Justice is responsible for collecting criminal debt and has delegated operating responsibility to its FLUs within all of Justice’s U.S. Attorneys’ Offices (USAO). Justice’s Executive Office for United States Attorneys (EOUSA) provides administrative and operational support, including support required for debt collection, to the USAOs. According to Justice, the FLUs typically become involved in the criminal debt collection process after the judgment, which occurs when an offender is convicted and a judge orders the offender to pay a fine or restitution. The U.S. Courts and their probation offices may also assist in collecting moneys owed. AOUSC provides national standards and promulgates administrative and management guidance, including standards and guidance required for debt collection, to the various U.S. judicial districts. In July 2001, we reported on the growth of uncollected criminal debt through fiscal year 1999. We noted that although some of the key factors that contributed to the increasing amount of criminal debt were beyond Justice’s control, certain of Justice’s criminal debt collection processes were inadequate. Accordingly, in the 2001 report, we made 14 recommendations to Justice to improve the effectiveness and efficiency of its criminal debt collection processes. In our March 2004 report, we discussed the extent to which Justice had acted on our previous recommendations to it to improve criminal debt collection. Our follow-up work on Justice’s efforts to implement our 2001 recommendations showed that it had completed actions on 7 of the 14 recommendations, most of which were completed about 2 years after we made the recommendations, and had efforts under way to address 6 other recommendations. We noted that because many of these recommendations largely focused on establishing policies and procedures, it is important that they be effectively implemented once they are established, and it will likely take some time for collection results to be realized from full implementation. However, efforts to implement the recommendation that we considered the most critical had not progressed—namely for Justice to participate in a multiagency effort to develop a unified strategy for criminal debt collection. Specifically, we reported that Justice had not yet worked with other agencies, including AOUSC, OMB, and Treasury, to implement a key recommendation to work as a joint task force to develop a strategic plan that addresses managing, accounting for, and reporting criminal debt. We concluded that the long-standing problems in the collection of outstanding criminal debt—including fragmented processes and lack of coordination—continued because there is no united strategy among the major entities involved with the collection process. Our case study review, on which the results described in this report are based, focused on a nonrepresentative selection of five criminal white- collar financial fraud debts that Justice reported outstanding as of September 30, 2002, each with a judgment prior to fiscal year 2001 that assessed the offender millions of dollars of restitution. We selected debts involving offenders who were not currently in prison and for which the offenders had paid a relatively small amount of the outstanding restitution amounts as of September 30, 2002. Also, our review only involved selected cases for which we could clearly identify the lead debtor in court and Justice records. We obtained sufficient information to address our three reporting objectives; however, we were not provided all of the details pertaining to each of the five selected cases and thus cannot be assured that there was not additional relevant information. Because Justice still considers these cases to be open law enforcement cases for collection purposes, the information Justice provided for each case was limited primarily to what was included in its debt collection file minus personal identifiers, such as the names of the offenders, their addresses, and their Social Security numbers. Therefore, we are not providing a comprehensive account of any particular case. For each selected debt, we reviewed Justice’s debt collection file or files, minus all personal identifiers. We interviewed appropriate officials from Justice’s EOUSA and the responsible FLUs concerning actions taken to collect the debt, obstacles to collection, and prospects for future collections. To supplement or attempt to further corroborate the information obtained from Justice for each case, we obtained and reviewed pertinent information about the selected debts and debtors from certain records made available by the courts and from public sources available through the Internet, such as property records. Also, for reporting purposes, rather than highlighting specific case studies in detail, our discussions focus on specific types of debt collection problems identified during this review, many of which we were aware of from our previous work. This was done to ensure sufficient privacy of those involved in our selected cases, and in consideration of Justice’s concern that the release of information on open cases could hinder the department’s efforts to collect the debts. We conducted our review from November 2003 through June 2004 in accordance with U.S. generally accepted government auditing standards. We received written comments signed by the Director, Executive Office for United States Attorneys, on a draft of this report. Justice’s comments are reprinted in appendix I, and technical comments received from both Justice and AOUSC have been addressed as appropriate in this report. The court-ordered restitution amounts assessed the offenders for