

money laundering violations. 

U. S. Secret Service 

Nigerian Advance Fee Fraud Scheme

This case originated with the Miami Field Office when Bank of America (BOA) investigators in 

Tampa became suspicious of a $98,000 check that was deposited into the account of one BOA 

customer, who then wire-transferred the $98,000 to another BOA account belonging to a financial 

services company in Miami. Upon examining the account, BOA investigators noticed a large amount 

of wire transfers in and out of the account. BOA investigators called the South Florida Organized 

Fraud Task Force and provided them with the suspicious activity from the company’s accounts. 

Investigation by Task Force agents, with the assistance of BOA investigators revealed that from late 

August 2003 to early October 2003, forty days, $1,239,957 was received in two accounts. Prior to 

August, the normal balance of the two accounts together rarely exceeded $10,000. 

Investigation into the two suspect bank accounts identified wire transfers and cash deposits from 

victims who identified the deposits as related to contracts and assistance they were providing to 

Nigerians. Each victim when interviewed described a variation of a Nigerian Advance Fee Fraud 

Scheme, including: over-invoiced contracts, counterfeit checks sent to purchase goods and services, 

Spanish lottery winnings, or requests from friends or business associates to transfer money for an 

“internet deal.” All expected to receive millions of dollars in return for the payments they sent. 

Victims were mainly from the United States, Canada and South America. 

A Federal Seizure Warrant was obtained and served on Bank of America for the two accounts and 

$798,657 was seized. Prior to the investigation, $385,878 was wire-transferred out of the accounts to 

various banks in Hong Kong, Tokyo and Canada. 

Food Stamp Scam Nets Grocer 41 Months in Prison and Forfeiture of Home and other Assets

In November 2003, a 3,200 square foot colonial house on a half-acre was auctioned off for $296,000. 

The home belonged to an East Side grocer who was convicted in a $15 million food-stamp scam at 

his stores in poor Cleveland neighborhoods. In addition, three of the grocer’s stores were sold for 

approximately $774,000. Other assets forfeited included luxury cars and more than $1.4 million in 

cash from an investigation that netted the grocer 41 months in prison. The IRS, FBI and Cleveland 
18 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004 

Police said the grocery stores, like many others, bought food-stamp benefits from welfare recipients 

at a discount, often paying about 50 cents on the dollar in cash. The stores then redeemed them to the 

government for their full value. Subsequently, the grocer and others laundered millions of dollars in 

proceeds from food-stamp trafficking through banks in Ohio and the country of Jordan. 

U. S. Coast Guard 

The United States Coast Guard (USCG) is a valuable partner of Federal law enforcement with its 

long and intriguing history of assistance on the high seas. The USCG is this nation’s oldest and its 

premier maritime agency. 

Treasury Forfeiture Fund management would like to take this opportunity to recognize one of the 

many achievements of the Coast Guard in its support of Federal law enforcement during FY 2004. 

U.S. Coast Guard Assists Other Federal Law Enforcement – Overtake Drug Smuggling 

Speedboat and Recover 5,000 pounds of Cocaine, Estimated Street Value $100 million

In early September 2004, the Coast Guard Cutter DECISIVE with the assistance of a sniper-equipped 

MH68-A helicopter and crew from the Coast Guard Helicopter Intercept Squadron (HITRON) in 

Jacksonville, Florida, took down a 40-foot “go fast” boat loaded with more than 2.5 tons of pure 

cocaine. DECISIVE got word that another law enforcement resource was actively tracking a “go 

fast,” as it sped its load north. DECISIVE swung into action. The ship immediately came to near full 

speed and changed course to intercept the smugglers. The next order of business was to get the 

helicopter airborne so that it could locate and stop the “go fast,” and launch the “Over the Horizon 

(OTH),” small boat to finally take custody of the smugglers. The biggest issue was the distance—

both the OTH and the helicopter had to cover more than 70 miles from the cutter to make the stop. 

Fortunately, the weather was calm and this allowed the OTH to travel at speeds nearing 40+ knots 

(not fast for the interstate, but on the ocean, that’s zooming!) The helicopter arrived on the scene and 

had to use their 50 caliber sniper rifle to shoot out the engines and stop the vessel. Shortly thereafter 

the OTH and boarding team arrived and detained the crew. The “go fast” boat swamped and turned 

over. 
SECTION I - OVERVIEW 19

When the HITRON helicopter opened fire, the crew of the “go fast,” started throwing bales of 

cocaine over the side in an effort to evade law enforcement actions. However, the DECISIVE arrived 

on the scene and the combined Coast Guard contingent scooped nearly ninety 50-to-70-pound bales 

of cocaine out of the water, making the total haul about 5,000 pounds. The estimated street value of 

the recovered cocaine is $100 million. 

Fund management notes the value and service of the OTH Cutter Boat to the Coast Guard law 

enforcement fleet, some of which have been funded by the Super Surplus of the Treasury Forfeiture 

Fund. 

The USCG reports a “record year” in counter drug operations for FY 2004. In FY 2004, the USCG 

seized 240,518 pounds of cocaine, shattering the previous record of 139,000 pounds interdicted in 

2001. Interestingly, the total “street value,” of contraband drugs seized by the USCG exceeds their 

total appropriated funding by hundreds of millions of dollars, establishing a superb “return on 

investment” for the USCG and the American taxpayer. 

Over the Horizon (OTH)” Fast Boat – Aboard the U.S. Coast Guard Cutter DECISIVE – en route to 

apprehend a “go fast” boat carrying 2.5 tons of pure cocaine with a street value of $100 million. 

Additional OTH boats such as this one have been funded for the U.S. Coast Guard with resources 

from the Treasury Forfeiture Fund Super Surplus. 
20 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004 

In addition, the efforts of the USCG to interdict contraband drugs prevents those seized drugs from 

getting to the streets of America thereby thwarting economic damage and loss of quality of life, or 

even the loss of life itself, that can be wrought by illegal drugs in society. 

 

CDR Steve Baynes, Commanding Officer of the USCGC DECISIVE 

CDR Baynes is standing beside approximately 2.5 tons of pure cocaine retrieved from the water 

when thrown overboard by smugglers apprehended by DECISIVE and a Jacksonville-based HITRON 

helicopter team. 
SECTION I - OVERVIEW 21

Program and Fund Highlights 

The Treasury Forfeiture Fund is a “special receipt account.” Such accounts represent Federal fund 

collections earmarked by law for a specific purpose. The enabling legislation for the Treasury 

Forfeiture Fund (31 U.S.C. § 9703) defines those purposes for which Treasury forfeiture revenue may 

be used. 

Once property or cash is seized, there is a forfeiture process. Upon forfeiture, seized currency, 

initially deposited into a suspense account, or holding account, is transferred to the Fund as forfeited 

revenue. Once forfeited, physical properties are sold and the proceeds are deposited into the Fund as 

forfeited revenue. It is this forfeiture revenue that comprises the budget authority for meeting 

expenses of running Treasury’s forfeiture program. 

Expenses of the Fund are set in a relative priority so that unavoidable, or “mandatory” costs are met 

first as a matter of policy. Expenses may not exceed revenue in the Fund. The Fund has several 

different spending authorities. Each of them is described below. 

Mandatory Authority 

The mandatory authority items are generally used to meet “business expenses” of the Fund, including 

expenses of storing and maintaining seized and forfeited assets; valid liens and mortgages; 

investigative expenses incurred in pursuing a seizure; information and inventory systems; and certain 

costs of local police agencies incurred in joint law enforcement operations. Following seizure, 

equitable shares are paid to state and local law enforcement agencies that contributed to the seizure 

activity at a level proportionate to their involvement. 

It is a strategic goal of the Fund to emphasize and monitor high impact forfeitures. To make 

significant forfeitures requires longer, more in-depth investigations. To this end, Fund management 

emphasizes the use of mandatory funding authorities that fuel large case initiatives including 

Purchase of Evidence and Information, expenses associated with Joint Operations, Investigative 

Expenses Leading to Seizure, and Asset Identification and Removal Groups. 

Asset Identification and Removal Groups

Asset Identification and Removal Groups (AIRGs) help ensure that seizure operations are conducted 

in the right way, with maximum precision and efficiency. Again, in FY 2004, the Fund contributed 

$5.2 million in mandatory funding, including necessary travel, to the efforts of Immigration and 

Customs Enforcement, Department of Homeland Security (the investigative arm of legacy Customs) 

AIRGs. The AIRG groups are comprised of special agents, auditors, accountants and contract data 

analysts who are specially trained to identify assets of criminal organizations. Today, there are 21 

AIRGs located within ICE field offices throughout the United States. The personnel assigned to the 

groups receive special training at Treasury’s Federal Law Enforcement Training Center to prepare 

them in the areas of asset identification, removal and forfeiture. The AIRGs are particularly valuable 

in international investigations, where criminal proceeds can be moved rapidly around the world. 

Their expertise in identifying and tracking these assets is critical to an effective seizure and forfeiture 

program. These groups assist their agencies in meeting their mandates. The results that they attain 

can be used as a tool to assist managers in assessing the strength and depth of criminal organizations 

and gauge their success in disrupting crime. 
22 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004 

Treasury Computer Investigative Specialist Program, multi-bureau

An increasing number of investigations conducted by law enforcement bureaus participating in the 

Treasury Forfeiture Fund are in an electronic environment or contain electronic evidence. A key 

component of the bureaus’ ability to perform their investigative mission in today’s high-tech and 

rapidly changing environment is the Treasury Computer Investigative Specialist (CIS) Program. This 

joint initiative began in 1997 as a means of coordinating Treasury resources and leveraging assets. 

Since that time, it has developed into one of the premier computer forensics programs in the world, 

with over 400 Treasury special agents deployed throughout the United States and abroad. Some of 

the primary features of the program are: 

• All computer forensic examiners are experienced criminal investigators (as opposed to other 

programs that have technicians conducting exams); 

• Uniform basic and advanced computer forensic training (planned and delivered jointly by the 

three bureaus) that allows the bureaus to share CISs and technical resources on large cases; 

• Each bureau’s CISs are provided the same state-of-the-art equipment; and 

• Continuous in-service training and equipment upgrades for CIS agents in the field maintains high 

skill-levels for all Treasury Department CISs. 

