Wednesday, June 4, 2008

Senate hearings on forfeiture funds

I am testifying tomorrow to the Texas Senate Committee on Criminal Justice, which is holding hearings on forfeiture funds. Below is my letter to the chairman of the committee, Senator John Whitmire.

June 3, 2008

Senator John Whitmire
P.O. Box 12068
Capitol Station
Austin, Texas 78711

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Re: Lack of accountability and transparency in asset forfeiture funds
(Hearing on Code Crim. Pro. Ch. 59)

Dear Senator Whitmire,

Thank you for allowing me to testify before the Criminal Justice Committee. I have attached copies of relevant documents in the appendix, and have prepared this letter to assure that I cover all the salient points. The gist is that the Attorney General refuses to enforce the audit requirements of Code of Crim. Pro. Ch. 59. Consequently, a district attorney - or a sheriff - can use an asset forfeiture fund however he sees fit, with no oversight.

In the case that I have investigated, that of the 198th Judicial District Attorney Ronald Sutton, he has spent thousands of dollars for questionable uses, e.g., multiple trips to Hawaii, new trucks, and thousands in cash withdrawals. Further, he has threatened to empty the fund if I win in the general election for DA against his chief assistant prosecutor.

Deficits in Ch. 59 of CCP

I have identified the following problems in the oversight of asset forfeiture funds:

- the Code of Crim. Pro. does not define “official uses” that the money can be used for;
- the Attorney General will not enforce the audit requirements;
- the Texas Comptroller will not audit the funds;
- the county commissioners and county judge claim they have no authority to audit;
- The Code does not require local sharing agreements be in writing;
- the Attorney General will not enforce the public information act.

Mr. Sutton’s forfeiture fund contains over $1.5 Million. Although he has refused to provide most of the information I requested under the Public Information Act, I have identified the following questionable expenditures:

$38,475 for Hawaii conference
In the last fiscal year, Mr. Sutton spent $79,000 for “training.” He wrote one check for $21,475 to TIBA (Texas Independent Bar Association) to cover travel, lodging, and seminar fees for a conference in Hawaii. TIBA’s website advertises that it sponsors trips to Hawaii and Cuba. He wrote checks for almost $14,000 in cash for “per diem” money for the same Hawaii trip.

Paying FICA contributions
Checks are written for FICA contributions from the special fund. I do not know any specific information, but this may violate Art. 59.06(d), which states that the state attorney:

… may not use the existence of an award to increase a salary, expense, or allowance for an employee of the attorney … who is budgeted by the commissioners court … unless the commissioners court … first approves the expenditure.

Mr. Sutton does not submit a proposed budget for the special fund to the commissioners court, as required by CCP 59.06(d).

Paying FICA contributions may also violate IRS regulations.

New trucks
The chief assistant DA is provided with a new truck from the special fund. He maintains an active private practice, and is also running to succeed Mr. Sutton. I believe that he uses the truck for his private practice and his campaign. He is also provided with a credit card for gas, maintenance, etc.

In 2006, the DA bought a new truck for $39,927, and in 2007, another for $35,235. I believe he buys the vehicles from a local dealer in Junction. This raises several issues: does the DA make the best use of the money by buying through the state’s fleet program? Why doesn’t he retain vehicles that the sheriff seizes instead of buying new ones? Since his chief assistant maintains his own private practice, does the DA require him to account for miles put on it for private purposes? Is this an “in kind” campaign contribution?

Miscellaneous
- $8,400 cash for printer
- $404 refund to Ronald Sutton for “camera overpay”
- $1,000 to Garvine Adams (office manager) for “supplement”
- $1,200 cash for Corpus Christi trip by investigator and two prosecutors
- $850 month lease payments to Amos Barton, chief assistant, for branch office (Mr. Barton maintains his private practice and campaign headquarters there)
- $202 for “Hawaii ticket change”
- $410.95 Visa charge to “Gal Galls” in Kentucky
- $541.25 Advanta card charge to J&J Signs and Banners in Kerrville
- $200 charge for coffee pot
- $79,000 for furniture donated to Kimble County, bought from a local Junction store.

