The Case for Accountability & Transparency: How Corporate Asset Forfeiture Creates a Conflict of Interest

Authors

Tiffany J. Klinger, Fordham University School of Law

Keywords

Forfeiture, Corporations, Conflicts, Conflicts of Interest, Disgorgement

Abstract

Asset forfeiture is a tool used by law enforcement to seize property or profits related to criminal activity. Due to the public's growing distain of asset forfeiture, congressional and state reform has attempted to curtail the use of civil asset forfeiture over the past twenty years. However, little attention has been given where asset forfeiture is used against corporations. This Note sheds light as to how asset forfeiture is used against the organizational defendant and makes the following observations: First, asset forfeiture is a powerful tool in corporate criminal proceedings; however, forfeiture lacks the procedural restraints that are placed on other financial penalties. Second, asset forfeiture is predominately used in plea deals and alternative resolution agreements, which allows law enforcement to bypass the limited procedural requirements that would otherwise accompany forfeiture. Third, funds from forfeited property typically goes directly to law enforcement. Thus, the potential for abuse is significant and raises the question of whether there is an inherent conflict of interest in utilizing asset forfeiture, particularly in the organizational context. This Note argues that the current system creates an incentive structure that, at the very least, appears to be a conflict of interest-resulting from either a perceived or actual incompatibility between law enforcement's private interests-both as individuals and as an institution-and their public duties. The appearance of a conflict of interest stems from a profound lack of oversight as to how the funds from asset forfeiture are used by law enforcement. To promote accountability and transparency, this Note suggests implementing independent oversight, which would require accurate reporting of how seized assets are utilized by law enforcement agencies and the creation of a database to house such information. Implementing independent oversight would (1) serve to alleviate law enforcement's conflict of interest and (2) be a positive step toward ensuring that the law is effectively deterring criminal activity.

Recommended Citation

Tiffany J. Klinger, The Case for Accountability & Transparency: How Corporate Asset Forfeiture Creates a Conflict of Interest, 25 Fordham J. Corp. & Fin. L. 571 (2020).
Available at: https://ir.lawnet.fordham.edu/jcfl/vol25/iss2/7