Preserving Foreign Criminal Assets for Forfeiture Act of 2010

Mr. Speaker, I move to suspend the rules and pass the bill (S. 4005) to amend title 28, United States Code, to prevent the proceeds or instrumentalities of foreign crime located in the United States from being shielded from foreign forfeiture proceedings.

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days to revise and extend their remarks and include extraneous material on the bill under consideration.

I yield myself such time as I may consume.

Mr. Speaker, the Preserving Foreign Criminal Assets for Forfeiture Act of 2010 will ensure that U.S. courts can freeze assets while foreign legal proceedings are pending. This fix permits Federal law enforcement to assist foreign governments without waiting for a final judgment in a foreign court.

I want to tell you a story that highlights the importance of this legislation. Years ago, I met a bright young man named Bobby Salcedo, who grew up in my district it in El Monte, California. What struck me right away was Bobby's dedication to improving the lives of children and residents of his community. It was that dedication that gave him his incredible energy and passion to achieve as much as he did.

He was an elected member of the El Monte School District. He returned to his alma mater, Mountain View High School, to become its assistant principal, and was studying for his doctorate in education at UCLA.

Aside from his caring, selfless nature, Bobby was very intelligent, driven, and charismatic. It was clear to everyone who knew him that he was going somewhere. He was our rising star.

A year ago, Bobby traveled to Gomez Palacio in the Mexican state of Durango to visit his wife's family for the holidays. On New Year's Eve, he was out with family and friends at a local restaurant when gunmen burst in and dragged Bobby, along with five other men, out of the restaurant at gunpoint. They were then each shot to death execution- style. The next day, all six bodies were found dumped in a ditch. Bobby was only 33 years old.

After the investigation began, it was confirmed that none of the six murder victims were connected to the drug trade in any way. Bobby and the others were in the wrong place at the wrong time. Their deaths exemplify a growing number of innocent bystanders who are

becoming victimized in the cartel violence in Mexico.

It had seemed as though the situation could not get worse. However, only weeks after Bobby was so brutally murdered, the lead state investigator in his case was also shot dead.

For me and thousands of others, Bobby's death is a symbol for both of our countries that progress for peace in Mexico must be made. We cannot allow the death of innocent bystanders or American citizens to pass without consequences. Until there is true accountability for the violence, there is little incentive for the drug lords to keep the peace.

In my conversations with law enforcement, I hear the same thing over and over again. In order to stop this wave of violence on the border and protect both American and Mexican citizens, we must hit the cartels where it hurts the most--their bank accounts and property, which are often located in the United States. So when I heard that Federal courts had severely limited law enforcement's ability to freeze foreign assets in the United States at the request of foreign governments, I had to act.

In 2000, Congress passed the Civil Asset Forfeiture Reform Act of 2000, which authorized Federal courts to assist foreign nations by freezing assets located in the United States while individuals stood trial in foreign courts. This process is consistent with our treaty obligations and, under those same international agreements, foreign courts will offer the United States similar assistance with assets located overseas.

This law is an important tool to fight organized crime, money laundering, and drug trafficking. It allows the U.S. to assist foreign governments in cutting the money supply to international criminal organizations.

Earlier this year, however, Federal courts interpreted the statute to apply only after a final decision has been reached in a foreign court proceeding. After the decision, law enforcement had no way to prevent illicit property from being moved out of our grasp before it was too late.

In the past few months, our government has been unable to protect more than $550 million that had been identified for forfeiture by foreign governments. This money will remain a continuing resource for criminal organizations, allowing them to fund extensive additional criminal activity.

The bill we are considering today includes due process protections similar to those used for restraining orders in anticipation of domestic forfeiture judgments. It also requires the courts to verify that the relevant foreign tribunal observes due process protections, has subject matter jurisdiction, and is not acting as a result of fraud.

This is just one small step to ensure that international criminal organizations like the cartels that murdered Bobby Salcedo have fewer resources to evade prosecution. It is for Bobby, his family, and the thousands of others who have been affected by cartel violence around the world that I fought to pass this important legislation.

I thank the chairman of the Judiciary Committee for allowing this bill to come to the floor so quickly, and I want to recognize the steadfast bipartisan support of my friend, Judge Ted Poe, and our colleagues in the Senate, Senators Whitehouse and Cornyn.

This bill has the support of the Department of Justice, which is eager to use this tool to protect our borders and make the world a safer place. I urge my colleagues to support this important legislation.

I reserve the balance of my time.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, S. 4005, the Preserving Foreign Criminal Assets for Forfeiture Act of 2010, makes a simple, yet very important, technical change to Federal law to facilitate asset preservation for foreign countries. I am pleased to be a cosponsor of this legislation, and I commend my colleague from California (Ms. Chu) in sponsoring this House companion to S. 4005. I would like to thank her for her work on this issue in bringing it before Congress.