In FY 2004, EOAF provided over $5.7 million to the CIS program, up from $4.4 million provided to 

the program in FY 2003. The majority of the funding went for basic and advanced training and 

specialized equipment. Since the inception of the program in 1997, the participating bureaus of the 

Treasury Forfeiture Fund have combined talents and resources to produce highly trained computer 

forensic agents capable of recovering digital evidence from stand alone and networked computer 

systems. Highly successful casework stemming from electronic evidence indicates that this is a 

sound investment for the Fund.

Payments for Remission and Mitigation and Innocent Owner/Victims

A long-standing policy of the Treasury Forfeiture Fund is to ensure that any innocent owners of 

property forfeited by the Fund receive restitution to the extent that policy and law provide for such 

restitution. A number of the law enforcement bureaus participating in the Fund become involved in 

cases in which there are victims of fraud which victims may range from private citizens to Trust 

Funds of the Federal Government. While the “net proceeds” to the Fund after restitution is paid may 

be quite small, it is imperative that the forfeiture sanction be applied to such cases to deter their 

occurrence in the future and to recover as much of the property on behalf of victims as possible. In 

this manner, our law enforcement bureaus work not only to protect the citizenry but also the public 

welfare in terms of protecting Federal resources from waste, fraud and abuse. In addition, Customs 

and Border Protection mitigates forfeitures in a number of instances and the Fund provides resources 

for those important law enforcement decisions. There were some unusually large restitution cases 

this year and the Fund allocated over $65.9 million toward these expenses, up from $41.5 million 

allocated for remissions and mitigations at the end of FY 2003. The Maluccan Church Fraud Scheme 

is an example of a large restitution case this year. 

National Seized Property Contract

As noted in the Profile section of our Accountability Report, the Treasury Forfeiture Fund continued 

in its capacity as a multi-Departmental Fund in FY 2004, representing the interests of law 

enforcement components of the Departments of Treasury and Homeland Security. With enactment of 

the Homeland Security Act, Treasury’s Federal Law Enforcement Training Center (FLETC) and 
SECTION I - OVERVIEW 23

Secret Service were moved to the Department of Homeland Security, and the Immigration and 

Naturalization Service (INS) was reorganized with Customs into two agencies: Customs and Border 

Protection (CBP) and Immigration and Customs Enforcement (ICE). The U.S. Coast Guard was also 

reorganized into the Department of Homeland Security and continues it close working relationship 

with legacy Customs. 

These changes were attended by an Administration emphasis on border security which then resulted 

in a large, rapidly escalating caseload including a car inventory which grew from an inventory at the 

beginning of the year of about 3,000 seized cars to an inventory of about 19,000 seized cars at the end 

of the year. As the result of this issue, and related matters, the national general property contract 

required resources in the amount of $51.3 million as compared to $27.14 million allocated to the 

contract for FY 2003, nearly doubling the cost of the contract. 

Equitable Sharing

Federal law enforcement bureaus participating in the Treasury Forfeiture Fund enjoy a continuing 

high level of support from state and local law enforcement agencies in the fight against crime. As 

evident in the investigative case narratives earlier in our Overview, Federal and state and local law 

enforcement work side-by-side daily to stop criminals. Pursuant to a long-standing goal of the 

Treasury Forfeiture Fund to encourage state and local law enforcement to assist Federal law 

enforcement; by policy, the Fund pays equitable shares to state and local law enforcement agencies 

that participated in a forfeiture of the Fund. The Fund also pay equitable shares to the Justice 

forfeiture fund and the Postal forfeiture fund for any role their Federal law enforcement bureaus play 

in a forfeiture of our program. 

In recognition of this ongoing high level of support, and consistent with revenue projections for FY 

2004, Fund management allocated over $93 million for equitable sharing obligations for FY 2004, as 

compared to $75.7 million allocated for FY 2003, an increase of nearly 23 percent. The difference 

bears a relationship to the difference in revenue between the two years. State and local governments 

are required to use equitable shares law enforcement purposes with certain limited exceptions and, as 

a result, their law enforcement programs and capability have benefited significantly from their 

cooperative efforts with Federal law enforcement. 

Training

Fund Management places significant emphasis on training as a mechanism for reinforcing the Fund’s 

Mission, which is to affirmatively influence the consistent and strategic use of asset forfeiture by our 

law enforcement bureaus to disrupt and dismantle criminal enterprises. During FY 2004, the 

Executive Office for Asset Forfeiture developed two new training curricula on cutting edge subjects 

related to investigation and forfeiture, and conducted six seminars nationwide for over 600 

participants. Our training strategy is aimed at fostering the cooperation between our participating 

agencies, as well as identifying and promoting their best investigative and forfeiture practices.

One of our new seminar series, titled “Obtaining and Analyzing Information from Investigative and 

Forfeiture Purposes,” focused on such issues as Bank Secrecy Act (BSA) requirements, developing 

cases from Suspicious Activities Reports (SARs), enhancing the work of SAR Review Teams, 

utilizing information from the wire remitter industry, and TEOAF-funded investigative data mining 

systems. The second seminar series, titled “Technology Issues Involved in Investigation and 

Forfeiture,” addressed new types of crimes exploiting computer and Internet technology, as well as 

technology tools available to the law enforcement agencies to fight these crimes. 
24 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004 

Both series received excellent and enthusiastic reviews from the audience that consisted of agents 

from all of our participating bureaus. The seminar locations included San Antonio, Miami, 

Cleveland, and Baltimore. 

Secretary’s Enforcement Fund 

The Secretary’s Enforcement Fund (SEF) is derived from equitable shares received from the Justice 

Department’s forfeiture fund for work done by Treasury law enforcement bureaus leading to Justice 

forfeitures. SEF revenue is available for Federal law enforcement purposes of any Treasury law 

enforcement organization or law enforcement bureau that participates in the Treasury Forfeiture 

Fund. In FY 2004, the Fund allocated $11.7 million in SEF spending to the law enforcement 

agencies. 

Major Case Initiatives, Immigration and Customs Enforcement, IRS-CI and U.S. Secret 

Service

Consistent with the Treasury Forfeiture Fund’s goal of supporting major case initiatives, during 

FY 2004, substantial funding was allocated from the SEF to support bureaus’ major case initiatives. 

This funding was used to continue to support undercover operations, and a variety of tasks including 

document analysis and translation for investigative and evidentiary purposes, Title III wiretaps, agent 

travel and specialized software equipment. 

International and Terrorism Investigations, IRS-CI

Consistent with the President’s initiative on international terrorism, funds were provided from the 

SEF to IRS Criminal Investigations (CI) to support the continuation of IRS’ overseas investigations 

of terrorist related money laundering and other financial crime cases. Funding was used primarily for 

travel to support these cases. 

Computer Forensics, IRS-CI

Additional funding was provided to IRS-CI to provide continuing support to the IRS-CI E-Crimes 

technology center. The facility supports, and is operated by CI’s computer forensic program, which 

is funded in its entirety by the Treasury Forfeiture Fund as part of the Treasury Computer Forensics 

Program. 

Enforcement Replacement Vehicles, IRS-CI

SEF funding was provided to IRC-CI toward the costs of replacing 800 law enforcement vehicles that 

have exceeded their useful time expectancy. Approximately 600 law enforcement vehicles must be 

purchased annually to maintain fleet quality. Over the past few years, IRS-CI has averaged the 

replacement of less than 400 vehicles per year due to funding constraints. At present, half of the IRSCI fleet exceeds replacement criteria as set by the Federal Property Management Regulations. The 

SEF funding will provide for the purchase of approximately 50 vehicles to assist IRS-CI with their 

need for a quality law enforcement vehicle fleet. 
SECTION I - OVERVIEW 25

Counter Terrorism Training, FLETC

SEF funding in the amount of $.5 million was provided to the Federal Law Enforcement Training 

Center (FLETC) to support the funding needed for the construction of a counter terrorism 

operation/urban training facility in Glynco, Georgia. 

 

Title III and Internet Intercept Program, ICE

SEF funding was provided to Immigration and Customs Enforcement (ICE) to support the funding 

for the infrastructure, equipment and technical program support to continue operations and case 

related use of telecommunications intercepts. The use of the Wiretap as an investigative tool has 

repeatedly resulted in a greater number of seizures of value and a significantly increased number of 

arrests. 

Super Surplus 

Super Surplus represents the remaining unobligated balance after an amount is reserved for Fund 

operations in the next fiscal year. Super Surplus can be used for any Federal law enforcement 

purpose. The Fund declared a Super Surplus for FY 2004 in the amount of $25 million, similar to the 

$24.1 million declared for FY 2003. 

A growing percentage of the investigations that our agencies handle now center on computer 

evidence. It is critical for the law enforcement bureaus to protect the integrity of original computer 

evidence and be able to authenticate any evidence originating from an electronic source. Each of the 

law enforcement bureaus has a computer laboratory devoted to assessing the impact of technological 

change on methods for obtaining digital evidence, developing forensics procedures and standards, 

and providing technical assistance to the computer forensics examiners in the field. The funding 

provided for these initiatives has allowed the agencies to maintain or build laboratories and sustain 

their computer forensics programs. These forensic programs involve a significant amount of research 

and development that cannot be funded through the mandatory authority. 

National Forensic Laboratory, IRS –CI 

Super Surplus funds in the amount of $800,000 were provided to the IRS-CI National Forensics 

Laboratory. These resources are provided in order that the lab maintain state of the art equipment 

necessary to maintain high-level quality forensic service to the field agents of CI. A variety of 

services provided by the laboratory simplify complex relationships between individuals and/or 

businesses and visually demonstrate the flow of moneys through a myriad of individuals, businesses, 

and financial institutions. 

