Fines and Forfeiture Laws This chapter is about existing laws which contain provisions to pay a percentage of fines and forfeitures to those who provide information leading to the conviction of felons. Examples of maximum fines for various felonies are listed in the last part of this chapter. The next chapter will tell you how to get the money. In certain circumstances the courts may assess a fine as part of the punishment. The amount depends on a lawbreaker's ability to pay as well as the appropriateness of such a fine. The courts realize that it serves the public interest to levy fines and forfeitures in lieu of, or with, jail terms. This is especially so when the felon has made huge profits by violating the law, and, the courts feel a need to take away ill-gotten gains. Fines and forfeitures are used to deny felons the "fruits of their criminal activity." Many laws contain provisions to pay 50 percent of resultant fines and forfeitures. This creates an unusual opportunity for CrimeFighters. As you look at the large dollar amounts involved, visualize yourself being eligible and being paid 50% of the fines and forfeitures. Some Examples On October 31, 1990, headlines in the Arizona Republic stated, "Underground Pot Factories Raided". Entrepreneurs had built two large houses designed specifically for marijuana growing in underground rooms. The rooms contained irrigation, lighting, diesel generators, and a compactor for making bales of pot worth an estimated $50 million. The houses cost $400,000. The sentence for each charge was 10 years to life in prison and a fine of up to $4 million. On April 13, 1990 a San Antonio Express-News headlines stated,"Mexican Agents Held in Border Cash Haul." Two customs agents were placed under arrest in Brownsville, Texas, when they were caught red-handed trying to smuggle $2.4 million into Mexico. The money was in various denominations, mostly small bills, and stashed in cardboard boxes. Only $10,000 can be legally taken out of the United States without registration. The violation of U.S. currency laws provide a maximum penalty of 15 years and fines up to $500,000. In this case, the Mexican customs agents violated the law, were caught, and the $2,400,000 in cash was seized and forfeited under customs law. In addition, their 1990 Jeep station wagon was also forfeited. The Bellingham (Washington) Herald (Bellingham, Washington) on June 11, 1990 stated, "Huge Heroin Bust in Bellingham." The story tells how U.S. Border Patrol agents became suspicious of three men in a parked car. Having "reasonable grounds" They searched the vehicle and found 13 packages of Asian heroin with a wholesale value of about $1.25 million. When blended with other ingredients for street sale, it could be worth about $15 million. The vehicle and heroin were forfeited. In 1981, also in Bellingham, 40 tons of marijuana valued at $25 million was seized from a ship on Bellingham Bay. The ship and its cargo were forfeited, and the ringleader was sentenced to 25 years in prison and fined $155,000. Almost every week a newspaper story tells of another large drug bust. Thousands of small drug busts of $100,000 are commonplace and hardly worth mentioning except in the local news media. It's been reported that 90 percent of all criminal activity is directly or indirectly related to narcotics. Drug-related crimes are the single largest law enforcement problem in America. On the other hand, they also provide CrimeFighters with an opportunity to make a better than average income to help police obtain evidence and to put violators in jail. RICO laws are being used more and more to remove the profit from criminal activity. With 50% of the fines and forfeitures from just a dozen or more small drug busts, a CrimeFighter can become financially independent! Fraudulent Tax Shelter Schemes vs IRS Title 26 USCS 7302 provides that "it shall be unlawful to have or possess any property intended for use in violating the provisions of internal revenue laws... and no property rights shall exist in any such property." An unofficial interpretation of this law follows. Any person using any property as "bait" in illegal tax shelter schemes loses title to said property, which is then seized by the IRS. One case (United States vs One 1954 Rolls Royce Silver Dawn, 777F.2d 1358 (9th Cir. 1985) involved a fraudulent tax shelter scheme in which the automobile was the "object" used in the illegal tax shelter. The Court of Appeals agreed it was an "active aid" in the illegal activity and was forfeited under civil procedure. Any object whether real estate or other property, used for illegal tax shelters, or any other fraud, are subject to forfeiture. Under RICO and other federal reward laws, the informant can get paid up to 50 