7 August 2001

See contents of full IRS Handbook of Criminal Investigation: http://cryptome.org/irs-ci/irs-ci.htm

## Handbook 9.7 Asset Seizure and Forfeiture Chapter 6 Seizure Planning
### Contents [9.7] 6.1 OVERVIEW [9.7] 6.2 PRE-SEIZURE RESPONSIBILITY FOR TITLE 18 FORFEITURES [9.7] 6.3 SOURCE OF INFORMATION USED AS BASIS OF SEIZURE [9.7] 6.3.1 Grand Jury Information [9.7] 6.3.2 Tax Return and Return Related Information [9.7] 6.3.2.1 Ex parte Order [9.7] 6.3.2.2 Related Statute Memorandum [9.7] 6.3.3 Formal Requests--Financial Institutions [9.7] 6.4 EQUITY CONSIDERATIONS [9.7] 6.4.1 Appraisals [9.7] 6.4.2 Identification and Value of Assets Subject to Criminal Forfeiture [9.7] 6.5 ADOPTIVE SEIZURES [9.7] 6.6 SPECIAL CIRCUMSTANCES SURROUNDING THE ASSETS TO BE SEIZED [9.7] 6.6.1 Potentially Contaminated Property [9.7] 6.6.2 Seizures of Ongoing Businesses [9.7] 6.6.3 Perishable Goods--Title 18 Seizures [9.7] 6.7 CURRENCY [9.7] 6.7.1 Currency Seized for Title 18 Forfeiture [9.7] 6.7.2 FED Wire Procedures [9.7] 6.7.3 Currency Seized Then Held as Evidence [9.7] 6.8 FINANCIAL INSTRUMENTS [9.7] 6.8.1 Title 18 Seizures of Financial Instruments [9.7] 6.8.1.1 Procedures for Transfer to Customs Suspense Account [9.7] 6.8.2 Bank Accounts [9.7] 6.8.3 Promissory Notes [9.7] 6.9 PERSONAL PROPERTY [9.7] 6.10 REAL ESTATE SEIZURES [9.7] 6.10.1 Real Estate Procedures--Civil Judicial Forfeiture [9.7] 6.10.2 Real Estate Procedures-- Criminal Forfeiture [9.7] 6.10.3 Evictions From Real Property [9.7] 6.11 STORAGE OF ASSETS [9.7] 6.12 CHAIN OF CUSTODY-- EVIDENCE [9.7] 6.13 CHAIN OF CUSTODY PROCEDURES-- FORFEITURES [9.7] 6.14 REMOVAL OF SEIZED PROPERTY FROM THE JUDICIAL DISTRICT [9.7] 6.15 PAYMENT OF AWARDS FOR INFORMATION OR ASSISTANCE LEADING TO A CIVIL OR CRIMINAL FORFEITURE [9.7] 6.15.1 Amount of Award [9.7] 6.15.2 Procedure for Requesting Payment of Award [9.7] 6.15.3 Purchase of Evidence or Information [9.7] 6.16 EXPENSES INCIDENTAL TO A SEIZURE [9.7] 6.16.1 Reimbursement And Payments From The Treasury Asset Forfeiture Fund [9.7] 6.16.1.1 Investigative Costs Leading to a Title 18 Forfeiture [9.7] 6.16.1.2 Program Management Expenses [9.7] 6.17 SPECIAL AGENT LIABILITY IN SEIZURE CASES Exhibit [9.7] 6-1 Title 12 Formal request For Financial Information Exhibit [9.7] 6-2 Customer Notice of Formal Request Exhibit [9.7] 6-3 Customer's Motion To Challenge Governments Access To Financial Records Exhibit [9.7] 6-4 Sample Certificate of Service Exhibit [9.7] 6-5 Customer's Sworn Statement For Filing a Challenge Exhibit [9.7] 6-6 Directions For Completing and Filing The Attached Motion and Sworn Statement Exhibit [9.7] 6-7 Affidavit to Delay Notice Exhibit [9.7] 6-8 Application For Delay of Notice and Request To Seal Exhibit [9.7] 6-9 Ex Parte Order to Delay Customer Notice and Order To Seal Exhibit [9.7] 6-10 Post Notice Following Court Ordered Delay Exhibit [9.7] 6-11 Personal Property Pre-Seizure Checklist Exhibit [9.7] 6-12 Real Estate Pre-Seizure Exhibit [9.7] 6-13 (Reserved) Exhibit [9.7] 6-14 Preparation of Fed Wire For Cash Exhibit [9.7] 6-15 TEOAF Form 6, Deposit Information Exhibit [9.7] 6-16 Request For OPAC of Funds Deposited To The IRS Suspense Account Exhibit [9.7] 6-17 Form 9573, Custody Receipt for Retained or Seized Property Exhibit [9.7] 6-18 Form 181, Inventory Record of Seized Vehicle, Vessel or Aircraft Exhibit [9.7] 6-19 EG&G Form 4006, Aircraft Condition and Inventory Exhibit [9.7] 6-20 EG&G Form 4007, Vehicle Condition and Inventory Exhibit [9.7] 6-21 Post Forfeiture Occupancy Agreement Exhibit [9.7] 6-22 Sample Post and Walk Notice Exhibit [9.7] 6-23 Occupancy Agreement Exhibit [9.7] 6-24 Eviction Letter Exhibit [9.7] 6-25 Notification of Retained Evidence Exhibit [9.7] 6-26 Information To Accompany Requests for Payment of Informant Approval Exhibit [9.7] 6-27 Treasury Forfeiture Fund--Reimbursement Report (With Samples) Exhibit [9.7] 6-28 Release of Claim Exhibit [9.7] 6-29 Form 5914, Release and Receipt of Property
### [9.7] 6.1 (04-30-1998) OVERVIEW
Consideration should be given to the handling of certain assets requiring special procedures prior to the execution of the warrant. There are numerous issues involved beyond the legality to execute the seizure. The agent should look beyond the ability to seize and address the practical aspects of what it will cost to seize, handle, and dispose of the asset. In addition, there are innocent owner, victim, and contingent liability issues and recent court decisions which become practical matters of consideration when deciding to seize and forfeit. By meeting early on with the various parties to the seizure forfeiture action, the answers to questions which arise in special circumstance cases can usually be resolved. The following sections are included in this chapter: Pre-Seizure Responsibility For Title 18 Forfeitures Source of Information Used As Basis of Seizure Equity Considerations Adoptive Seizures Special Circumstances Surrounding the Assets to be Seized Currency Financial Instruments Personal Property Real Estate Seizures Storage of Assets Chain of Custody--Evidence Chain of Custody Procedures--Forfeitures Removal of Seized Property From the Judicial District Payment of Awards for Information or Assistance Leading to a Civil or Criminal Forfeiture Expenses Incidental to a Seizure Special Agent Liability in Seizure Cases
### [9.7] 6.2 (04-30-1998) PRE-SEIZURE RESPONSIBILITY FOR TITLE 18 FORFEITURES
In judicial cases, the U.S. Attorney's office representative is responsible for ensuring that proper and timely pre-seizure planning occurs. In administrative cases, the Asset Forfeiture Coordinator (AFC) is responsible for this function. In smaller districts or outlying posts of duty, the reality is that this responsibility may be with the seizing agent. Regardless of who is formally responsible, the seizing agent must take the initiative to ensure that pre-seizure meetings are incorporated in the process of any seizure. Specific procedures for pre-seizure planning will ensure that critical financial and property management issues are addressed prior to seizure of real property, commercial enterprises, or other types of property which may pose potential problems of maintenance or disposition. The degree and nature of pre-seizure planning will depend directly upon the circumstances and complexity of each case. EG&G is currently the independent contractor for Treasury cases and serves as the property manager. A representative of EG&G has to be actively involved in the planning process. However, in judicial matters, the Assistant United States Attorney (AUSA) may feel the pre-seizure information is too sensitive and may want the pre-seizure meetings bifurcated to limit the information discussed with the EG&G representative.