Enforcement Equipment , IRS-CI

Super Surplus funds totaling $1.5 million was provided to IRS-CI for investigative equipment 

required by IRS-CI for carrying out its investigative and enforcement functions. This includes 

equipment utilized by agents in carrying out their duties on a daily basis in addition to specialized 

equipment used during surveillance, undercover operations, during the execution of search warrants 

and for other investigative purposes. 
26 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004 

ADP Initiatives, IRS-CI

Super Surplus funding totaling $7.0 million was provided to IRS-CI for a variety of ADP initiatives 

database development including but not limited to web-based tools. One system for which funding 

support was provided will provide capability to access various databases and systems to identify 

trends and other pertinent data that will help to target potentially illegal activity. Another initiative 

will streamline IRS-CI’s asset forfeiture productivity by facilitating the processing and approval of 

documents across all levels of the organization. 

Operation Predator , Immigration and Customs Enforcement

Super Surplus funding in the amount of $720,000 was provided to Immigration and Customs 

Enforcement of the Department of Homeland Security (ICE, DHS) to provide office space, cabling 

and air conditioning (HVAC) toward “Operation Predator.” Predator will combine the investigative 

efforts of the ICE Cyber Crimes Center’s Child Exploitation Unit, a newly staffed Predator group, 

other Federal, state, and local law enforcement agencies and the National Center for Missing and 

Exploited Children to identify and target individuals or organizations preying upon America’s 

children. 

Technical Surveillance Equipment, Immigration and Customs Enforcement

Super Surplus funding in the amount of $2.5 million was provided to ICE to support the purchase of 

surveillance equipment to keep pace with investigative technology developments including the 

placement of upgraded ground sensors and the deployment of video over Internet Protocol Systems. 

This equipment will be utilized to obtain evidence of criminal activity and to expand the scope of 

investigations being conducted by ICE. The majority of the equipment will be used to enhance 

covert audio and video recording of criminal conspirators, to assist agents in tracking subjects and 

contraband, and to enhance thermal imaging capability. 

Computer Forensics, Training, Investigative Support, U.S. Secret Service

Super Surplus funding in the amount of $4.144 million was provided to the U.S. Secret Service, 

Department of Homeland Security, to support: computer forensics initiatives, computer forensic 

training and other investigative support initiatives of the bureau during FY 2004. 

Aircrew Survival Vests, U.S. Coast Guard (USCG)

Super Surplus funding in the amount of $626,000 was provided to the USCG to equip all aircrew 

personnel with new vests that are both ballistics and chemical mask compatible. 

Portable Flight Planning Stations, USCG

Super Surplus funding in the amount of $560,000 was provided to the USCG to fund the purchase of 

28 Portable Flight Planning Stations that will be used to download law enforcement tasking into 

formats that can be loaded into awaiting aircraft. 
SECTION I - OVERVIEW 27

High Frequency Voice Privacy, USCG

Super Surplus funding in the amount of $284,000 was provided to the USCG for the purpose of 

equipping aircraft with specific communication gear to enhance interoperability with other law 

enforcement agencies. 

Portable Satellite Tracking Device, USCG

Super Surplus funding in the amount of $35,000 was provided to deploy portable satellite tracking 

devices to monitor vessels ordered to return to port for fisheries violations. This capability will 

enhance Coast Guard operations by allowing patrolling vessels to remain on patrol in high threat 

areas in lieu of escorting vessels to port. This technology could save 1 to 14 vessel patrol days per 

enforcement action of this nature, depending upon the distance of the fishing vessel from port. 
28 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004 

Program Performance 

Strategic View 

Fund Management continues to focus on strategic cases and investigations that result in high-impact 

forfeitures. We believe this approach affects the greatest damage to criminal organizations while 

accomplishing the ultimate objective – to disrupt and dismantle criminal activity. To make 

significant forfeitures requires longer, more in-depth investigations. To this end, Fund Management 

emphasizes the use of mandatory funding authorities that fuel large case initiatives including 

Purchase of Evidence and Information, expenses associated with Joint Operations, Investigative 

Expenses Leading to Seizure, Asset Identification and Removal teams and state-of-the-art Computer 

Forensics capability. In addition, the Fund continues to support and carry out the goals of the 

National Money Laundering Strategy as well as the High Intensity Financial Crime Areas (HIFCAs); 

support Treasury’s efforts to attack terrorist financial infrastructures; and continue to improve our 

ability to measure, assess and adapt our performance. 

Strategic Mission and Goal 

The mission of the Treasury Forfeiture Fund is to affirmatively influence the consistent and strategic 

use of asset forfeiture by Treasury law enforcement bureaus to disrupt and dismantle criminal 

enterprises. The goal of the Treasury Forfeiture Fund is to support the Department of the Treasury’s 

national asset forfeiture program in a manner that results in Federal law enforcement’s continued and 

effective use of asset forfeiture as a high-impact law enforcement sanction to disrupt and dismantle 

criminal activity. To achieve our mission and goal, the program must be administered in a fiscally 

responsible manner that seeks to minimize the administrative costs incurred, thereby maximizing the 

benefits for law enforcement and the society it protects. 

Multi-Departmental Fund During FY 2004 

The Treasury Forfeiture Fund continued in its capacity as a multi-Departmental Fund in FY 2004, 

representing the interests of law enforcement components of the Departments of Treasury and 

Homeland Security. As the result of these numerous and complex changes, FY 2004 brought some 

management challenges and the need to assess new policies of the reorganized bureaus against the 

broad management interests of the Treasury Forfeiture Fund which now encompass the concerns of 

more than one Department. In the midst of this period of growth and change, the Fund’s family of 

law enforcement bureaus continued their hard work of Federal law enforcement and the application 

of asset forfeiture as a sanction to bring criminals to justice. 

FY 2004 was a robust revenue year for the Fund with regular revenue exceeding $335 million. As 

we closed FY 2004, Fund Management was pleased with our prior year efforts in FY 2003 to support 

the Homeland Security Act through intensive and consuming transition endeavors and pleased with 

the evidence that we were successful in meeting our goals of a smooth transition. 

 

As we enter fiscal year 2005, the Fund remains focused on support for strategic investigative 

initiatives that will have the greatest impact on national and international criminal enterprise 

including valuable training and investigative expense funding which emphasizes high impact cases.
SECTION I - OVERVIEW 29

Performance Measure 

In FY 2004, the Fund measured performance through the use of the following performance measure: 

Percent of forfeited cash proceeds resulting from high-impact cases. This measures the percentage of 

forfeited cash proceeds resulting from high-impact cases (those with currency seizures in excess of 

$100,000). Focusing on strategic cases and investigations which result in high-impact seizures will 

affect the greatest damage to criminal organizations while accomplishing the ultimate objective – to 

disrupt and dismantle criminal activity. 

Results 

Fund performance measures and associated results for FY 2004 are as follows: 

Performance Measure 

FY 2003 

Actual 

FY 2004 

Target 

FY 2004 

Actual 

Percent of forfeited cash proceeds resulting from 

high-impact cases 

80.6% 75% 84.0% 

A target of 75 percent high-impact cases was set for FY 2004. The final percentage for FY 2004 was 

84.0 percent, fully 9 percentage points above the target. This compares favorably with our FY 2003 

achievement of 80.6 percent, also well beyond our target. This achievement remains excellent given 

the significant diversion of Treasury law enforcement personnel to other than routine law 

enforcement involved with anti-terrorism efforts. FY 2004 was a robust revenue year and the results 

of our performance indicator point to the successful year of our dedicated law enforcement bureaus. 

This measure was put into effect in FY 2001. 

This measure is calculated by dividing the total amount of forfeited cash proceeds from cases greater 

than $100,000 by the total amount of forfeited cash proceeds for all cases. 

A Look Forward 

With the divestiture of the legacy U.S. Customs Service to the new Department of Homeland 

Security, legacy Customs was subsequently divided into two principal law enforcement components: 

Customs and Border Protection (CBP), and Immigration and Customs Enforcement (ICE). With the 

division into two separate components, there is a requirement that accounting, case management and 

other command and control structures be divided so that the resources and accounts for the separate 

components can be identified discretely. The Customs and Border Protection (CBP) component 

which inherited the legacy systems for the two bureaus has been working since late FY 2003 to 

accomplish these significant tasks. CBP Management has been working as closely as possible with 

ICE Management to coordinate changes in a manner that results in as little disruption to ongoing 

services as possible. 

Fund Management will continue to work with Customs and Border Protection to resolve issues 

related to the national general property contract, the costs for which escalated and accelerated at an 

alarming rate during FY 2004. An enduring and primary goal of Fund Management is to manage the 

Treasury Forfeiture Fund in a manner that ensures its ongoing viability and ability to support all of 

our participating law enforcement bureaus into the future. We are confident that a satisfactory 

resolution of these issues will be accomplished on behalf of all bureaus. 
30 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004 

In the meanwhile, Fund Management continues to emphasize high impact case cases through training 

and investigative funding initiatives. The Executive Office for Asset Forfeiture will conduct six 

high-level training seminars during FY 2004, using two new training curricula on cutting edge 

subjects related to investigation and forfeiture. Our training strategy is aimed at fostering the 

continued cooperation between our participating agencies, as well as identifying and promoting their 

best investigative and forfeiture practices so that these practices can be implemented as widely as 

possible. 

We look forward to another successful year in FY 2005. 
SECTION I - OVERVIEW 31

Financial Highlights 

The following provides a brief explanation for each major section of the audited financial statements 

accompanying this report for the fiscal year ended September 30, 2004. 

These statements have been prepared to disclose the financial position, results of operations and 

changes in net position pursuant to the requirements of the Chief Financial Officers Act of 1990 and 

the Government Management Reform Act of 1994 (GMRA). While the financial statements have been 

prepared from the books and records of the Fund in accordance with the formats prescribed by the 

Office of Management and Budget, the statements are different from the financial reports used to 

monitor and control budgetary resources that are prepared from the same books and records and are 

subsequently presented in Federal budget documents. Therefore, it should be noted that direct 

comparisons are not possible between figures found in this report and similar financial figures found 

in the FY 2004 and FY 2003 Appendix, Budget of the United States Government. Further, the notes 

to the financial statements and the independent auditor’s opinion and report on internal controls are 

also integral components to understanding fully the financial highlights of Fund operations described 

in this chapter. 

