Criminal Debt: Actions Still Needed to Address Deficiencies in
Justice's Collection Processes (05-MAR-04, GAO-04-338).
In July 2001, GAO reported that outstanding criminal debt, as
reported in Department of Justice (Justice) statistical reports,
had increased from about $6 billion as of September 30, 1995, to
more than $13 billion as of September 30, 1999. Although some of
the key factors that contributed to this increase were beyond
Justice's control, GAO concluded--after accounting for such
factors--that Justice's criminal debt collection processes were
inadequate. Accordingly, in the 2001 report, GAO made 14
recommendations to Justice to improve the effectiveness and
efficiency of its criminal debt collection processes. To follow
up on the 2001 report, GAO was asked to (1) provide information
on the amount and growth of criminal debt for fiscal years 2000
through 2002, (2) examine the extent to which Justice has acted
on GAO's previous recommendations, and (3) review Justice's
collection efforts for selected criminal debt cases related to
white-collar financial fraud. This report addresses the first two
objectives; GAO will report separately on its ongoing work to
address the third.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-04-338
ACCNO: A09406
TITLE: Criminal Debt: Actions Still Needed to Address
Deficiencies in Justice's Collection Processes
DATE: 03/05/2004
SUBJECT: Collection procedures
Crimes or offenses
Criminals
Debt collection
Fines (penalties)
Restitution
Strategic planning
Policies and procedures
Treasury Offset Program
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO Product. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
******************************************************************
GAO-04-338
United States General Accounting Office
GAO
Report to the Honorable Byron L. Dorgan,
U.S. Senate
March 2004
CRIMINAL DEBT
Actions Still Needed to Address Deficiencies in Justice's Collection Processes
a
GAO-04-338
Highlights of GAO-04-338, a report to the Honorable Byron L. Dorgan, U.S.
Senate
In July 2001, GAO reported that outstanding criminal debt, as reported in
Department of Justice (Justice) statistical reports, had increased from
about $6 billion as of September 30, 1995, to more than $13 billion as of
September 30, 1999. Although some of the key factors that contributed to
this increase were beyond Justice's control, GAO concluded-after
accounting for such factors-that Justice's criminal debt collection
processes were inadequate. Accordingly, in the 2001 report, GAO made 14
recommendations to Justice to improve the effectiveness and efficiency of
its criminal debt collection processes.
To follow up on the 2001 report, GAO was asked to (1) provide information
on the amount and growth of criminal debt for fiscal years 2000 through
2002, (2) examine the extent to which Justice has acted on GAO's previous
recommendations, and (3) review Justice's collection efforts for selected
criminal debt cases related to white-collar financial fraud. This report
addresses the first two objectives; GAO will report separately on its
ongoing work to address the third.
While GAO is not making any new recommendations in this report, it
reaffirms those made in 2001 for which actions have not been completed.
www.gao.gov/cgi-bin/getrpt?GAO-04-338.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Gary T. Engel at (202)
512-3406 or [email protected].
March 2004
CRIMINAL DEBT
Actions Still Needed to Address Deficiencies in Justice's Collection Processes
Justice reported an unaudited amount of total outstanding criminal debt of
about $25 billion as of September 30, 2002, almost double when compared to
Justice's unaudited amount from 3 years earlier. This increase, which was
not unexpected, continued a trend that began in fiscal year 1996. A
primary factor contributing to the increase is a mandate that requires
restitution to be assessed regardless of the ability of the offender to
pay. As we reported in 2001, collections as a percentage of outstanding
criminal debt averaged about 7 percent for fiscal years 1995 through 1999.
As indicated in Justice's unaudited records, because collections decreased
slightly while debt increased, collections as a percentage of outstanding
debt declined to an average of about 4 percent for fiscal years 2000,
2001, and 2002. For each of these 3 fiscal years, according to Justice's
unaudited records, about twothirds or more of criminal debt was related to
white-collar financial fraud.
Justice has made progress responding to GAO's 2001 recommendations related
to criminal debt collection, but not to the degree that had been expected.
A key recommendation in 2001 was for Justice, the Administrative Office of
the U.S. Courts, the Office of Management and Budget, and the Department
of the Treasury to work as a joint task force to develop a strategic plan
that addresses managing, accounting for, and reporting criminal debt. As
of mid-December 2003, Justice had not yet worked with these other agencies
to develop this plan. We also made 13 interim recommendations to Justice
to help improve the efficiency and effectiveness of criminal debt
collection while the strategic plan was being developed. Since July 2001,
Justice has completed action on 7 of these recommendations; actions to
address 4 of the 7 were completed about 2 years after GAO made them.
Actions to address the remaining 6 interim recommendations are in process.
According to Justice, GAO did not fully recognize its progress in
improving the criminal debt collection process. GAO said that it had given
Justice full credit for its efforts to implement the 2001 recommendations,
as well as for some related efforts outside the scope of those
recommendations. GAO noted, however, that Justice had not yet led efforts
to resolve key jurisdictional issues and functional responsibilities.
While acknowledging that Justice was laying the foundation for improved
collections by establishing policies and procedures in response to certain
of the interim recommendations, GAO noted that it is important that the
new policies and procedures be effectively implemented and that it will
likely take some time for collection results to be realized from full
implementation.
Until Justice takes action to fully implement these recommendations,
Justice's management processes and procedures will not provide adequate
assurance that offenders are not afforded their ill-gotten gains and that
innocent victims are compensated for their losses to the fullest extent
possible.
Contents
Letter 1
Results in Brief 2
Background 4
Scope and Methodology 5
Criminal Debt Has Increased Markedly, but
Collections Have
Decreased Slightly 6
Prompt Action Has Not Been Taken to Address the
Majority of
Recommendations 10
Conclusion 20
Agency Comments and Our Evaluation 21
Appendix
Comments from the Department of Justice's
Appendix I: Executive
Office for United States Attorneys 24
GAO's Comments 28
Table 1: Status of Recommendations from the July
Table 2001 Criminal
Debt Report
Figure 1: Criminal Debt Outstanding and Collected
Figures for Fiscal Years Ended September 30, 1995, through
September 30, 2002 8
Figure 2: Justice's Total Criminal Debt and
White-Collar Financial
Fraud Debt Outstanding as of September 30, 2000,
2001,
and 2002 9
Figure 3: White-Collar Financial Fraud Debt
Outstanding and
Collected for Fiscal Years Ended September 30,
2000
through 2002 10
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.
A
United States General Accounting Office Washington, D.C. 20548
March 5, 2004
The Honorable Byron L. Dorgan United States Senate
Dear Senator Dorgan:
In July 2001, we reported that the Department of Justice (Justice) and
certain other federal agencies needed to take a number of actions to
improve the federal government's criminal debt collection efforts.1 We
reported that outstanding criminal debt, as reported in Justice's U.S.
Attorneys' statistical reports,2 had increased from about $6 billion as of
September 30, 1995, to over $13 billion as of September 30, 1999. We noted
that four key factors, some of which were beyond Justice's or probation
offices' control, contributed to the significant growth in the amount of
reported uncollected criminal debt: (1) the nature of the debt, in that it
involves criminals who may be incarcerated or have been deported or who
have minimal earning capacity; (2) the assessment of mandatory restitution
regardless of ability to pay as required by the Mandatory Victims
Restitution Act of 1996 (MVRA);3 (3) interpretation by Justice's Financial
Litigation Units (FLU) of payment schedules set by judges which limit
collection activities; and (4) state laws that may limit the type of
property that can be seized and the amount of wages that can be garnished.
