Follow-Up on Recommendations from Report No. 18-09, Audit of the Department of the Attorney General’s Asset Forfeiture Program

A Report to the Governor and the Legislature of the State of Hawai‘i

Report No. 21-09 from Hawaii State Auditor, July, 2021 (excerpts)

We found the Department of the Attorney General has implemented 2 and partially implemented 2 of the 7 recommendations made in our (2018) report. Three recommendations have not been implemented and remain open….

The Department of the Attorney General’s Asset Forfeiture Program Asset forfeiture refers, generally, to the government’s ability to confiscate a person’s property without any corresponding payment or compensation. In some cases, the property is illegal contraband. In other cases, the property is alleged to have been used in the commission of a crime. In still other cases, the property is alleged to be “the fruit of a crime.” The primary purpose of an asset forfeiture program is to deter crime by enabling law enforcement to take away the means by which criminals engage in their unlawful activity as well as the “profits” from that unlawful activity….

Forfeited funds and proceeds from the sale of forfeited property are deposited into the Criminal Forfeiture Fund. By statute, the law enforcement agency that seized the cash or property and the prosecuting attorney’s office that applied for forfeiture of the cash or property each receive 25 percent of the cash or proceeds from the sale of the forfeited property. The remaining 50 percent is used to support the program, including the salaries of program staff.

Why we did the 2018 audit

We conducted the audit pursuant to House Concurrent Resolution No. 4 of the 2016 Legislative Session, which required the Auditor to conduct an audit of the administrative asset forfeiture program of the department, including an evaluation of the efficiency and effectiveness of the program; and whether the program used moneys for intended purposes. The audit was also to include an accounting of money and property seized and disposed of through asset forfeitures, and a determination of how many asset forfeitures occurred in cases that did not result in criminal convictions. In response to that request, we issued Report No. 18-09, Audit of the Department of the Attorney General’s Asset Forfeiture Program.

What we found in 2018

In Report No. 18-09, we found the department was administering the program without administrative rules describing the specific procedures and practice requirements for asset forfeiture or clear internal policies and procedures to ensure that petitions for forfeiture as well as petitions for remission or mitigation are timely and consistently processed….

We also found the program manager was acting only as a property manager in charge of overseeing forfeited property, but neither actively guiding the program’s day-to-day activities nor overseeing the financial management of the program. Other management responsibilities, such as establishing internal program procedures, as well as accounting for program costs and proceeds, were being handled by various individuals, instead of a dedicated program manager. We found that petitions for administrative forfeiture languished – during the two-year period from July 2012 through July 2014 processing petitions took an average of 561 days – and that the program was unable to accurately account for forfeited property. We also found that the program was unaware of the requirement that 20 percent of the moneys deposited into the Criminal Forfeiture Fund be used to support drug abuse education, prevention, and rehabilitation programs. We could not identify any program disbursements that complied with the requirement.

What we found in 2021…

Our follow-up on the department’s implementation of the recommendations made in Report No. 18-09, conducted between February and March 2021, involved examining relevant documents and records, interviewing the program manager, and evaluating whether the department’s actions addressed the recommendations.

Our first recommendation related to the department’s need to promulgate administrative rules, and our second recommendation addressed the need for clear internal policies and procedures. Our third recommendation involved strengthening internal controls to provide transparency and accountability for forfeited property and program funds and included five separate sub-parts. Including the sub-parts of recommendation three, the following analysis covers a total of seven recommendations.

We found that the department implemented two of the recommendations; two recommendations were partially implemented; and three were not implemented and remain open….

Recommendation 1 -- Implemented

The Department of the Attorney General should promulgate administrative rules necessary to provide direction to county prosecutors, police departments, and those seeking remission or mitigation.

Comments This recommendation was made in light of the administrative asset forfeiture program having gone without administrative rules since its inception, nearly 30 years earlier…

Recommendation 2 -- Not Implemented

The Department of the Attorney General should develop clear internal policies and procedures to ensure that petitions for administrative forfeiture are processed timely and consistently, that forfeited property and program funds are appropriately managed, and that proceeds from the sale of forfeited property are used for purposes intended by the Legislature. …

Recommendation 3b -- Not Implemented

The Department of the Attorney General should strengthen internal controls to provide transparency and accountability for forfeited property and program funds by maintaining a complete listing of forfeited property with estimated values for each property; and properly accounting for transactions for each property auctioned, destroyed, or kept for use by law enforcement.

Comments This recommendation was made because the department was not maintaining a complete inventory of forfeited property, much of which is held by the county police departments until an auction is scheduled. The program manager told us that he only maintained a list of the forfeited property that was stored in the department’s warehouse to be auctioned. The 2018 audit also found that police departments destroyed, among other things, a change machine, a surveillance monitor, and a television monitor — property that seemingly had value — without Attorney General approval. …

Recommendation 3e -- Not Implemented

The Department of the Attorney General should strengthen internal controls to provide transparency and accountability for forfeited property and program funds by ensuring the department complies with Act 104 (Session Laws of Hawai‘i (SLH) 1996) which requires the allocation of 20 percent of moneys deposited into the Criminal Forfeiture Fund be used to support drug abuse education, prevention, and rehabilitation programs. …

In Report No. 18-09, we found that, although $10.2 million had been deposited into the Criminal Forfeiture Fund from FY2004–FY2017, the department has not disbursed any moneys as required by Act 104. …

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