Statements: Changes in Net Position

Follows are brief highlights from the Statement of Changes in Net Position for FY 2004 and 2003. 

Net Position – End of Year. For FY 2004, the Net Position for the Fund at the end of the year, an 

indicator of the future capability to support ongoing operations of the Fund, totaled $194.1 million 

versus $177.2 million at the end of FY 2003. Both years closed with a strong and viable net position 

given that annual revenue totaled between $250 million and over $335 million each year. 

Total Gross Non-Exchange Revenues. This line item on the Statements of Changes in Net Position

is the best indicator of regular “business-type” income of the account on an annual basis. Fund 

Management generally forecasts between $200 million and $250 million for the Fund from regular 

seizure and forfeiture activities of our participating bureaus. For FY 2004, the Fund closed with 

$289.2 million in Gross Non-Exchange Revenues versus a total for the FY 2003 closing of $266.3 

million, an increase of 8.6 percent over FY 2003. 

Proceeds from Participating with other Federal Agencies. This line item on the Statements of 

Changes in Net Position indicates revenue earned from the participation of Treasury Forfeiture Fund 

law enforcement bureaus in the seizures leading to forfeiture of bureaus that participate in the 

Department of Justice Assets Forfeiture Fund or with the forfeiture fund of the U.S. Postal Service 

(Postal Service). It is noted that this category of revenue is recognized when received on deposit by 

the Treasury Forfeiture Fund. Therefore, there is no accrual recorded on the Fund’s financial 

statements for this category of revenue. 

As of the close of FY 2004, Treasury Forfeiture Fund bureaus earned a total of $22.7 million in 

revenue from participation in the seizures leading to forfeiture of the Justice and Postal Service 

forfeiture funds as compared to a total of $16.1 million during FY 2003. Fund Management 

continues to work with the Department of Justice to identify the basis for delays associated with 

Reverse Asset Sharing payments to the Treasury Forfeiture Fund. This revenue affords Treasury 

Management significant funding flexibilities for our participating agencies as the authority is broad 

and not confined to funding program costs but can be used for any law enforcement purpose of our 
32 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004 

participating bureaus. Significant projects may be funded in FY 2005 if long-anticipated revenue is 

received early enough in the fiscal year. 

Cost of Operations. For FY 2004, the Cost of Operations totaled $122.1 million, up from 

$108.1 million in FY 2003. 

Investment Interest Income. The Fund is authorized to invest cash balances in Treasury securities. 

On September 30, 2004, investments totaled $455.1 million, down from $527.0 million invested on 

September 30, 2003. Given the slightly reduced balances, investment income totaled $4.6 million in 

FY 2004 as compared to $5.0 million in FY 2003, as the result of stable interest rates earned on 

invested balances. 

Equitable Sharing with State and Local Governments, and Foreign countries. Each year, the 

Fund pays tens of millions of dollars to state and local law enforcement agencies, and foreign 

governments, for their participation in seizures that lead to forfeitures of the Treasury Forfeiture 

Fund. State and local law enforcement agencies can use these resources to augment their law 

enforcement budgets to fight crime in their jurisdictions. Without these funds, budgets of the local 

municipalities would be taxed to provide these important resources or the need would go unmet. 

During FY 2004, the Fund shared a total of $98.7 million with state and local law enforcement 

agencies, and another $2.7 million with foreign countries. This compares with $78.5 million shared 

with state and local law enforcement agencies during FY 2003, and another $1.3 million with foreign 

countries in FY 2003. 

Victim Restitution. During FY 2004, the Fund paid restitution to victims the amount of $0.4 

million as compared with $7.3 million in FY 2003. 

Summary of Statements of Changes in Net Position. FY 2004 represents a very successful year in 

high-impact cash forfeiture cases, with 84.0 percent of all cash forfeitures stemming from cases with 

a value of $100,000 or more, as compared with 80.6 percent in FY 2003. Along with a high water 

mark in forfeiture revenue for the year, the performance against this measure exceeded our target 

performance of 75 percent. The FY 2004 performance in forfeiture revenue earnings and highimpact cases is truly a credit to the dedicated law enforcement personnel of the Treasury Forfeiture 

Fund participating bureaus. 

Statements: Net Cost

Costs of the Forfeiture Program – Intragovernmental. After revenue is applied toward policy 

mandates such as equitable sharing, shown in the Statement of Changes in Net Position as negative 

revenue or applied non-exchange revenue, the remaining financing supports the law enforcement 

activities of the Fund and pays for the storage of seized and forfeited property and sales associated 

with the disposition of forfeited property. 

On the Statements of Net Cost, the Net Cost of Operations increased to $122.1 million in FY 2004, 

up from $108.1 million in FY 2003, attributable to increased asset management costs. 

Intragovernmental Costs less Secretary’s Enforcement Fund and Super Surplus Expenses. 

This net figure represents the amounts incurred by participating bureaus in running their respective 

forfeiture programs. Secretary Enforcement Fund Expenses generally represent expenses that while 

key to the law enforcement bureau are not costs of running the forfeiture program itself. 
SECTION I - OVERVIEW 33

National Seized Property Contract. The largest single program cost of the Fund is the storage, 

maintenance and disposal of real and personal property. This function is performed by EG&G 

Technical Services, a private firm under multiple contracts to the Customs and Border Protection 

(CBP) component of the U.S. Department of Homeland Security (DHS). There is one contract for 

the custody and maintenance of real properties and a separate contract for general property of the 

program. Both of these contracts, at this time, are awarded to EG&G Technical Services. In FY 

2004, storage and maintenance expenses totaled just over $61.5 million, significantly up from $34.4 

million in FY 2003. This significant increase is attributable substantially to additional car seizures on 

the southwest border and associated polices that prevent efficient disposition of these cars to 

destruction in lieu of storage. 

Statements: Balance Sheet

Assets, Liabilities and Net Position

Total assets of the Fund increased in FY 2004 to $697.7 million, up from $687.8 million in FY 2003, 

an increase in asset value of nearly 1.4 percent. If seized currency, which is an asset in the custody of 

the government but not yet owned by the government, is backed out of both figures, the adjusted total 

assets of the Fund increased to $324.3 million in FY 2004, up from $291.2 million in FY 2003, an 

increase of 11.4 percent. 

During FY 2004, total liabilities of the Fund increased to $503.6 million, up from 510.5 million in 

FY 2003, a decrease of only 1.4 percent in overall liabilities pending at the end of the fiscal year. 

Likewise, if seized currency is backed out of both figures, the adjusted liability totals of the Fund 

increased to $130.2 million in FY 2004 from $114.0 million in FY 2003, an increase of 14.2 percent. 

The Cumulative Results of Operations, i.e., retained earnings, increased at the end of FY 2004 to a 

total of $194.1 million, up from $177.2 million at the end of FY 2003. 

Summary of Financial Highlights 

Net Position. To summarize, Fund management concluded FY 2004“in the black,” with the 

necessary resources to commence the business of the asset forfeiture program for FY 2005. Fund 

management may declare some level of Super Surplus from FY 2004 operations although the 

estimate for this spending has not been finalized. 

FY 2004 Audit. The Fund’s independent auditors have given the FY 2004 financial statements an 

Unqualified Opinion and again determined that there are no material weaknesses for the Fund’s 

financial statements. In addition, only one Reportable Condition remains regarding the recording of 

indirect overhead expenses of property to the line item level. This is a long-standing condition that 

Fund Management has worked to resolve for the real property contract though the remedy has not 

been implemented by Customs and Border Protection as of the close of FY 2004. Corrective action 

for general property cannot be taken pending award of a new general property contract which has 

been in the process of re-award for over 4 years now. Given complexities associated with the 

contract process, Fund Management anticipates that it may be FY 2006 before this second tier 

condition can be fully resolved. 

Program Performance 

Financial and Program Performance -What is needed and planned. OMB Bulletin No. 01-09, 
34 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004 

Form and Content of Agency Financial Statements, requires that agencies include an explanation of 

what needs to be done and what is being planned to improve financial or program performance. In 

that regard, Fund management provides the following information with regard to the remaining 

reportable condition identified by auditors during the FY 2004 financial statement audit. 

Reportable Condition: In fiscal year 2004, the auditors of the Fund’s financial statements reported 

one Reportable Conditions associated with the Fund’s internal controls: indirect asset specific 

expenses are not recorded and accounted for to the line item level by the Fund. 

 

Asset Specific Expenses: Fund Management will continue to work toward the capture of indirect 

asset specific expenses. The accounting system of the Real Property Contractor is capable of 

capturing and reporting both direct and indirect costs. However, to capture this data for the Fund’s 

financial statements, Customs and Border Protection’s SEACATS system requires additional 

programming. To date, this programming has not been completed though the contractor-proposed 

remedy has been identified for over three years. The award of the new general property contract has 

been delayed and until such time as the new contract provisions can be implemented, efforts to 

develop a methodology to distribute indirect overhead costs to general property will also be delayed. 

Management will continue to work with participating bureaus to improve the capture of all expense 

data to the asset level. 

Look Forward. Efforts will continue to ensure that progress is made toward resolving the 

remaining second tier finding. Fund Management looks forward to another successful year in FY 

2005. 

Limitations of the Financial Statements. As required by OMB Bulletin 01-09, Form and Content 

of Agency Financial Statements, Fund management makes the following statements regarding the 

limitations of the financial statements: 

• The financial statements have been prepared to report the financial position and results of 

operations of the entity, pursuant to the requirements of 31 USC § 3515(b). 

• While the statements have been prepared from the books and records of the entity in accordance 

with the formats prescribed by OMB, the statements are in addition to the financial reports used 

to monitor and control budgetary resources which are prepared from the same books and records. 

• The statement should be read with the realization that they are for a component of the U.S. 

government, a sovereign entity. One implication of this is that liabilities cannot be liquidated 

without legislation that provides resources to do so. 



