Asset Forfeiture: Statement by the Manhattan District Attorney Robert M. Morgenthau

You are looking at the aftermath of a failed power grab. This year alone, my Office has distributed to the City USD181 million in funds recovered in criminal cases, and has sent the State another USD119 million -- a total that is about four times the size of our City budget. The City did not say “thank you.” Instead, all this year the administration has loudly and repeatedly protested that any money is going to the State. The City demands every dime.

This Office, like any state prosecutor’s office, must exercise independent judgement in criminal cases. And so we rejected the City’s demands. In our view, both the law and justice require that the State receive a fair portion of our recoveries. The Legislature agrees: this week it passed a bill that says the bulk of recoveries will be split 50-50: half to the City, and half to the State.

But this City administration cannot abide not being in control. As retaliation for our independent decision, it has now leaked word that this Office has unseemly “secret bank accounts.” The accusation is false and irresponsible. This Office, like any large agency, has bank accounts, and the City has been fully aware of that all along. Every year we pay the City millions of dollars from those accounts -- as noted, USD181 million this year alone. Of course the City knew of our accounts: it cashes our cheques. Indeed, one of the so-called “secret accounts” is one which we set up to receive a USD109 million fine in the Tyco case, and through which we passed that money to the City. The “secret account” complaint is reminiscent of Claude Rains’ famous statement in Casablanca that he was shocked -- SHOCKED -- to learn what was going on at Rick’s place.

Apart from that, there is nothing unseemly about these accounts. Every year we receive very large amounts of state and federal forfeiture funds, grants, and fines, and we hold large amounts of money as an escrow agent -- for example, for crime victims who are entitled to the money as restitution. We keep the different types of money segregated in separate accounts and in CDs in four banks until it is ripe for payout.

And we have used that money well. For example, in the last year this Office, in partnership with the Justice Department, used its resources to make the most important Iran sanctions case to date, after we discovered that Lloyds Bank was assisting Iranian banks with illicit transactions. And we made the most important case to date against a supplier of forbidden munitions to Iran, the LIMMT Economic and Trade Company. Not only were these cases extremely important in and of themselves, but they have resulted in huge and unprecedented financial recoveries for the City. The City’s response to this is not “well done,” but nitpicking over whether the relevant recoveries were placed in properly registered accounts.

Our use of bank accounts is routine business practice. We have invited the Comptroller, the only person legally entitled to audit our overall operations, to come in and examine all those accounts, and we have no concerns at all about what his conclusions will be when his audit is done. In the meantime, we will continue to resist political efforts to undercut the independence of prosecutors. We cannot allow petty partisan concerns to control important public policy decisions.