[Code of Federal Regulations]
[Title 39, Volume 1]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 39CFR233.7]

[Page 52-63]
 
                        TITLE 39--POSTAL SERVICE
 
                 CHAPTER I--UNITED STATES POSTAL SERVICE
 
PART 233_INSPECTION SERVICE AUTHORITY--Table of Contents
 
Sec.  233.7  Forfeiture authority and procedures.

    (a) Designation of officials having forfeiture authority. The Chief 
Postal Inspector is authorized to perform all duties and 
responsibilities necessary on behalf of the Postal Service to enforce 18 
U.S.C. 981, 2254, and 21 U.S.C. 881, to delegate all or any part of this 
authority to Deputy Chief Inspectors, Inspectors in Charge, and 
Inspectors of the Postal Inspection Service, and to issue such 
instructions as may be necessary to carry out this authority.
    (b) Administrative forfeiture authority. The Chief Postal Inspector 
is authorized to conduct administrative forfeitures under the statutes 
identified in paragraph (a) of this section, following, where 
applicable, the procedures provided by the customs laws of the United 
States (19 U.S.C. 1600 et seq.), and to pay valid liens and mortgages 
against property that has been so forfeited.
    (c) Inventory. An inventory of all property seized for forfeiture 
under the statutes identified in paragraph (a) of this section shall be 
prepared and maintained by the Postal Inspection Service. The inventory 
should occur within seven days of the seizure. The inventory must, at a 
minimum, identify all property seized, state the exact location of the 
property at the time of its seizure, and describe in detail the 
condition of the property. A written receipt containing such information 
and identifying the Postal Inspector who conducted the seizure must be 
provided to the party from whom the property was seized, or the party's 
agent or representative, at the time of the seizure or as soon 
thereafter as is practicable.
    (d) Custody. Custody of all property seized for forfeiture under the 
statutes identified in paragraph (a) of this section is maintained by 
the U.S. Marshals Service, except property held for evidentiary 
purposes; retained for official use upon forfeiture; subject to 
equitable transfer to federal, state or local law enforcement agencies; 
or subject to civil administrative forfeiture.
    (e) Appraisal. The Postal Inspection Service must promptly obtain or 
complete an appraisal of all seized property. The appraisal value is the 
fair market value of the property, which is

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the highest price, in terms of money, which a property will bring in a 
competitive and open market.
    (f) Quick-release. Property subject to administrative forfeiture 
may, prior to forfeiture, be released by the Postal Inspection Service 
to the owner of the property having an immediate right to possession of 
the property when the Postal Inspection Service concludes that release 
of the property is in the best interest of justice. An agreement to hold 
harmless the United States, the Postal Inspection Service, and all other 
involved entities should be obtained from the owner. A decision for 
quick release of the property should be made within five days of the 
seizure.
    (g) Judicial forfeiture. If the appraised value of property seized 
exceeds $500,000, with the exception of: (1) Monetary instruments within 
the meaning of 31 U.S.C. 5312(a)(3), or (2) any conveyance which was 
used to import, export, transport, or store any controlled substance or 
if a claim and satisfactory bond have been received for property 
appraised at $500,000 or less, or for any monetary instruments within 
the meaning of 31 U.S.C. 5312(a)(3) or any conveyance which was used to 
import, export, transport, or store any controlled substance the Postal 
Inspection Service must transmit the claim and bond to the U.S. Attorney 
for the judicial district in which the seizure was made and request that 
the U.S. Attorney promptly institute a judicial forfeiture proceeding 
against the property. The Postal Inspection Service must provide the 
U.S. Attorney a complete written description of the property, a 
statement of the facts and circumstances leading to the seizure of the 
property, including all facts and documentation leading to the 
conclusion that the seized property is subject to forfeiture, and such 
additional information as the U.S. Attorney may require for the purpose 
of instituting a judicial forfeiture action.
    (h) Notice of seizure for property having a value of $500,000 or 
less, or for monetary instruments or for conveyances which were used to 
transport or store any controlled substance; advertisement; declaration 
of forfeiture. (1) The Postal Inspection Service must cause written 
notice of the seizure of all property subject to civil administrative 
forfeiture to be sent to each known party that may have a possessory or 
ownership interest in the seized property. The notice must describe the 
property seized; state the date, place, and cause for seizure; and 
inform the party of the intent of the Postal Inspection Service to 
forfeit the property. In addition, the notice must state that any person 
desiring a judicial determination of forfeiture must file a claim and 
bond (see paragraph 2 of this subsection) with a designated official of 
the Postal Inspection Service, within twenty days from the date of the 
first publication of the notice of seizure (see paragraph (4) of this 
subsection), or of the date of the letter of personal notice required by 
this paragraph, whichever is later. Any claim submitted pursuant to this 
paragraph is invalid unless accompanied by a bond meeting the 
requirements of paragraph (2), or a completed PS Form 1518, Petition to 
Proceed in Forma Pauperis.
    (2) A bond in the amount of $5,000 or ten percent of the value of 
the claimed property, whichever is lower, but in no event less than 
$250, must accompany any claim submitted pursuant to paragraph (1). The 
bond may be in the form of a cashier's check, certified check, or money 
order made payable to the United States of America, or satisfactory 
sureties. If a claimant is financially unable to post the bond because 
of indigency, such a person may request a waiver of the bond by 
completion of PS Form 1518, Petition to Proceed in Forma Pauperis.
    (3) Upon receipt of the claim and bond, the Postal Inspection 
Service must, upon determining that the documents are in proper form and 
the sureties satisfactory, transmit the documents to the appropriate 
U.S. Attorney as provided in subsection (g). If the documents are not 
satisfactory, the Postal Inspection Service must notify the party making 
the claim and may allow a reasonable time for correction. If correction 
is not made within the time allowed for that purpose, the administrative 
forfeiture must proceed as though the claim and bond had not been 
tendered.
    (4) Notice of administrative forfeiture proceedings containing the 
information required by subsection (h)(1)

