Contents

• [9.7] 9.1 OVERVIEW

• [9.7] 9.2 NOTICES TO PARTIES OF INTEREST IN A SEIZURE

• [9.7] 9.3 CLAIMANTS' FILES

• [9.7] 9.4 MULTIPLE VICTIMS ( "BOILERROOM" TYPE CASES)

• [9.7] 9.5 QUICK RELEASE AUTHORITY AND PROCEDURES
  • [9.7] 9.5.1 Quick Release Determination Criteria

• [9.7] 9.6 PETITIONS FOR REMISSION AND MITIGATION
  • [9.7] 9.6.1 Effect Of Actions By Claimants On Notice Of Seizure

• [9.7] 9.7 CLAIM AND COST BOND
  • [9.7] 9.7.1 In Forma Pauperis Procedure
  • [9.7] 9.7.2 Deposit of Collateral On A Claim And Cost Bond
  • [9.7] 9.7.3 Processing Cost Bonds
    • [9.7] 9.7.3.1 Electronic Funds Transfer
    • [9.7] 9.7.3.2 Certified Mail
    • [9.7] 9.7.3.3 Direct Deposit to the Customs Suspense Account
    • [9.7] 9.7.3.4 On-Line Payments and Collections (OPAC) Transfer
    • [9.7] 9.7.3.5 Receipt of Surety Bond
  • [9.7] 9.7.4 Costs of Forfeiture And The Cost Bond

• [9.7] 9.8 SETTLEMENT OF FORFEITURE PROCEEDINGS BY THE U.S. ATTORNEY

• [9.7] 9.9 INVESTIGATION OF ACTIONS BY CLAIMANTS INCLUDING PETITIONS

• [9.7] 9.10 REMISSION OF PROPERTY TO CLAIMANTS
  • [9.7] 9.10.1 Remission And Mitigation Payments By The Treasury Fund

• [9.7] 9.11 PETITION FOR RESTORATION OF THE PROCEEDS
  • Exhibit [9.7] 9-1 Mitigation Guidelines
  • Exhibit [9.7] 9-2 First Offense Warning Letter
  • Exhibit [9.7] 9-3 Claim and Cost Bond Transmittal To District Counsel
  • Exhibit [9.7] 9-4 Sample TEOAF Form 3, Cost Bond Disposition Instructions
  • Exhibit [9.7] 9-5 Sample Form 9365, Application To Proceed in Forma Pauperis
  • Exhibit [9.7] 9-6 Preparation of Fed Wire For Cost Bonds
  • Exhibit [9.7] 9-7 Sample TEOAF Form 2, Disposition Form For Currency Held in Customs Suspense Account
  • Exhibit [9.7] 9-8 Sample TEOAF Form 1, Disposition Form For Assets Other Than Currency

[9.7] 9.1  (04-30-1998)
OVERVIEW

1. When property is seized, there may be several people or entities that have claims to the property, including the individual from whom it was seized. Individuals who might have a claim to the property may become aware of the government seizure for forfeiture through a seizure notice, forfeiture notice or advertisement. This chapter will discuss the procedure for filing a claim, investigating the claim, and releasing property. The following sections are included in the chapter:
   • Notices To Parties Of Interest In A Seizure
   • Claimants Files
   • Multiple Victims ( "Boilerroom" Type Cases)
   • Quick Release Authority And Procedures
   • Petitions For Remission And Mitigation
   • Claim And Cost Bond
   • Settlement Of Forfeiture Proceedings By The U.S. Attorney
   • Investigation Of Actions By Claimants Including Petitions
   • Remission Of Property To Claimants
   • Petition For Restoration Of The Proceeds

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[9.7] 9.2  (04-30-1998)
NOTICES TO PARTIES OF INTEREST IN A SEIZURE

1. See Chapter 7, Processing Seized Property, in this Handbook for notices to parties of interest requirements.

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[9.7] 9.3  (04-30-1998)
CLAIMANTS' FILES

1. Claimants' petitions shall be sworn to before a notary and shall include the following information in clear and concise terms:
   1. A complete description of the property, including model and serial numbers, if any, and the date and place of seizure.
   2. The interest of the claimant in the property, as owner, mortgagee or otherwise, supported by bills of sale, contracts, mortgages, or other satisfactory documentary evidence.
   3. The facts and circumstances established by satisfactory proof, including, but not limited to, sworn affidavits from third parties, relied upon by the claimant to justify challenge to the forfeiture.
2. If the Asset Forfeiture Coordinator (AFC) determines that the seizure was actually conducted by another district, the petition will be immediately forwarded to that district's AFC.

[9.7] 9.4  (04-30-1998)
MULTIPLE VICTIMS ( "BOILERROOM" TYPE CASES)