Department of the Treasury Forfeiture Fund

BALANCE SHEETS

As of September 30, 2004 and 2003

( Dollars in Thousands)

2004 2003

Assets:

Intragovernmental :

Fund balance with Treasury $ 146,527 $ 64,841

Investments and related interest (Note 3) 455,142 527,034Advances (Note 5) 12 13

Total Intragovernmental 591,888 601,681

Cash and other monetary assets (Note 6) 52,626 60,746Accounts receivable (Note 4) 850 1,196

 61,942 53,476

Forfeited property (Note 7)

Held for sale, net of mortgages, liens and claims 41,743 33,881To be shared with Federal, state or local, or foreign  governments 820 50

Total forfeited property, net of mortgages, liens

 and claims 42,563 33,931

Total Assets $ 697,720 $ 687,761

Liabilities:

Intragovernmental:

Distributions payable

Other Federal agencies $ 748 $ 380

Accounts payable 30,040 41,035

Total Intragovernmental 41,415 30,788

Seized currency (Note 9) 373,445 396,556Distributions payable (Note 10)

State and local agencies and foreign governments 50,385 34,853

Accounts payable 6,970 2,719Deferred revenue from forfeited assets 42,029 34,987

Total Liabilities 510,530 503,617

Net Position:

Cumulative results of operations (Note 11) 194,103 177,231

Total Liabilities and Net Position $ 697,720 $ 687,761

The accompanying notes are an integral part of these financial statements

SECTION II - FINANCIAL STATEMENTS 37
Department of the Treasury Forfeiture Fund

STATEMENTS OF NET COST

For the years ended September 30, 2004 and 2003

(Dollars in Thousands)

2004 2003

Program:

ENFORCEMENT

Intragovernmental:

Seizure investigative costs and asset management $ 34,170 $ 28,833 

Other asset related contract services 331 - 

Awards to informer 141 840 

Data systems, training and others 16,756 21,024 

Super surplus (Note 13) - 8,601 

Secretary's enforcement fund (Note 14) 40 5,527 

Total Intragovernmental 64,825 51,438 

With the Public:

 National contract services seized property and other 61,524 34,382 

Joint operations 9,172 8,846 

Total with the Public 43,228 70,696 

Net Cost of Operations $ 122,134 $ 108,053 

38 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT - FISCAL YEAR 2004

The accompanying notes are an integral part of these financial statements
Department of theTreasury Forfeiture Fund

STATEMENTS OF CHANGES IN NET POSITION

For the years ended September 30, 2004 and 2003

(Dollars in Thousands)

2004 2003

Net Position - Beginning of year $ 177,231 $ 173,029 

Financing Sources (Non-Exchange Revenues):

Intragovernmental

Investment interest income 4,612 5,016 

Public

Forfeited currency and monetary instruments 228,905 163,842 

Sales of forfeited property net of mortgages and claims 42,660 31,012 

Proceeds from participating with other Federal agencies 22,740 16,078 

Value of property transferred in equitable sharing 6,237 12,317 

Payments in lieu of forfeiture, net of refund (Note 19) (51,756) 19,192 

Reimbursed costs 4,220 2,044 

Others 31,604 16,795 

Total Gross Non-Exchange Revenues 266,296 289,222 

Less: Equitable Sharing

Intragovernmental

Federal (9,758) (11,555) 

Public

State and local agencies (98,667) (78,503) 

Foreign countries (2,708) (1,320) 

Victim Restitution (437) (7,336) 

 (87,159) (101,812) 

Total Equitable Sharing (98,714) (111,570) 

Total Non-Exchange Revenues, Net 167,582 177,652 

Transfers-Out

Intragovernmental

Super Surplus (Note 13) (25,207) (37,732) 

Secretary's Enforcement (Note 14) (13,439) (17,595) 

Total Transfers-Out (55,327) (38,646) 

Total Financing Sources- Net 139,006 112,255 

Net Cost of Operations (108,053) (122,134) 

Net Results of Operations 4,202 16,872 

Net Position - End of Year $ 194,103 $ 177,231 

The accompanying notes are an integral part of these financial statements

SECTION II - FINANCIAL STATEMENTS 39
Department of theTreasury Forfeiture Fund

STATEMENTS OF BUDGETARY RESOURCES

For the years ended September 30, 2004 and 2003

(Dollars in Thousands)

2004 2003

Budgetary Resources:

Budget authority $ 313,130 $ 252,680 

Unobligated balance- beginning of year 74,826 60,093 

Spending authority from offsetting collections 154 27 

Recoveries from prior year obligations 23,265 15,924 

Total Budgetary Resources $ 411,375 $ 328,724 

Status of Budgetary Resources:

Obligations incurred $ 315,596 $ 253,898 

Unobligated balances - available 95,779 74,826 

Total Status of Budgetary Resources 328,724 411,375 

Relationship of Obligations to Outlays:

Obligated balance, net - beginning of year 172,651 156,798 

Obligated balance, net - end of year

Undelivered orders 89,450 167,949 

Accounts payable 86,932 4,702 

Outlays

Disbursements $ 288,600 $ 222,121 

Less: Spending authority from offsetting collections (154) (27) 

Net Outlays $ 288,446 $ 222,094 

40 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT - FISCAL YEAR 2004

The accompanying notes are an integral part of these financial statements
For the years ended September 30, 2004 and 2003

(Dollars in Thousands)

2004 2003

Resources Used to Finance Activities:

Budgetary resources obligated

Obligations incurred $ 315,596 $ 253,898 

Less: Spending authority from offsetting collections and

recoveries (23,419) (15,951) 

Net obligations 292,177 237,947 

Other Resources

Transfers - out (38,646) (55,327) 

Total Resources Used to Finance Activities 182,620 253,531 

Resources Used to Finance Items not Part of the Net Cost of 

Operations

Change in budgetary resources obligated for goods,

services and benefits ordered but not yet provided 47,910 41,636 

Other resources or adjustments to net obligated resources that

do not affect net cost of operations

Mortgages and Claims (7,331) (9,913) 

Refunds (60,406) (7,576) 

Equitable Sharing (Federal, state/local and foreign) (111,133) (91,378) 

Victim restitution (437) (7,336) 

Total Resources Used to Finance Items not Part of the

Net Cost of Operations (74,567) (131,397) 

Total Resources Used to Finance the Net Cost of Operations 108,053 122,134 

Net Cost of Operations $ 122,134 $ 108,053 

The accompanying notes are an integral part of these financial statements

SECTION II - FINANCIAL STATEMENTS 41

Department of theTreasury Forfeiture Fund

STATEMENTS OF FINANCING








Note 8: FY 2004 Analysis of Changes in Forfeited Property and Currency

Value Number Value Number Value Number Value Number Value Number Value Num

Currency 6,853 $ - - $ - 6,853 $ - 159,420 $ - (164,845) $ - (1,833) $ 

Other MonetaryInstruments 1,581 - - - 1,581 - 136 - (23) - - 

Subtotal 8,434 - - - 8,434 - 159,556 - (164,868) - (1,833) 

Real Property 23,025 99 (2,052) - 20,973 99 18,783 96 (21,512) (85) (202) General Property 7,043 4,080 27,254 - 34,297 4,080 21,469 10,862 (20,455) (2,421) (3,887) (

Vessels 374 33 292 - 666 33 2,089 95 (2,062) (78) (183) 

Aircraft 20 2 - - 20 2 384 6 (133) (4) (96) 

Vehicles 4,727 1,559 3,470 - 8,197 1,559 29,034 19,364 (15,324) (2,270) (6,471) (

Subtotal 35,189 5,773 28,964 - 64,153 5,773 71,759 30,423 (59,486) (4,858) (10,839) (1,

Grand Total 43,623 $ 5,773 28,964 $ - 72,587 $ 5,773 231,315 $ 30,423 (224,354) $ (4,858) (12,672) $ (1,

Value Number Value Number Value Number Value Number Value Number Value Num

Currency - $ - $ 7,130 $ - - $ - 6,725 $ - $ 

Other Monetary - - - - - - - - - - 

 

Instruments - - - - - 1 - - - 1,695 - 

Subtotal - - - - 7,131 - - - 8,420 - - 

 

Real Property - - - - 1,442 8 (126) - 19,358 114 12,245 

 

General Property - - (80) (8,012) (7,532) 1,456 (4,985) - 18,827 5,335 (15,972) 

 

Vessels - - - (11) 352 1 (14) - 848 32 (282) 

 

Aircraft - - - - - - - - 175 2 (72) 

 

Vehicles - - (67) (9,316) (346) (9) (1,009) - 14,014 8,686 (5,378) 

 

Subtotal - - (147) (17,339) (6,084) 1,456 (6,134) - 53,222 14,169 (9,459) 

 

Grand Total - $ - (147) $ (17,339) 1,047 $ 1,456 (6,134) $ - 61,642 $ 14,169 (9,459) $ 

 

50 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT - FISCAL YEAR 2004(Dollar value is in thousasnds.)

Other Adjustments Value Change 2004 Carrying Value Adjustment 

Forfeitures

Victim Restitution

Destroyed

The following schedule presents the changes in the forfeited property and balances from October 1, 2003 to September 30, 2004. 

10/1/03 Financial 10/1/03 Carrying

Fair Market Valu

Statement Balance Adjustments Value Deposits/Sales Disposals/Transf
Note 8 (Contd.): FY 2003 Analysis of Changes in Forfeited Property and Currency

The following schedule presents the changes in the forfeited property and balances from October 1, 2002 to September 30, 2003. (Dollar value is in thousands).