However, we also pointed out Justice could do more to improve the
collection of criminal debt. We noted as contributing factors to the
growth of reported uncollected criminal debt Justice's inadequate policies
and procedures for collecting criminal debt, lack of adherence to
established
1U.S. General Accounting Office, Criminal Debt: Oversight and Actions
Needed to Address Deficiencies in Collection Processes, GAO-01-664
(Washington, D.C.: July 16, 2001). The report covered the debt collection
processes of the U.S. Courts, including the Administrative Office of the
U.S. Courts and selected probation offices, as well as Justice. In
addition, it covered the criminal debt oversight roles of the Office of
Management and Budget and the Department of the Treasury.
2These statistical reports, which are published annually, are unaudited.
3Courts are required by 18 U.S.C. S: 3663A (2000) to order restitution
when sentencing offenders convicted of (1) a crime of violence as defined
by 18 U.S.C. S: 16 (2000); (2) an offense against property under title 18
of the U.S.C. including any offense committed by fraud or deceit; or (3)
an offense related to tampering with consumer products, 18 U.S.C. S: 1365
(2000), in which an identifiable victim has suffered a physical injury or
pecuniary loss. See also 18 U.S.C. S:S: 2248, 2259, 2264, and 2327 (2000).
criminal debt collection procedures at certain Justice districts, and
Justice's insufficient coordination with other entities involved in the
collection of criminal debt. After taking into account the factors that
were not controllable, we concluded that Justice's management processes
and procedures did not provide assurance that offenders were not afforded
their ill-gotten gains and that innocent victims would be compensated for
their losses to the fullest extent possible. We observed that until top
management at Justice and the U.S. Courts placed a higher priority on
ensuring that the entities involved in the criminal debt collection
process more effectively and efficiently pursued collection efforts, the
assessment of criminal fines and restitution as an effective punitive tool
would be jeopardized, and valuable, limited resources would continue to be
wasted on duplicative efforts. Accordingly, we made 14 recommendations to
Justice and several to the Administrative Office of the U.S. Courts
(AOUSC) to improve the effectiveness and efficiency of the federal
government's criminal debt collection processes.
In your request letter and our subsequent discussions with your office,
you asked us to (1) provide detailed information on the amount and growth
of criminal debt for fiscal years 2000 through 2002, including specific
amounts related to white-collar financial fraud; (2) examine the extent to
which Justice has acted on our previous recommendations to it to improve
criminal debt collection; and (3) review Justice's collection efforts for
selected criminal debt cases related to white-collar financial fraud. This
report addresses the first two objectives. We will report separately on
the results of our ongoing work, which addresses the third objective.
Results in Brief Justice reported an unaudited amount of total outstanding
criminal debt of about $25 billion as of September 30, 2002, almost double
when compared to Justice's unaudited amount from 3 years earlier.4 This
increase, which was not unexpected, continued a significant upward trend
that started in fiscal year 1996, the year MVRA was enacted. According to
Justice officials, nonfederal restitution stemming from MVRA's mandatory
restitution requirements was the major component of criminal debt
outstanding as of September 30, 2000, 2001, and 2002. Justice's unaudited
records showed that nonfederal restitution accounted for about 70 percent
of total reported
4The latest reported data from Justice as of the completion date of our
fieldwork in mid-December 2003 were for fiscal year 2002. Justice was
still in the process of compiling and summarizing criminal debt
information for fiscal year 2003.
criminal debt as of September 30, 2002. As we reported in 2001, the rate
of criminal debt collection averaged about 7 percent for fiscal years 1995
through 1999. Due to a significant increase in debt and a slight decrease
in collections as indicated in Justice's unaudited records, this rate
decreased to an average of about 4 percent for fiscal years 2000, 2001,
and 2002. For each of these more recent 3 fiscal years, according to
Justice's unaudited records, about two-thirds or more of criminal debt was
related to whitecollar financial fraud.
Justice has made progress in responding to our recommendations, but not to
the degree we would have anticipated. As we reported in 2001, building and
sustaining the capacity to address the long-standing problems in
collecting outstanding criminal debt-including overcoming fragmented
processes and lack of coordination-will require a united strategy among
the entities involved. Therefore, we recommended that Justice, AOUSC, the
Office of Management and Budget (OMB), and the Department of the Treasury
(Treasury) work together in the form of a joint task force to develop a
strategic plan that addresses managing, accounting for, and reporting
criminal debt. As we recommended, this strategy should include (1)
determining the collectibility of outstanding criminal debt amounts so
that a meaningful allowance for uncollectible debt can be reported and
used for measuring debt collection performance and (2) ensuring that
relevant criminal debt information is reported and/or disclosed in
applicable executive branch agencies' financial statements and subjecting
such information to audit. We previously noted that proper accounting for,
reporting, and managing of criminal debt would heighten management
awareness and ultimately result in a more effective collection process.
However, as of the completion of our follow-up fieldwork in mid-December
2003, Justice had not yet worked with these other agencies to develop the
strategic plan, which was a key recommendation. We also made 13 interim
recommendations to Justice to stem the growth of reported uncollected
criminal debt while Justice and other agencies worked to develop the
strategic plan. Since July 2001, Justice has completed action on 7 of the
interim recommendations. Actions to address 4 of these 7 recommendations
were completed about 2 years after we made them; actions to address the
remaining 6 are still in process.
Justice's own criminal debt information, which shows that debt has
increased markedly while collections have decreased slightly, strongly
supports the need for prompt and decisive management action to ensure full
implementation of our prior recommendations. Until such action is taken,
including forming a joint task force with AOUSC, OMB, and Treasury
and developing the strategic plan, the effectiveness of criminal fines and
restitution as a punitive tool may be diminished, and Justice's management
processes and procedures will not provide adequate assurance that
offenders are not afforded their ill-gotten gains and innocent victims are
compensated for their losses to the fullest extent possible.
Justice stated that we had not fully reflected its efforts to improve the
criminal debt collection process. As discussed in the "Agency Comments and
Our Evaluation" section at the end of this report and in the more detailed
analysis in appendix I following our reprinting of Justice's comments, we
believe that the report accurately depicts Justice's efforts to respond to
the recommendations made in our July 2001 report to improve criminal debt
collection.
Background Justice is responsible for collecting criminal debt and has
delegated operating responsibility to its FLUs within all of Justice's
U.S. Attorneys' Offices (USAO).5 Justice's Executive Office for United
States Attorneys (EOUSA) provides administrative and operational support,
including support required for debt collection, to the USAOs. The criminal
debt collection process typically begins when an offender is convicted and
a judge orders the offender to pay a fine or restitution. In addition to
Justice, the U.S. Courts and their probation offices may assist in
collecting monies owed. AOUSC provides national standards and promulgates
administrative and management guidance, including standards and guidance
required for debt collection, to the various U.S. judicial districts. The
courts typically receive payments of fines and deposit them in the Crime
Victims Fund.6 Both the courts and certain FLUs receive restitution
payments, which are disbursed to the applicable victims or entities as
directed by the courts.