[[Page 54]]

must be published once each week for at least three successive weeks in 
a newspaper of general circulation in the judicial district in which the 
property was seized. If a claim and satisfactory bond is not filed 
within the time allowed, the Postal Inspection Service may declare the 
property forfeited.
    (i) Disposition of forfeited property. (1) Whenever property is 
forfeited administratively, the Postal Inspection Service may:
    (i) Retain the property for official use;
    (ii) Transfer ownership of the property to any federal, state or 
local law enforcement agency that participated in the investigation 
leading to the forfeiture;
    (iii) Sell any property which is not required to be destroyed by law 
and which is not harmful to the public;
    (iv) Destroy the property; or
    (v) Dispose of the property as otherwise permitted by law.
    (2) If the laws of a state in which an article of forfeited property 
is located prohibit the sale or possession of such property or if the 
Postal Service and the Marshals Service are of the opinion that it would 
be more advantageous to sell the forfeited property in another district, 
the property may be moved to and sold in such other district.
    (3) If, after an administrative forfeiture of property is completed, 
it appears that the proceeds of sale will not be sufficient to pay the 
costs of sale or the proceeds will be insignificant in relation to the 
expenses involved in the forfeiture, then the Postal Service or the 
Marshals Service may order destruction or other disposition of the 
property including alteration of the property into an article that is 
not prohibited.
    (j) Remission or mitigation of administrative, civil, and criminal 
forfeitures--(1) Authority, purpose, and scope--(i) Purpose. This 
section sets forth the procedures for Postal Inspection Service 
officials to follow when considering remission or mitigation of 
administrative forfeitures under the jurisdiction of the Postal Service. 
The purpose of these regulations is to provide a basis for ameliorating 
the effects of forfeiture through the partial or total remission of 
forfeiture for individuals who have an interest in the forfeited 
property but who did not participate in, or have knowledge of, the 
conduct that resulted in the property being subject to forfeiture and, 
where required, took all reasonable steps under the circumstances to 
ensure that such property would not be used, acquired, or disposed of 
contrary to law. Additionally, these regulations provide for partial or 
total mitigation of the forfeiture and imposition of alternative 
conditions in appropriate circumstances.
    (ii) Authority to grant remission and mitigation. (A) Remission and 
mitigation functions in administrative forfeitures are performed by the 
agency seizing the property. Within the Postal Inspection Service, 
authority to grant remission and mitigation is delegated to the 
Independent Counsel, Office of the Chief Inspector, Washington, DC.
    (B) Remission and mitigation functions in judicial cases are within 
the jurisdiction of the Criminal Division of the Department of Justice. 
Within the Criminal Division, authority to grant remission and 
mitigation has been delegated to the Chief, Asset Forfeiture and Money 
Laundering Section.
    (C) The powers and responsibilities within these regulations may be 
redelegated to attorneys or managers working under the supervision of 
the designated officials.
    (D) The time periods and internal requirements established in these 
regulations are designed to guide the orderly administration of the 
remission and mitigation process and are not intended to create rights 
or entitlements in favor of individuals seeking remission or mitigation. 
These regulations will apply to all decisions on petitions for remission 
or mitigation made on or after July 1, 1997. These regulations will 
apply to decisions on requests for reconsideration of a denial of a 
petition under paragraphs (j)(3)(x) and (3)(xi) of this section only if 
the initial decision on the petition was made under the provisions of 
this part effective July 1, 1997.
    (E) This section governs any petition for remission or mitigation 
filed with the Chief Postal Inspector and supersedes any Postal Service 
regulation governing petitions for remission or