percent of the value of confiscated assets that are involved in criminal activity. The courts may authorize seizure of cars, boats, airplanes, homes, and even going businesses when they are used in the commission of a felony. Most people know that customs laws, for example, provide for the forfeiture of contraband items plus the vehicles or vessels if drugs are found in them. Homes May Be Seized and Forfeited A recent (1989) newspaper article in the Harlingen (Texas) Valley Times mentioned a Brownsville man was arrested for 10 separate violations of importing photographs of naked children engaged in sexually explicit conduct. In many states, pornography of adults is permitted and tolerated by law. When it involves underage children the law is harsh on offenders. In this case, the possible penalty for each count is 10 years in jail and up to $250,000 in fines for each violation. The indictment includes a notice that the lawbreaker's house will be seized and forfeited under a pornography law (Title 18, Sections 2251 - 2254). This law allows the forfeiture of property used in the commission of pornographic offenses. If the Brownsville man had legitimate businesses (other than the porn business) and it was proven that part of the proceeds of his illegal business was used to finance the legitimate business, or the legitimate business was used to "launder" the illegal profits, the legitimate business and its bank accounts could also have been seized and forfeited. Money Laundering Problems Al Capone was indicted for income tax evasion after the government couldn't pin him down on other criminal charge. All they could prove was that Capone was spending a lot of money that wasn't reported on his income tax forms. Al couldn't account for the money or wouldn't say where it came from. Most criminals know if they don't have a job or a business to support expensive tastes, they will come under scrutiny for income tax evasion. Money laundering is the obvious solution. Money laundering is accomplished by investing illegally obtained money into a legitimate business. Criminals then report profits from the business. Laundering money solves one problem but creates another. If a criminal owns the business it becomes "tainted" with illegal money. When that can be proven, the business or business investments may be forfeited under various laws as the fruits of criminal activity. The Use of Corporations Most racketeering businesses are incorporated. Corporations provide tax sheltering and lower personal taxes. They also facilitate selling shares to raise money for investments. When a business owner has many legitimate business investments, accountants will recommend the use of a separate corporation as a holding company. Such a corporation "holds" the shares of various investments in the holding company's name. Dividend income from various corporations are paid to the holding company and not to the owner. That allows the owner to defer surplus business income and to reduce his personal income taxes. This common business practice is a legal tax- sheltering strategy. A successful criminal can become a rich business owner, obtain legal tax breaks, and receive a legitimate income to avoid suspicion of illegal activity. However, if it can be proved that a business was financed by the profits from criminal activity, the business can be forfeited. If illegal money can be traced to a holding company, that holding company (which "owns" the shares of all the various businesses) can itself be forfeited and the crime boss loses everything! Civil Forfeiture Cases United States vs Cauble. 706 F.2d 1322 (5th Cir. 1983). Cauble placed various legitimate businesses under the umbrella of a holding company which was the RICO enterprise named in the indictment for a marijuana smuggling enterprise. Although not all the businesses were involved in the illegal activity, the jury felt that it is impossible to determine which weren't tainted. They decided it would be better to declare forfeit all the businesses rather than none. It was estimated the total value of Cauble's enterprises was worth $15 to $20 million! United States vs $4,255,000. 