Some of these are relatively small amounts, and may be perfectly legitimate; but without an audit it is impossible to say.

I have requested vouchers to show how the $14,000 checks for cash were used, but Mr. Sutton refuses to comply. Further, the information he has provided covers only the last fiscal year. I have been told that the Hawaii trip is an annual event.

Refusal to pay to extradite murderer
Meanwhile, the San Antonio Express news reported that Mr. Sutton has refused to use money from the forfeiture fund to pay for the translation of documents in a murder case, and he has done nothing to extradite a fugitive who murdered a Kerrville woman (Ex. “O”).

Background
I am running as the Democratic candidate for the office of the 198th Judicial District Attorney, which covers Kerr, Kimble, Menard, McCullough and Mason Counties. Ronald Sutton, the current DA, has held that position for close to thirty years. He has endorsed my opponent, who is currently his chief assistant DA.

After I announced my candidacy, I was contacted by several people who suggested that I look into the asset forfeiture fund that Mr. Sutton maintains. I was told that he uses the fund to take his entire staff and their spouses, and others who are not his employees, to Hawaii for seminars. Since 2004 or 2005, when the sheriff seized $2.4 million during a traffic stop, Mr. Sutton’s fund has always had at least $1.5 Million. The most recent report that Mr. Sutton submitted to the OAG, for fiscal year 09/09/06 to 08/31/07, showed a beginning balance of $1,532,428. This is significant amount of money for a small office serving a predominantly rural rural district. Mr. Sutton is its only full time prosecutor.

The fund is replenished regularly, as the sheriff makes major seizures of cash from drug sales being smuggled to Mexico. The DA gets some of that money under a verbal local agreement with the sheriff.

Exhibits

The appendix contains the following exhibits:

A. excerpts from Ch. 59 Tex. Code Crim. Pro. ;

B. Attorney General Opinion No. DM-247, concluding that the county commissioners courts are required to conduct annual audits of multi-district prosecutors’ offices;

C. Holmes v. Morales, 924 S.W.2d 39 (Tex. 1996) - holding that a district attorney’s office is a governmental office subject to the open records laws;

D. My initial FOIA Request to Mr. Sutton (Jan. 9, 2008);

E. Mr. Sutton’s response letter (Jan. 15, 2008) in which he wrote:
1. The Code of Crim. Pro. does not require him to have the forfeiture fund audited because his is a multi-county district.
2. His local agreement with the sheriff is oral.
3. The fund may not be available to his successor.

F. DA’s budget requests to commissioner’s court for his general fund:
1. 2003-04
2. 2004-05
3. 2005-06
4. 2006-07
5. 2007-08

G. DA’s Asset Forfeiture Reports to Attorney General:
1. 9/1/03 to 8/31/04
2. 9/1/05 to 8/31/06
3. 9/1/06 to 8/31/07

H. Sheriff Chapman’s letter response to my FOIA request (March 7, 2008);

I. My letter to the Attorney General requesting it enforce the audit provisions of Ch. 59 (Feb. 13, 2008);

J. Kent S. Richardson’s (Asst. AG) letter refusing to refer matter to Texas Comptroller, on grounds that Mr. Sutton had complied with the audit requirement by submitting his report on the correct form (Feb. 28, 2008);

K. Comptroller letter refusing to audit on grounds that Attorney General said Mr. Sutton had complied, and that it would take legislative action to change anything (May 15, 2008);

L. Attorney General’s letter to me advising that AG “must accept the statement” from Mr. Sutton that he hads complied with the open records act (April 22, 2008);

M. Letter from Kimble County Treasurer that its office has no records re. DA AF fund (Feb. 25, 2008);




N. Excerpts from audited financial reports of Kimble County for years ending
1. Dec. 31, 2003
2 Dec. 31, 2004
3. Dec. 31, 2005
4. Dec. 31, 2004

O. San Antonio Express News article about DA’s refusal to pay for translation of documents for arrest and extradition of murderer.