10/1/02 Financial 

Statement Balance

10/1/02 Carrying 

Adjustments Value Forfeitures Deposits/Sales Dispos

Value Number Value Number Value Number Value Number Value Number Value 

Currency $ 9,550 $ - $ 9,550 $ $ 182,190 (158,361) $ (29,3Other Monetary Instruments (2) 357 - 357 64 (73) 

 

Subtotal 9,907 - - - 9,907 - 182,254 - (158,434) - (29,4Real Property 24,157 114 (1,550) - 22,607 114 20,660 78 (18,999) (91) (3,4

 

General Property 5,782 3,923 15,309 - 21,091 3,923 74,985 9,999 (61,611) (2,625) (1,4Vessels 489 19 358 - 847 19 2,185 81 (1,967) (59) (2

 

Aircraft 35 1 - - 35 1 327 5 (127) (3) (2

 

Vehicles 4,343 1,128 2,918 - 7,261 1,128 19,574 4,750 (14,943) (3,911) (4,5Subtotal 34,806 5,185 17,035 - 51,841 5,185 117,731 14,913 (97,647) (6,689) (10,0

Grand Total $ 44,713 5,185 $ 17,035 - $ 61,748 $ 5,185 299,985 14,913 $ (256,081) $ (6,689) (39,4

Victim Restitution Other Adjustments

Fair M

A

Destroyed Value Change 2003 Carrying Value 

Value Number Value Number Value Number Value Number Value Number Value 

Currency $ - $ - $ 2,860 $ - $ 6,853 $ 

 

Other Monetary Instruments - - 1,248 - 1,581 

 

Subtotal - - - - 4,108 - - - 8,434 - 

 

Real Property - - - - 468 9 (297) - 20,973 99 2,0

 

General Property - - (125) (7,579) 1,879 991 (468) - 34,297 4,080 (27,2Vessels - - - - (80) 1 (25) - 666 33 (2

 

Aircraft - - - - 70 1 - - 20 2 

 

Vehicles - - (64) (111) 974 (12) (38) - 8,197 1,559 (3,4

Subtotal - - (189) (7,690) 3,311 990 (828) - 64,153 5,773 (28,9Grand Total $ - - $ (189) (7,690) $ 7,419 990 $ (828) - $ 72,587 5,773 $ (28,9

 

SECTION II - FINANCIAL STATEMENTS 
Note 9: FY 2004 Analysis of Changes in Seized Property and Currency

Seized property and currency result primarily from enforcement activities. Seized property is not legally owned by the Fund until judicially or administratively forfeited. Because of the fuand the high level of control necessary over these assets and the possibility that these monies may be returned to their owners in lieu of forfeiture, seized currency is reported as seizure. Seized property other than currency is reported as a custodial asset upon forfeiture. (Dollar value is in thousands.)

Value Number Value Number Value Number Value Number Value Number Value Numb

Currency 395,706 $ - 254,451 $ - (123,051) $ - (159,420) $ - 4,283 $ - - $ 

 

Other MonetaryInstruments 850 - 268 - (362) - (136) - 856 - - 

 

Subtotal 396,556 - 254,719 - (123,413) - (159,556) - 5,139 - - 

 

Real Property 96,331 293 143,081 292 (7,258) (60) (18,783) (96) 21,353 152 1 

 

General Property 151,771 9,992 296,201 18,861 (234,946) (5,463) (21,469) (10,862) (18,660) (2,096) 14,465 

 

Vessels 2,626 70 5,156 148 (1,900) (31) (2,089) (95) (432) 3 (213) 

 

Aircraft 5,393 14 33,209 22 (31,248) (16) (384) (6) (981) - - 

 

Vehicles 22,988 1,866 125,080 35,594 (54,949) (4,421) (29,034) (19,364) (736) (120) (1,421) 

 

Subtotal 279,109 12,235 602,727 54,917 (330,301) (9,991) (71,759) (30,423) 544 (2,061) 12,832 

 

Grand Total 675,665 $ 12,235 857,446 $ 54,917 (453,714) $ (9,991) (231,315) $ (30,423) 5,683 $ (2,061) 12,832 $ 

 

52 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT - FISCAL YEAR 2004

Forfeitures Adjustments Value Changes 

9/30/03 Financial 

Statement Balance Seizures Remissions
Note 9 (Contd.): FY 2003 Analysis of Changes in Seized Property and Currency

Seized property and currency result primarily from enforcement activities. Seized property is not legally owned by the Fund until judicially or administratively forfeitedand the high level of control necessary over these assets and the possibility that these monies may be returned to their owners in lieu of forfeiture, seized currency is Seized property other than currency is reported as a custodial asset upon forfeiture. (Dollar value is in thousands).

9/30/02 Financial 

Statement Balance Remissions Valu

Seizures Forfeitures Adjustments 

Value Number Value Number Value Number Value Number Value Number Value 

Currency $ 363,014 - $ 299,612 - $ (88,304) - $ (182,190) - $ 3,574 - $ 

 

Other Monetary Instruments 15,951 - 352 - (4,073) - (64) - (11,316) - 

 

Subtotal 378,965 - 299,964 - (92,377) - (182,254) - (7,742) - 

 

Real Property 97,214 290 38,135 135 (14,482) (53) (20,660) (78) (3,886) (1) 

 

General Property 105,347 9,465 366,427 16,988 (113,835) (4,887) (74,985) (9,999) (21,561) (1,575) (109,62Vessels 5,591 66 3,962 124 (1,394) (31) (2,185) (81) (3,259) (8) (8

 

Aircraft 7,060 15 8,184 18 (7,797) (13) (327) (5) (70) (1) (1,65

Vehicles 22,647 1,728 42,152 6,712 (19,407) (1,642) (19,574) (4,750) (2,331) (182) (49Subtotal 237,859 11,564 458,860 23,977 (156,915) (6,626) (117,731) (14,913) (31,107) (1,767) (111,85Grand Total $ 616,824 11,564 $ 758,824 23,977 $ (249,292) (6,626) $ (299,985) (14,913) $ (38,849) $ (1,767) (111,85

SECTION II - FINANCIAL STATEMENTS 



SECTION III 

OTHER REPORTS
Independent Auditor's Report on Internal Control

Office of Inspector General 

United States Department of the Treasury 

Washington, D.C. 

We have audited the Principal Statements (balance sheets and the related statements of net cost, 

changes in net position, budgetary resources and financing, hereinafter referred to as “financial 

statements”) of the Department of the Treasury Forfeiture Fund (the Fund) as of and for the year 

ended September 30, 2004, and have issued our report thereon dated October 25, 2004. We 

conducted our audit in accordance with auditing standards generally accepted in the United 

States of America; the standards applicable to financial audits contained in Government Auditing 

Standards, issued by the Comptroller General of the United States; and, Office of Management 

and Budget (OMB) Bulletin No. 01-02, Audit Requirements for Federal Financial Statements.

In planning and performing our audit, we considered the Fund’s internal control over financial 

reporting by obtaining an understanding of the Fund’s internal control, determined whether these 

internal controls had been placed in operation, assessed control risk, and performed tests of 

controls in order to determine our auditing procedures for the purpose of expressing our opinion 

on the financial statements. We limited our internal control testing to those controls necessary to 

achieve the objectives described in OMB Bulletin No. 01-02 and Government Auditing 

Standards. We did not test all internal controls relevant to operating objectives as broadly 

defined by the Federal Managers’ Financial Integrity Act of 1982, such as those controls relevant 

to ensuring efficient operations. The objective of our audits was not to provide assurance on 

internal control over financial reporting. Consequently, we do not provide an opinion on internal 

control over financial reporting. 

Our consideration of the internal control over financial reporting would not necessarily disclose 

all matters in the internal control over financial reporting that might be reportable conditions. 

Under standards issued by the American Institute of Certified Public Accountants, reportable 

conditions are matters coming to our attention relating to significant deficiencies in the design or 

operation of the internal control that, in our judgment, could adversely affect the Fund’s ability 

to initiate, record, process, and report financial data consistent with the assertions by Fund 

Management in the financial statements. 
SECTION III – OTHER REPORTS 58

Material weaknesses are reportable conditions in which the design or operation of one or more of 

the internal control components does not reduce to a relatively low level the risk that 

misstatement caused by error or fraud in amounts that would be material in relation to the 

financial statements being audited may occur and not be detected within a timely period by 

employees in the normal course of performing their assigned functions. Because of inherent 

limitations in internal controls, misstatements due to error or fraud, may occur and not be 

detected. However, we noted a certain matter discussed in the following paragraphs involving 

the internal control over financial reporting and its operation that we consider to be a reportable 

condition. However, this reportable condition is not believed to be a material weakness. 

The identified reportable condition, as defined above, is summarized below with further 

explanations and Fund Management’s responses in Exhibit I of this report. 

The reportable condition identified below was reported in prior years and is of continuing 

significance. 

 Indirect Overhead Expenses of the National Seized Property Contractor are not 

Recorded and Accounted for by the Fund to the Line Item Level.

Indirect overhead expenses of the national seized property contractor are not recorded and 

accounted for by the Fund to the line item level. The Fund’s Property Custodian incurs costs on 

behalf of the Fund from the time of seizure until the asset is ultimately disposed. Currently, only 

holding costs and direct selling costs related to general property are captured in the Seized Assets 

and Case Tracking System (SEACATS) at the line item level, but not the indirect costs. 

Because this condition can impact equitable sharing expenses of the Fund, this condition should 

be remedied. 

We also noted other matters involving the internal control structure and its operation that we 

have reported to Fund Management in a separate letter dated October 25, 2004. 

Finally, with respect to internal control related to performance measures reported in Section 1, 

“Overview,” we obtained an understanding of the design of significant internal controls relating 

to the existence and completeness assertions, as required by OMB Bulletin No. 01-02. Our 

procedures were not designed to provide assurance on internal control over reported performance 

measures, and, accordingly, we do not provide an opinion on such controls. 

This report is intended solely for the information and use of the Management of the Fund, the 

U.S. Department of the Treasury, OMB, the U.S. Congress, the Office of Inspector General and 

the Government Accountability Office and is not intended to be, and should not be used by 

anyone other than these specified parties. However, this report is a matter of public record and its 

distribution is not limited. 

October 25, 2004 
Independent Auditor's Report on Compliance with Laws and Regulations

Office of Inspector General 

United States Department of the Treasury 

Washington, D.C. 