762, F.2d 895 (11th Cir. 1985) is a case in which a person, who claimed to be an honest and well established money- exchanger, moved $242 million in drug proceeds through a Miami bank in less than eight months during 1981. The lawbreaker said he had no idea the money delivered to him were the proceeds of illegal drug activity. The government filed a $10 million civil penalty action against the defendant's company, Sonal, Inc. (under 31 USCS 5321 (a)(2)) and seized $453,731 that was in a Sonal's bank account. Most of the criminal laws mentioned in this book offer rewards based on either the arrest or conviction. An exception is Title 28, USCS 524, which states: "payment of awards may be paid for information or assistance leading to a civil or criminal forfeiture under the comprehensive Drug Abuse Prevention and Control Act or a criminal forfeiture under the Racketeer Influenced and Corrupt Organization Statute (RICO) 18 USCS 1961 et seq." Keep USCS 524 in mind for RICO civil suits. The payment of awards provides legal standing to citizens to initiate civil actions against drug dealers. It's one of the keys to a CrimeFighter's financial success. (More on civil suits in chapter 8) Customs' Forfeiture Law Also an exception is 19 USCS 1619, mentioned later in more detail in Chapter 14. This Custom's law is very broad law and provides compensation to informers. USCS 1619 doesn't mention (therefore doesn't specifically prohibit) payment based on civil action fines and forfeitures. Payment is not tied to an arrest or conviction -- only that such information "leads to a recovery of any duties withheld, or any fine, penalty, or forfeiture of property incurred: the Secretary may award and pay such person an amount that does not exceed 25 percent of the net amount so recovered." Smuggling often involves large quantities of contraband. Drugs have a very high value (currently $100,000 per kilogram from Columbia which is sold for $1 million on the street.) This "drug value" seems to be anticipated in the 25 percent Custom's reward. The reward is limited to $250,000 for each case. That's about where the total value of fines and forfeitures is expected to be $1 million or more. Bonuses Title 18 USCS 886, Drug Enforcement Agency pays an additional reward, up to $25,000, for information leading to the conviction of any drug-related criminal activity. Whether or not there is a conviction, but providing the case goes to trial, you can also qualify for up to $25,000 under Title 18 USCS 3059, which pays a reward for information leading to the arrest for any state or Federal felony. If a conviction is obtained on drug-related crimes, you can qualify for up to 50% of the fines and forfeitures (vehicles, equipment, cash, jewelry, businesses, guns, stocks and bonds, etc.), plus rewards of up to $50,000 via USCS 3059 and USCS 886. Free Vehicles, Guns, Boats and Aircraft? State and Federal district attorneys hardly ever try to sell forfeited items at retail prices. They usually sell them at wholesale prices or less to get rid of them as soon as possible. This is especially so when the items, such as vehicles, boats and airplanes, require maintenance charges, storage or are subject to vandalism, weathering, theft, or obsolescence which would quickly reduce their value. A CrimeFighter who has 50% claim to the items forfeited might be able to persuade authorities to use the 50% and possibly related rewards as the purchase amount. That would provide the authorities with immediate disposal of the forfeited property. Fines - How Much? USCS 3571 provides the courts with guidelines and amounts of fines: 18 USCS 3571 Sentence of fine. (a) In general. A defendant who has been found guilty of an offense may be sentenced to pay a fine. (b) Fines for individuals. Except as provided in this subsection (e) of this section, an individual who has been found guilty of an offense may be fined not more than the greatest of - (1) the amount specified in the law setting forth the offense; (2) the applicable amount under subsection (d) of this section; (3) for a felony, not more than $250,000; (4) for a misdemeanor resulting in death not more than $250,000; (5) for a Class A misdemeanor that does not result in death, not more than $100,000; (6) for a Class B or C misdemeanor that does not result in death, not more than $5,000; or (7) for an infraction, not more than $5,000. - - - - - - - - - (c) Fines for organizations. Except as provided in subsection (e) of this section, an organization that has been found guilty of an offense may be fined not more than the greatest of - (1) the amount specified in the law setting forth the offense; (2) the applicable amount under subsection (d) of this section; (3) for a felony, not more than $500,000; (4) for a misdemeanor resulting in death, not more than $500,000; (5) for a Class A misdemeanor that does not result in death, not more than $200,000; (6) for a Class B or C misdemeanor that does not result in death, not more than $10,000; or (7) for an infraction, not more than $10,000. (d) Alternative fines based on gain or loss. If any person derives pecuniary gain from the offense, or if the offense results in pecuniary loss to a person other than the defendant, the defendant may be fined not more than the greater of twice the gross gain or twice the gross loss, unless imposition of a fine under