[[Page 55]]

mitigation to the extent such regulation is inconsistent with this 
section.
    (2) Definitions. As used in this part:
    (i) The term administrative forfeiture means the process by which 
property may be forfeited by an investigative agency rather than through 
judicial proceedings.
    (ii) The term appraised value means the estimated market value of an 
asset at the time and place of seizure if such or similar property was 
freely offered for sale between a willing seller and a willing buyer.
    (iii) The term Attorney General means the Attorney General of the 
United States or his or her designee.
    (iv) The term beneficial owner means a person with actual use of, as 
well as an interest in, the property subject to forfeiture.
    (v) The term general creditor means one whose claim or debt is not 
secured by a specific right to obtain satisfaction against the 
particular property subject to forfeiture.
    (vi) The term judgment creditor means one who has obtained a 
judgment against the debtor but has not yet received full satisfaction 
of the judgment.
    (vii) The term judicial forfeiture means either a civil or criminal 
proceeding in a United States District Court that may result in a final 
judgment and order of forfeiture.
    (viii) The term lienholder means a creditor whose claim or debt is 
secured by a specific right to obtain satisfaction against the 
particular property subject to forfeiture. A lien creditor qualifies as 
a lienholder if the lien:
    (A) Was established by operation of law or contract;
    (B) Was created as a result of an exchange of money, goods, or 
services; and
    (C) Is perfected against the specific property forfeited for which 
remission or mitigation is sought (e.g., a real estate mortgage, a 
mechanic's lien).
    (ix) The term net equity means the amount of a lienholder's monetary 
interest in property subject to forfeiture. Net equity shall be computed 
by determining the amount of unpaid principal and unpaid interest at the 
time of seizure, and by adding to that sum unpaid interest calculated 
from the date of seizure through the last full month prior to the date 
of the decision on the petition. Where a rate of interest is set forth 
in a security agreement, the rate of interest to be used in this 
computation will be the annual percentage rate so specified in the 
security agreement that is the basis of the lienholder's interest. In 
this computation, however, there shall be no allowances for attorneys' 
fees, accelerated or enhanced interest charges, amounts set by contract 
as damages, unearned extended warranty fees, insurance, service contract 
charges incurred after the date of seizure, allowances for dealer's 
reserve, or any other similar charges.
    (x) The term owner means the person in whom primary title is vested 
or whose interest is manifested by the actual and beneficial use of the 
property, even though the title is vested in another. A victim of an 
offense as defined in paragraph (j) (2)(xxi) of this section may also be 
an owner if he or she has a present legally cognizable ownership 
interest in the property forfeited. A nominal owner of property will not 
be treated as its true owner if he or she is not its beneficial owner.
    (xi) The term person means an individual, partnership, corporation, 
joint business enterprise, estate, or other legal entity capable of 
owning property.
    (xii) The term petition means a petition for remission or mitigation 
of forfeiture under these regulations. This definition includes a 
petition for restoration of the proceeds of sale of forfeited property 
and a petition for the value of forfeited property placed into official 
use.
    (xiii) The term petitioner means the person applying for remission, 
mitigation, restoration of the proceeds of sale, or for the appraised 
value of forfeited property under these regulations. A petitioner may be 
an owner of forfeited property as defined in paragraph (j)(2)(x) of this 
section; a lienholder as defined in paragraph (j)(2)(viii) of this 
section; or a victim as defined in paragraph (j)(2)(xxi) of this section 
subject to the limitations of paragraph (j)(8) of this section.
    (xiv) The term Postal Service Fund means the United States Postal 
Fund established under 39 U.S.C. 2003.