5There are 94 districts throughout the country, but USAOs for 2 of them
are combined, resulting in 93 USAOs.
6Criminal fine payments are required by 42 U.S.C. S: 10601 (2000) to be
deposited in the Crime Victims Fund except for payments for fines related
to the Endangered Species Act, Lacey Act Amendments of 1981, Railroad
Unemployment Insurance Act, Federal Water Pollution Control Act, Postal
Service Fund, and county public schools.
In our 2001 report, we noted that collection of outstanding criminal debt
was a long-standing problem, with many of the problems cited similar to
problems that we reported on back in 1985.7 Aside from the question of
whether those convicted had earnings or assets with which to pay fines or
restitution, a number of other factors make collection difficult. These
factors, listed below, remain applicable today:
o Criminals may not be willing to comply with the law. Forcing compliance
is difficult because criminals are already convicted offenders who may be
serving time in prison or may have been deported.
o Imprisoned offenders have limited earning capacity, making potential
collections limited.
o A significant amount of time may pass between offenders' arrest and
sentencing, thus affording opportunities for offenders to hide
fraudulently obtained assets in offshore accounts, shell corporations,
family members' names and accounts, or other ways.
o MVRA requires that assessment of restitution be based on actual loss
and not on an offender's ability to pay. Therefore, depending on the
nature of the crime, collection of the total restitution assessed may be
unrealistic from the outset.
o According to 18 U.S.C. section 3613 (2000), most criminal debts must
remain on the books for 20 years plus the period of the offender's
incarceration and cannot be "written off" prior to the expiration of those
periods unless the debtor is deceased or the court approves a petition of
remission filed by USAO. Even if Justice determines that certain criminal
debts, or a large percentage of them, are not collectible, these debts
must remain on the books.
Scope and To provide detailed information on the amount and growth of
criminal debt, including specific amounts related to white-collar
financial fraud, weMethodology obtained information from Justice on the
amount of (1) outstanding criminal debt as of the end of fiscal years
2000, 2001, and 2002 and
7U.S. General Accounting Office, After the Criminal Fine Enforcement Act
of 1984-Some Issues Still Need to Be Resolved, GAO/GGD-86-2 (Washington,
D.C.: Oct. 10, 1985).
(2) related collections for each of these 3 fiscal years. This information
has not been audited. However, we reviewed the trends in the amounts and
growth of overall criminal debt for these fiscal years. Specifically, we
analyzed trends in major components of the debt and reasons for the
changes and compared them to similar trends that we had assessed and
discussed in our 2001 report. We also discussed the trends with
appropriate Justice officials and compared overall criminal debt
information provided by those officials to information in existing
published Justice reports, when available. We worked with Justice
officials to identify the criminal debt categories in Justice's
information systems that Justice considers to be white-collar financial
fraud.
We obtained an understanding of the key automated information systems
Justice uses to track criminal debt amounts and related collections
through discussions with Justice officials and review of pertinent
documents that describe the systems. We also discussed with Justice
officials and obtained appropriate documentation supporting reliability
testing performed by Justice on these systems.
To evaluate actions Justice has taken to implement our previous
recommendations, we obtained and reviewed pertinent Justice documents,
including correspondence to certain congressional committees related to
our 2001 report, relevant memorandums, summaries of work performed,
proposed actions, revised policy and procedures manuals, and other related
materials and correspondence. We discussed the documents provided by
Justice and the status of implementation of each of the recommendations
with an appropriate Justice official.
We conducted our review from March 2003 through mid-December 2003 in
accordance with U.S. generally accepted government auditing standards.
We requested written comments on a draft of this report from the Attorney
General or his designated representative. Justice's letter is reprinted in
appendix I.
Criminal Debt Has Justice reported an unaudited amount of total
outstanding criminal debt of
about $25 billion as of September 30, 2002, almost double when
comparedIncreased Markedly, to Justice's unaudited amount from 3 years
earlier. This marked increase but Collections Have over the 3-year period
continued a significant upward trend that started in Decreased Slightly
fiscal year 1996, the year MVRA was enacted. Given MVRA's requirement
that restitution be assessed regardless of the criminal's ability to pay,
the
significant increase in the balance of reported uncollected criminal debt
was not unexpected. According to Justice's unaudited records, collections
relative to outstanding criminal debt averaged about 7 percent for fiscal
years 1995 through 1999 and decreased to an average of about 4 percent for
fiscal years 2000, 2001, and 2002. For each of these latter 3 fiscal
years, according to Justice's unaudited records, about two-thirds or more
of the criminal debt was related to white-collar financial fraud.
As shown in figure 1, Justice's reported criminal debt outstanding totaled
approximately $16 billion, $20 billion, and $25 billion as of September
30, 2000, 2001, and 2002, respectively. Criminal debt owed consists
primarily of fines and federal and nonfederal restitution8 related to a
wide range of criminal activities, including domestic and international
terrorism, organized drug trafficking, firearms crimes, and white-collar
financial fraud. According to Justice officials, nonfederal restitution
stemming from MVRA's mandatory restitution requirements was the major
component of criminal debt outstanding as of September 30, 2000, 2001, and
2002. Justice's unaudited records showed that nonfederal restitution
accounted for about 70 percent of total reported criminal debt as of
September 30, 2002. This proportion is generally consistent with what we
found for fiscal year 1999, which we reported in our 2001 report. At that
time, about 66 percent of outstanding criminal debt as of September 30,
1999, was nonfederal restitution debt.
According to Justice's unaudited records, collections of outstanding debt
did not increase, and in fact fell slightly, over this 3-year period. As
shown in figure 1, collections for fiscal years 2000, 2001, and 2002,
totaled about $1 billion, $800 million, and $800 million, respectively, or
an average of about 4 percent of outstanding debt for the 3 years. In our
2001 report, we reported that criminal debt collection averaged about 7
percent for fiscal years 1995 through 1999.
8Nonfederal restitution is criminal debt owed to victims of crime other
than the federal government, for which Justice has collection
responsibility.
Figure 1: Criminal Debt Outstanding and Collected for Fiscal Years Ended
�September 30, 1995, through September 30, 2002�30 Dollars
in billions�
25
25
20
15
10
5
1 0.8 0.8
0 1995 1996 1997 1998 1999 2000 2001 2002
Outstanding balance as of September 30
Collected for the fiscal year ended September 30
Source: EOUSA.
Note: EOUSA data used for this figure are unaudited.
As shown in figure 2, a major component of criminal debt was debt related
to white-collar financial fraud, which, according to Justice's unaudited
records, totaled about $11 billion, $13 billion, and $17 billion as of
September 30, 2000, 2001, and 2002, respectively, or about two-thirds or
more of overall outstanding criminal debt at the end of each of these
years. White-collar financial fraud debts included fines and restitution
related to fraud against business institutions, antitrust violations, bank
fraud and embezzlement, bankruptcy fraud, computer fraud, consumer fraud,
federal procurement fraud, federal program fraud, health care fraud,
insurance fraud, and tax fraud. Also included were debts related to
corporate financial fraud, which, as of the date of completion of our
fieldwork, consisted of fines and restitution related to advance fee
schemes,9 commodities fraud, securities fraud, and other investment fraud.