Federal law currently provides procedures by which the Federal Government can seek a court order to preserve or freeze certain domestic assets on behalf of a foreign government. This is an important tool to take out of the hands of criminals the proceeds that fund their illegal operations.

Criminals will go to great lengths to stash their ill-gotten profits. And whether it is an international drug cartel, a terrorist group, organized crime syndicate, or simply a savvy computer hacker or corrupt corporation, the key to putting a stop to their crimes is to put a stranglehold on their money that they have illegally obtained. But a recent D.C. circuit court of appeals decision limits the ability of the United States to assist foreign governments in retaining and restraining those assets.

The court interpreted section 2464 of title 28, governing the entry of foreign judgments, to authorize a U.S. court to freeze assets only after the foreign court's final forfeiture judgment. This is a significant limitation on our ability to assist in foreign forfeiture proceedings. If forced to await until a final foreign judgment is entered, we run the risk of allowing thousands, if not millions, of dollars to slip through our hands into the hands of the criminals.

In many countries, like Mexico, their judiciaries operate at a much slower pace than ours, and their prosecution rates are much lower. In fact, the criminal conviction rate in Mexico is less than 10 percent. Therefore, a lot of times, by the time a forfeiture judgment is made, the target has already moved their assets someplace else. This hampers our ability to go after Mexican cartel members who have assets here in the United States. So unless Congress clarifies the scope of section 2467, we run the risk of losing cooperation from foreign governments in our request to seize assets that are held abroad.

The investigation into the multi-billion dollar Ponzi scheme undertaken by Allen Stanford demonstrates our need for foreign countries to continue to freeze assets on our behalf. To date, Switzerland, Canada, and the United Kingdom have restrained a combined $400 million on behalf of the United States in just the Stanford case. This is money that certainly could have been lost if the United States was prevented from requesting such assistance from our allies until a final judgment was made.

The court of appeals was correct that it is not a court's role to substitute its view or policy for the legislation which has been passed by Congress. So I don't argue with the court's decision; but it is Congress' obligation to change and fix the law so that this does not occur in the future. With adoption of this legislation, Congress is establishing a clear and simple policy on the restraint of foreign assets.

So I commend my colleagues, Senators Whitehouse and Cornyn, and of course the gentlelady from California (Ms. Chu), for their efforts to clarify this statute. We must ensure that foreign governments can continue to rely on our assistance with their criminal prosecutions and the United States will continue to receive the same cooperation from our foreign allies.

I urge my colleagues to support this legislation.

I yield such time as he wishes to consume to the gentleman from Louisiana (Mr. Scalise).

I yield myself such time as I may consume.

Mr. Speaker, the forfeiture concept is very important to the helping of our law enforcement agencies throughout the United States. It is the concept that criminals, drug cartels make a lot of money off the crimes they commit; and that money, when confiscated, should be not given back to the perpetrator, of course. It should be used for law enforcement and other worthwhile endeavors.

Under current law, this problem is an extreme problem because of the fact that many times, by the time the criminal cartel has been captured and they go to trial, they have hidden their assets and then there is no money to go back into the forfeiture.

So this legislation prevents this problem from occurring in the future. It allows the seizure of those assets where they can be used for law enforcement. It makes criminals pay the rent on the courthouse and pay for the system that they have created, and it helps in the forfeiture.

I cannot overemphasize how important forfeiture of illegal, ill- gotten gain is to our law enforcement agencies. Just one example of this: down on the Texas border where our sheriffs are operating on the border, we have got one county. The sheriff in Hudspeth County doesn't even have a budget for the motor pool; in other words, he has no vehicles that are funded at taxpayer expense. So the only way he gets vehicles is capturing drug cartels and drug runners when they come into Hudspeth County and forfeiting their vehicles to law enforcement. That is why they have a nice set of Escalades that they use in the fight on the drug cartel.

So forfeiture, whether it is vehicles or whether it is money, is extremely important to law enforcement; and we must continue to help them where we can and make the criminals pay for the system they have created and pay the rent on the courthouse.

I yield back the balance of my time.

Mr. President, I rise to speak in support of S. 4005, the Preserving Criminal Assets for Forfeiture Act of 2010, which I recently introduced with my distinguished colleague Senator Cornyn. This bill will help keep the proceeds and instrumentalities of crime out of the hands of foreign criminals. It will also encourage foreign countries to assist the United States in recovering the overseas assets of U.S. criminals.