[[Page 56]]

    (xv) The term property means real or personal property of any kind 
capable of being owned or possessed.
    (xvi) The term record means a series of arrests for related crimes, 
unless the arrestee was acquitted or the charges were dismissed for lack 
of evidence; a conviction for a related crime or completion of sentence 
within ten years of the acquisition of the property subject to 
forfeiture; or two convictions for a related crime at any time in the 
past.
    (xvii) The term related crime as used in paragraphs (j)(2)(xvi) and 
(6)(v) of this section means any crime similar in nature to that which 
gives rise to the seizure of property for forfeiture. For example, where 
property is seized for a violation of the federal laws dealing with 
drugs, a related crime would be any offense involving a violation of the 
federal laws relating to drugs or the laws of any state or political 
subdivision thereof relating to drugs.
    (xviii) The term related offense as used in paragraph (j)(8) of this 
section means:
    (A) Any predicate offense charged in a Federal Racketeer Influenced 
and Corrupt Organizations Act (RICO) count for which forfeiture was 
ordered; or
    (B) An offense committed as part of the same scheme or design, or 
pursuant to the same conspiracy, as was involved in the offense for 
which the forfeiture was ordered.
    (xix) The term Ruling Official means any official to whom decision 
making authority has been delegated pursuant to paragraph (j)(1)(ii) of 
this section.
    (xx) The term seizing agency means the federal agency that seized 
the property or adopted the seizure of another agency for federal 
forfeiture.
    (xxi) The term victim means a person who has incurred a pecuniary 
loss as a direct result of the commission of the offense underlying a 
forfeiture. A drug user is not considered a victim of a drug trafficking 
offense under this definition. A victim does not include one who 
acquires a right to sue the perpetrator of the criminal offense for any 
loss by assignment, subrogation, inheritance, or otherwise from the 
actual victim, unless that person has acquired an actual ownership 
interest in the forfeited property.
    (xxii) The term violator means the person whose use or acquisition 
of the property in violation of the law subjected such property to 
seizure for forfeiture.
    (3) Petitions in administrative forfeiture cases--(i) Notice of 
seizure. The notice of seizure and intent to forfeit the property shall 
advise any persons who may have a present ownership interest in the 
property to submit their petitions for remission or mitigation within 
thirty (30) days of the date they receive the notice in order to 
facilitate processing. Petitions shall be considered any time after 
notice until the forfeited property is placed into official use, sold, 
or otherwise disposed of according to law, except in cases involving 
petitions to restore the proceeds from the sale of forfeited property. A 
notice of seizure shall include the title of the seizing agency, the 
Ruling Official, the mailing and street address of the official to whom 
petitions should be sent, and an asset identifier number.
    (ii) Persons who may file. A petition for remission or mitigation 
must be filed by a petitioner as defined in paragraph (j)(2)(xiii) of 
this section or as prescribed in paragraphs (j)(9) (vii) and (viii) of 
this section.
    (iii) Contents of petition. (A) All petitions must include the 
following information in clear and concise terms:
    (1) The name, address, and social security or other taxpayer 
identification number of the person claiming an interest in the seized 
property who is seeking remission or mitigation;
    (2) The name of the seizing agency, the asset identifier number, and 
the date and place of seizure;
    (3) A complete description of the property including make, model, 
and serial numbers, if any; and
    (4) A description of the petitioner's interest in the property as 
owner, lienholder, or otherwise, supported by original or certified 
bills of sale, contracts, deeds, mortgages, or other documentary 
evidence.
    (B) Any factual recitation or documentation of any type in a 
petition must be supported by a sworn affidavit.
    (iv) Releases. In addition to the contents of the petition for 
remission or mitigation set forth in paragraph (j)(3)(iii) of this 
section, upon request,