Discussion

Attorney General refuses to require audits
I filed an open records request with Mr. Sutton in early January of this year. I requested copies of the audited reports and budgets required by Code of Crim. Pro. Art. 59.06, and other public information. Mr. Sutton wrote in response that he does not have his fund audited, because the code does not require it. When I requested the Office of the Attorney General require an audit as required by CCP 59.06, the OAG refused on the grounds that Mr. Sutton was in compliance with the law, even though he had never submitted audited reports. The Comptroller also refused to do anything, on the grounds that the AG said Mr. Sutton was in compliance.

Local officials also refuse to audit
I had no better luck with the local officials. The Kimble County Judge told me that he lacks the authority to require audits of the fund, and he didn’t know what Mr. Sutton did with most of the money. Judge Delbert Roberts told me that Mr. Sutton had donated some furniture to the courthouse for the judges and commissioners, and paid to have some of the courthouse repainted. I believe he told me that Mr. Sutton bought the furniture from a Junction and paid $79,000 for it.

It is my opinion that all these officials have failed to comply with the plain language of Art. 59.06(g)(2), which requires:

All law enforcement agencies and attorneys representing the state who receive proceeds or property under this chapter shall account for the seizure, forfeiture, receipt, and specific expenditure of all such proceeds in an audit, which is to be performed annually by the commissioners court or governing body of a municipality, as appropriate…. The audit shall be completed on a form provide by the attorney general.

The Code requires conformity to accepted accounting and audit standards in at least two other places:

…all forfeited property shall be administered by the attorney representing the state, acting as the agent for the state, in accordance with accepted accounting practices….

“Expenditures are subject to audit provisions established under this article.”

My conclusion is further supported by Attorney General Opinion No. DM-247 (Sept. 3, 1993):

The commissioner’s courts of all the counties of a multicounty judicial district must conduct, separately or jointly, an annual audit of the forfeiture fund of the district attorney or criminal district attorney of that district.

If the DA fails to comply, then the AG is charged with enforcing the audit requirement.

Failure to comply with Public Information Act
I encountered another problem when Mr. Sutton failed to provide me with the bulk of the public information that I requested. All he has produced is limited information for the last fiscal year. He has not produced any documentation to explain the thousands of dollars spent on the Hawaii trip. When I recently requested production of the vouchers for $14,000 in cash withdrawals, Mr. Sutton’s lawyer requested an opinion from the OAG open records division, claiming that it was confidential information. The request for an AG opinion was not only late, it was a stalling tactic. I have made clear that I am not seeking personal information, and I do not object to the redacting of account numbers, social security numbers, addresses, and telephone numbers).

The Office of the Attorney General wrote to me that if a public official claims he has fully complied with a public information request, the OAG must accept the statement as true. This leaves me in the position of having to file a lawsuit to obtain the information that the DA should have produced under the Public Information Act. I will do so, but that does not address the greater issue of the public’s right to know.

Comptroller refuses to audit
The Comptroller, whom the code charges with the responsibility to audit the fund, refused to do so. Martin Cherry, the general counsel, advised that “any changes that would establish different procedures concerning these funds will require legislative action.” (Ex. “K”).

Why audit? - goal displacement, potential for abuse
Public administration and law enforcement experts have argued that in some cases there has been a “goal displacement” that “motivates law enforcement agencies to implement drug enforcement strategies that aggressively pursue civil asset forfeitures as a means of supplementing their budgets rather than as a legitimate tool for decreasing the supply of illicit drugs.”

While asset forfeiture is a legitimate law enforcement activity, it “…has an inherent potential for law enforcement abuse and arbitrary government action.” Further, the temptation and the potential for abuse “are proportionate with personal interest - as personal interest decreases, so does the potential for abuse.” As Shoemaker suggests, “in some cases, asset forfeitures may be sufficient to allow an agency or task force to become self-sufficient, thus, decreasing its accountability to higher authorities.”