According to Justice's unaudited records, as was the case for criminal
debt overall, the major component of white-collar financial fraud debt for
each of the 3 fiscal years was nonfederal restitution, which accounted for
about 80 percent of the white-collar financial fraud debt as of September
30, 2002.
9Advance fee schemes involve fraud against businesses or individuals
involving the payment of a fee in advance for goods, services, or other
things of value.
Figure 2: Justice's Total Criminal Debt and White-Collar Financial Fraud
Debt Outstanding as of September 30, 2000, 2001, and 2002 25 25
20
15
10
5
0 2000 2001 2002
Total criminal debt
Total white-collar financial fraud debt
Source: EOUSA.
Note: EOUSA data used for this figure are unaudited.
As shown in figure 3, according to Justice's unaudited records,
collections of debt related to white-collar financial fraud, while
increasing, have remained low when compared to total white-collar
financial fraud debt outstanding. Such collections totaled about $300
million, $400 million, and $600 million for fiscal years 2000, 2001, and
2002, respectively.
Figure 3: White-Collar Financial Fraud Debt Outstanding and Collected for
Fiscal Years Ended September 30, 2000 through 2002
18 Dollars in billions
17
Justice has not taken timely action to address all of the recommendations
we made to it in July 2001, which were designed to improve the
effectiveness and efficiency of Justice's criminal debt collection
processes. Specifically, Justice has not taken action along with certain
other agencies to develop a strategic plan for criminal debt collection,
which was a key recommendation. In addition, since July 2001, Justice has
completed action on only 7 of the 13 interim recommendations that were
made to stem the growth of reported uncollected criminal debt while
Justice and certain other agencies worked to develop the strategic plan.
Actions to address 4 of these 7 recommendations were completed about 2
years after we made the recommendations, and actions to address the
remaining 6 interim recommendations are still in process. One indication
of Justice's level of resolve to expeditiously improve collection success
is the timeliness of a required response to the Congress. Heads of federal
agencies are required to submit a written statement within an established
time frame to certain
16
14
13
12
11
10 8
6
4
2
0.3 0.4 0.6
0
2000 2001 2002
Fiscal years
Outstanding white-collar financial fraud debt balance as of September 30
Collected white-collar financial fraud debt for the fiscal year ended
September 30 Source: EOUSA.
Note: EOUSA data used for this figure are unaudited.
Prompt Action Has Not Been Taken to Address the Majority of Recommendations
congressional committees on actions taken in response to recommendations
we make in a report.10 Justice did not submit its statement until 2 years
after the date of our report, after we had made inquiries about the status
of the statement and Justice's progress in implementing our
recommendations.
Justice Has Not Developed a Strategic Plan with Certain Other Agencies
In our 2001 report, we emphasized that addressing the long-standing
problems in the collection of outstanding criminal debt required a united
strategy among the entities involved with the collection process. In
addition to identifying a need to work closely with the U.S. Courts to
coordinate criminal debt collection efforts, we stated that leveraging
OMB's and Treasury's current central agency roles could result in
effective oversight of the collection of criminal debt. For example, a
primary function of OMB as a central agency is to evaluate the performance
of executive branch programs and serve as a catalyst for improving
interagency cooperation and coordination. In its central role, OMB is also
responsible for reviewing debt collection policies and activities. We also
noted that Treasury has a central agency role in implementing certain
provisions of the Debt Collection Improvement Act of 1996, which would
allow it to help Justice identify the types of delinquent criminal debt
that would be eligible for reporting and referral to Treasury's offset
program (TOP).11
To promote a united approach to collecting outstanding criminal debt, we
recommended that the Attorney General work with the Director of AOUSC, the
Director of OMB, and the Secretary of the Treasury in the form of a joint
task force to develop a strategic plan to improve criminal debt collection
processes and establish an effective coordination mechanism
10When the Comptroller General issues a report that includes a
recommendation to the head of an agency, 31 U.S.C. S: 720(b) (2000),
requires the head of an agency to submit a written statement on action
taken on the recommendation. The statement is required to be submitted to
the Committee on Governmental Affairs of the Senate and the Committee on
Government Reform of the House of Representatives before the 61st day
after the date of the report and to the Committees on Appropriations of
both houses of the Congress in the agency's first request for
appropriations submitted more than 60 days after the date of the report.
11TOP is a governmentwide delinquent debt matching and payment offset
system. TOP offsets federal payments such as tax refunds, vendor and
miscellaneous payments, and federal retirement payments against federal
nontax debts, states' child support debts, and certain states' tax debts.
among all entities involved in these processes. We stated that the
strategy should address managing, accounting for, and reporting criminal
debt. We also stated that the strategy should include (1) determining an
approach for assessing the collectibility of outstanding amounts so that a
meaningful allowance for uncollectible criminal debts can be reported and
used for measuring debt collection performance and (2) having OMB work
with Justice and certain other executive branch agencies to ensure that
these entities report and/or disclose relevant criminal debt information
in their financial statements and subject such information to audit.
It is important to reemphasize the need for assessing the collectibility
of outstanding criminal debt amounts and establishing and reporting a
meaningful allowance for uncollectible debts.12 According to Justice,
about 74 percent or more of reported criminal debt amounts in its records
for fiscal years 2000, 2001, and 2002 were in suspense, meaning that no
collection action was being taken on the debt because it had been
determined that reasonable efforts to collect were unlikely to be
effective. However, we emphasized in our 2001 report that Justice had not
performed an analysis of its criminal debt to estimate how much of the
outstanding amounts was uncollectible and had not established an allowance
for uncollectible debt for amounts that were due to the federal
government. We specifically noted that since the collectibility of
outstanding criminal debt had not been assessed, the amount in suspense
did not represent a reliable estimate of the amount that was expected to
be uncollected. We also discussed the importance of subjecting criminal
debt amounts to independent audit, which would include assessments of
internal controls and compliance with applicable laws and regulations
related to the criminal debt process. Further, we noted that proper
accounting for, reporting, and managing of criminal debt would heighten
management awareness and ultimately result in a more effective collection
process.
12According to Statement of Federal Financial Accounting Standards (SFFAS)
No. 1, Accounting for Selected Assets and Liabilities, and SFFAS No. 7,
Accounting for Revenue and Other Financing Sources and Concepts for
Reconciling Budgetary and Financial Accounting, a receivable should be
recognized once amounts that are due to the federal government are
assessed, net of an allowance for uncollectible amounts. Also, OMB
Circular No. A-129 (revised, November 2000), Policies for Federal Credit
Programs and Non-Tax Receivables, requires agencies to provide accounting
and management information for effective stewardship, including resources
entrusted to the government (e.g., for nonfederal and federal
restitution).