this subsection would unduly complicate or prolong the sentencing process. (e) Special rule for lower fine specified in substantive provisions. If a law setting forth an offense specifies no fine or a fine that is lower than the fine otherwise applicable under this section and such law, by specific reference, exempts the offense from the applicability of the fine otherwise applicable under this section, the defendant may not be fined more than the amount specified in the law setting forth the offense." * * * * * * Comment: Note that under ordinary law, sub-paragraph (d) allows a fine to be doubled, as in a case of fraud, swindle, or larceny such as those often used by confidence artists and unethical businesses via shady dealings. Also note that organizations also pay twice as much in fines resulting in a maximum fine of up to four times the illegal profit! However, the amount and imposition of fines are contingent on individual personal or business finances of the defendant. Fines that are not suspended by the court constitute a lien until paid in full. Though the lawbreaker (or business) can't pay the full amount of the fine, it hangs over their head like any other debt and must be paid sooner or later. Bankruptcy laws do not include relief for fines based on criminal violations. Significant assets that are later obtained by a lawbreaker may be seized and sold to satisfy the debt. When prosecutions are under RICO laws, triple damages are possible. If you have a choice, RICO laws are best for prosecution to get maximum awards by the court. Prosecutions are easier under civil lawsuits than under criminal charges. If you decide to do the actual prosecution (which is possible) you can be awarded 50% of the total fines and forfeitures. In addition, you can also be paid for your investigative and related costs, plus legal fees to your lawyer who acts as your assistant to prosecute offenders. State Forfeiture Laws State laws are organized differently from Federal laws. That is, rewards for forfeitures (if any) are often found in separate laws that deal only with forfeitures. For example, Arizona's forfeiture law, 13-4315, has a provision that says "Payment of awards for information or assistance leading to a civil or criminal proceeding may be made under this Title." Awards (rewards) are authorized in any civil or criminal case, including Arizona's RICO law and any other law where and when forfeitures are imposed. When no reward dollar amount or percentage is specified it's purposely left negotiable. Always negotiate for 50% of all fines and forfeitures. That's the usual amount paid under various Federal laws. Conclusion In most criminal statutes the law provides for forfeiture of assets used or instrumental in the crime to prevent the crime from being easily repeated. Most readers know that customs laws and "zero tolerance" drug laws allow forfeiture of contraband items. If drugs are found, the law permits the seizure of vehicles, boats and airplanes if the vehicles were used to assist or commit the criminal act. No matter what the crime is, it can include fines. If the lawbreaker has the money to pay a fine, fines are imposed. Forfeiture is usually imposed on money used as working capital, money found in a drug bust, businesses, tools, guns, vehicles, etc. when the items are used in the execution of the crime. Any significant asset proven to be the fruits of criminal activity may be seized. CrimeFighters can get 50% of the value of same! Which law you should use to prosecute a lawbreaker depends on an analysis of state vs Federal laws. Determine which authority pays the maximum amount, or has the best advantages, all things considered. That's what State prosecutors do. In any event, USCS 3059 and 886 still apply no matter if you use state or Federal RICO laws. State laws are too numerous to try to fit into this book (and you'd only be interested in 1/50th of them). Instead, I'll recommend that you familiarize yourself with your state laws. They will be found in almost every public library or in local law libraries. (Chapter 20 includes some state laws that provide for suitable payment of rewards comparable to Federal laws.) Keep in mind that rewards (or awards) may be contained in a separate law. Look in the index for Rewards, Fines, Forfeitures, and Informants. As in Arizona law, they may not be specifically mentioned within the criminal statute itself. Criminal statutes may deal only with the definitions of the crime and assigns specific classes of felonies and misdemeanors, as appropriate, depending on the severity of the violation. Fines, forfeitures, and jail sentences are contained in other sections which are cross-referenced to the class of the felony or misdemeanor. F9 for next Chapter