### [9.7] 6.3 (04-30-1998) SOURCE OF INFORMATION USED AS BASIS OF SEIZURE
In the course of a criminal investigation, special agents work with restricted and sensitive information from various sources. When planning for seizure activity (which is frequently a civil action), one must be certain to adhere to the secrecy provisions surrounding the grand jury process. The IRS special agent also has to be cognizant of the Service's restrictions concerning the revelation of tax return and return information.
### [9.7] 6.3.1 (04-30-1998) Grand Jury Information
It is important to remember that 18 USC 981 and Code forfeitures are civil actions whether they are administrative or judicial. Therefore, grand jury information generally cannot be used to perfect the civil forfeiture; however, if information relating to a forfeiture is developed in the normal course of a grand jury investigation, it can be used for forfeiture via the Rule 6(e) order. If grand jury information is used, it must be a judicial proceeding. When grand jury information is needed to effect a seizure of an asset, consideration should be given to using the criminal forfeiture provisions of 18 USC 982, especially if a criminal indictment of the responsible party is forthcoming for violation of 31 U.S.C. 5313(a) or 5324(a) or 18 USC 1956, 1957 or 1960. In situations where a criminal indictment is not immediately forthcoming, or a decision is made that a criminal forfeiture action under 18 USC 982 is not prudent, then the only available method for using grand jury information is by obtaining a Rule 6(e) order (See F.R.Cr.P. 6(e)(3)(c)(i)). In requesting grand jury information pursuant to Rule 6(e) for a civil forfeiture proceeding, the government must demonstrate a "particularized need," i.e., that the evidence sought is needed to avoid a possible injustice in another judicial proceeding, that the need for the disclosure is greater than the need for continued secrecy, and that the request is structured to cover only the material needed. If grand jury information has been used to obtain an arrest or search warrant, then any seizure of property pursuant to the warrant based upon this information must be seized as evidence of a crime, and not for civil forfeiture purposes. To pursue a forfeiture, subsequently, a Rule 6(e) order will be needed, if the information has not yet become public knowledge through an indictment, complaint, etc. If the information received relating to a possible Code forfeiture action is not grand jury information, the potential forfeitures may be perfected administratively.
### [9.7] 6.3.2 (04-30-1998) Tax Return and Return Related Information
There are two methods which allow an agent to utilize tax return and return related information when attempting to include this information in an affidavit for a seizure warrant or other means of seizing assets and the subsequent litigation: Ex parte Order Related Statute Test
### [9.7] 6.3.2.1 (04-30-1998) Ex parte Order
Internal Revenue Code Section 6103(i)(1) allows disclosure of returns and return information for investigations of non-tax criminal violations. Upon grant of an Ex Parte Order, Internal Revenue Code Section 6103(i)(4)(a) provides for this information to also be used in a civil forfeiture proceeding. The ex parte order is considered the safest and preferable method to access tax returns. In many districts throughout the country, if an investigation is conducted strictly on money laundering, the only way a tax return can be accessed is through an ex parte order. The application for this order must demonstrate to the district court judge or magistrate judge: Reasonable cause to believe a specific criminal act has been committed. Reasonable cause to believe the information is or may be relevant to a matter relating to the commission of such act. The information is sought only for use in a federal criminal investigation or proceeding concerning such an act, and the information cannot be reasonably obtained, under the circumstances, from another source.
### [9.7] 6.3.2.2 (04-30-1998) Related Statute Memorandum
Revenue Code Section 6103(h)(1) and (2) stipulate that returns and return information shall be open to inspection by or disclosed to employees of the Department of Justice (DOJ) in matters involving tax administration. The money laundering statutes found in the Anti-Drug Abuse Act (Title 18 USC 981, 1956 or 1957) and the Bank Secrecy Act (Title 31) can involve matters of tax administration and can be considered statutes related to the Internal Revenue laws for tax purposes. The agent must submit a memorandum to the Chief, CI, providing sufficient information on which the Chief can issue an opinion in good faith that the related statute test has been met. The Chief must be able to conclude from the evidence detailed in the memorandum that the Title 31, 18 USC 1956 or 1957 and 18 USC 981 violation being investigated: Was committed in furtherance of a violation of Title 26. Is part of a pattern of violations of Title 26. The Chief's memorandum finding that the related statute test has been met is the document that needs to be in the file. The District Disclosure Office should be contacted if the agent relies on the related statute method for accessing tax returns. If these conditions are met, then disclosure of returns and return information to the DOJ for the purpose of conducting an investigation is permissible. The related statute method is less preferred, as once this method is initiated, all the case information becomes subject to the rules under Internal Revenue Code Section 6103. Further, the decision by the Chief is subjective and open to scrutiny in the event of a claim of improper disclosure.
### [9.7] 6.3.3 (04-30-1998) Formal Requests--Financial Institutions
Title 12 USC 3401 et seq. provides procedures for how law enforcement agencies may obtain financial institution records by means other than a grand jury subpoena, provided that the records are relevant to a legitimate law enforcement inquiry, e.g., civil forfeiture perfection independent of an ongoing grand jury investigation. A letter from the Chief, CI, (Exhibit 6-1, Formal Request), requests production of records from the financial institution, as defined in Title 12. NOTE: The definition of a financial institution according to Title 12 is not as broad as the definition found in Title 31. A copy of the request letter must be served on the financial institution's customer for whom records are being sought (Exhibit 6-2, Notice of Formal Request) along with certain attachments (Exhibits 6-3 through 6-6). These attachments are the same as Part C of Treasury Department Form 90-22.31 (Rev. 8-88), Title 31 Summons, excluding the red lettering. If it is believed that the customer notice will jeopardize the forfeiture investigation, a delay of customer notice can be applied for as follows; After the Chief, CI, signs the request letter, the agent will prepare an affidavit setting forth the circumstances that indicate that notice will "seriously jeopardize" the investigation (Exhibit 6-7, Affidavit). An application may be made to include an order to seal the notice (Exhibits 6-8 and 6-9, Application and Order). The agent will arrange a meeting with a civil section AUSA for review of the affidavit to delay customer notice. If the AUSA concurs, the agent will appear before the U.S. magistrate judge or district court judge. The Formal Request and Delay of Notice Order will be served on the financial institution. The delay is binding for 90 days, and must be renewed every 90 days. If the Delay of Notice Order is not renewed, notice must be sent to every customer listed in the formal request and must contain specific language (Exhibit 6-10, Delayed Notice of Formal Title 12 Request). (This is also Part F of TDF 90-22.31, without the red lettering.)
### [9.7] 6.4 (04-30-1998) EQUITY CONSIDERATIONS
The net equity in property must be considered in determining whether to seize property. Minimum equity amounts are usually standard throughout the Treasury and Justice agencies. In individual cases, these guideline thresholds may be waived to serve a compelling law enforcement interest. If a seizure is done in which the property's net equity is less than the minimum equity standard, it must be approved in writing by the Chief, CI. An explanation for the departure will be noted in the case file. The minimum net equity is the difference between current market value of the property less innocent third party liens and mortgage(s). The minimum equity positions on individual assests are as follows:
Conveyances
| Vehicles | $5,000
| Vessels | $10,000
| Aircraft | $10,000
Real Property | --Land and improvements
|  | $20,000 or 20 percent of the appraised value, whichever is greater
All Other Property | --Currency, Bank accounts, | monetary instruments, jewelry, etc.
|  | $2,000
Note: These minimum net equity requirements are higher than the stated minimum thresholds appearing in the Department of the Treasury, Executive Office for Asset Forfeiture, Guide to Equitable Sharing for Foreign Countries and Federal, State, and Local Law Enforcement Agencies, dated October 1, 1996.
