DA’s spending of federal forfeiture money in question

Claim: Federal forfeiture funds may pay for the rental of a venue, food and a DJ for the DA's annual holiday awards gala.

Fact: He may pay for plaques and certificates, but the Justice Department frowns upon spending on food and social events.

Claim: Howard may use federal forfeiture dollars to buy tickets to a charity gala that funds scholarships.

Fact: Federal rules do let agencies spend their forfeiture funds on scholarships, addiction treatment and other community programs, but they are supposed to purchase specific services, supplies or equipment. Spending on social events or things that give the appearance of extravagance are not allowed.

Highlights of federal forfeiture expenditures

2010 office holiday gala,$4,840

Tickets to Gate City Bar Association galas,$2,500

Burglary task force trip to Tucson, Ariz.,$894

DA Howard’s home security,$8,200

Dinner, bus transportation to Paschal’s Restaurant,$1,315

More on federal forfeiture

When local and state law enforcement or prosecutors help in a federal investigation, they can get a cut of the forfeiture proceeds through billion-dollar initiatives run by the U.S. Department of Justice and the Department of the Treasury. Backers of these national programs, which ballooned in recent decades, credit federal forfeiture with deterring organized crime and keeping money out of the hands of drug kingpins.

Critics such as the American Civil Liberties Union and the libertarian Institute for Justice say that forfeitures can infringe upon civil and property rights, and encourage law enforcement to "police for profit." They say it can also hurt people who cannot afford to hire a lawyer to fight for the return of their property. Current law allows the government to seize property even if its owner is not charged with a crime, and it does not make provisions for all indigent property owners to receive legal representation.

Finances of the Fulton County District Attorney’s Office were in such chaos in recent years that even its most basic bills went unpaid. It was slapped with eviction fees for paying rent late for its burglary task force. One of its bank accounts was dangerously close to being overdrawn. A $7,000 bill for accounting services was two years overdue.

Top prosecutor Paul Howard’s solution was to conjure up his own federal bailout — with money that is primarily intended to fight crime and drugs.

Along the way, Howard dipped into these same federal funds to buy $8,200 worth of security equipment for his home; a trip for him and his top lieutenants to a civil rights celebration in Alabama; and attendance at a celebrity basketball showcase featuring his NBA star nephew Dwight Howard and entertainers such as Atlanta music icon Cee Lo Green.

Thousands more went to food, gala tickets and office bashes, even as the county slashed the office’s budget, an Atlanta Journal-Constitution examination found.

The money came from a controversial program where federal investigators give the DA’s office a cut of assets seized from criminal suspects. Unlike a similar state program, the federal program has strict rules on spending. Forfeiture proceeds must be spent to improve an agency’s crime-fighting abilities — not to supplant local dollars or pay for perks.

Howard’s office is already under Georgia Bureau of Investigation scrutiny for spending money from the state program. This federal forfeiture spending now raises questions about whether he followed U.S. Department of Justice rules.

Howard said his spending is being singled out unfairly by the AJC. It lowered crime, he said, and was well within federal guidelines.

“I’m honestly trying to see what the point is. I think the work this office does is outstanding, and this is just part of the outstanding work that we do,” Howard said

But critics said it looks like Howard is spending some forfeiture money in a way that elected officials do far too often — playing politics, not fighting crime.

“They say, ‘Well, we’re just giving the money for charity,’ which is not exactly a political purpose,” said David B. Smith, an Alexandria, Va. attorney who helped launch the Justice Department’s forfeiture program in the 1980s. “But what he’s really doing is buying favors and using forfeiture money to do it.”

Howard’s purchases and other controversies are proof that forfeiture spending needs tougher scrutiny, critics said.

The Justice Department has audited only a tiny fraction of the thousands of agencies that receive the money. And despite reports of abuse, it rarely seeks criminal charges against violators.

“It’s sometimes quite surprising people would be so flagrant with violations,” said Jeff Holcomb, an Appalachian State University professor who has studied federal forfeiture.

He finds himself asking why various agencies’ spending seems so out of line. “Really, you couldn’t come up with a better way to spend that money?” he said.

Signs of trouble

Agencies may spend federal forfeiture money on investigations, equipment and other initiatives that help them perform their official duties. In certain cases, the money may back community programs.

But they should avoid spending that gives “any appearance of extravagance, waste, or impropriety,” the Justice Department guide says. “For example, tickets to social events, hospitality suites at conferences, or meals outside of the per diem” are not allowed.

Checks and balances are supposed to stop the money’s misuse.

Agencies that get the funds must submit an annual, five-page report to the Justice Department that gives a brief spending summary and certifies that they follow the rules. The head of the local government must sign off on it.

Federal and county auditors also may review the spending.

None of this stopped Howard from making purchases that are flashier than some the DOJ has ruled out of bounds.

The DA has told the Justice Department he spent some $175,000 of his federal forfeiture money on computers, communications and buildings during the past five years, and records indicate much of it likely fits within federal guidelines.

But an AJC review of the office’s receipts and three Fulton County audits indicate tens of thousands of dollars might not, such as funds spent for parties and perks.

This spending stretches at least as far back as 2006, when confiscated funds paid more than $5,600 for a Christmas party and $1,100 for flowers. Thousands more went to galas and luncheons, and county auditors complained that the DA's books were a mess.

Howard also mixed federal forfeiture monies with other dollars in a confiscated funds account. Co-mingling of federal money is strictly prohibited, auditors said.

In 2007, Fulton auditors noted that Howard drew from the confiscated funds account for things that had little to do with law enforcement, such as $1,000 in alcoholic drinks for the holiday party.