As of the completion date of our fieldwork, Justice had not begun to
develop, in conjunction with AOUSC, OMB, and Treasury, a written strategic
plan for collection of outstanding criminal debt. In December 2001,
Justice's EOUSA sent letters to AOUSC, OMB, and Treasury citing our 2001
report on criminal debt collection and our recommendation to form a joint
task force to develop a strategic plan to improve criminal debt collection
and establish effective coordination between each of the involved
entities. According to a Justice official, the purpose of the letters was
to solicit representatives from each of the agencies to assist in this
effort. However, this initial attempt to form the joint task force was
unsuccessful. The official stated that on account of our recent inquiries
about this recommendation, EOUSA plans to make another attempt to contact
appropriate officials at the other agencies. The Justice official also
stated that both EOUSA and AOUSC have to address certain internal
deficiencies, including systems problems, before they can effectively
develop a strategic plan.13
As previously mentioned and discussed in more detail in our 2001 report,
addressing the long-standing problems in the collection of outstanding
criminal debt-including fragmented processes and lack of coordination-
will require a united strategy among the entities involved with the
collection process. The participation and cooperation of each of these
entities, including AOUSC, OMB, and Treasury, are critical to the
formation of the joint task force and development of a strategic plan, as
recommended. Justice cannot require these agencies to participate in the
joint task force and development of the strategic plan. However, Justice
is a key federal agency responsible for the collection of criminal debt
and, as such, is accountable for enlisting all affected agencies' support
in a sustained effort to develop a strategic plan and cohesive approach
for managing, accounting for, reporting, and improving the collection of
such debt.
13EOUSA meets regularly with AOUSC, and the goal of these meetings is to
improve criminal debt collection and establish effective coordination for
the debt collection process.
It is important to note that Justice has begun to get criminal debts into
TOP. According to a Justice official, during the first part of fiscal year
2003, Justice piloted the TOP process for criminal debts in four
districts, resulting in inclusion of about $700,000 of criminal debts in
TOP by the end of fiscal year 2003. This official told us that with the
progress of the pilot program, the debt referral program was expanded in
August 2003 to all eligible FLUs.14 According to the official, as of
December 5, 2003, 20 of the 43 districts eligible to submit criminal debts
to TOP had either added criminal debts to TOP or were in the process of
identifying criminal debts and sending out 60-day notices to debtors
demanding payment, which is necessary before a debt can be sent to TOP.15
As of December 3, 2003, FLUs had submitted 549 criminal debts, with a
total outstanding balance of approximately $1.4 million, to TOP, and
Justice anticipates many more debts will be included in TOP in the next
few months. Given that TOP has resulted in over $1 billion in nontax debt
collections from payment offsets governmentwide during each of fiscal
years 2000, 2001, and 2002, it will be important for Justice to continue
to emphasize submitting debts to TOP as an integral part of its criminal
debt collection efforts, as such action could increase potential
collections.
Actions to Address Certain of Our Interim Recommendations Have Been Taken
Recently or Are in Process
We recognized at the time of our 2001 report that the development of a
strategic debt collection plan with other agencies that have a key role to
play in criminal debt collection would take time. Therefore, to help
improve collections and stem the growth in reported uncollected criminal
debt while Justice worked with other agencies to establish the task force
and develop the strategic plan for criminal debt collection, we made 13
recommendations for interim action to the Attorney General. As shown in
table 1, Justice has completed action on 7 of these recommendations. Four
of the 7 recommendations, however, were not completed until about 2 years
after we made them. Actions to address the 6 remaining recommendations are
still in process. Since the interim recommendations largely focused on
policies and procedures, it will be important that they be effectively
implemented once they are established.
14To be eligible for the program, the clerk's office in that district must
meet certain criteria established by AOUSC, including that the clerk's
office must (1) agree to participate in including criminal debts in TOP
and (2) use a specific automated accounting system.
15This 60-day notice informs the debtor of the FLU's intent to submit the
debt to Treasury for offset purposes.
Table 1: Status of Recommendations from the July 2001 Criminal Debt Report
Status Recommendations Date completed In process The Attorney General should
1. Work together with the Director of AOUSC to (1) reduce duplication of
data entry for collections X and disbursements, (2) require FLUs and the
courts to periodically reconcile payment data recorded in their separate
tracking systems, and (3) revise district guidance so that FLUs can take a
more proactive role in monitoring collection efforts of probation offices.
2. Establish policies and procedures that require Justice investigating
case agents and prosecuting May 2003 attorneys to share relevant financial
information with FLUs within an established time frame after an offender
is sentenced
3. Require FLUs to document correspondence with case agents and
prosecuting attorneys in the X FLU files, including whether and why
efforts were not coordinated
4. Require FLUs to use collectibility analyses to prioritize criminal
debt collection efforts on debt Sept. 2003 types deemed through historical
experience to be more collectible
5. Reinforce current policies and procedures for entering cases into
criminal debt tracking systems; Prior to FY 2003 filing liens; issuing
demand letters, delinquent notices, and default notices; performing asset
discovery work; using other enforcement techniques; and using event codes,
including suspense codes
6. Revise current policies for issuing demand letters, specifying when a
demand letter should be May 2003 sent and within what time frames
7. Require FLUs to establish time frames for procedures related to
criminal debt collection activities May 2003 that do not currently have
established time frames
8. Require FLUs to document in their files instances where asset
discovery work was not performed X and why it was not performed
9. Establish a policy for the FLUs to date stamp when judgments in a
criminal case are received X
10. Revise interest and penalty policies so that interest and penalties
are consistently assessed and X reported
11. Adequately measure criminal debt collection performance against
established goals Prior to FY 2003
12. Revise the FLUs' databases to (1) capture needed information such as
terms of fine and X restitution order, status of offender (expected
release date from prison or probation) and (2) allow FLUs to allocate
outstanding amounts between amounts likely to be collected and those that
are not likely to be collected
13. Perform an analysis to assess whether the FLUs' human capital
resources and training are Prior to FY 2003 adequate to effectively
perform their collection activities
Source: EOUSA.
The status of each of our 13 interim recommendations is discussed below.
Recommendations for which corrective actions have been completed are
discussed first.
Policies and Procedures for Sharing Relevant Financial Information
Use of Collectibility Analysis to Prioritize Criminal Debt Collection
Efforts
In May 2003, Justice's EOUSA took action to address recommendation 2 by
issuing the Prosecutor's Guide to Criminal Monetary Penalties. The guide
contains information on the obligations and responsibilities of criminal
prosecutors and others involved in the criminal debt collection process to
increase the likelihood that victims of crime are compensated for their
losses. EOUSA has provided the guide to all entities involved in the
collection of criminal debt at Justice, including prosecuting attorneys,
investigating case agents, and FLU staff. The guide is also available on
Justice's intranet.
This guide requires prosecutors to ensure that the responsible FLU
receives all available information on a defendant's financial resources by
(1) forwarding a copy of the presentence report to the FLU; (2) providing
the FLU with any information or pleading in the government's file on a
defendant's financial resources not obtained through the grand jury
investigation; (3) filing a motion asking the court to order disclosure to
the FLU of any information gathered by the grand jury, and to make the
disclosure as soon as it is ordered; and (4) ordering the transcript of
any hearing in which a defendant's financial resources were discussed,
such as a bond hearing, and forwarding the transcript to the FLU.
According to a Justice official, case agents work directly with the
prosecuting attorneys and share any information, including financial
information, with the prosecutors before a judgment on a case is issued.
The Justice official noted that once a judgment in a criminal case is
issued, it generally is sent from the courts to the criminal prosecutor
within 1 week, and once the prosecutor receives the judgment, the
financial information is shared with the responsible FLU.