[[Page 57]]

the petitioner shall also furnish the agency with an instrument executed 
by the titled or registered owner and any other known claimant of an 
interest in the property releasing interest in such property.
    (v) Filing petition with agency. (A) A petition for remission or 
mitigation of an administrative forfeiture by the Postal Inspection 
Service shall be sent to the Chief Postal Inspector, United States 
Postal Service, 475 L'Enfant Plaza SW, Washington, DC 20260-2100.
    (B) The petition shall be sworn to by the petitioner or by the 
petitioner's attorney upon information and belief, supported by the 
client's sworn notice of representation pursuant to 28 U.S.C. 1746, as 
set out in paragraph (j)(9)(vii) of this section.
    (vi) Agency investigation. Upon receipt of a petition, the Postal 
Inspection Service shall investigate the merits of the petition and 
prepare a written report containing the results of that investigation. 
This report shall be submitted to the Ruling Official for review and 
consideration.
    (vii) Ruling. Upon receipt of the petition and the agency report, 
the Ruling Official shall review the petition and the report, and shall 
rule on the merits of the petition. No hearing shall be held.
    (viii) Petitions granted. If the Ruling Official grants a remission 
or mitigation of the forfeiture, a copy of the decision shall be sent by 
certified mail to the petitioner, or, if represented by an attorney, to 
the petitioner's attorney. A copy of the decision shall also be sent to 
the U.S. Marshals Service or other property custodian. The written 
decision shall include the terms and conditions, if any, upon which the 
remission or mitigation is granted and the procedures the petitioner 
must follow to obtain release of the property or the monetary interest 
therein.
    (ix) Petitions denied. If the Ruling Official denies a petition, a 
copy of the decision shall be sent by certified mail to the petitioner, 
or, if represented by an attorney, to the petitioner's attorney of 
record. A copy of the decision shall also be sent to the U.S. Marshals 
Service or other property custodian. The written decision shall specify 
the reason that the petition was denied. The decision shall advise the 
petitioner that a request for reconsideration of the denial of the 
petition may be submitted to the Ruling Official in accordance with 
paragraph (j)(3)(x) of this section.
    (x) Request for reconsideration. (A) A request for reconsideration 
of the denial of the petition shall be considered if:
    (1) It is postmarked or received by the office of the Ruling 
Official within ten (10) days from the receipt of the notice of the 
denial of the petition by the petitioner; and
    (2) The request is based on information or evidence not previously 
considered that is material to the basis for the denial or presents a 
basis clearly demonstrating that the denial was erroneous.
    (B) In no event shall a request for reconsideration be decided by 
the same Ruling Official who ruled on the original petition.
    (C) Only one request for reconsideration of a denial of a petition 
shall be considered.
    (xi) Restoration of proceeds from sale. (A) A petition for 
restoration of the proceeds from the sale of forfeited property, or for 
the appraised value of forfeited property when the forfeited property 
has been retained by or delivered to a government agency for official 
use, may be submitted by an owner or lienholder in cases in which the 
petitioner:
    (1) Did not know of the seizure prior to the entry of a declaration 
of forfeiture; and
    (2) Could not reasonably have known of the seizure prior to the 
entry of a declaration of forfeiture.
    (B) Such a petition shall be submitted pursuant to paragraphs 
(j)(3)(ii) through (v) of this section within ninety (90) days from the 
date the property is sold or otherwise disposed of.
    (4) Petitions in judicial forfeiture cases--(i) Procedure for filing 
petition. If the forfeiture proceedings are judicial, a petition for 
remission or mitigation of a judicial forfeiture shall be addressed to 
the Attorney General; shall be sworn to by the petitioner or by the 
petitioner's attorney upon information and belief, supported by the 
client's