If the person from whom the asset was seized was or is being criminally prosecuted by state or federal authorities for criminal activity related to the property, the amount must be at least $1,000. Minimum net equity is $25,000 for IRS seizures computed by aggregating the net equity value of the assets. The Personal and Real Property Pre-Seizure Checklists (Exhibits 6-11 and 6-12) set forth procedures to follow in determining net equity and other pre-seizure considerations. See also LEM IX, 454.1. The equity considerations set forth above may be waived in individual cases to serve a compelling law enforcement interest such as: Failure to seek forfeiture of some of the assets will cause the government to take an inconsistent position in its theory of forfeiture. The seized assets are an integral part of the criminal operation and the failure to seek forfeiture of the asset will allow the criminal operation to continue. Any downward departures, either for an individual asset or from the $25,000 aggregate, must be approved in writing by the Chief, CI. An explanation for the departure will be noted in the investigative file. In code forfeitures (unlike Title 18 forfeiture), IRS is responsible for all costs associated with the appraisal, storage, maintenance, and disposition of all Code forfeited assets. Careful scrutiny of the inherent costs as opposed to the asset's net equity should be made prior to seizure. In general, if the anticipated costs exceed the value of the asset, the asset should not be seized. If the asset has been seized, the Chief, CI, should quickly release it. However, this is not the ultimate criteria. An asset may be seized, despite the low equity value, if there is an overriding law enforcement benefit.
### [9.7] 6.4.1 (04-30-1998) Appraisals
Knowing the value of what will be seized is very important. This is immediately relevant in determining if the proposed asset seizure meets existing net equity threshold standards to warrant seizure. Keep in mind that seizures and forfeitures are not without costs to the government. In many instances the cost of seizing, maintaining, and disposing of seized/forfeited assets is substantial and can adversely impact the decision to initiate the action. However, this is not the ultimate criteria and it is understood that, in some circumstances, the overriding law enforcement benefit will require the asset be seized. EG&G and/or the USCS (FP&F) can provide or locate qualified, expert appraisers to suit specific situations.
### [9.7] 6.4.2 (04-30-1998) Identification and Value of Assets Subject to Criminal Forfeiture
Identify all forfeitable assets and determine a total aggregate value for that property in the indictment. In addition, include an all inclusive phrase for any other property in violation of 18 USC 982, not known of at the indictment, but later identified or found. In the forfeiture count, seek an overall money judgment as the total proceeds for forfeiture. This provides the basis for the substitution of assets, should this become necessary. Sample indictment language follows: "Money laundering money judgment forfeiture charge: As a result of the foregoing offense, (name the defendant), shall forfeit to the United States all property, real and personal, involved in the aforestated offense and all property traceable to such property, including but not limited to the following: $ ______ in United States currency and all interest and proceeds traceable thereto, in that such sum in aggregate is property which was involved in the aforestated offense or is traceable to such property, in violation of Title 18, United States Code, 1956 and 982."
### [9.7] 6.5 (04-30-1998) ADOPTIVE SEIZURES
State and local law enforcement authorities may seize vehicles, currency and other property for evidence of a violation of statutes over which they have jurisdiction, but have no forfeiture authority. Federal agencies without forfeiture authority may request that IRS adopt their seizure. State and local law enforcement agencies which have forfeiture authority may also request that their seizures be adopted by the IRS, or other federal agency participating in a forfeiture fund, in expectation that the majority of the proceeds resulting from forfeiture will be directly returned to the requesting agency as equitable sharing. Forfeitures of seized property accepted in this manner have the same effect as if the property had originally been seized by the IRS. Where the property has also been used in violation of 31 USC 5313(a) or 5324; or 18 USC 1956 or 1957, those state and local jurisdictions that do not have forfeiture statutes may ask the Service to adopt the action in order to prevent the continued use of the property in unlawful activities. Seizures of vehicles and other property used in violation of these laws may be adopted from state and local law enforcement authorities, via a seizure warrant, in those instances where: A particularly desirable deterrent effect would result. The net equity value of the asset meets IRS threshold requirements. The evidence on which the forfeiture proceeding will be predicated has been legally obtained. If a state or local seizure is not adopted by the IRS because there is no violation within our jurisdiction, it is appropriate to refer the local authorities to the federal agency having jurisdiction. Local or state agencies requesting the IRS to adopt their seizures for forfeiture action must do so within 30 days of the seizure action so as to avoid situations where property is held for interminable periods of time prior to the commencement of forfeiture proceedings. The Chief, CI, may waive this rule provided the requesting agency can set forth circumstances justifying the delay. Prior to formally adopting the seizure, the Chief, CI, will ensure that the adoption meets the minimum equity threshold guidelines and considers the action a good quality seizure. The Request for Adoption of a Local or State Seizure form detailing the probable cause to support the seizure will be forwarded to District Counsel. Attachments to the memorandum should include pertinent police reports, affidavits for Search Warrant(s) and other memoranda of activities. The Chief, CI, will not take custody of the seized property and institute the necessary forfeiture procedures until, and only if, District Counsel signs off on the Request for Adoption of a Local or State Seizure form (Exhibit 2-1) supporting the action, and after a federal seizure warrant is obtained.
### [9.7] 6.6 (04-30-1998) SPECIAL CIRCUMSTANCES SURROUNDING THE ASSETS TO BE SEIZED
When planning a seizure, Ci must take into account some special circumstances such as: Contaminated property. Ongoing Businesses. Perishable goods.
### [9.7] 6.6.1 (04-30-1998) Potentially Contaminated Property
The potential liability and poor marketability of potentially contaminated property leaves it a very undesirable asset to seize. Although, with the expansion of Code forfeitures to include motor fuel excise tax violations, there is a high probability that environmentally contaminated property may be seized for forfeiture, i.e. tank farms, barges, gasoline stations, and fuel trucks. It is the policy of the Departments of Treasury (TEOAF Directive 7) and Justice that property, which is contaminated or potentially contaminated with hazardous substances, may be seized and forfeited only upon a determination by the U.S. Attorney in the district where the property is located. This decision will be made in consultation with the seizing agency and the contractor, in consultation with the seizing agency and EG&G. Once a potentially contaminated property has been seized, an environmental study should be initiated immediately. If it is determined the cost to correct any problems would exceed the property's net equity, the Chief, CI, should proceed to quick release the property, unless there is an overriding law enforcement purpose not to do so. If the agent or AFC becomes aware after the seizure that the property is contaminated, the AFC must notify the contractor (EG&G) immediately.
### [9.7] 6.6.2 (04-30-1998) Seizures of Ongoing Businesses
Due to the complexities of seizing an on-going business and the potential for substantial losses from such a seizure, the AUSA shall obtain by memorandum the concurrence of the IRS Asset Seizure/Forfeiture Section, prior to initiating a forfeiture action against, or seeking a temporary restraining order affecting, an on-going business. The AFC will discuss frequency of operating reports of the business from EG&G or their subcontractor in pre-seizure planning. Where forfeiture of a business is sought under the theory that the business facilitated a money laundering offense, civil or criminal forfeiture action may not be filed without prior consultation with DOJ's Asset Forfeiture Office and the IRS Asset Seizure/Forfeiture Section.
### [9.7] 6.6.3 (04-30-1998) Perishable Goods--Title 18 Seizures
Perishable goods pose an immediate problem of trying to maintain the condition of the asset at time of seizure. It is extremely important to involve the representative from EG&G in pre-seizure discussions since the value of the asset can deteriorate rapidly if appropriate measures are not taken. The best way to handle seized perishable goods is to dispose of the property immediately after seizure through a stipulated sale between the parties or an interlocutory sale authorized by a court order. Another possibility is to have the property owner post a bond in an amount equal to the Fair Market Value (FMV) of the property so the perishable property may be returned to the owner.
### [9.7] 6.7 (04-30-1998) CURRENCY
Currency, whether seized for forfeiture or for evidence, must be handled according to established procedures.