We have audited the Principal Statements (balance sheets and the related statements of net cost,

changes in net position, budgetary resources and financing, hereinafter referred to as “financial 

statements”) of the Department of the Treasury Forfeiture Fund (the Fund) as of and for the year 

ended September 30, 2004, and have issued our report thereon dated October 25, 2004. We

conducted our audit in accordance with: auditing standards generally accepted in the United 

States of America; the standards applicable to financial audits contained in Government Auditing

Standards, issued by the Comptroller General of the United States; and, Office of Management 

and Budget (OMB) Bulletin No. 01-02, “Audit Requirements for Federal Financial Statements.” 

The management of the Fund is responsible for complying with laws and regulations applicable 

to the Fund. As part of obtaining reasonable assurance about whether the Fund’s financial

statements are free of material misstatement, we performed tests of its compliance with certain 

provisions of laws and regulations, noncompliance with which could have a direct and material 

effect on the determination of financial statement amounts, and certain provisions of other laws 

and regulations specified in OMB Bulletin No. 01-02, including the requirements referred to in 

the Federal Financial Management Improvement Act (FFMIA) of 1996. We limited our tests of 

compliance to these provisions and we did not test compliance with all laws and regulations

applicable to the Fund. 

The results of our tests of compliance disclosed no instances of noncompliance with laws and 

regulations discussed in the preceding paragraph exclusive of FFMIA, that are required to be

reported under Government Auditing Standards or OMB Bulletin No. 01-02. 

Under FFMIA, we are required to report whether the Fund’s financial management systems

substantially comply with the Federal financial management systems requirement, applicable 

Federal accounting standards, and the United States Government Standard General Ledger at the 

transaction level. The Bureau of Customs and Border Protection (CBP) provides cross-servicing 

of the accounting for the Fund. To meet this requirement, we performed tests of compliance with 

FFMIA section 803(a) requirements. 

The results of our test on the substantial compliance of CBP, as it relates to the Fund, with the 

requirements of Federal Financial Management Systems Requirements (FFMSR) disclosed no 

instances where CBP’s financial management systems, as they relate to the Fund, did not 

substantially comply with FFMSR. Our audit tests disclosed no instances in which the Fund’s 
SECTION III – OTHER REPORTS 60

financial management systems did not substantially comply with Federal accounting standards and 

the U.S. Government Standard General Ledger requirements. 

Providing an opinion on compliance with certain provisions of laws and regulations was not an 

objective of our audit and, accordingly, we do not express such an opinion. 

This report is intended solely for the information and use of the Management of the Fund, the U.S. 

Department of the Treasury, OMB, the U.S. Congress, the Office of Inspector General, and the 

Government Accountability Office and is not intended to be and should not be used by anyone other 

than these specified parties. However, this report is a matter of public record and its distribution is not 

limited. 

October 25, 2004 
EXHIBIT I

REPORTABLE CONDITION
EXHIBIT I – REPORTABLE CONDITION 61

INDIRECT OVERHEAD EXPENSES OF THE NATIONAL SEIZED PROPERTY 

CONTRACTOR ARE NOT RECORDED AND ACCOUNTED FOR BY THE FUND TO THE 

LINE ITEM LEVEL. (Repeat Condition)

CONDITION 

Indirect overhead expenses of the national seized property contractor are not recorded and accounted 

for by the Fund to the line item level. The Fund’s Property Custodian incurs costs on behalf of the 

Fund from the time of seizure until the asset is ultimately disposed. Currently, only holding costs and 

direct selling costs related to general property are captured in the Seized Assets and Case Tracking 

System (SEACATS) at the line item level, but not the indirect costs. 

CRITERIA 

The Budget and Accounting Procedures Act of 1950, Section 3512, Executive Agency's Accounting 

System requires Federal agencies to establish an internal control which ensures the safeguarding of 

assets and the proper recording of revenues and expenditures. It is further reinforced by the Federal 

Manager's Financial Integrity Act of 1982 (FMFIA) which requires that internal accounting and 

administrative controls be established to provide reasonable assurances that revenues and 

expenditures applicable to agency operations are properly recorded and accounted for to permit the 

preparation of accounts and reliable financial and statistical reports and to maintain accountability 

over the assets. Additionally, the Joint Financial Management Improvement Program’s (JFMIP) 

Seized Property and Forfeited Assets Systems Requirements require seized property and forfeited 

assets systems to record costs incurred while the asset is in custody, and costs incurred in disposition 

activities. 

CAUSE

The Fund relies on the Property Custodian for providing asset specific expenses information. 

Deficiencies in the system (SEACATS) that the Property Custodian uses preclude the capturing of 

certain expense information at the asset level. Currently, only holding costs and direct selling costs 

related to general property are captured in SEACATS at the line item level. 

EFFECT

The Fund is unable to report total asset specific expenses in the inventory systems. The Fund’s asset 

management function will deteriorate if the above conditions are allowed to continue, resulting 

ultimately in a lack of accountability over the assets of the Fund. 

RECOMMENDATION

In view of the Fund’s acknowledgement of this condition and SEACATS’ inability to capture the 

required information we make the following recommendations: 

a. For all common support costs not directly traceable to individual seizures, an allocation process 

needs to be developed and implemented. Indirect costs will have to be applied to the individual 

seizures. Direct and indirect costs will have to be added together to provide total costs per seizure. 
62 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004 

b. EOAF should vigorously pursue the enhancement of SEACATS system capabilities to record and 

report total expenses at the asset level. 

MANAGEMENT RESPONSE 

Management Assessment on Progress: 

(1) Real Property Contract: Although the Real Property Contract has been in place for nearly three 

years, and resolution of this reportable condition is a specifically stated requirement for the contract, 

the condition remains open and unresolved. TFF Management has taken action to move the Real 

Property Contract from the auspices of Customs and Border Protection, Department of Homeland 

Security to direct management by the Executive Office for Asset Forfeiture. 

(2) General Property Contract: The requirement to distribute contract overhead costs to the line item 

level is included in the Statement of Work for the general property contract now pending re-award for 

nearly 4 years. Notwithstanding this lengthy lapse in the contract process, during which the Fund has 

funded bridge contracts with the incumbent contractor, competition for re-award of the general 

property contract is suspended by Customs and Border Protection, Department of Homeland 

Security. TFF Management has not been provided a schedule by Customs and Border Protection for 

re-award of the contract and Fund Management also understands from information provided by CBP 

that no further bridge contracts are eligible for purposes of maintaining and preserving the Fund’s 

seized and forfeited property once the current bridge contract expires. The current bridge contract 

expires on March 31, 2005. Until a new contract can be awarded, this portion of the Reportable 

Condition will remain open. 

Discussion/Background and Planned Action: 

Fund management concurs with the auditor’s recommendation regarding the development and 

implementation of an allocation process for indirect costs. EOAF relies on a national seized property 

contractor (the contractor) to account for all costs related to the storage, maintenance and sale of 

seized and forfeited property. Currently, the real property contractor has proposed a methodology 

for identifying indirect costs to the line item level. Customs and Border Protection has not yet 

implemented the methodology through SEACATS. Implementation of an indirect cost methodology 

for general property will have to await the re-competition of the successor contract for general 

property, which is suspended at this time. The requirement is not a part of the current general 

property contractor’s statement of work. 
SECTION IV 

REQUIRED SUPPLEMENTAL INFORMATION 
TREASURY FORFEITURE FUND 

Required Supplemental Information 

(Required by OMB Bulletin 01-09) 

For the Years Ended September 30, 2004 and 2003 

(Dollars in Thousands) 

SECTION IV – REQUIRED SUPPLEMENTAL INFORMATION 63

Intragovernmental Amounts – Assets (Dollars in thousands) 

2004 2003

Partner Agency 

Fund 

Balance 

with 

Treasury 

Accounts 

Receivable/

Advances 

Investments

Fund 

Balance 

With 

Treasury 

Accounts 

Receivable/

Advances 

Investments

Departmental 

Offices $-- $12 $ -- $-- $13 $ --

Department of 

Justice -- -- -- -- -- --

Bureau of Public 

Debt -- -- $455,142 -- -- $527,034

Totals $-- $12 $455,142 $-- $13 $527,034

Intragovernmental Amounts – Liabilities (Dollars in thousands) 

2004 2003

Partner Agency

Accounts 

Payable

Accounts 

Payable

Department of Justice $ 2,280 $11,618

US Postal Service -- 15

Departmental Offices 1,584 880

Department of Homeland Security 8,336 10,126

Internal Revenue Service 18,588 18,291

Financial Crimes Enforcement Network -- 485

Totals $30,788 $41,415

Intra-Governmental Amounts – Revenues and Costs (Dollars in thousands) 

2004 2003 

Budget Functions

Cost to Generate 

Exchange 

Intragovernmental 

Revenue

Costs to Generate 

Non-Exchange 

Intragovernmental 

Revenue

Cost to Generate 

Exchange 

Intragovernmental 

Revenue

Costs to Generate 

Non-Exchange 

Intragovernmental 

Revenue

Administration of 

Justice 

$ -- $ 51,438 $ -- $ 64,825
TREASURY FORFEITURE FUND 

Required Supplemental Information 

(Required by OMB Bulletin 01-09) 

For the Years Ended September 30, 2004 and 2003 

(Dollars in Thousands) 

64 SECTION IV – REQUIRED SUPPLEMENTAL INFORMATION 

Intragovernmental Amounts – Non-exchange Revenue (Dollars in thousands) 

 

2004 2003 

Partner Agency In Out In Out

Department of Justice $ -- $ 2,091 $ -- $ 10,481

Department of Homeland Security -- 21,671 -- 30,825

Engraving and Printing -- 200 -- --

Internal Revenue Service -- 14,506 -- 11,881

Financial Crimes Enforcement Network -- 178 -- 2,140

Totals 

___

$ --

______

$38,646

___

$ --

______

$55,327
SECTION V 

OTHER ACCOMPANYING INFORMATION 

(Unaudited) 
TREASURY FORFEITURE FUND 

Equitable Sharing Summarized by State and U.S. Territories 

For the Year Ended September 30, 2004 

 (Dollars in Thousands) 