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sworn notice of representation pursuant to 28 U.S.C. 1746; and shall be 
submitted to the United States Attorney for the district in which the 
judicial forfeiture proceedings are brought. A petitioner also shall 
submit a copy of the petition to the Chief Postal Inspector if the 
Postal Inspection Service was the seizing agency.
    (ii) Ruling. Department of Justice regulations on petitions for 
remission or mitigation in judicial forfeiture cases are stated in 29 
CFR 9.4.
    (5) Criteria governing administrative remission and mitigation--(i) 
Remission. (A) The Ruling Official shall not grant remission of a 
forfeiture unless the petitioner establishes that:
    (1) The petitioner has a valid, good faith and legally cognizable 
interest in the seized property as owner or lienholder as defined in 
these regulations; and
    (2) The petitioner is innocent within the meaning of the innocent 
owner provisions of the applicable civil forfeiture statute, is a bona 
fide purchaser for value without cause to believe that the property was 
subject to forfeiture at the time of the purchase, or is one who held a 
legally cognizable interest in the seized property at the time of the 
violation underlying the forfeiture superior to that of the defendant 
within the meaning of the applicable criminal forfeiture statute, and is 
thereby entitled to recover his or her interest in the forfeited 
property by statute. (If the applicable civil forfeiture statute 
contains no innocent owner defense, the innocent owner provisions 
applicable to 21 U.S.C. 881(a)(4) shall apply.) Unless otherwise 
provided by statute, in the case of petitioners who acquired their 
interest in the property after the time of the violation underlying the 
forfeiture, the question of whether the petitioner had knowledge of the 
violation shall be determined as of the point in time when the interest 
in the property was acquired.
    (B) The knowledge and responsibilities of petitioner's 
representative, agent, or employee in paragraph (j)(5)(i)(A)(2) of this 
section are imputed to the petitioner where the representative, agent, 
or employee was acting in the course of his or her employment and in 
furtherance of the petitioner's business.
    (C) The petitioner has the burden of establishing the basis for 
granting a petition for remission or mitigation of forfeited property, a 
restoration of proceeds of sale or appraised value of forfeited 
property, or a reconsideration of a denial of such a petition. Failure 
to provide information or documents and to submit to interviews, as 
requested, may result in a denial of the petition.
    (D) The Ruling Official shall presume a valid forfeiture and shall 
not consider whether the evidence is sufficient to support the 
forfeiture.
    (E) Willful, materially false statements or information, made or 
furnished by the petitioner in support of a petition for remission or 
mitigation of forfeited property, the restoration of proceeds or 
appraised value of forfeited property, or the reconsideration of a 
denial of any such petition, shall be grounds for denial of such 
petition and possible prosecution for the filing of false statements.
    (ii) Mitigation. (A) The Ruling Official may grant mitigation to a 
party not involved in the commission of the offense underlying 
forfeiture:
    (1) Where the petitioner has not met the minimum conditions for 
remission, but the Ruling Official finds that some relief should be 
granted to avoid extreme hardship and that return of the property 
combined with imposition of monetary and/or other conditions of 
mitigation in lieu of a complete forfeiture will promote the interest of 
justice and will not diminish the deterrent effect of the law. 
Extenuating circumstances justifying such a finding include those 
circumstances that reduce the responsibility of the petitioner for 
knowledge of the illegal activity, knowledge of the criminal record of a 
user of the property, or failure to take reasonable steps to prevent the 
illegal use or acquisition by another for some reason, such as a 
reasonable fear of reprisal; or
    (2) Where the minimum standards for remission have been satisfied 
but the overall circumstances are such that, in the opinion of the 
Ruling Official, complete relief is not warranted.
    (B) The Ruling Official may in his or her discretion grant 
mitigation to a

[[Page 59]]