### [9.7] 6.7.1 (04-30-1998) Currency Seized for Title 18 Forfeiture
CI policy mandates that seized domestic and foreign currency, except when held as evidence or held as a "collectible asset" , must be expeditiously counted, processed, and deposited to the U.S. Customs Suspense Account within 5 days of seizure. The use of safe deposit boxes, or other similar methods of storing seized currency, is acceptable when necessary for overnight storage. All seized currency must be assigned an AFTRAK seizure number. Currency should be videotaped or photographed, if possible, at the time of seizure. The seizure of the currency will be witnessed by two special agents or at least one special agent and another law enforcement officer if two special agents are not available. At the seizure site, it is recommended that the currency be sealed (preferably heat sealed) in a container by the two seizing special agents and/or law enforcement officer, all of whom will initial and date the seal. The inventory left at the search site should reflect that a "lot of currency was seized and sealed" from the location where the currency was found during the search. (The currency can be counted on-site, but this may be time consuming, and there may be discrepancies between what the agents count, and what the bank counts. If the currency is counted onsite, the currency must be counted by at least two special agents or one special agent and a law enforcement officer). The seized currency will be accompanied by the seizing special agents and law enforcement officer to a bank where a banking relationship has been established. The seized currency will be unsealed by the seizing agents and the law enforcement officer and counted by bank personnel in the presence of the seizing agents and the law enforcement officer. There may be instances where the bank provides the counting service but will not allow agents into the counting area. The sealed identifiable container will be delivered to personnel in the counting facility who will provide an initial receipt for a specific sealed container to the agents delivering the currency. Once the currency is counted, the bank will provide a detailed accounting of the seized currency. The seizing agents will document the chain of custody from the seizure to the physical delivery of the currency to the bank facility. The Chief, CI, should also ensure that the banking facility provides adequate preventive measures to preclude embezzlement of funds by bank personnel. The seized currency will be transmitted by the bank personnel to the Customs Suspense Account via the FED Wire (wire transfer) system. (See 6.7.2 below.) Once the seized currency has been counted and wire transferred to the U.S. Customs Suspense Account, the actual amount of seized currency should be noted on the search warrant inventory returned to the U.S. magistrate or judge and written notice should be delivered to, or sent by certified mail, the party from whom the currency was seized. If currency, which is seized for forfeiture and held as evidence, serves a significant, independent, tangible, evidentiary purpose, and is less than $5,000, written approval to retain the currency must be granted at a supervisory level within the cognizant United States Attorney's Office. Should the amount of currency, seized for forfeiture and held as evidence, equal or exceed $5,000, a request for an exception to the seized cash management policy should be obtained from the Chief, Asset Forfeiture and Money Laundering Section, Criminal Division, Department of Justice. A copy of the approval document from the Asset Forfeiture and Money Laundering Section granting an exception to retain currency as evidence should be obtained from the United States Attorney's Office and be transmitted to the Treasury Executive Office for Asset Forfeiture, through the Asset Forfeiture and Narcotics Section.
### [9.7] 6.7.2 (04-30-1998) FED Wire Procedures
At least 2 agents will take the currency to a bank where the Service has a banking relationship, and FED Wire (wire transfer) the money to the Customs Suspense Account. The cost of the wire transfer must not be paid out of the seized funds, but either by an advance from the imprest fund account or from personal funds followed by a claim for reimbursement (Form 1164) to the imprest fund indicating Sub-Object Code (SOC) 2504. Instructions for preparation of the Wire Transfer Form are on Exhibit 6-14. The IRS Subject Seizure Number and Class Code (732) must also be entered on the form. When the transfer is complete, a report of the deposit (Wire Transfer Form or Deposit Ticket) and a copy of the Deposit Information Form, TEOAF Form 6 (Exhibit 6-15), must be faxed to: Forfeiture Fund Unit, Customs National Finance Center, Fax No. 317-298-1569 (see TEOAF Directive 4).
### [9.7] 6.7.3 (04-30-1998) Currency Seized Then Held as Evidence
Should the amount of currency, seized solely for evidence or for evidence as part of a Title 26 investigation, be less than $5,000, written approval to retain the currency should be obtained for the cognizant United States Attorney's Office. The approval to retain the currency as evidence should be maintained in the seizure file. Should the amount of currency, seized solely for evidence or as part of a Title 26 investigation equals or exceeds $5,000, written approval to retain the currency must be obtained from the Director, National Operations Division. A written request to retain the currency must be obtained from a supervisory level within the cognizant United States Attorney's Office. The request of the United States Attorney's Office should then be transmitted to the Asset Forfeiture and Narcotics Section, for approval decision by the Director, National Operations Division. If only some of the cash seized as evidence is requested by the US Attorney's Office (USAO) to be held intact, then the rest should be deposited into the IRS Suspense Account or Customs Suspense Account as appropriate. If cash has been seized as evidence pursuant to a Title 26 investigation's search warrant or incident to an arrest, it must also be deposited into the IRS Suspense Account, unless the USAO has requested it to be held intact. The deposit ticket must note that it pertains to a Title 26 seizure for evidence. Currency seized solely as evidence is to be placed on the General Ledger by sending a copy of the Form 4008 Fiscal Management Branch. The Fiscal Management Branch must also be informed by the AFC if this situation changes and the currency no longer has to be carried on the General Ledger to reverse the transaction. For more detailed information and considerations concerning currency seized for evidence see Chapter 11 of this Handbook.
### [9.7] 6.8 (04-30-1998) FINANCIAL INSTRUMENTS
Financial accounts include checking, savings, money market, mutual funds, and brokerage accounts, including those accounts "frozen" at financial institutions. The procedures generally call for the agent or AFC to contact the custodian, carrier, financial institution, or responsible agency official who issued the instrument or controls the funds backing the instrument. In situations involving brokerage accounts, airline tickets and personal checks, the asset must be converted immediately into cash to preserve the funds. However, if conversion is not possible, the procedures for freezing the funds should be determined and implemented until the forfeiture is litigated. These instruments can then be liquidated upon forfeiture. If it is a Title 18 seizure, immediately have the financial institution wire transfer the seized funds to the Customs Suspense Account via the FED Wire (wire transfer) system. However, if it is a Code forfeiture, the forfeited funds are to be deposited to the Treasury's General Fund, instead of the Treasury's Asset Forfeiture Fund. If wire transfer is not used, all cashier's checks for Title 18 seizures should be made to the "U.S. Treasury Department." Cashier checks for Title 26 seizures are to be made payable to the "IRS" .