1. Certain types of investigations will invariably lead to the disclosure of multiple victims of the crime. These individuals and entities are entitled to file claims for restitution against any assets which may be seized. The restitution procedure for claimants is the same as the remission process.
2. The agent, in all probability, has records and information which can provide definitive leads as to the names, addresses and amount of loss suffered by these parties. Accordingly, the Service is bound by policy to ensure that proper notice is provided to each of the potential victims and to give them the opportunity to file claims. However, only those parties that have a provable interest in the property that was actually seized will have their petitions approved. It is to only these parties that proper notice is required to be given. It is not required to send notice to any other potential victim uncovered during the investigation. Most often, the action to seize will be judicial, therefore, the mailing of notices and receipt of petitions will have to be coordinated with the U.S. Attorney's Office.
3. An agent should not pass up the opportunity to seize the ill gotten proceeds of the illegal activity, especially if there is a strong possibility that those assets may be secreted or spent. This will be determined on a case-by-case basis, especially when the assets may be depleted.
4. There is always a possibility of a class action suit by the potential claimants or a pending bankruptcy action by the individuals or entities under investigation. The IRS may be well served to work directly with the claimants' representative or bankruptcy administrator within the scope of disclosure authority. To avoid the responsibility of the government having to handle and account for the disposition of the funds to the victims, it may be prudent to petition the court to have the seized funds released to an authorized court appointed administrator. The administrator can then be responsible for distribution to the claimants based upon whatever equitable distribution is determined through collateral civil actions (i.e., bankruptcy or class action suits) and reporting the results to the court. (If assets are turned over to a Bankruptcy Court, it is possible the assets may be sold and converted to cash. If this occurs, AFTRAK should be updated for the seized assets sold to reflect a substitute asset as prescribed. If the asset's value materially changes as a result of the sale, this change should also be reflected on the Form 4008.)
5. These seizures require extensive pre-seizure planning involving many parties and legal issues. Explore these issues thoroughly before seizure action is initiated. Consultation with District Counsel is recommended.

[9.7] 9.5  (04-30-1998)
QUICK RELEASE AUTHORITY AND PROCEDURES

1. The Chief (CI), subsequent to seizure, but prior to forfeiture or filing of a complaint for forfeiture, is authorized to release property seized for forfeiture. This is true for Title 18 and Title 26 seizures. The property may be quick released when the Chief (CI) deems that there is an innocent owner having an immediate right to possession of the property, or when the release is in the best interest of justice and the government, e.g., excessive forfeiture processing costs compared to net asset value. A Release of Claim and an executed Form 5914, Release and Receipt of Property (Exhibits 6-29 and 6-30), should be obtained from the innocent owner at the time the property is returned.
2. Unlike Title 18, an innocent owner provision is not addressed in Title 26 forfeiture sections. Consequently, CI is not required to accept this type of claim to release the asset. However, it is the policy of IRS that relief will be provided to a true innocent owner under Code seizures. If the Chief (CI) deems a true innocent owner exists, the procedures for quick release will be followed.

[9.7] 9.5.1  (04-30-1998)
Quick Release Determination Criteria

1. An owner, lienholder, or a general creditor for property must show satisfactory proof of ownership or of an ownership interest to have the property quick released.
2. The four (4) following questions determine if property should be quick released to an owner where there is no lienholder or general creditor:
   1. Did the owner, lienholder or general creditor have knowledge that the property was or would be used in any violation of the law?
   2. Did the owner, lienholder or general creditor have knowledge of the particular violation which subjected the property to seizure and forfeiture?
   3. Did the owner, have knowledge that the user of the property had any record for violating laws of the U.S. or of any State for related crime(s)?
   4. Did the lienholder or general creditor take all reasonable steps to prevent the illegal use of the property?
3. If the answers to the first three questions are "no" , indicating that the owner, lienholder or general creditor is innocent, and the answer to the last question is "yes" , indicating that the owner took all reasonable steps to protect the property from illegal use, the Chief (CI) can authorize the quick release.
4. If the asset has no encumbrances then it can be quick released to the owner. If there are lienholders or general creditors, then compare the appraised value of the seized property with the minimum equity guidelines set forth in Chapter 11 of this Handbook.
5. Where the appraised value of the property exceeds the minimum monetary interest of the lienholder or general creditor to the extent of the minimum equity guidelines, the property will be retained for forfeiture proceedings. The innocent lienholder or general creditor can secure an interest in the property through the petition process. The property will be released if the difference is marginal or if the monetary interest exceeds the appraised value.
6. If the claimant does not have a recognized interest in the seized property or the answer to any of the above four questions reveals the claimant is not an innocent owner or did not reasonably prevent the illegal use, the Chief (CI) should retain the property and continue the forfeiture action.
7. The entity requesting a quick release must reimburse the IRS and/or EG&G for all costs incurred in seizing the property. In unusual circumstances, the property may be released without payment of the costs of seizure. If IRS receives reimbursement in Title 18 and Title 31 based seizures, the funds should be deposited into the local imprest fund provided that the reimbursement has not been requested. If reimbursement has been requested, the funds should be forwarded to TEOAF. If a Blanket Purchase Authorization (BPA) was used, the funds should be forwarded to Facilities for deposit to the General Fund. EG&G will take the appropriate action concerning expenses incurred by them.
8. When quick release occurs a Release of Claim and a Form 5914, Release and Receipt of Property should be obtained. (Exhibits 6-29 and 6-30).
9. When releasing a vehicle restore the vehicle identification number (VIN), in accordance with applicable state law, before the return of any motor vehicle or motor vehicle part which had the VIN removed or falsified.
10. If the property is released to a lienholder or a creditor, the owner must be notified by registered mail, return receipt requested.