(Unaudited) 

State/U.S. Territories Currency Value Property Value

Alabama $ 79 $ 12 

Alaska - -

Arizona 2,423 198

Arkansas - -

California 1,938 309

Colorado 28 -

Connecticut 66 -

D.C. Washington 203 1 

Delaware - -

Florida 3,410 1,238

Georgia 155 -14

Guam - -

Hawaii - 4

Idaho - -

Illinois 2,606 14

Indiana 311 -28

Iowa 2 3

Kansas - -

Kentucky 156 55

Louisiana - -

Maryland 496 17

Massachusetts 1,145 78

Michigan 953 51

Minnesota 3 4

Mississippi 134 17

Missouri 32 137

Montana - -

Nebraska 4 337

Nevada 11 39

New Jersey 2,615 142 

New Hampshire - - 

New Mexico 19 - 

New York 9,620 234 

North Carolina 720 200 

North Dakota - - 

Ohio 1,212 296

Oklahoma 13 -

Oregon 437 166

Pennsylvania 78 12

Puerto Rico 3,453 34 

Rhode Island - -539 

South Carolina 1,286 5 

South Dakota 1 - 

Tennessee 116 38

Texas 10,239 152

Utah - -

Vermont 90 -

Subtotal carried forward $44,054 $3,212 

TREASURY FORFEITURE FUND 

SECTION V – OTHER ACCOMPANYING INFORMATION 65
Equitable Sharing Summarized by State and U.S. Territories 

For the Year Ended September 30, 2004 

(Dollars in Thousands) 

(Unaudited) 

State/U.S. Territories Currency Value Property Value

Subtotal brought forward 44,054 3,212 

Virgin Islands 50 - 

Virginia 305 129

Washington 292 -

West Virginia - - 

Wisconsin 37 1

Wyoming 43 -

 Totals $44,781 $3,342

Summarized above are the currency and property values of assets forfeited and shared with state and local agencies 

and U.S. Territories participating in the seizure. This supplemental schedule is not a required part of the financial 

statement of the Department of the Treasury Forfeiture Fund. Information presented on this schedule represents 

assets physically transferred during the year and, therefore, does not agree with total assets shared with state and 

local agencies in the financial statements. In addition, the above numbers do not include the adjustment to present 

property distributed at net realizable value. 

TREASURY FORFEITURE FUND 

66 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004
Uncontested Seizures of Currency and Monetary Instruments Valued Over 

$100,000, Taking More Than 120 Days from Seizure to Deposit in Fund 

For the Year Ended September 30, 2004 

(Dollars in Thousands) 

31 U.S.C. 9703(f)(2)(E) requires the Secretary of the Treasury to report annually to Congress uncontested seizures 

of currency or proceeds of monetary instruments over $100,000, which were not deposited in the Department of the 

Treasury Forfeiture Fund within 120 days of the seizure date. There were no administrative seizures over $100,000 

over 120 days old for all bureaus in FY 2004. 

TREASURY FORFEITURE FUND 

Analysis of Revenue and Expenses and Distributions 

SECTION V – OTHER ACCOMPANYING INFORMATION 67
For the Year Ended September 30, 2004 

(Dollars in Thousands) 

Revenue, Expenses and Distributions by Asset Category: 

Revenue

Expenses and 

Distributions

Vehicles $18,886 $35,631

Vessels 5,246 45,397

Aircraft 5,246 14,625

General Property 16,787 144,092

Real Property 58,756 5,644

Currency and monetary instruments 252,038 111,570

356,959 356,959

Less: 

 Mortgages and claims (7,331) (7,331)

 Refunds (60,406) (60,406)

Add: 

Excess of net revenues and financing sources over total program

 expenses 

 -- --

Total $289,222 $289,222

Revenues, Transfers, Expenses and Distributions by Type of 

Disposition: 

Sales of property and forfeited currency and monetary instruments 241,169 67,822

Reimbursed storage costs 4,220 35,696

Assets shared with state and local agencies 98,667 98,667

Assets shared with other federal agencies 9,758 9,758

Assets shared with foreign countries 2,708 2,708

Victim Restitution 437 437

Destructions -- 42,835

Pending disposition -- 99,036

356,959 356,959

Less: 

 Mortgages and claims (7,331) (7,331)

 Refunds (60,406) (60,406)

Add: 

Excess of net revenues and financing sources over total program

 expenses 

 -- --

Total $289,222 $289,222

The revenue amount of $289,222 is from the Statement of Net Position. This supplemental schedule “Analysis of 

Revenues, Expenses and Distributions” is required under the Treasury Forfeiture Fund Act of 1992. Because the 

Fund does not have a cost accounting system, the method used does not provide reliable information in the analysis 

of revenue and expenses and distributions by type of disposition. The information is presented to comply with the 

requirements of the Treasury Forfeiture fund Act of 1992. 

TREASURY FORFEITURE FUND 

Information Required by 31 U.S.C. 9703(f) 

For the Year Ended September 30, 2004 

68 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004
(Dollars in Thousands) 

The Treasury Forfeiture Fund Act of 1992, 31 U.S.C. 9703(f), requires the Secretary of the Treasury to transmit to 

Congress, no later than February 1, of each year, certain information. The following summarizes the required 

information. 

(1) A report on: 

(A) The estimated total value of property forfeited with respect to which funds were not deposited 

in the Department of the Treasury Forfeiture Fund during the preceding fiscal year under any 

law enforced or administered by the Department of the Treasury law enforcement organizations

of the United States Coast Guard, in the case of fiscal years beginning after 1993. 

As reported in the audited financial statements, at September 30, 2004, the Fund had forfeited property 

held for sale of $42,563. The realized proceeds will be deposited in the Fund when the property is sold. 

Upon seizure, currency and other monetary instruments not needed for evidence in judicial proceedings 

are deposited in a U.S. Customs Service (Customs) suspense account. Upon forfeiture, it is transferred 

to the Treasury Forfeiture Fund. At September 30, 2004, there was $8,420 of forfeited currency and 

other monetary instruments that had not yet been transferred to the Fund. This is reported as a part of 

“Cash and Other Monetary Assets” in the audited financial statements. 

(B) The estimated total value of all such property transferred to any state or local law enforcement 

agency. 

The estimated total value of all such property transferred to any state or local law enforcement bureau is 

summarized by state and U.S. territories. Total currency transferred was $1,833 and total property 

transferred was $10,839 at appraised value. 

(2) A report on: 

(A) The balance of the Fund at the beginning of the preceding fiscal year. 

The total net position of the Treasury Forfeiture Fund on September 30, 2003 which became the 

beginning balance for the Fund on October 1, 2003, as reported in the audited financial statements is 

$177,231. 

(B) Liens and mortgages paid and the amount of money shared with federal, state, local and 

foreign law enforcement bureaus during the preceding fiscal year. 

Mortgages and claims expense, as reported in the audited financial statements, was $7,331. The 

amount actually paid on a cash basis was not materially different. 

TREASURY FORFEITURE FUND 

Information Required by 31 U.S.C. 9703(f) 

For the Year Ended September 30, 2004 

69

(Dollars in Thousands) 

SECTION V – OTHER ACCOMPANYING INFORMATION
The amount of forfeited currency and property shared with federal, and distributed to state, local and 

foreign law enforcement bureaus as reported in the audited financial statements was as follows: 

State and local $98,667 

Foreign countries 2,708 

Other federal agencies 9,758 

Victim restitution 437 

(C) The net amount realized from the operations of the Fund during the preceding fiscal year, the 

amount of seized cash being held as evidence, and the amount of money that has been carried 

over into the current fiscal year. 

The net cost of operations of the Fund as shown in the audited financial statements is $122,134. 

The amount of seized currency not on deposit in the Fund’s suspense account at September 30, 2004, 

was $44,206. This amount includes some funds in the process of being deposited at yearend; cash 

seized in August or September 2004 that is pending determination of its evidentiary value from the U.S. 

Attorney; and the currency seized for forfeiture being held as evidence. 

On a budgetary basis, unobligated balances as originally reported on the Office of Management and 

Budget Reports, SF-133, “Report on Budget Execution” was approximately $95,779 for fiscal year 

2004. 

(D) Any defendant’s property not forfeited at the end of the preceding fiscal year, if the equity in 

such property is valued at $1 million or more.

The total approximate value of such property for the Treasury Forfeiture Fund, at estimated values 

determined by bureau and contractor’s officials, and the number of seizures is as follows: 

CBP $ 64,207,747 25 seizures 

IRS 230,277,125.18 70 seizures

(E) The total dollar value of uncontested seizures of monetary instruments having a value of over 

$100,000 which, or the proceeds of which, have not been deposited into the Fund within 120 days 

after the seizure, as of the end of the preceding fiscal year. 

The total dollar value of such seizures is $0. This is also documented on page 67. 

TREASURY FORFEITURE FUND 

Information Required by 31 U.S.C. 9703(f) 

For the Year Ended September 30, 2004 

(Dollars in Thousands) 

70 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2004
(F) The balance of the Fund at the end of the preceding fiscal year. 

The total net position of the Fund at September 30, 2004, as reported in the audited financial statements 

is $194,103. 

(G) The net amount, if any, of the excess unobligated amounts remaining in the Fund at the end of 

the preceding fiscal year and available to the Secretary for Federal law enforcement related 

purposes. 

There is no cap on amounts that can be carried forward into fiscal year 2005 per the fiscal year 1997 

Omnibus Appropriations Act (PL 104-208). 

(H) A complete set of audited financial statements prepared in a manner consistent with the 

requirements of the Chief Financial Officers Act of 1990. 

The audited financial statements, including the Independent Auditor’s Report, is found in Section II. 

(I) An analysis of income and expense showing revenue received or lost: (i) by property category

(such as general property, vehicles, vessels, aircraft, cash, and real property); and (ii) by type of 

disposition (such as sale, remission, cancellation, placement into official use, sharing with state 

and local agencies, and destruction). 

A separate schedule is presented on page 68. 

SECTION V – OTHER ACCOMPANYING INFORMATION 71