In September 2003, EOUSA completed actions to address recommendation 4 by
issuing a memorandum to all Financial Litigation Supervisors and FLUs
requiring that each FLU establish policies and procedures to ensure that
all FLU cases are effectively prioritized and enforced pursuant to a
priority system. The memorandum contained guidance, including factors to
consider in assigning priority codes (e.g., the debtor's assets and
income, type of debtor, type of debt, type of victim, complexity of the
case); default priority codes based on the amount of the debt; information
on setting review dates; and implementation procedures, including a list
of fields and codes to be used in Justice's new system for tracking debts,
and milestone dates for completion of the review and prioritization of all
existing cases. According to a Justice official, the guidance for
establishing a priority system is fairly general to allow each district to
set its own priorities based on the type of debt typically collected at
that district. According to the
Reinforcement of Certain Current Debt Collection Policies and Procedures
Revision of Policies for Issuing Demand Letters
Establishment of Time Frames for Certain Criminal Debt Collection
Activities
memorandum, effective October 1, 2003, all new judgments should be
prioritized using the priority system; by December 31, 2003, FLUs should
review all pre-existing judgments with an original debt balance of $1
million or more; by March 31, 2004, FLUs should review all pre-existing
judgments with an original debt balance of $100,000 to $999,999; and by
December 31, 2004, to the extent resources permit, FLUs should review all
remaining pre-existing judgments. Although priority-setting is currently a
manual process, once Justice's new system has been updated, which
according to the Justice official is scheduled for May 2004, the priority
codes will be incorporated into the new automated priority process.
In January 2002, EOUSA completed actions to address recommendation 5 by
sending a memorandum to all U.S. Attorneys, all First Assistant U.S.
Attorneys, and all Civil Chiefs, concerning our 2001 report. The
memorandum generally noted the findings in the report and encouraged each
district to review its policies and procedures for collecting and
enforcing criminal debt in light of the report. The memorandum also
offered the assistance of the districts' Financial Litigation Program
Manager in implementing or improving criminal debt collection policies and
procedures. EOUSA has also worked to reinforce current policies and
procedures by developing and providing training materials to its staff
involved in debt collection. Moreover, EOUSA's periodical DebtBeat, which
is available to all USAOs, private counsel, and client agencies, regularly
provides updates on debt collection issues, including any modifications to
debt collection policies and procedures.
EOUSA used the May 2003 prosecutor's guide to respond to recommendation 6.
Specifically, the guide requires FLUs to issue a demand letter for payment
of a debt for each case opened within 30 days of the judgment. To
facilitate collection, the guide further specifies that the demand letter
should inquire whether the defense attorney will continue to represent the
defendant for collection purposes.
EOUSA also used the May 2003 guide to address recommendation 7. As stated
in our 2001 report, FLUs lacked procedures for performing certain debt
collection actions in a timely manner, including (1) entering cases into
their tracking systems; (2) filing liens; (3) sending demand, delinquent,
or default letters; and (4) performing asset discovery work. The
prosecutor's guide provides a specific time frame for performing each of
these actions. It requires that for each case opened for collection, the
responsible FLU should, at a minimum, take the following steps within 30
days of the
judgment: open and record the case; initiate the filing of a lien where
possible; issue a demand letter; and conduct an initial assessment of the
prioritization and collectibility of the case, which would include
performing asset discovery work. The guide also states that the
responsible FLU should provide notice to the defendant of any fine or
restitution payment that is found to be delinquent or in default within 10
working days after the delinquency or default occurs.
Measurement of Criminal Debt To address recommendation 11, according to a
Justice official, Justice Collection Performance against annually assesses
each district based on established collection goals for
Goals
Assessment of Human Capital Resources and Training
that district. The official stated that because of the differences in size
of caseloads and types of cases worked, it does not make sense for EOUSA
to establish nationwide goals. Instead, each district establishes and is
measured against its own collection goals. To assess debt collection
performance and compliance with applicable guidance and regulations at
each district, EOUSA uses (1) a goals-setting package, which includes
instructions for completing goals based on each district's workload and
collections; (2) a state-of-the-district report, which provides 3 years of
detailed district-specific collection statistics to allow each USAO to
evaluate its own collection activities based on historical experience; and
(3) a compliance checklist, which provides FLUs with an opportunity to
review their current policies and procedures to ensure compliance with
EOUSA requirements. According to the Justice official, EOUSA works with
each district to prepare these tools annually, and each district uses them
to determine needed actions to improve criminal debt collection.
Justice has also assessed its FLUs' human capital resources and training
to respond to recommendation 13. According to a Justice official, although
EOUSA did not prepare a formal written assessment of FLUs' human capital
resources, EOUSA has assessed FLU human capital resources and determined
that FLUs are understaffed and need more staff or contractors to perform
debt collection activities. However, to date, EOUSA has not been
successful in requesting additional staff for debt collection.
Nevertheless, the Justice official noted that EOUSA did receive funding,
beginning in fiscal year 2002, through the Office for Victims of Crime to
support asset investigations in criminal debt collection cases. The Office
for Victims of Crime provides 50 percent of the funding for asset
investigators, with the remaining 50 percent to be funded through the
Three Percent Fund.16 Therefore, half the asset investigators' time may be
spent on postsentencing criminal fine and restitution debt collection
cases. The asset investigators' services are available through the
Financial Litigation Investigator Program. Prior to fiscal year 2002,
these investigators were limited to working solely on civil debts because
funding for their time was exclusively through the Three Percent Fund.
Corrective Actions in Process to Justice is in the process of taking
corrective actions to address the
Address Remaining remaining 6 recommendations. Specifically, actions taken
to address parts
Recommendations 1 and 2 of recommendation 1 are still in process.17 In
July 2003, EOUSA rolled out to all USAOs a new version of its collections
case tracking system. The new system allows for the tracking of all debt
components in a single record for each debtor, thus eliminating the need
to open multiple records to track collections for a single debtor. Also,
many of the required fields, such as collection types and agency program
codes, have been coded to eliminate duplicative data entry by the user.
However, additional upgrades, such as automatic payment posting to debtor
accounts, are still under development and are scheduled to be completed
during fiscal year 2004. According to a Justice official, complete
implementation of this recommendation depends on AOUSC upgrading its
automated criminal debt tracking systems. The Justice official stated that
full reconciliation of payment information between FLUs and the courts
will not be possible until AOUSC fully implements its new Civil/Criminal
Accounting Module
16Pub. L. No. 107-273, Div. C., Title 1, S: 11013(a), 116 Stat. 1758, 1823
(2002), authorizes Justice to deposit in its Working Capital Fund 3
percent of all amounts collected pursuant to its civil debt collection
litigation activities. Such amounts remain available until expended and
are to be used first, for paying the costs of processing and tracking
civil and criminal debt-collection litigation, and, thereafter, for
financial systems and for debt-collectionrelated personnel,
administrative, and litigation expenses. Section 11013(a) of Pub. L. No.
107-273, expanded on the authority conferred on Justice by an earlier law
(Pub. L. No. 103121, Title 1, S: 108, 107 Stat. 1153, 1164 (1993)) that
limited Justice's use of such deposits to paying the costs of processing
and tracking civil debt collection litigation.
17The May 2003 prosecutor's guide addresses part 3 of recommendation
1-that Justice revise its district guidance so FLUs can take a more
proactive role in monitoring collection efforts of probation offices.
According to the guide, FLUs' responsibilities for enforcement of
restitution or a fine include coordination with probation offices while
defendants are on supervision or probation to facilitate collection,
mutual exchange of information, and providing advance notice to probation
offices of collection methods. Further, the guide states that during a
defendant's supervision, the prosecutor and/or the FLU should coordinate
with each other and with probation offices to facilitate the maximum
possible collection of the restitution or fine.
system, which, according to the official, is not expected to be completed
until 2005.