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[9.7] 9.6  (04-30-1998)
PETITIONS FOR REMISSION AND MITIGATION

1. Upon receipt of the Petition for Mitigation or Remission and the recommendation of the Assistant Chief Counsel (Criminal Tax), the Assistant Commissioner (CI) shall review the factual situation and the recommendation(s). The Assistant Commissioner (CI) shall not remit a forfeiture unless the petitioner establishes that:
   1. The petitioner has a valid, good faith interest in the seized property as owner or otherwise.
   2. The petitioner had no knowledge that the property was or would be involved in any violation of the law.
   3. The petitioner had no knowledge of the particular violation which subjected the property to seizure and forfeiture.
   4. The petitioner had no knowledge that the user of the property had any record for violating laws of the U.S or of any State for a related crime.
   5. The petitioner had taken all reasonable steps to prevent the illegal use of the property.
2. The Assistant Commissioner (CI) has the discretionary authority to grant relief by a complete remission of the forfeiture, or by mitigating forfeiture of seized property where the petitioner has not met the minimum conditions precedent to remission, but where extenuating circumstances indicate that some relief should be granted to avoid extreme hardship. Mitigation may also be granted where the minimum standards for remission have been satisfied, but overall circumstances are such that complete relief is unwarranted. The Chief (CI) may recommend the amount of a monetary penalty which should be imposed for release of the property.
3. Mitigation shall take the form of a monetary penalty imposed upon the petitioner in addition to any other sums chargeable as a condition to remission. This penalty is payable by the petitioner, and shall be disposed of as an amount realized from the forfeiture.
4. The Chief (CI) may make a recommendation as to the application of the mitigation guidelines (Exhibit 9-1) in forfeiture actions involving violations of 31 USC 5313(a) and 5324(a); Exhibit 9-2 is the verbiage to be used in a warning letter to be sent to individuals involved in a first violation of 31 USC 5313(a) or 5324(a). The Chief (CI) may also make a recommendation as to the granting or denial of petitions involving violations of 18 USC 1956 and 1957.
5. When a petition for remission or mitigation of forfeiture is received for property subject to administrative or judicial forfeiture, the forfeiture process will continue as scheduled. However, once the property is forfeited, it shall not be placed into official use, transferred, or sold until final action is completed on the petition or mitigation of forfeiture.
6. The Assistant Commissioner (CI), or any other official, shall not hold any hearings when considering a Petition for Remission or Mitigation of Forfeiture (28 CFR 9.3 and 9.4).
7. The Assistant Commissioner (CI) and the Director, Office of National Operations, are the deciding or determining officials in all petitions for remission or mitigation of forfeiture in seizure(s) of property subject to administrative forfeiture under 18 USC 981 valued at not more than $500,000. The Under Secretary of the Treasury (Enforcement) is the deciding official for amounts greater than $500,000.
8. In Code forfeiture actions the Assistant Commissioner (CI) or the Director, Office of National Operations (CI) is the deciding official in all petitions for remission or mitigation of forfeiture in seizures of property subject to administrative Code forfeiture valued at $100,000 or less (Delegation Order No. 157). Code forfeitures pursuant to 26 USC 7327 states that the provisions of law applicable to the remission or mitigation of forfeitures under the customs laws (19 USC 1613 and 1618) shall apply for Code forfeitures.
9. All petitions for remission or mitigation of forfeiture will be investigated by the Chief (CI) within 30 days of receipt, whenever possible. If a petition is received indicating the existence of evidence which was not included with the petition, CI will contact the petitioner and allow a reasonable period of time (such as 10 days) to submit such documentary evidence. The Chief (CI) will ensure that all issues presented within the petition have been addressed and will forward the entire package with a recommendation to the Assistant Chief Counsel (Criminal Tax) through District Counsel within 45 days.
10. Upon receipt, District Counsel will forward the original package within 5 days to the Assistant Chief Counsel (Criminal Tax), along with the original law and fact memorandum and underlying advice that District Counsel previously wrote regarding the forfeiture, and any additional information, if applicable. If District Counsel had not previously written such a memorandum, they must forward the package within 20 days.
11. The Assistant Chief Counsel (Criminal Tax) after reviewing the package, evidence and petition, and making necessary contacts with the AFC or agents, is responsible for submitting the original package to the Assistant Commissioner (CI) within 30 days upon receipt from District Counsel, or within 45 days upon District Counsel's receipt of the package from the Chief (CI), which ever is less, and preparing:
    1. A law and fact memorandum from the Assistant Chief Counsel (Criminal Tax) to the Assistant Commissioner (CI) discussing the petition and the facts underlying the recommendation as to whether such petition be granted or denied.
    2. A proposed memorandum from the Assistant Commissioner (CI) to the District Director, setting forth the Assistant Commissioner's authority to grant or deny the petition (i.e., Delegation Order No. 157 or 158), and the decision to grant or deny the petition.
    3. A proposed letter from the District Director to the petitioner, stating whether the petition has been granted or denied, which includes instructions for the petitioner to follow if it has been granted. This letter will also address the appeal rights of the petitioner.
12. The Assistant Commissioner (CI) will review the original petition file and attachments received from Assistant Chief Counsel (Criminal Tax) and render a decision. The decision will be forwarded to the District Director for implementation using the memorandum and letter drafted by Counsel if in agreement, or by original documents if the Assistant Commissioner's decision differs from that recommended by Assistant Chief Counsel (Criminal Tax). The original petition file will be retained by the Assistant Commissioner's (CI) office.
13. In an 18 U.S.C. 981 administrative forfeiture action, a Claim and Cost Bond filed with the Service will be promptly forwarded by the Chief (CI) to District Counsel for review and preparation of a letter referring the claim to the U.S. Attorney's office having jurisdiction in the action (Exhibit 9-3). The District Director will sign and approve the referral letter prepared by District Counsel, provided the bond is sufficient. A copy of the letter will be sent to the Chief (CI). District Counsel will review its files, and/or the files of the Assistant Chief Counsel (Criminal Tax), for administrative petitions on hand so that forfeiture proceedings will be suspended. Any original administrative petitions and evidence will immediately be returned to District Counsel for inclusion in the referral file, and any other petition files will be returned to the CI original seizure file. In Title 26 forfeiture actins, the filing of a Claim and Cost Bond will cause District Counsel's referral to the DOJ, Tax Division; see Chapter 14, Title 26 (Code) Forfeitures, for additional information.
14. Notice of the granting or the denial of a petition for property subject to administrative forfeiture shall be by certified mail, return receipt requested, to the petitioner and/or petitioner's attorney. If the petition is granted, the conditions of relief and the procedures to obtain the release of the property or a monetary interest shall be set forth. If the petition is denied, the petitioner shall be advised of the reasons for denial. Submission procedures for Reconsideration of the Denial will be printed in the notification letter, normally drafted by the Assistant Chief Counsel (Criminal Tax), and in the letter to the District Director that sets forth the Assistant Commissioner's (CI) authority to grant or deny petitions and which instructs the District Director to mail the notification letter.
15. A request for Reconsideration of the Denial must be submitted to the Chief (CI) within 10 days from the receipt of the letter denying the petition. The request must be addressed to the Chief (CI) in the seizing district, who will investigate any new evidence and forward a recommendation within 15 days directly to the Assistant Commissioner (CI), Attn: Chief, Asset Forfeiture and Narcotics Section. The request may be referred to the Assistant Chief Counsel (Criminal Tax) if the Assistant Commissioner (CI) believes that any new evidence submitted by the petitioner warrants a review of Counsel's position. The request will be based on evidence recently developed or not previously considered and will be considered only on the merits of the new information pursuant to the criteria set in paragraph (1) of this section. Only one request for reconsideration will be honored.
16. Employees of the Internal Revenue Service will not encourage the filing of a Petition for Remission or Mitigation of Forfeiture with respect to seizures.
17. Jurisdiction in an administrative forfeiture is transferred to DOJ and the U.S. Courts by the timely filing of an acceptable Claim and Cost Bond.