### [9.7] 6.8.1 (04-30-1998) Title 18 Seizures of Financial Instruments
Conversion of all financial instruments where the value may depreciate should be undertaken to protect the interest of the government. This may be accomplished by an interlocutory sale which requires a court order or a stipulated sale which simply requires an agreement of all the parties to the forfeiture who assert an interest in the property. If the instruments can simply be negotiated, this action should be taken. In either situation, the proceeds will be handled as instructed above concerning the seizure of currency, fed wired, or obtained in the form of a cashier's check made payable to the "U.S. Treasury Department" . TEOAF Directive 2, issued in July 1993, addresses "Seizure of Financial Instruments," a copy should be available through the AFC. The document covers the handling of: Postal Money Orders. Personal Checks. Cashiers Checks. Certificates of Deposit. Travelers Checks. Stocks and Bonds. U.S. Savings Bonds. Airline Tickets. Postal Money Orders--Immediately following seizure, prepare and send a letter containing a list of the serial numbers, the amount of each money order, and a statement that the government has seized the money orders, and is entitled to them under the applicable forfeiture law to the: National Money Order Coordinator, St. Louis Postal Data Center, P.O. Box 388, St. Louis, MO 63166-0388. Bank Checks and Bank Money Orders--Immediately following seizure, notify the bank upon which the check is drawn that the check has been seized for forfeiture. Direct the financial institution to take whatever legal steps necessary to prevent the withdrawal or transfer of funds. Obtain a seizure warrant for the bank account on which the check or money order is drawn and seize the funds in the account. The proceeds from the account will be handled as instructed in 6.8.1.1 below. Cashier's Checks--Use same procedure as used for personal checks. Certificates of Deposit--Immediately following seizure, notify the bank which issued the certificate of deposit (CD) that it has been seized for forfeiture and instruct the bank officials to take whatever legal steps necessary to freeze the funds covered by the certificate so that the certificate of deposit will be negotiable after forfeiture. The proceeds from the account will be handled as instructed in 6.8.1.1 below. Traveler's Checks--Immediately following seizure, notify the company issuing the checks that they have been seized for forfeiture. Determine what procedures will be required in order to redeem the checks. If they can be redeemed prior to forfeiture, take appropriate steps to liquidate the checks and have the issuing company issue a cashier's check made payable to the "U.S. Treasury Department" and handled as instructed in 6.8.1.1 below. If liquidation cannot occur until after forfeiture, the issuing company must be notified to freeze the funds (by serving a copy of the seizure warrant) and the checks will be properly secured in a safe deposit box until forfeiture. Stocks and Bonds--Immediately following seizure, contact a state or national certified stock broker to establish the FMV of the asset and determine how the instrument is traded. Stocks and bonds with a Fair Market Value equal to $0, or any stocks and bonds which are privately or closely held, or were issued by a "shell corporation" and are not traded on an open market should not be retained. Stocks and bonds of privately or closely held corporations should be "quick released" unless it can be documented that they have significant value. Listed Over The Counter (OTC) stocks and bonds will be held unless there is a possibility they will lose their value during the forfeiture process. CI should try to liquidate stocks and bonds through interlocutory sale or a stipulated sale whenever possible. If the stocks and bonds are liquidated, a check should be made payable to the "U.S. Treasury Department" from the broker and handled as instructed in 6.8.1.1 below. United States Savings Bonds--The procedure for the liquidation of United States savings bonds are listed in TEOAF Policy Directive 31. Upon forfeiture, the bonds should be delivered to the TEOAF by hand or registered mail to: Revenue Desk, Executive Office for Asset Forfeiture, Suite 700, 740-15th Street, N.W. Washington DC 20220. The following documentation of the forfeited property should be submitted with the bonds: Inventory of the bonds, i.e. owner, issue date, serial number, and face amount. Copy of the final order of forfeiture of declaration of forfeiture. Name of the seizing agency, seizing agency contact person, telephone number, and office address. Agency seizure number. A Brief description of the circumstances under which the bond(s) were forfeited and the basis for forfeiture. The TEOAF will process the request for bond redemption with the Bureau of Public Debt and will provide the seizing agency notice of the date of payment and amount received for the bond redemption. Airline Tickets--Immediately following seizure, notify the issuing carrier of the government's intention to forfeit. Determine what procedures will be required in order to redeem the tickets. If they can be redeemed prior to forfeiture, take appropriate steps to liquidate the tickets and have the issuing carrier obtain a cashier's check made payable to the "U.S. Treasury Department" with verification that the issuing company has been notified. If liquidation cannot occur until forfeiture, the tickets will be properly secured in a safe deposit box until forfeiture. Upon receipt of a declaration or order of forfeiture, liquidate the tickets in accordance with the procedures in 6.8.1.1 below.
### [9.7] 6.8.1.1 (04-30-1998) Procedures for Transfer to Customs Suspense Account
If the financial institution will not wire transfer the seized funds as procedure outlines in 6.7.2, one of the following procedures can be used to transfer the seized funds to the Customs Suspense Account: Obtain a cashier's check made payable to the "U.S. Treasury Department" and make arrangements to wire transfer the funds through another financial institution using the same transfer procedures. (Also see section on the transfer of seized currency.) Mail the cashier's check to TEOAF at Asset Forfeiture Financial Management, Suite 700, 740 15th Street, NW, Washington DC 20220, along with a completed Deposit Information Form, TEOAF Form 6 (Exhibit 6-15). Deposit the cashier's check into the IRS Suspense Account and wire transfer (OPAC) the funds to the Customs Suspense Account. See TEOAF Directive 4. This deposit and transfer is accomplished by a Request to OPAC Funds Deposited to the IRS Suspense Account, (Exhibit 6-16)
### [9.7] 6.8.2 (04-30-1998) Bank Accounts
A primary question of whether to seize all or only a portion of the proceeds in an account has ample case law on both sides of the issue. The decision depends on the frequency of transactions involving tainted funds and how well it can be demonstrated that the clean money cloaked the tainted money and thereby advanced the money laundering scheme to continue undetected. This is a decision that will have to be made by consulting with the AUSA, if judicial, and District Counsel, if administrative. Caution must be exercised when indirect or secondary bank accounts are involved as the potential exists for an award of costs and attorneys' fees to claimants under the Equal Access to Justice Act in cases where the seizure was inappropriate. In Title 18 seizures, the fungible property statute (18 USC 984) allows for seizing of funds from the same account when traceable funds are no longer in the account, provided that seizure takes place within one year of the violation.
### [9.7] 6.8.3 (04-30-1998) Promissory Notes
Promissory notes, secured or unsecured, seized pursuant to Title 18 should be sold if a purchaser of such notes can be found. Contract services to sell promissory notes should be obtained through the normal procurement process using Form 1334. If the notes are sold, the sales proceeds should be deposited into the Customs Suspense Account via the FED Wire (wire transfer) system. If the funds cannot be wire transferred, use one of the procedures listed in 6.8.1.1 above to deposit the seized funds to the Customs Suspense Account. If promissory notes are not sold, arrangements must be made to contract the collection of such notes by a financial institution or a reputable finance company. The contract should cover the collection of funds and their deposit to the Customs Suspense Account. Contract services to handle the collection of such notes should be obtained through the normal procurement process using Form 1334. If a mortgage business or a finance company that handles collections on promissory notes is seized, the business enterprise should be seized and transferred to EG&G using the procedures established to transfer real property and business enterprises. For Promissory Notes (secured or unsecured) seized under the Code, the proceeds are to be deposited into the IRS Suspense Account in lieu of the Customs Suspense Account. If a Code seizure obtains financial accounts include checking, savings, money market, mutual funds, and brokerage accounts, including those accounts "frozen" at financial institutions: Immediately upon seizure have the financial institution wire transfer the seized funds to the IRS Suspense Account via the FED Wire system. If the financial institution will not wire transfer the funds, obtain a cashier's check made payable to the "IRS" . Either deposit the check into the IRS Suspense Account or make arrangements to wire transfer the funds through another financial institution to the IRS Suspense Account.