Actions to address recommendations 3, 8, 9, and 10 are also in process at
Justice. We emphasized in our 2001 report the importance of documenting
key steps in the criminal debt collection process to help ensure that all
opportunities for collection were being pursued. We also noted that
because FLUs do not consistently assess interest and penalties, the
reported amounts do not accurately represent how much total principal,
interest, and penalties are due. We stressed that failure to assess
interest and penalties reduces the amount that can be recovered and passed
along to victims or the federal government and eliminates a tool designed
to give debtors an incentive to make prompt payments. According to a
Justice official, the Financial Litigation Working Group, which Justice
established in February 2002 in part to address our recommendations, will
continue to work toward fully implementing these open recommendations.
Finally, Justice is in the process of taking corrective actions to address
recommendation 12. According to a Justice official, EOUSA's system
programmers are currently developing automated tracking of debtor status
from incarceration through probation. EOUSA plans to have such automated
tracking available during fiscal year 2004. In addition, according to the
official, EOUSA is working to determine how to allocate outstanding
criminal debt amounts between amounts likely to be collected and amounts
not likely to be collected, which is critical for effective use of debt
collection resources.
Conclusion The long-standing problems in the collection of outstanding
criminal debt-including fragmented processes and lack of
coordination-continue, as there is no united strategy among key entities
involved with the collection process. According to Justice's unaudited
records, during fiscal years 2000, 2001, and 2002, criminal debt increased
significantly, but collections decreased slightly. Until Justice takes
actions to fully implement our previous recommendations to it to improve
criminal debt collection efforts, including forming a joint task force
with AOUSC, OMB, and Treasury and developing a strategic plan to improve
the criminal debt collection processes, the effectiveness of criminal
fines and restitution as a punitive tool may be diminished, and Justice's
management processes and procedures will not provide adequate assurance
that offenders are not afforded their ill-gotten gains and that innocent
victims are compensated for their losses to the fullest extent possible.
Therefore, we reaffirm those
recommendations made to Justice from our 2001 report on which Justice has
not completed action.
Agency Comments and Our Evaluation
In written comments on a draft of this report, which are reprinted in
appendix I, Justice's EOUSA said that the draft report did not fully
reflect EOUSA efforts to improve the criminal debt collection process by
implementing the recommendations from our 2001 report and by taking
additional actions that go beyond the specific recommendations made in
that report. We disagree. As stated in this report, Justice has not taken
timely action to address all of the July 2001 recommendations, which were
designed to improve the effectiveness and efficiency of Justice's criminal
debt collection processes. Most important, from the standpoint of
resolving key jurisdictional issues and functional responsibilities,
Justice has not taken action along with certain other agencies to develop
a strategic plan for criminal debt collection.
Of the 13 interim recommendations made to stem the growth of reported
uncollected criminal debt while Justice and the other agencies worked to
develop the strategic plan, Justice completed action on only 7. Actions to
address 4 of these 7 recommendations were completed about 2 years after we
made them, and actions to address the remaining 6 interim recommendations
are still in process.
In support of its view that it has taken extensive implementation action,
EOUSA referred to a June 16, 2003, letter and stated that excerpts from
this letter were included with its comments. We are not aware of a June
16, 2003, letter; however, all of the excerpts contained in EOUSA's
comments are included verbatim in Justice's July 15, 2003, letter to the
Congress regarding actions EOUSA had taken in response to recommendations
we made in our 2001 report. Justice submitted this letter 2 years after
the date of our 2001 report, and after we had made inquiries about the
status of Justice's response to the Congress regarding Justice's
implementation of our recommendations. In accordance with 31 U.S.C. 720,
the head of a federal agency is required to submit a written statement of
the actions taken on our recommendations to the Senate Committee on
Governmental Affairs and to the House Committee on Government Reform not
later than 60 calendar days from the date of the report and to the House
and Senate Committees on Appropriations with the agency's first request
for appropriations made more than 60 calendar days after that date.
Moreover, as stated in this report, to evaluate actions Justice has taken
to implement our previous recommendations, we obtained and reviewed
pertinent
Justice documents, including correspondence to certain congressional
committees related to our 2001 report. As such, in drafting our report, we
fully considered each of EOUSA's assertions that were contained in the
previously mentioned excerpts from its letter. Our responses to specific
parts of these excerpts appear in appendix I.
EOUSA also stated that our draft report failed to address its comments on
our 2001 report that responsibility for accounting for and reporting
criminal debt does not rest with Justice. In our 2001 report, we stated
that Justice's comments related to accounting for and reporting of
criminal debt, plus the lack of response from AOUSC regarding its position
on this issue, illustrated the need for cooperation and coordination in
the criminal debt collection area. Thus, we emphasized the need for the
development of the previously mentioned strategic plan to improve the
criminal debt collection processes and establishment of an effective
mechanism to coordinate efforts among all entities involved in these
processes. We noted that the strategic plan should address managing,
accounting for, and reporting of criminal debt. It is important to note
that, as stated in our 2001 report, both Treasury and OMB agreed that
criminal debt should be reported on either Justice's or the U.S. Court's
financial statements.
Finally, EOUSA stated that our 2001 report focused on asset investigation
resources and that EOUSA has put particular emphasis in this area. EOUSA
also stated that even though it has fully implemented more than half of
our recommendations, with the remaining ones nearing completion,
collections have decreased slightly since our 2001 report. As previously
stated, actions to address 4 of the 7 fully implemented recommendations
were completed about 2 years after our 2001 report, and actions to address
the 6 remaining recommendations are still in process. Since these interim
recommendations largely focused on policies and procedures, it is
important that they be effectively implemented once they are established,
and it will likely take some time for collection results to be realized
from full implementation. Moreover, as stated in our report, the debt
collection strategy to be developed by the task force should include
determining the collectibility of outstanding criminal debt amounts so
that a meaningful allowance for uncollectible debt can be reported and
used for measuring debt collection performance. We also stated that proper
accounting for, reporting of, and managing of criminal debt would heighten
management awareness and ultimately result in a more effective collection
process. Identifying debts with the best prospects for collection will
allow more efficient targeting of limited collection resources in order to
maximize collections.
As agreed with your office, unless you announce its contents earlier, we
plan no further distribution of this report until 30 days after its
issuance
date. At that time, we will send copies of this report to the Chairmen and
Ranking Minority Members of the Subcommittee on Financial
Management, the Budget and International Security, Senate Committee on
Governmental Affairs, and the Subcommittee on Government Efficiency
and Financial Management, House Committee on Government Reform. We
will also provide copies to the Attorney General, the Director of the
Administrative Office of the U.S. Courts, the Director of the Office of
Management and Budget, and the Secretary of the Treasury. Copies will
then be made available to others upon request. The report will also be
available at no charge on GAO's Web site, at http://www.gao.gov.
If you have any questions about this report, please contact me on (202)
512
3406 or Kenneth R. Rupar, Assistant Director, on (214) 777-5714. Other key
contributors to this report are Linda K. Sanders and Michael D. Hansen.