[9.7] 9.6.1  (04-30-1998)
Effect Of Actions By Claimants On Notice Of Seizure

1. When a Petition for Remission or Mitigation of Forfeiture in Title 18 seizures is filed regarding property subject to administrative forfeiture, the property should be advertised for claimants in the regular manner under the procedures set forth in the Chapter 7, Processing Seized Property, found in this Handbook, and routinely forfeited. However, disposition of such property must be held in abeyance pending final action on the petition. The publication of the "Notice of Seizure" will continue as scheduled even after receipt of a Claim and Cost Bond for the purpose of identifying potential parties in interest.
2. This is not true for Code forfeitures. When a Claim and Cost Bond is filed for all of the property subject to administrative forfeiture between the first and third publication, the remaining advertisements will be canceled. If any other parties file a petition, they are to be informed that the forfeiture is proceeding judicially. The IRS cannot decide the merits of the petition until after, and only if, the judicial proceeding results in a defeat of the claim. If the claimant obtains relief judicially, the petition cannot proceed. Therefore, the petitioners may also want to proceed judicially, to guarantee a hearing of their claim. When a Claim and Cost Bond is filed for only a portion of the property subject to administrative forfeiture between the first publication and the third publication, the original advertisement will be canceled. The advertisement will be modified to publish a revised Notice of Seizure listing only the unclaimed property for the remaining number of times necessary to effect forfeiture.