### [9.7] 6.9 (04-30-1998) PERSONAL PROPERTY
Agents and AFCs are to ensure that personal property is stored securely. When a contract storage facility is used, it must provide a secure storage area with limited access. If a vendor is utilized to store vehicles, vessels, or aircraft, ensure that the contract calls for required maintenance to keep the asset in the condition in which it was seized. During the pre-seizure phase when arranging contract services for a Code seizure, agents must also be aware of disclosure limitations and sensitivity of the seizure. Access to the storage facilities will be limited to the seizing agent(s) and a CI management official. An entry log will be maintained. The storage, towing, maintenance, and repairs of assets seized for Title 18 seizures are to be arranged through EG&G. Code forfeitures must be arranged through Facilities Management. Under no circumstances will the Treasury Forfeiture Fund be used to pay for Code forfeiture expenses. In emergency situations where the seized items must be stored in facilities belonging to another agency, a representative of the agency must sign a detailed inventory listing the seized items being stored by him or her on behalf of CI. The use of Form 9573, Custody Receipt for Retained or Seized Property (Exhibit 6-17), is recommended for use in these situations. This will ensure that the chain of custody is maintained. Special agents and AFCs will obtain receipts when seized property is stored in any public facility. Since the type of receipt to be obtained in storing other personal property will depend upon the circumstances involved, no receipt form is prescribed. If the storage facility does not provide a formal receipt, the seizing agent will prepare one for preservation in the seized property file. Seized vehicles, airplanes, vessels, any sealed container, and other personal property, except currency, financial accounts, financial instruments, or promissory notes, should be temporarily stored at the earliest practical date at a no-cost government facility, unless Customs has been contacted as is recommended and EG&G has a representative present to take immediate possession of the seized asset. (See Chapter 8 of this Handbook on how to transfer personal property to EG&G.) If neither of these options is available, the seized personal property should be stored in the nearest contract garage or other suitable storage place based on the nature of the property and what type of facility will provide the best security for and preservation of the asset at the most favorable cost to the government. When seizing vehicles, airplanes, vessels, any sealed container, or any other personal property, an inventory will be performed via Form 181, Inventory Record of Seized Vehicle, Vessel or Aircraft (Exhibit 6-18), for preservation in the seized property file. Any items discovered in the course of a property inventory and which constitutes contraband or evidence of a crime is subject to seizure. To effect the transfer of vehicles, vessels, aircraft, and other personal property to a vendor arranged by Facilities Management, Form 9573, Custody Receipt for Retained or Seized Property, and Form 9572, Continuation Sheet (Exhibits 6-19 & 6-20), will be used as accountable documents for transfer of custody of seized assets. Special agents will enter the AFTRAK number in Block 2 and the Subject Seizure Investigation Number in Block 3 of Form 9573, and will complete all other applicable portions of the form when transferring custody of property. All receipts will be preserved as part of the Seized Property File. When a computer is seized, the stored data should be retrieved for evidentiary purposes by a CI computer investigative specialist (CIS). Once the evidence has been retrieved and secured, the seized computer shall remain in the custody or possession of the CIS until all investigative matters have been completed. Once forfeiture proceedings have been concluded, the computer equipment should not be sold, transferred to a sharing agency, or placed into official use until a CIS has "deleted" all data on the hard drive. The same rules and procedures utilized to transfer personal property seized for Title 18 forfeiture will be used for Title 26 seized assets.
### [9.7] 6.10 (04-30-1998) REAL ESTATE SEIZURES
In U.S. v. James Daniel Good Real Property et. al., the Supreme Court held that, absent exigent circumstances, the due process clause of the Fifth Amendment prohibits the government in a civil forfeiture case from seizing real property without first affording the owner notice and an opportunity to be heard. Consequently, specific procedures (see TEOAF Directive 6) shall normally be followed when seizing real property for civil judicial forfeiture. The government can give notice and opportunity for a pre-seizure hearing or file a lis pendens in conjunction with a complaint for forfeiture to meet these requirements. The Service prefers to file a lis pendens, except in those Circuits with more stringent notice requirements. Special agents must work closely with the AUSA to ensure that the filing of the complaint is done at or near the filing of the lis pendens. This will reduce the possibility of additional hearings and ensure that due process is observed. Agents must be cognizant of local requirements for service and notice of the lis pendens. Any personal notice or lis pendens will be served by CI special agents, or the U.S. Marshal, if agreed to in a pre-seizure plan. In addition, notice of the judicial proceeding must be made to all potential claimants and published in a local newspaper by the U.S. Marshal or U.S. Attorney. Some judicial districts require title reports and preliminary appraisals prior to executing a complaint. EG&G will provide this service. This title report will reflect all liens and encumbrances to assist in determining the potentially interested parties. After the Complaint for Forfeiture has been filed, the AUSA should prepare and serve a Rule 34 Request for Inspection (FRCivP). At the appropriate time, preferably within 45 days of the filing of the complaint, an agent and the appraiser will inspect the property. Occupancy issues are also of vital concern. If the property is vacant, EG&G will obtain a property manager and possibly initiate rental agreements on a month-to-month basis. If the property is occupied and not vacated upon forfeiture, it will be necessary for the IRS to enter into a post forfeiture occupancy agreement (Exhibit 6-21), with the Chief, CI, being the approving official. Occupancy agreements can be obtained from the AFC.
### [9.7] 6.10.1 (04-30-1998) Real Estate Procedures--Civil Judicial Forfeiture
Obtain a complaint for forfeiture evidencing a violation of Title 18 USC 1956, Title 18 USC 1957 or Title 31 USC 5313(a) or Title 18 USC 5324(a) to support a forfeiture of the real property pursuant to Title 18 USC 981 and a warrant of arrest in rem through the U.S. Attorney's office. The warrant of arrest in rem gives the court jurisdiction over the real property. Accompany the U.S. Marshal's Service in serving the warrant of arrest in rem on the owner or occupant of the real property and posting process (by placing a copy of the warrant of arrest in rem on the real property). A Post and Walk Form (Exhibit 6-22) will be prepared identifying the individual on whom the "Post and Walk" process was served. Absent a specific court order based upon a finding of exigent circumstances, no physical seizure of the property will be made at this time. Obtain an AFTRAK number. The special agent, or U.S. Marshal, per pre-seizure agreement, should file a notice of lis pendens, prepared by the AUSA, pursuant to state law with the state court having jurisdiction over the real property. The servicing agent will be responsible for paying any filing fees. This filing will prevent the real property from being sold or encumbered. Notify EG&G through Customs by filing a Form 4008 with "Consignment Order" noted on top of the form that the real property is subject to forfeiture and a title search can be performed. If an agent does not want EG&G or an EG&G subcontractor to make a visual inspection of the real property, the agent should give specific instructions in the Facts and Circumstances Section of the Form 4008 regarding "no inspection of the property should be made by EG&G personnel or subcontractors.""Perform pre-seizure work only." See the Chapter 7 on Processing Assets in this Handbook. If there is evidence that the owner or occupant intends to damage or destroy the real property, or has damaged the real property, the government can schedule a hearing to comply with the "Good" decision, or obtain a Writ of Entry to inspect and photograph or videotape the condition of the real property. Upon receiving a final order of forfeiture, CI will be responsible for seizing, maintaining, and disposing of the real property. See Chapter 8 on Storage of Seized Assets in this Handbook for procedures. Occupancy agreements should be obtained when exigent circumstances exist and the court has authorized the seizure of real property prior to a finding of forfeiture after the owner has been afforded an opportunity to be heard, and occupants of the property are permitted to remain in the property pending forfeiture for what may be an extended period. Exhibit 6-23 is an occupancy agreement developed by TEOAF, see TEOAF Directive 13, which includes various restrictions (maintenance and access to the property, potential for continued illegal activity, insurance, etc.) that addresses Treasury Department concerns. The language of this document is intended to enhance the government's position in evicting occupants, if necessary, and is to be signed and approved by the Chief, CI. EG&G will propose to the IRS AFC reasonable repairs that will enhance the salability of real property or business enterprise. The AFC will forward his concurrence or other recommendations to EG&G through the SPC/SPS. Repairs to real property cannot exceed 15% of the appraised value or $10,000, whichever is less, unless a memorandum is sent by the district AFC to TEOAF for forwarding to the Contracting Officer (USCS) requesting approval for excess repairs. The memorandum should set forth the anticipated cost of repairs and how these repairs will enhance the salability of the real property. A copy of the request and reply should be retained in the Seizure Property File. If the property is rented while in the custody of EG&G, the rental income shall not be used to pay expenses or mortgages. Rental of the property will be in accordance with TEOAF Directive 13 regarding executed occupancy agreements.