Sincerely yours,
Gary T. Engel
Director
Financial Management and Assurance
Appendix I
Comments from the Department of Justice's
Executive Office for United States Attorneys
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
See comment 1.
Appendix I
Comments from the Department of Justice's
Executive Office for United States Attorneys
See comment 2.
See comment 1. See comment 3.
See comment 4.
See comment 5.
See comment 6.
See comment 7.
Appendix I
Comments from the Department of Justice's
Executive Office for United States Attorneys
See comment 7.
See comment 8.
See comment 9.
See comment 11. See comment 12.
See comment 13.
See comment 1.
See comment 10.
Appendix I
Comments from the Department of Justice's
Executive Office for United States Attorneys
See comment 1.
See comment 1.
Appendix I
Comments from the Department of Justice's
Executive Office for United States Attorneys
The following are GAO's comments on the Department of Justice's (Justice)
Executive Office for United States Attorneys' (EOUSA) letter dated January
23, 2004.
GAO's Comments 1.
2.
3.
4.
See "Agency Comments and Our Evaluation" section.
Our 2001 report responded to a request that we review the federal
government's collection of criminal debt, primarily fines and
restitutions. As such, our review resulted in numerous recommendations to
Justice and the Administrative Office of the U.S. Courts (AOUSC) aimed at
addressing the fragmented processes and lack of coordination among those
entities involved in debt collection and at helping to improve collections
and stem the growth in reported uncollected criminal debt.
For this report, we were requested to examine the extent to which Justice
has acted on the recommendations we made in our 2001 report to improve
criminal debt collection. We acknowledge in our report Justice's use of
the Prosecutor's Guide to Criminal Monetary Penalties to address
recommendations 2, 6, and 7. Our follow-up work did not focus on certain
areas covered by the guide, including charging defendants and negotiating
plea agreements, because such issues were not part of the scope of our
2001 report or of this report.
We acknowledge in this report that the Financial Litigation Working Group
was established in part to address the recommendations we made in our 2001
report and will continue to work toward fully implementing certain open
recommendations.
Writing legislative proposals that will remove barriers to enforcement of
criminal debts, such as clarifying that payment schedules set forth in
court orders are minimum payments due and do not prohibit enforcement of
the total amount of the obligation imposed, is consistent with our 2001
recommendation to AOUSC to revise the language in the Judgment in a
Criminal Case forms to clarify that payment terms established by judges
are minimum payments and should not prohibit or delay collection efforts.
Although we did not recommend such action to Justice, its initiative to
address this concern makes sense.
Appendix I
Comments from the Department of Justice's
Executive Office for United States Attorneys
5. We acknowledge in our report that Justice provided the prosecutor's
guide to all entities involved in criminal debt collection at Justice, and
we credit the guide with addressing recommendation 2 by requiring
prosecutors to ensure that responsible Financial Litigation Units (FLU)
receive all available information on a defendant's financial resources.
6. We acknowledged and explained in our report EOUSA's State of the
District Report and Compliance Checklist in relation to actions taken to
address recommendation 11.
7. We are aware of EOUSA's hiring of an independent contractor to perform
a requirements analysis for a new debt collection system. However, as of
the completion date of our fieldwork, according to an EOUSA official,
Justice was in the process of reviewing the contractor's work, and we
could not obtain a copy of the contractor's report until the review was
complete. Therefore, we are unable to comment on the results of the
contractor's review. However, we acknowledge in our report EOUSA's new
version of its collections case tracking system, including its recent and
planned upgrades designed to reduce the data entry responsibilities of
FLUs.
8. We provide in our report detailed information on Justice's efforts to
add criminal debts to the Treasury Offset Program.
9. Our July 2001 report addressed many factors that have had an impact on
the effectiveness of the criminal debt collection process. That report
resulted in numerous recommendations to Justice and AOUSC to improve debt
collection. Justice has taken action to enhance its asset investigations
resources. In our discussion of Justice's efforts to address
recommendation 13, we acknowledge EOUSA's receipt of funding, beginning in
fiscal year 2002, through the Office for Victims of Crime to support asset
investigations in criminal debt collection cases.
10. Assets identified by outside investigators, combined with fervent debt
collection efforts, could result in potential collections on outstanding
criminal debts. If investigators found assets for approximately $50
million of the $150 million of criminal debts referred to them, the
potential collection rate for such assets might well exceed the average
collection rates being experienced by Justice.
11. Although we are aware of EOUSA's contract for credit bureau report
services, the issue of credit bureau report services did not directly
Appendix I
Comments from the Department of Justice's
Executive Office for United States Attorneys
relate to any particular recommendation made in our 2001 report.
Therefore, the contract was not addressed in this report. However, we
agree that credit bureau report services, if properly applied, can enhance
FLUs' ability to assess a debtor's ability to pay.
12. We acknowledge in our discussion of EOUSA's actions to address
recommendation 5, that EOUSA has worked to reinforce policies and
procedures by developing and providing training materials to its staff
involved in debt collection.
13. In our 2001 report, we recommended that Justice perform an analysis to
assess whether FLUs' human capital resources are adequate to effectively
perform their collection activities. In our discussion of Justice's
actions to address recommendation 13 in this report, we acknowledge that
EOUSA has assessed FLU human capital resources and determined that FLUs
need more staff or contractors to perform debt collection activities. We
further state that, to date, EOUSA has not been successful in requesting
additional staff for debt collection.
GAO's Mission The General Accounting Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting its
constitutional responsibilities and to help improve the performance and
accountability of the federal government for the American people. GAO
examines the use of public funds; evaluates federal programs and policies;
and provides analyses, recommendations, and other assistance to help
Congress make informed oversight, policy, and funding decisions. GAO's
commitment to good government is reflected in its core values of
accountability, integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony
The fastest and easiest way to obtain copies of GAO documents at no cost
is through the Internet. GAO's Web site (www.gao.gov) contains abstracts
and fulltext files of current reports and testimony and an expanding
archive of older products. The Web site features a search engine to help
you locate documents using key words and phrases. You can print these
documents in their entirety, including charts and other graphics.
Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as "Today's Reports," on its
Web site daily. The list contains links to the full-text document files.
To have GAO e-mail this list to you every afternoon, go to www.gao.gov and
select "Subscribe to e-mail alerts" under the "Order GAO Products"
heading.
Order by Mail or Phone The first copy of each printed report is free.
Additional copies are $2 each. A check or money order should be made out
to the Superintendent of Documents. GAO also accepts VISA and Mastercard.
Orders for 100 or more copies mailed to a single address are discounted 25
percent. Orders should be sent to:
U.S. General Accounting Office 441 G Street NW, Room LM Washington, D.C.
20548
To order by Phone: Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202)
512-6061
To Report Fraud, Contact: Web site: www.gao.gov/fraudnet/fraudnet.htm
Waste, and Abuse in E-mail: [email protected]
Federal Programs Automated answering system: (800) 424-5454 or (202)
512-7470
Public Affairs Jeff Nelligan, Managing Director, [email protected] (202)
512-4800 U.S. General Accounting Office, 441 G Street NW, Room 7149
Washington, D.C. 20548
Presorted Standard
Postage & Fees Paid
GAO
Permit No. GI00
United States
General Accounting Office
Washington, D.C. 20548-0001
Official Business
Penalty for Private Use $300
Address Service Requested
*** End of document. ***