[9.7] 9.7  (04-30-1998)
CLAIM AND COST BOND

1. There is no required standard format for a valid Claim and Cost Bond. However, it must contain:
   1. A clear and concise description of the property involved.
   2. The location from which the property was seized.
   3. A statement setting forth the claimant's interest in the property.
2. The filing of the claim and the posting of the bond do not entitle the claimant to possession of the property, but they do convert the matter to a judicial forfeiture proceeding. The administrative forfeiture proceeding will be suspended unless the Claim and Cost Bond are found to be defective.
3. When a Claim and a Cost Bond are filed for a portion, or all of the property subject to administrative forfeiture in one seizure, the original advertisement will continue. However, if any other claimants file a petition, they should be informed that the forfeiture is proceeding judicially. Their petition will be put on hold until after, and only if, the judicial proceeding results in a defeat of the other claimant's standing. If the other claimant obtains judicial relief, the administrative claimant cannot proceed, but may want to proceed judicially, as put forth in Title 19, to guarantee a hearing.
4. The Cost Bond must be conditioned so that the obligor on the bond pays all costs and expenses incident to any forfeiture proceedings in the event that the property is forfeited by the court. The court must state in the final order of forfeiture the expenses to be paid from the bond.
5. Upon receipt of a Claim and Cost Bond, the Chief (CI) will recommend whether or not the claim should be accepted. If the Chief (CI) believes that the claim should be accepted, the recommendation with explanations will be transmitted to District Counsel by memorandum. Relevant information in Criminal Investigation seizure files, including the seizure affidavit, should be included in the cover memorandum forwarding the Claim and Cost Bond to District Counsel.
6. District Counsel will review the recommendation and, upon concurrence, will prepare a referral letter to the U.S. Attorney for the District Director's signature. This referral letter will contain a notice that a cost bond has been received and processed, a description of the property, its appraised value, the seizure number, the facts and circumstances known to the agents, the names of witnesses, and a citation of the statute or statutes believed to have been violated that form the basis for the proposed forfeiture.
7. Upon acceptance of the Claim and Cost Bond, the District Director will forward the referral letter prepared by District Counsel (Exhibit 9-3), and the package, including a copy of any actual bond received and a copy of any pertinent law and fact memorandum already prepared by District Counsel, to the U.S. Attorney having jurisdiction for the institution of judicial forfeiture proceedings. A copy of the referral letter will be directed to the Chief (CI), and retained in the seizure property file.
8. In Code forfeitures, if the Chief (CI) feels the claim should be accepted, the process is the same EXCEPT District Counsel will prepare a judicial forfeiture package for the Department of Justice (DOJ). District Counsel must first obtain the approval of the Assistant Chief Counsel (Criminal Tax) before forwarding the forfeiture package to the DOJ. If the Assistant Chief Counsel (Criminal Tax) concurs with the proposed forfeiture action, District Counsel will be notified of such concurrence. At that point District Counsel will forward the package to Tax Division, DOJ for review, authorization, and forwarding to the appropriate United States Attorney Office (USAO). A copy of the forwarding letter will also be sent to the District Director, Attention: Chief (CI).
9. If, in the opinion of the Chief (CI), the Claim and the Cost Bond are not timely or are deficient, the Chief will allow the claimant seven (7) work days from date of notification to correct noted deficiencies. If correction is not made within the stated time, the documents will be forwarded to District Counsel with a memorandum detailing CI instructions to the claimant. The AFC will prepare a letter for the District Director's signature informing the claimant that the claim will be treated as nugatory, thereby allowing administrative forfeiture to proceed as though the claims had not been tendered.
10. When a determination has been made on a claim, TEOAF Form 3, IRS Cost Bond Disposition Instructions (Exhibit 9-4), must be completed by the AFC.
11. If individuals state a desire to file a Claim and a Cost Bond, but claim a financial inability to post the bond, they may proceed "In Forma Pauperis." Instructions on how to proceed are to be included in the forfeiture letter (Exhibit 3-2). Districts may attach Form 9365 and instructions to this letter to expedite the process.

[9.7] 9.7.1  (04-30-1998)
In Forma Pauperis Procedure

1. A claimant must request in writing to proceed In Forma Pauperis, and must prepare an Application to Proceed In Forma Pauperis, Form 9365 (Exhibit 9-5). This form, if accepted, will serve in lieu of posting the cost bond.
2. There are no provisions in Title 26 statutes or regulations for foregoing the filing of a cost bond by the claimant proceeding In Forma Pauperis. However, to afford any potential claimant the maximum opportunity to retrieve their property this proceeding will be offered to them. Therefore, the procedure established for Title 18 will also be used in Title 26
   proceedings.
3. The Form 9365 may be sent as an attachment to the forfeiture letter (Exhibit 3-2), or it may be sent under separate cover to the claimant upon request to proceed In Forma Pauperis. A reasonable amount of time should be given the claimant to complete the form if the application is not included with the forfeiture letter. Failure to submit tax returns is not grounds for automatic denial.
4. The In Forma Pauperis application (Form 9365) must be properly completed and submitted to the Chief (CI) in the seizing district within the same time frame as a claim in order to be considered. However, a reasonable amount of time should be allowed if further information is needed to make an evaluation.
5. The Chief (CI) will immediately refer the application to District Counsel, along with a recommendation to accept or deny the application.
6. In 18 U.S.C. 981 Forfeitures, District Counsel will refer the matter to the U.S. Attorney upon concurrence of the District Director.
7. If the Service notices blatant inconsistencies in the application which appear to render the application false, the Service has jurisdiction to deny the application via a letter from the District Director, informing the claimant of such denial based on clear and articulate reasons. The letter will advise that the claimant may seek judicial review of the bond waiver request. Reasons to deny may include:
   1. The claimant's ability to pay the cost bond.
   2. Lack of information demonstrating indigence or hardship.
   3. Inclusion of false statements.
8. The District Director's letter shall notify the claimant of denial within ten (10) days of determination.
9. The claimant will be informed that declaration of administrative forfeiture will be delayed twenty (20) days from the date of receipt of the application denial, in order to give the claimant time to institute a challenge, or to pay the cost bond. In Code forfeitures, a delay of thirty (30) days will be provided to the claimant.
10. If the application contains material misstatements of fact, either through omission or commission, the Chief (CI) shall determine if a separate criminal investigation of the matter is warranted.

[9.7] 9.7.2  (04-30-1998)
Deposit of Collateral On A Claim And Cost Bond

1. The sureties of a Claim and Cost Bond must meet the following requirements:
   1. For a Title 18 seizure the Bond amount shall be $5,000 or ten percent of the value of the claimed property whichever is lower, or $2,500 for Code feifeiture, but not less than $250.
   2. The bond posted to cover costs may be in cash, certified check, cashier's check, postal money order or satisfactory surety bonds. Checks and money orders are to be made payable to either the Internal Revenue Service, or the U.S. Customs Service.
   3. If United States bonds, notes, or other obligations are used, the interest and principal must be unconditionally guaranteed by the United States. However, United States bonds which are not transferable, are not acceptable. (See Treasury Department Circular 154 and 31 C.F.R., Part 225.)
   4. A corporation holding a Certificate of Authority from the Secretary of Treasury as being an acceptable surety must have process agents in the judicial district where the person resides or the obligation is to be performed, and where the bond is returnable or filed. Corporate surety bonds are subject to the limitations prescribed by Treasury Department Circular 570, as amended.