### [9.7] 6.10.2 (04-30-1998) Real Estate Procedures-- Criminal Forfeiture
Identify the real property for forfeiture pursuant to 18 USC 982 in a criminal indictment or criminal information. The indictment or information must charge a violation of Title 18 USC 1956, 1957, 1960 and or Title 31 USC 5324 to support a forfeiture of the real property pursuant to Title 18 USC 982 (See F.R.Cr.P. Rule 7 (c)(2)). Obtain an AFTRAK number. Upon conviction of the defendant and the defendant property (whether by trial or plea agreement), the court will enter a preliminary order of forfeiture. The AUSA may obtain a consent order of forfeiture from the defendant setting forth the property to be forfeited. In addition, the AUSA will start notice to all third parties in interest and publish advertisement in a publication serving the area where anyone having an interest may reside. The AFC or special agent will personally serve notice as directed by the AUSA, to all individuals believed to have an interest in the property. CI will advise the AUSA of the name and address of all individuals given personal notice. If petitions are not filed within 30 days, the court will enter a final order of forfeiture. Upon receiving a final order of forfeiture, CI is responsible for seizing, maintaining and disposing of the real property. If a petition is filed by any party claiming interest in the property, a hearing will take place before a final order of forfeiture can be entered by the court. Upon receiving a final order of forfeiture, CI will be responsible for seizing, maintaining, and disposing of the real property. After a preliminary order of forfeiture and prior to a final order of forfeiture, or upon the filing of a stay of forfeiture, occupants of real property may be permitted to remain in the property pending the forfeiture. Occupancy agreements, signed by the IRS in criminal cases, should be obtained, along with a substitute custodial order naming the IRS as the custodial agency. Exhibit 6-23, as shown in TEOAF Directive 13 is a occupancy agreement, which includes various restrictions (maintenance, access to the property, potential for continued illegal activity, insurance, etc.) that address Treasury Department concerns. The language of these documents is intended to enhance the government's position in necessary evictions.
### [9.7] 6.10.3 (04-30-1998) Evictions From Real Property
A final order of forfeiture forfeits the real property to the government, orders the government to take possession of the real property, and orders the government to dispose of the real property "according to law." Upon receiving a final order of forfeiture, and assurance from the AUSA that no stay of the order has been issued as part of an appeal, the AFC shall deliver, by personal service or send by registered mail, a letter to the occupant of the real property (Exhibit 6-24). This letter advises the occupant that the property has been forfeited, the occupant and all personal property must be vacated by a specific date, and any personal property left on the premises will be considered abandoned property, without value, and will be disposed of according to law. The AFC should arrange for EG&G to inspect the real property. If the occupant refuses to allow the inspection, check with the AUSA for a suggested course of action. If the occupant refuses to vacate the premises, the AFC or special agent handling the investigation shall ask the AUSA for an eviction order. Some AUSAs may take the position that an eviction order is not needed since the final order of forfeiture grants the real property to the government and the right to remove the occupant. If the AUSA takes this position, have the AUSA put his or her position in writing before attempting the eviction. If eviction is necessary, it will be the responsibility of the AFC to accomplish the eviction. The AFC may seek the assistance of the AUSA or whatever assistance he or she feels is necessary for the safety of all involved and to ensure that access cannot be reasonably obtained by the reentry of the occupant. Custody of the property will be transferred to EG&G using the procedures set forth in the Chapter on Storage of Seized Assets found in this Handbook. If the occupant abandons the personal property contained in the real property, the personal property will be removed and stored, using the procedures set forth in this Handbook. If the occupant does not claim the personal property within the thirty (30) days, then abandonment procedures should be initiated and the property disposed of using the procedures set for abandoned property.
### [9.7] 6.11 (04-30-1998) STORAGE OF ASSETS
TEOAF has set the following policies regarding seizures and storage of assets which we will follow: Any seizures made under Title 26 will not use EG&G, or the Customs Suspense Account for storage. All currency seized, with the exception of currency seized under Title 26, is to be stored in the Customs Suspense Account, unless it has physical evidentiary value due to, for example, fingerprints, packaging in an incriminating fashion, or the existence of narcotics residue. See Chapter 13 on Seizure of Evidence in this Handbook. Property seized exclusively for evidentiary purposes cannot be stored with EG&G until forfeiture proceedings have been initiated. Until that happens, storage will be the responsibility of the IRS. Expenses may be submitted to TEOAF for reimbursement when forfeiture proceedings are initiated. For additional details concerning the transfer and storage of assets, see Chapter 8 of this Handbook.
### [9.7] 6.12 (04-30-1998) CHAIN OF CUSTODY-- EVIDENCE
"Chain of custody" is an expression usually applied to the preservation of the instrument of a crime, other evidence, or any relevant writing in its original condition through its successive custodians. Documents or other physical objects may be the instrumentalities used to commit a crime and are generally admissible as such. However, the trial judge must be satisfied that the writing or other physical object is in the same condition as it was when the crime was committed. Consequently, the witness through whom the instrument is sought to be introduced must be able to identify it as being in the same condition as when it was recovered. Special agents must, therefore, promptly identify and preserve in original condition all evidentiary matter that may be offered into evidence. This would particularly apply to records, recordings, videotapes, documents, and other paraphernalia seized in a raid. In order that a seized document may be admissible as evidence, it is necessary to prove that it is the document that was seized and that it is in the same condition as it was when seized. Since several persons may handle it in the interval between the seizure and the trial of the case, it should be adequately marked at the time of seizure for later identification, and its custody must be shown from that time until it is introduced in court. When records are obtained from a possible defendant, notation should be made of the circumstances to show that they were furnished voluntarily. Notation should also be made of the chain of custody of records and of all other evidence in order that authenticated identification of the evidence may be made. A special agent who seizes documents should at once identify them by some marking so that the agent can later testify that they are the documents seized, and that they are in the same condition as they were when seized. An agent may put his or her initials and the date of seizure on the margin, in a corner or some other inconspicuous place on the front, or on the back of each document. If circumstances indicate that such marking may render the document subject to attack on the ground that it has been defaced or it is not in the same condition as when seized, the special agent may, after making a photostat or other copy for comparison or for use as an exhibit to their report, put the document into an envelope and write a description and any other identifying information on the face of the envelope. Special agents are not to sign or initial the records of a possible defendant nor to assure them in any manner whatsoever that their tax liability has been correctly reported as of any certain date. They are not to assure them that their records will be subject to no further examination. The best method of maintaining the chain of custody is to assure that each item is properly identified and appoint one special agent to have continuous control of all evidence until he produces it at the trial of the case. To preserve in original condition all evidentiary matter that may be offered into evidence, material, such as records, recordings, videotapes, documents, and paraphernalia seized in a raid, should be inventoried, sealed, and maintained in an Evidence Envelope, Form 5397. This process should be initiated by the first special agent who has access to any such evidentiary material. The Evidence Envelope should be filled out on its face with all the appropriate available information. The envelope should be sealed in the presence of a witness. The sealer and witness should each apply their signature and date straddling the sealed envelope flap seam, and the flap seam should be covered with clear cellulose tape. The lower portion of the face of the envelope has a printed receipt log to be filled in when the envelope is turned over to another person. Evidentiary material that is too bulky to be placed in an Evidence Envelope may be sealed in a carton or other appropriate container. An evidence envelope, Form 5397, can be affixed to the container with the face of the envelope appropriately filled out. No evidence container should be opened unless a witness is present. An Evidence Envelope should be opened by slitting along one of its edges. When a container is opened, the following should be noted on the container: That the container was opened. The date. Who opened it. Who witnessed it. The reason for opening it. That the contents were examined and were found to be identical with the description listed on the front of the Evidence Envelope. An Evidence Envelope, Form 5397, will only be sealed once. Should it become necessary to open a sealed envelope, that envelope will not be used again to store evidence. A new Form 5397 will be prepared and the evidence will be sealed in the envelope as stated above. The old envelope(s) will be retained and affixed to the new one in order to preserve the chain of evidence. The use of safe deposit boxes is acceptable when necessary in storing currency seized and retained for evidentiary purposes. To preserve the integrity of the chain of custody over seized items, strict procedures must be followed in using a safe deposit box for storage. The safe deposit box will be set up to require the signatures of two special agents, one of whom should be in CI management. An entry log reflecting the dates of entry, the persons entering, and a brief description of the purpose for entry shall be maintained and kept in CI files. When the safe deposit box is used to store items from multiple seizures, no commingling of the items is allowed. To preclude this, the items from each seizure must be placed in a sealed envelope or container and initialed and dated prior to placement in the safe deposit box. At a minimum, the case agent of each multiple seizure should be one of the authorized signatures. If entry is necessary in multiple seizure situations involving different investigations, the case agent and CI management official should be the entry personnel. In the event that a seizure is made during hours when access to a safe deposit box is not possible, the Chief, CI, may authorize the seized items to be stored in a CI safe, on an interim basis, providing that access to such safe is limited and a log of entry is maintained as noted above. The seized items should be moved to a safe deposit box as soon as possible (preferably the next bank business day). All items secured in a safe deposit box should be inventoried on an annual basis. Currency seized as evidence, whether or not it is deposited into the Customs Suspense Account, is to be placed on the General Ledger by sending a copy of the Form 4008 to the Fiscal Management Branch, together with a modified version of Exhibit 6-25. If the funds were deposited to the Customs Suspense Account, be sure to make that clear in the transmittal memorandum. The Fiscal Management Branch, must also be informed by the AFC when the currency no longer has to be held as evidence. This notification will remove the currency from the General Ledger.