Later, the office separated the federal funds, but Howard’s flashy spending of them continued.

In March 2009, Howard went with three top staffers to an annual celebration in Selma, Ala., which marks the anniversary of the 1965 civil rights march across Edmund Pettus Bridge.

The bill included $500 in hotel rooms, plus $250 for a breakfast where U.S. Attorney General Eric Holder was keynote speaker.

Howard also made security at his home a priority. Some $8,200 purchased a system that streams live video from security cameras over the Internet for remote viewing. (Along with state forfeiture money, Howard’s spending for security at his home totaled $16,630 over five years.)

In 2010, he used some $4,800 for the office's holiday awards gala at The Wimbush House, a historic Midtown mansion. The contract included use of its ballroom, sun porch, and 146 chairs with cream-colored cushions.

Guests dined on $3,200 worth of sirloin tip beef roast, roasted turkey breast, and mini crab cakes with champagne sauce.

That same year, Howard spent $1,000 for a table at a gala for the Gate City Bar Association’s Hall of Fame. He was a 2008 inductee.

In 2011, he followed with a $1,500 gala sponsorship.

Howard said that he has wide discretion to spend as he sees fit. He and staffers traveled to Alabama to ask Holder for a grant to fight gangs. It did not come through, he said, but area federal agencies received more funds because of his request.

Howard needed home security equipment because of break-ins at elected officials’ homes and gang threats, the DA’s security director wrote in a memo. Howard said it was less expensive than posting a uniformed officer.

The galas raise funds for community programs, Howard said, and they aren’t as fancy as they seem.

“They say ‘gala’ just to make it seem exciting. It’s strange to me that you take that word and turn it almost into a bad thing,” he said.

Top county officials continued to certify on the DA’s annual report that he followed the rules. Fulton Commission Chairman John Eaves, who signed a 2010 filing, said county and commission staffers never warned him that Fulton auditors called Howard’s spending into question.

“There’s a disconnect right there and that needs to be tightened,” Eaves said.

Howard did run into trouble with federal administrators in 2011, when they noticed that spending figures submitted in his annual five-page report did not add up. He was ineligible to receive funds for a month, internal emails show.

This was a minor problem, Howard said, and the AJC is making too much of it.

“It just seems like we are not allowed to make a mistake,” he complained.

Plugging budget holes

The DA’s office also used federal forfeiture funds to plug budget holes as its county funding was cut.

In 2010, it used $7,000 to pay a long-overdue bill from The Wesley Peachtree Group, which it had hired in 2007 to clean up its bookkeeping.

A DA attorney certified the cost was allowed as a “law enforcement equipment and operations” expense.

And in 2011, the DA used federal money to pay about $800 in eviction fees from overdue rent.

Proceeds are supposed to boost an agency’s ability to fulfill its mission, not replace local funding.

And while the rules allow spending on asset accounting, they don’t say that federal money can fund an overhaul of an agency’s entire finances.

Rules do require that forfeiture money be kept separate from other funding. But when Howard was close to overdrawing an unrelated bank account for witness expenses in 2010, he poured $5,000 of federal funds into it.

Over time, the DA’s office ran the risk of relying on federal forfeiture to pay for workaday bills, internal emails show.

When the office was low on funds in February, DA officials even pressured a prosecutor to push the feds to give them their cut sooner. He failed.

“I’ve done everything I can do on my end to expedite the process,” an email said.

This year, Howard also hoped to use $20,000 in federal forfeiture funds to pay interns’ salaries. But when his staffers checked with federal administrators, they said no, internal emails said. The rules frown upon paying salaries for those who are not sworn officers.

Straying from rules

Other reports of controversial spending also raise serious concerns about the potential for abuses, as seizures in the billion-dollar Justice Department program have tripled in the past decade.

Police in Bal Harbour, Fla. paid more than $700,000 in salaries and benefits not allowed by federal rules. They also bought a $100,000 boat and $225,000 surveillance truck. A 2012 audit found no record of arrests related to the seizures.

And in 2011, a Kentucky sheriff pleaded guilty to theft-related charges after prosecutors said he used funds “like a personal checking account.”

In Georgia’s Troup County, a sheriff who lost a primary election used federal forfeiture funds for a $2 million spending spree during the final months of his term, a county audit found.

More than $400,000 bought shotguns for the Georgia State Patrol, which also received Tasers, police dogs, radar guns and cameras. About $75,000 went to the state Department of Natural Resources.

When Troup’s new sheriff James Woodruff took office, he couldn’t afford new bullet-proof vests.

Woodruff said advisers told him that the spending was legal because it paid for crime-fighting equipment. Also, federal rules let one agency transfer proceeds to another.

“As far as committing a crime, there’s no crime there,” Woodruff said.

The Justice Department’s asset forfeiture program only launched a compliance team in April 2011. By the end of that year, it had audited 11 of the 9,200 participating state and local agencies, a U.S. Government Accountability Office report said.

The reviews found that only two of the 11 agencies were in full compliance. Others did not follow accounting and spending rules consistently, but committed no intentional violations, the GAO said.

An asset forfeiture section spokesman did not respond to information requests from the AJC.

Questionable expenditures will continue unless the Justice Department uses its muscle to enforce the rules, said Smith, the attorney who previously ran its forfeiture office. Too many agencies don’t take spending guidelines seriously.

“As a result you get these periodic scandals because the local agency uses the money in an unwise way. Sometimes it’s even a corrupt way,” he said.

“There’s nothing unique about Atlanta,” he added.