[9.7] 9.7.3  (04-30-1998)
Processing Cost Bonds

1. The following procedures pertain to the processing of cost bonds. These procedures were derived from TEOAF Directive 11. All cost bonds are to be deposited into the Customs Suspense Account in one of the following ways:
   1. Electronic funds transfer (EFT).
   2. Certified mail.
   3. Direct deposit to the Customs Suspense Account.
   4. OPAC transfer.
   5. Receipt of surety bond.

[9.7] 9.7.3.1  (04-30-1998)
Electronic Funds Transfer

1. Cashier's checks, certified checks, and postal money orders made payable to the Service, and currency, can be deposited to an available district office bank account and wired to the Customs Suspense Account in the same manner as a seized bank account, however, "class code 073" must always be used when making a wire transfer of a "cost bond" . If a district does not have an available bank account, a cooperating bank may wire the proceeds directly to the Customs Suspense Account for a nominal service charge. Additional instructions for preparation of the Wire Transfer Form for Cost Bonds are on Exhibit 9-6. The IRS Subject Seizure Number and Class Code (732) must also be entered on the form.
2. Seizure information requested on the TEOAF Form 6 ( "Internal Revenue Service Deposit Information" ) (Exhibit 6-15) must be provided and faxed to the Customs Finance Center, Forfeiture Fund Unit (317) 298-1569.
3. Instructions for preparing the Fed Wire:

If currency is involved, at least two (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.

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] 9.7.3.2  (04-30-1998)
Certified Mail

1. If an EFT is not possible, send the instrument and TEOAF Form 6, by certified mail, to: Executive Office for Asset Forfeiture, Attn: Cost Bond Officer, 740 15th Street, NW, Suite 700, Washington, DC 20220.
2. The proceeds must be accompanied by the AFTRAK seizure number with the name and telephone number of the IRS AFC by memorandum from the AFC.

[9.7] 9.7.3.3  (04-30-1998)
Direct Deposit to the Customs Suspense Account

1. In some major metropolitan areas, direct deposit into the Customs Suspense Account through the local Federal Reserve Bank. Consult with the local Federal Reserve Bank for procedures, if this is possible in your area. Fax the completed "Internal Revenue Service Deposit Information" form (Exhibit 6-15) to the Customs Finance Center.

[9.7] 9.7.3.4  (04-30-1998)
On-Line Payments and Collections (OPAC) Transfer

1. On-Line Payments and Collections (OPAC) is an electronic transfer from one federal reserve account to another. This method should be used only if the other methods cannot be used. Here, the cashier's check or currency is deposited to the IRS Suspense Account (previously used for seized currency).
2. Simultaneously, a memorandum signed by the Chief (CI) must be faxed to the IRS Regional Fiscal Office servicing the seizing office, instructing Fiscal to transfer the funds to the Customs Suspense Account and remove the funds from the ledger of the Service. The memorandum will include the name and number of the contact at the Customs Finance Center: Ann Allen, Operating Accountant, Analysis and Information Section, telephone number (317) 298-1308.
3. At the same time, a completed Internal Revenue Service Deposit Information Form 6 (Exhibit 6-15) must be faxed to the Customs Finance Center. Information required includes the ALC (agency locator code), 20060094. Agents should indicate in the remarks section of the GOALS transaction form that the deposit of monies represent a cost bond, e.g., "This transfer to the USCS Suspense Account is for cost bond funds for seizure #1234567 by the IRS ACC732 Central Area. The Agency Class Code (ACC) for IRS is IRS ACC 732."

[9.7] 9.7.3.5  (04-30-1998)
Receipt of Surety Bond

1. In rare instances, an actual bond may be received from a claimant. The bond should be held in the seizure file until the judicial case is resolved. Should negotiation of the bond be required to recover costs of the seizure/forfeiture, the claimant may be requested to negotiate the bond and submit the required amount to the Treasury Forfeiture Fund. Should the claimant not be cooperative, negotiation of the bond may be attempted with the bonding company. Should this be unsuccessful, the Assistant U.S. Attorney should obtain an order requiring negotiation from the court.

[9.7] 9.7.4  (04-30-1998)
Costs of Forfeiture And The Cost Bond

1. When property for which a Cost Bond was filed is judicially forfeited, the judgement should allow for costs and be included in the judgment of forfeiture, or sought by separate motion and order.
2. The costs allowed should be recovered from the amount of the Cost Bond with amount remaining returned to the claimant.
3. Monies due Treasury law enforcement agencies, for costs incurred against the bond, will be deposited into the general fund of the Treasury.
4. The U.S. Attorney has the authority to waive the costs incurred in the settlement of judicial forfeiture cases and return the bond if none of the property for which the cost bond was filed is forfeited in which case the entire amount deposited as the cost bond will be returned to the claimant, along with the property.