### [9.7] 6.13 (04-30-1998) CHAIN OF CUSTODY PROCEDURES-- FORFEITURES
Chain of custody of assets seized for forfeiture is also important so the trial judge must be satisfied that the asset forfeited is in the same one (or appropriately substituted one) that was seized. Form 3389, Seized Property Notice and Identification Tag, will be prepared in an original only and securely attached to each item of seized property, except in the case of seized vehicles, vessels, or aircraft, when Form 181 will serve as a seizure notice and identification tag. If the seized property is of a type which cannot be removed from the premises where seized, a duplicate of the Form 3389 will be prepared for the case file. Where appropriate, a stamped impression, gummed label, printed "Evidence" envelope, or similar seizure notice may be used in lieu of Form 3389, provided such notice shows the same basic information as would have been shown on the front of the Form 3389 and it also shows the chain of custody when necessary. Seized currency will be accompanied by the seizing special agents and law enforcement officer to a bank where a banking relationship has been established. The seized currency will be unsealed by the seizing agents and the law enforcement officer and counted by bank personnel in the presence of the seizing agents and the law enforcement officer. There may be instances where the bank provides the counting service but will not allow agents into the counting area. The sealed identifiable container will be delivered to personnel in the counting facility who will provide an initial receipt for a specific sealed container to the agents delivering the currency. Once all the seized currency is counted, the bank will provide a detailed accounting of the seized currency. The seizing agents will document the chain of custody from the seizure to the physical delivery of the currency to the bank facility. The seized currency will be transmitted by the bank personnel to the Customs Suspense Account via the FED Wire (wire transfer) system. In the case of seized monies, Form 3389 will be attached to or placed in the sealed package when they are put in the custody of a safekeeper. Also, in the case of seized monies, the chain of custody portion of Form 3389 need not be prepared because this information is shown on Form 141-A. Form 141-A will be used by CI to report the acquisition or disposition of special monies to Fiscal Management, which is charged with the responsibility of maintaining an accounting control of such funds: As a chain of custody and control document for special monies. As a receipt form for use when special monies are stored with or reclaimed from a safekeeper. This form is designed as a six-part, snap-out assembly with a worksheet copy. Ordinarily, it will be necessary to prepare only one assembly to report both acquisition and disposition of seized monies. Item instructions for preparation of Form 141-A are included on the form. In the event seized property is turned over to the U.S. Marshal in a judicial forfeiture situation, the U.S. Marshal will act as custodian of the property. This is not to be considered a final disposition, since the IRS may continue to incur expenses for the maintenance and storage of the property. A final disposition will occur only when the forfeiture action is completed. Seized property may also be turned over to the U.S. Marshal as evidence in a related case. In this situation, the U.S. Marshal also acts as custodian of the property. In either situation, an entry should be made in the Seized Property File stating that the property was turned over to the U.S. Marshal for his custody. This is to ensure that the chain of custody is preserved.
### [9.7] 6.14 (04-30-1998) REMOVAL OF SEIZED PROPERTY FROM THE JUDICIAL DISTRICT
All property should normally remain in the judicial district where it was seized. The property manager may remove seized property for forfeiture for economy and maintenance, unless otherwise ordered by the court. The court does not lose jurisdiction even if property is moved to another judicial district. The forfeiture action may be brought in: The district where the underlying crime occurred; The district where the property is located; The district where a related criminal indictment is pending. Coordination with EG&G, the USAO, and any other district office where assets are located or forfeiture action is instituted is recommended and encouraged. Property seized for evidence may be removed pursuant to Rule 41 from the judicial district from where it was seized at the discretion of the government.
### [9.7] 6.15 (04-30-1998) PAYMENT OF AWARDS FOR INFORMATION OR ASSISTANCE LEADING TO A CIVIL OR CRIMINAL FORFEITURE
Application for awards will be accepted on behalf of any individual, corporation, or association. A sample Memorandum of Understanding between the IRS and an informant dealing with payment of an award for information leading to forfeiture of assets may be obtained from the Criminal Investigation Asset Forfeiture and Narcotics Section. Awards will be paid only after disposition of the forfeited property. Awards will not be paid to individuals who are representatives of state or local law enforcement agencies. The respective agency may be compensated through asset sharing for any information or assistance provided by an individual(s) who represented a state or local law enforcement agency No monies will be used to pay retainers or to pay cooperating informants in the expectation of future specific information or assistance.
### [9.7] 6.15.1 (04-30-1998) Amount of Award
For Title 18 violations involving forfeitures, awards shall not exceed the lesser of $250,000 or one-fourth the amount realized by the U.S. from the property forfeited. Awards paid relating to Title 31 violations shall not exceed the lesser of $150,000 or one-fourth the amount realized by the U.S. from the property forfeited If forfeited property is sold, the "amount realized" is the net proceeds as defined by TEOAF. If the forfeited property is retained for official use, the "amount realized" is the value of the property at the time of seizure minus expenses paid from the Fund. If an award claimant has already received payment under Title 31 USC 9703(a)(1)(A) or (a)(3)(B) for the same information for which an award is sought, any such award shall be paid only to the extent that the total of the award and previous payment does not exceed $250,000.
### [9.7] 6.15.2 (04-30-1998) Procedure for Requesting Payment of Award
An informant may apply for an award by submitting a written narrative detailing his or her participation/contribution to the Chief, CI, in the district conducting the investigation. The request for an award may also be initiated by the CI district office conducting the investigation. The CI district receiving or initiating the request for award will prepare a report that will evaluate the information or assistance provided by the informant and recommend an amount to be paid. This report will be forwarded through the Director of Investigations to the Assistant Commissioner, CI, for approval. The report shall: Identify the property or properties on which the information or assistance was provided. Include both the AFTRAK number(s) and the federal district court case number. Also include the value of the asset less any liens, mortgages or other extraordinary costs. Identify those properties forfeited and date forfeited. Recommend the amount of the award and the degree to which the information or assistance aided in the forfeiture. State whether the information or assistance provided was unique or indispensable. List the costs incurred with respect to the property forfeited. If more than one request for award is received in a single forfeiture action, the requests should be handled in a consolidated manner. Decisions on all the requests should be made at the same time and should consider the comparative value of information or assistance provided by each informant and the aggregate amount of award(s) to be made. In these cases, the limits discussed previously apply to the aggregate amount of the awards to be made. Any award in excess of $250,000 must be approved by the Under Secretary of the Treasury (Enforcement). The request for approval must include the information listed in Exhibit 6-26.
### Internal Revenue Manual | ### Hndbk. 9.7 Chap. 6 Seizure Planning | ### (04-30-1998)

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