The smaller the agency, the more potential for abuse. Federal agencies tend to be more systematically managed, with layers of bureaucracy that discourage misuse of funds. Local agencies are smaller, with less oversight, and therefore present greater opportunity for abuse (Sigler and Vecchi). As stated above, the Texas Attorney General disclaims any duty or authority to require audits, leaving district attorneys and local law enforcement officials free to spend the money as they see fit, with no concern they will be called to account.

The Dallas Morning News reported on March 26 of this year that the district attorney of Rockwall County was convicted of theft by a public servant for his misuse of his office account. The judge who sentenced him to prison said he hoped the case would send a message that those holding elective office cannot be "tempted to feed themselves at the public trough. A public official, like Caesar's wife, must be above suspicion."
All of Mr. Sutton’s uses of the money may be proper, but his refusal to submit to audits and to respond fully to my open records request give the appearance of impropriety, and call into question the integrity of the criminal justice system.
No written local agreement with sheriff
I also discovered that Mr. Sutton and the sheriff’s local agreement is not in writing. Texas allows state law enforcement agencies and district attorneys to enter “local agreements” to divide the locals’ share of the spoils (Crim. Code, Art. 59.06(a)). The code does not require the agreement be reduced to writing.

In Kimble County the sheriff and DEA have a verbal agreement for a “Sheriff’s Office 80%-DEA 20% split.” The sheriff and district attorney divide up the local share. From 1992 through August, 2006, the sheriff and DA split the proceeds 50/50 under a written local agreement (App. “H”). In August, 2006, the sheriff and DA renegotiated their local agreement and “settled on a Sheriff’s Office 70%-DA’s Office 30% split,” by verbal agreement. Id.

CCP Ch. 59 does not define “official purposes”
If there is a local agreement, the state’s attorney and law enforcement agency may retain the assets for “official purposes.” The Code does not define “official purposes” or give examples.

Operation Money Clip
Mr. Sutton maintains a significant asset fund, particularly in light of his small office. As stated, since a major bust in 2004, the fund has maintained a balance in excess of $1.5 Million. In 2004, the sheriff seized $2.4 Million in a bust that started a nationwide law enforcement operation called “Operation Money Clip.”

In the last fiscal year, Mr. Sutton made total expenditures from the forfeiture fund of $573,082. Expenditures included:

- Salaries $ 236,934
- Equipment (includes vehicles, computers, etc.) 112,349
- Supplies 94,709
- Training 79,070
- Miscellaneous fees 10,472
- Donations 8,243

The reports filed with the OAG do no provide any specific information on these broad categories. For example, how did a district attorney’s office with only one full time prosecutor spend $79,070 in one year for “training”? Who went on the Hawaii trip? Has his chief assistant used resources from the special fund for his campaign? What are the FICA contributions paid for, and for whose benefit?

As stated, there may be legitimate explanations for all of these questions, but without access to the records, and an audit, we are left in the dark. This violates the letter and spirit of Criminal Code Ch. 59 and the public information act. My sense is that Mr. Sutton intend to avoid producing any more information until after the general election, when he will be out of office. Then it won’t be his problem.

Conclusions and Recommendations

Texas law on asset forfeiture needs to be strengthened to ensure that local agencies and district attorneys use forfeited assets for legitimate purposes, and properly account for their expenditures. The statute should:
- specify uniform accounting standards and practices for special funds;
- require the commissioner’s courts to discharge their oversight responsibility;
- define “official purposes” for which funds may be spent;
- require the OAG to enforce the audit provisions;
- penalize district attorneys that fail to comply;
- require local agreements be in writing.

I hope this is helpful, and I will be happy to answer any questions.

Sincerely yours,
/S/
Richard L. Ellison

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