the five selected criminal debt cases far exceed likely collections for the crime victims. The offenders’ restitution amounts totaled about $568 million. However, according to court records, only about $40 million, or about 7 percent of the total, had been collected several years after the courts sentenced each of the offenders. The vast majority of these collections resulted from asset forfeiture actions and from payments that were made before the offenders were sent to prison or placed on probation. We found that the FLUs, which typically become involved in criminal debt collection after the debt is established at judgment, performed certain debt collection activities; however, they were not able to reduce the restitution debts significantly by identifying and liquidating additional assets of the offenders to pay the victims. Moreover, based on information available to us, the FLUs’ prospects are not good for collecting additional restitution amounts from the offenders to compensate their victims to the extent initially ordered by the courts. Following the judgments, despite indications of prior wealth or possession of significant financial resources, the offenders claimed to have limited financial means to pay their restitution debts. Further, there were minimal, if any, apparent negative consequences to the offenders for not paying such debts. A major debt collection problem for the FLUs for the selected cases was that up to 13 years had passed between the offenders’ criminal activities and the related judgments. By the time the FLUs became involved in trying to collect the restitution debts, the offenders’ assets had been, among other things, transferred to family members or others, forfeited to the government, or involved in bankruptcy. Justice acknowledged to us that the long intervals between criminal activity and the related judgments, and certain dispositions and circumstances involving the offenders’ assets or the offenders that take place during such intervals, make collection difficult for many criminal restitution debt cases. As previously mentioned, the offenders’ restitution amounts for the selected cases totaled about $568 million. Restitution amounts for individual cases ranged from over $7 million to more than $400 million. Court records show that each of the offenders, who pled guilty to engaging in criminal activity, had been high-ranking officials of companies and lending institutions or operated their own business. The crimes in these cases consisted of fraudulently manipulating company sales figures and inventories to increase stock values or to obtain loans, engaging in schemes to convert business loan proceeds for personal use, selling securities to private investors under false pretenses, and illegally sharing in loan proceeds from a federally insured financial institution. The victims of the crimes involving the offenders of our selected cases included corporate shareholders, large lending institutions, and small investors—many of whom were elderly and had been harmed financially. In addition to the court-ordered restitution, prison terms ordered by the courts for four of these offenders ranged from 1 to 5 years followed by 3 to 5 years of supervised release. One offender received several years of probation rather than prison. As of June 2004, all of the offenders were out of prison or off probation, but three offenders were still on supervised release. As noted earlier, only about $40 million, or about 7 percent of the total restitution for the selected cases had been paid as of June 2004, which was from about 4 to 8 years after the courts sentenced each of the offenders. Collections for the individual cases ranged from less than 1 percent to about 10 percent of the restitution amounts owed. About $24 million of these collections resulted from asset forfeiture actions, and over $11 million from payments that were made prior to the offenders’ sentencing. After the judgments were rendered, the FLUs performed certain debt collection activities, such as filing liens on the offenders’ real property; issuing restraining notices forbidding the transfer or disposition of assets; performing title searches; and requesting, obtaining, and reviewing financial information from the offenders. Performing such activities did not enable the FLUs to further reduce the restitution debts significantly by identifying and liquidating additional assets of the offenders. For the selected cases, based on information available to us, the FLUs are not likely to collect sufficient additional restitution amounts from the offenders to compensate their victims to the extent initially ordered by the courts. At some point prior to the judgments establishing the restitution debts, each of the offenders either reported having wealth or significant financial resources to the courts or to Justice, or there were indicators of such. Specifically, prior to sentencing, one or more of the offenders reported earning millions of dollars in annual gross income, having millions of dollars in net worth, or spending thousands of dollars per month on clothing and entertainment. In addition, court records indicate that certain of the offenders converted millions of dollars of fraudulently obtained assets for personal use, established businesses for their children, or held residential properties worth millions that were located in upscale communities. In spite of the reported wealth or financial resources or indications of such, following their judgments, each of the offenders reported to either the courts or Justice a modest income or net worth and claimed to have limited financial means to pay restitution debt.