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[9.7] 9.8  (04-30-1998)
SETTLEMENT OF FORFEITURE PROCEEDINGS BY THE U.S. ATTORNEY

1. After a Claim and Cost Bond are filed in an administrative seizure, or if the seizure is initially a civil judicial action, settlement of the forfeiture may be undertaken by the U.S. Attorney's Office in consultation with the IRS. There must be a statutory basis for the forfeiture. Any settlement negotiated by the U.S. Attorney's Office should parallel Service guidelines, e.g., Service Mitigation Guidelines for seizures pertaining to violations of 31 USC 5313 and 5324(a).
2. In an administrative forfeiture action, the Assistant Commissioner (CI) may consent to judicial forfeiture of seized property, if circumstances warrant, and if the claimant agrees to the potential forfeiture of all assets in a single judicial settlement.
3. The U.S. Attorney has authority to settle those judicial forfeiture actions involving property in his judicial district. However, in an administrative action where a Claim and Cost Bond were filed and the AUSA negotiates a settlement wherein the claim is withdrawn, the matter is referred back to the Service. The forfeiture action is to then proceed administratively. This requires that the Chief (CI) approve the negotiated
   settlement.
4. The government may initiate a settlement of a criminal forfeiture action in conjunction with the criminal charges against the defendant that provide the cause of action against the property. However, the government should not tie civil forfeiture to a reduction or dismissal of criminal charges just to gain the advantage of a civil forfeiture, or to be used as leverage in a criminal plea or vice versa. If a settlement is made in a criminal forfeiture action:
   1. Such settlements must be in writing and include specific reference to the withdrawal of the claim, and should include appropriate exhibits, such as the warrant, affidavit, agreement, and other pertinent documents.
   2. The referral and associated paperwork will be forwarded to the Chief (CI) for a decision whether to accept the negotiated settlement. This decision will then be forwarded to the District Director for implementation. If the Chief does not agree with the settlement, the matter will be referred back to the U.S. Attorney for appropriate action.
   3. TEOAF Directive 17 specifically addresses Treasury Policy regarding plea bargaining and forfeiture by settlement.

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[9.7] 9.9  (04-30-1998)
INVESTIGATION OF ACTIONS BY CLAIMANTS INCLUDING PETITIONS

1. Upon receipt of a petition for property subject to administrative forfeiture, the Chief (CI) will cause the petition to be reviewed for new and/or additional facts. If new and/or additional facts are presented in the petition, the Chief shall have an investigation conducted within 45 days pertaining to those facts. The Chief shall forward to the Assistant Chief Counsel (Criminal Tax), through District Counsel, the report of the completed petition investigation and his/her recommendation to grant or deny the petition.
2. Where the petition alleges facts not previously considered, it may be necessary to investigate these issues before the Assistant Chief Counsel (Criminal Tax) can evaluate the merits of the petition. Where the petition alleges items that may not be factually supported, it is in the best interest of the Service to provide a cursory investigation to either disprove these allegations, or to provide a preponderance of evidence supporting the seizure, some of which should already be in the seizure file.
3. The report from the Chief (CI) will be similar to, but not as detailed as, a prosecution report. This report will be a case synopsis memorandum, to include:
   1. The petition.
   2. Service counter arguments and evidence.
   3. The Chief's recommendations including those pertinent to Mitigation Guidelines.
   4. Information found that supports the petitioner's position.
   5. Any potential procedural flaws.
   6. Any due process problems.
   7. Other known or documented items that may be adverse to the Service's position.
   8. Seizure warrant.
   9. Affidavit.
   10. Relevant notices.
   11. Pertinent investigative interviews.
   12. Other documents as appropriate.
4. The petition, warrant, notices, and supporting and refuting evidence will be exhibited.
5. Chief Counsel's office will review the package and contact the AFC or agents and District Counsel as necessary for further information. IRS Counsel will not contact the petitioner, or the petitioner's representative, giving such discretion to the determining official. If contacted by either the claimant or the claimant's representative, conversation will be limited to explaining who currently is reviewing the petition, or procedural requirements to be followed by the claimants. Counsel will not proffer to the claimants an estimated date as to when the parties will be informed of the decision, nor will they discuss the merits of the case.
6. District Counsel will send the original package, along with a copy of their original law and fact memorandum on the seizure to the Assistant Chief Counsel (Criminal Tax) within fifteen (15) workdays of receipt from CI.
7. The Assistant Chief Counsel (Criminal Tax) will forward the original package to the Assistant Commissioner (CI), along with their law and fact memorandum within 30 days upon receipt from District Counsel.
8. The Assistant Commissioner (CI) will then make a decision based upon a review of the materials presented to him.
9. The investigation of petitions must be thorough, accurate, and conclusive to support the actions taken by the Assistant Commissioner (CI) in granting or denying said petitions. Inordinate time and effort should not be expended in addressing irrelevant claims.
10. The merits of petitions where property is subject to judicial forfeiture action will not be investigated except upon the request of the AUSA.
11. All time expended investigating and preparing reports of investigation of petitions, In Forma Pauperis investigations, etc., will be charged to the original Subject Seizure Investigation (SSI).
12. The district which seized the property shall accept and consider petitions until thirty (30) days after forfeiture letters to the interested parties have been mailed, or 30 days from the first publication of notice, whichever is later. Administrative forfeiture should occur promptly on schedule even if a petition has been filed, but not if a Claim and Cost Bond have been filed.
13. The "Notice of Seizure" and forfeiture letter sent to the parties in interest will state the statutes relied upon for forfeiture, procedures under which forfeiture will take place, and instructions for claimant options to contest forfeiture. If a timely petition is filed, the property will not be disposed of, delivered into official use, nor shared, until the petition process is exhausted, including time for any reconsideration.