The U.S. Government is currently authorized to assist foreign nations seeking to enforce their forfeiture judgments, for example by seizing the proceeds of large-scale international fraud, drug trafficking, or money laundering. Recent judicial decisions, however, have interpreted existing statutes as not providing our courts with the authority to restrain known criminal assets located in the U.S. prior to the issuance of a foreign forfeiture judgment. Criminals are therefore able to move and hide the assets they hold in

the United States as soon as they find out they will be subject to foreign forfeiture proceedings, or even while the proceedings are ongoing. This leaves U.S. courts with no property to freeze once the foreign forfeiture judgment is entered.

Because of this hole in the law, foreign criminals have already been able to shield hundreds of millions of dollars worth of ill-gotten property, allowing them to continue their criminal enterprises and frustrating the efforts of law enforcement. In recent months alone, our government has been unable to restrain more than $550 million that had been identified for forfeiture by foreign governments in connection with criminal investigations and prosecutions. This money will remain a continuing resource for criminal organizations, allowing them to fund extensive additional criminal activity, some of which may well target Americans.

The U.S. Government's lack of authority to preserve criminal assets in advance of a foreign forfeiture judgment also threatens the cooperation we receive from foreign nations in our own criminal cases. The United States regularly seeks our allies' assistance in issuing prejudgment restraints to preserve the ill-gotten assets of U.S. criminals who have hidden their proceeds overseas. For example, in April of this year, Panama repatriated approximately $40 million in gold and jewelry from a drug money laundering case, which had been restrained there for years at our request. The forfeited assets will be liquidated, with the final proceeds from those sales placed into the Department of Justice's assets forfeiture fund, and used to enhance future domestic and international criminal investigations and law enforcement initiatives. As another example, in the major international fraud case involving Allen Stanford, Switzerland, the United Kingdom, and Canada have restrained a combined $400 million on behalf of the United States pursuant to our forfeiture proceedings.

Comparable future forfeitures could be in jeopardy because, before executing a request from the United States, most countries require assurances of reciprocity. In fact, a number of these reciprocity agreements are codified in treaties. If we fail to provide our government with authority to restrain assets pending foreign forfeiture judgments, we may ultimately enable criminal organizations in the United States to dissipate foreign assets that should be subject to U.S. forfeiture proceedings. That puts at risk hundreds of millions of dollars in criminal proceeds that may not be able to be returned to fraud victims or that criminals will reinvest in drug trafficking offenses or other crimes that affect our communities.

The bipartisan Preserving Criminal Assets for Forfeiture Act of 2010 will fix these problems by preventing criminals from removing illicit assets from the United States during the pendency of foreign forfeiture proceedings. The bill would amend 28 U.S.C. Sec. 4267(d)(3) to clarify that U.S. courts have the power to issue restraining orders freezing the proceeds and instrumentalities of foreign criminals until foreign forfeiture proceedings have concluded. In doing so, the legislation brings the treatment of international criminals' assets in line with that of domestic criminals.

The bill includes due process protections analogous to those used for restraining orders in anticipation of domestic forfeiture judgments, to make sure that only criminal assets are targeted. It also requires the U.S. court to ensure that the relevant foreign tribunal observes due process protections, has subject matter jurisdiction, and is not acting as a result of fraud.

The bill is supported by the Department of Justice, and I thank the attorneys of the Department for their expert advice on this legislation. I also particularly thank Senator Cornyn for his leadership on this issue. It has been a great pleasure to work with him in introducing this legislation. I urge our colleagues on both sides of the aisle to join with us to enact this much needed bill into law.

I thank my colleague from Texas for yielding.

Mr. Speaker, I rise in strong support of the Preserving Criminal Assets for Forfeiture Act, and I want to commend my colleagues, both Ms. Chu and Judge Poe, for bringing this forward.

As he talked about, we've got a problem right now where a court case has allowed a loophole, a major loophole, where criminal organizations are able to shield their assets from our Justice Department. We do not want, and we cannot allow, for these foreign criminal organizations, whether it is drug cartels, money launderers, or others, to be able to shield those assets from the law, not only removing the accountability, but allowing them to keep those assets that they may use against our law enforcement here in the United States. It is critical that we get this passed quickly to close this loophole and prevent those types of shielding from the law as it is currently happening.

I also want to point out something else that my colleague from Texas talked about. In the Stanford case, this is a case where somebody created a

Ponzi scheme that affected lots of people in my State, in Texas, and other States. We cannot allow these kinds of people to be able to shield their assets from justice. Ultimately, they need to have their day in court, and they need to have to face justice for the things that they did to our American citizens here.

I strongly support this legislation and urge all of my colleagues to do so as well.

Mr. President, I ask unanimous consent that the Judiciary Committee be discharged from further consideration of S. 4005, and the Senate proceed to its immediate consideration.

Mr. President, I ask unanimous consent that the bill be read the third time and passed, the motion to reconsider be laid upon the table, with no intervening action or debate, and that any statements relating to the measure be printed in the Record.