[9.7] 9.10  (04-30-1998)
REMISSION OF PROPERTY TO CLAIMANTS

1. Where remission of forfeiture is granted for an owner, the owner can, within twenty (20) days after notice is received, pay the costs and expenses of the seizure and forfeiture and obtain possession of the property. If a civil judicial forfeiture action against the property is pending, release of the property must await a court order. If the owner does not comply with conditions imposed upon release of the property, the property may be sold after forfeiture. Following the sale, the proceeds shall be used to pay all costs of the seizure and forfeiture, and any remaining balance shall be paid to the owner.
2. Lienholders must file petitions or claims. If the petition is granted for a lienholder, the Assistant Commissioner (CI) can either release the property, or, if the property is retained for official use, return an amount equal to the petitioner's lien, less costs.
3. If the property is not retained for official use, the lienholder has the option of obtaining possession of the property or a monetary amount up to the lienholder's net equity following the sale of the property. Within 20 days following the granting of the petition, the lienholder may obtain possession of the property by paying the costs and expenses incident to the seizure and forfeiture or an amount by which the appraised value exceed the petitioner's net equity, whichever is greater.
4. If the lienholder does not comply with the conditions imposed upon the release of the property, the property will be sold after forfeiture. All costs incident to the seizure, forfeiture, and the balance, up to the net equity, shall be paid to the petitioner. Any remaining balance will be placed in the Treasury Asset Forfeiture Fund.
5. Claims by vehicle lienholders tend to take a long time to resolve as storage fees quickly mount and the vehicle value decreases. AFCs are encouraged to include a letter to the lienholder, along with the notification letter to parties of interest, to offer the option of releasing the vehicle to the lienholder to protect their interest and avoid protractive costs. See Treasury Directive 22 for further information.
6. In a Code seizure and forfeiture action the Assistant Commissioner (CI) may enter into an agreement with the creditor to acquire the seized property for official use. If that occurs, the creditor will be paid the smaller of the petitioner's equity or the appraised value of the property less the amount of all costs.
7. Another option is for the Assistant Commissioner (CI) in Code forfeiture actions is to enter into an agreement with the owner to acquire the seized property for official use by paying the owner the appraised value of the property less the amount of costs.

[9.7] 9.10.1  (04-30-1998)
Remission And Mitigation Payments By The Treasury Fund

1. Authorized remission and mitigation payments may be paid by the Treasury Fund in cases where:
   1. the property was already equitably shared, or
   2. sales proceeds do not cover the costs of the sale.
2. However, payments may not exceed the value of the property at the time of seizure.
3. If the petition is approved prior to final disposition of the seized property, payment should be requested on TEOAF Form 2, Disposition Instructions for Currency on Deposit in Customs Suspense Account (Exhibit 9-7), or TEOAF Form 1, Disposition Instructions for Non-Currency Assets (Exhibit 9-8), as appropriate.
4. If the petition is approved subsequent to final disposition of the forfeited property, the refund must be requested on TEOAF Form 7, Request for Refund from Treasury Forfeiture Fund.

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[9.7] 9.11  (04-30-1998)
PETITION FOR RESTORATION OF THE PROCEEDS

1. A petitioner may submit a petition for restoration of the proceeds of sale or for the appraised value of forfeited property, when the forfeited property has been retained by the IRS or shared with a government agency. A petition has to be submitted within ninety (90) days from the date the property is sold or other disposal action has been taken, otherwise the Assistant Commissioner (CI) may deny consideration of the petition.
2. The circumstances that permit the submission of a petition are:
   1. The petitoner did not know of the seizure prior to the entry of the Declaration of Forfeiture.
   2. The petitioner was in such circumstances which prevented him from knowing of the seizure and forfeiture action.

Exhibit [9.7] 9-4  (04/30/98)
Sample TEOAF Form 3, Cost Bond Disposition Instructions

Exhibit [9.7] 9-5  (04/30/98)
Sample Form 9365, Application To Proceed in Forma Pauperis

Exhibit [9.7] 9-5 (Cont.)  (04/30/98)
Sample Form 9365, Application To Proceed in Forma Pauperis

Exhibit [9.7] 9-5 (Cont. 3)  (04/30/98)
Sample Form 9365, Application To Proceed in Forma Pauperis

Exhibit [9.7] 9-5 (Cont. 4)  (04/30/98)
Sample Form 9365, Application To Proceed in Forma Pauperis

Exhibit [9.7] 9-5 (Cont. 5)  (04/30/98)
Sample Form 9365, Application To Proceed in Forma Pauperis

Exhibit [9.7] 9-5 (Cont. 6)  (04/30/98)
Sample Form 9365, Application To Proceed in Forma Pauperis

Exhibit [9.7] 9-5 (Cont. 7)  (04/30/98)
Sample Form 9365, Application To Proceed in Forma Pauperis

Exhibit [9.7] 9-5 (Cont. 8)  (04/30/98)
Sample Form 9365, Application To Proceed in Forma Pauperis

Exhibit [9.7] 9-7  (04/30/98)
Sample TEOAF Form 2, Disposition Form For Currency Held in Customs Suspense Account

Exhibit [9.7] 9-8  (04/30/98)
Sample TEOAF Form 1, Disposition Form For Assets Other Than Currency

Exhibit [9.7] 9-8 (Cont.)  (04/30/98)
Sample TEOAF Form 1, Disposition Form For Assets Other Than Currency