party involved in the commission of the offense underlying the 
forfeiture where certain mitigating factors exist, including, but not 
limited to: The lack of a prior record or evidence of similar criminal 
conduct; if the violation does not include drug distribution, 
manufacturing, or importation, the fact that the violator has taken 
steps, such as drug treatment, to prevent further criminal conduct; the 
fact that the violation was minimal and was not part of a larger 
criminal scheme; the fact that the violator has cooperated with federal, 
state, or local investigations relating to the criminal conduct 
underlying the forfeiture; or the fact that complete forfeiture of an 
asset is not necessary to achieve the legitimate purposes of forfeiture.
    (C) Mitigation may take the form of a monetary condition or the 
imposition of other conditions relating to the continued use of the 
property, and the return of the property, in addition to the imposition 
of any other costs that would be chargeable as a condition to remission. 
This monetary condition is considered as an item of cost payable by the 
petitioner, and shall be deposited into the Postal Service Fund as an 
amount realized from forfeiture in accordance with the applicable 
statute. If the petitioner fails to accept the Ruling Official's 
mitigation decision or any of its conditions, or fails to pay the 
monetary amount within twenty (20) days of the receipt of the decision, 
the property shall be sold, and the monetary amount imposed and other 
costs chargeable as a condition to mitigation shall be subtracted from 
the proceeds of the sale before transmitting the remainder to the 
petitioner.
    (6) Special rules for specific petitioners--(i) General creditors. A 
general creditor may not be granted remission or mitigation of 
forfeiture unless he or she otherwise qualifies as a petitioner under 
these regulations.
    (ii) Rival claimants. If the beneficial owner of the forfeited 
property and the owner of a security interest in the same property each 
file a petition, and if both petitions are found to be meritorious, the 
claim of the beneficial owner shall take precedence.
    (iii) Voluntary bailments. A petitioner who allows another to use 
his or her property without cost, and who is not in the business of 
lending money secured by property or of leasing or renting property for 
profit, shall be granted remission or mitigation of forfeiture in 
accordance with the provisions of paragraph (j)(5) of this section.
    (iv) Lessors. A person engaged in the business of leasing or renting 
real or personal property on a long-term basis with the right to 
sublease shall not be entitled to remission or mitigation of a 
forfeiture of such property unless the lessor can demonstrate compliance 
with all the requirements of paragraph (j)(5) of this section.
    (v) Straw owners. A petition by any person who has acquired a 
property interest recognizable under these regulations and who knew or 
had reason to believe that the interest was conveyed by the previous 
owner for the purpose of circumventing seizure, forfeiture, or these 
regulations, shall be denied. A petition by a person who purchases or 
owns property for another who has a record for related crimes as defined 
in paragraph (j)(2)(xvii) of this section, or a petition by a lienholder 
who knows or has reason to believe that the purchaser or owner of record 
is not the real purchaser or owner, shall be denied unless both the 
purchaser of record and the real purchaser or owner meet the 
requirements of paragraph (j)(5) of this section.
    (vi) Judgment creditors. (A) A judgment creditor will be recognized 
as a lienholder if:
    (1) The judgment was duly recorded before the seizure of the 
property for forfeiture;
    (2) Under applicable state or other local law, the judgment 
constitutes a valid lien on the property that attached to it before the 
seizure of the property for forfeiture; and
    (3) The petitioner had no knowledge of the commission of any act or 
acts giving rise to the forfeiture at the time the judgment became a 
lien on the forfeited property.
    (B) A judgment creditor will not be recognized as a lienholder if 
the property in question is not property of which the judgment debtor is 
entitled to claim ownership under applicable state or other local law 
(e.g., stolen

[[Page 60]]

property). A judgment creditor is entitled under these regulations to no 
more than the amount of the judgment, exclusive of any interest, costs, 
or other fees including attorney's fees associated with the action that 
led to the judgment or its collection.
    (C) A judgment creditor's lien must be registered in the district 
where the property is located if the judgment was obtained outside the 
district.
    (7) Terms and conditions of remission and mitigation--(i) Owners. 
(A) An owner's interest in property that has been forfeited is 
represented by the property itself or by a monetary interest equivalent 
to that interest at the time of seizure. Whether the property or a 
monetary equivalent will be remitted to an owner shall be determined at 
the discretion of the Ruling Official.
    (B) If a civil judicial forfeiture action against the property is 
pending, release of the property must await an appropriate court order.
    (C) Where the government sells or disposes of the property prior to 
the grant of the remission, the owner shall receive the proceeds of that 
sale, less any costs incurred by the government in the sale. The Ruling 
Official, at his or her discretion, may waive the deduction of costs and 
expenses incident to the forfeiture.
    (D) Where the owner does not comply with the conditions imposed upon 
release of the property by the Ruling Official, the property shall be 
sold. Following the sale, the proceeds shall be used to pay all costs of 
the forfeiture and disposition of the property, in addition to any 
monetary conditions imposed. The remaining balance shall be paid to the 
owner.
    (ii) Lienholders. (A) When the forfeited property is to be retained 
for official use or transferred to a state or local law enforcement 
agency or foreign government pursuant to law, and remission or 
mitigation has been granted to a lienholder, the recipient of the 
property shall assure that:
    (1) In the case of remission, the lien is satisfied as determined 
through the petition process; or
    (2) In the case of mitigation, an amount equal to the net equity, 
less any monetary conditions imposed, is paid to the lienholder prior to 
the release of the property to the recipient agency or foreign 
government.
    (B) When the forfeited property is not retained for official use or 
transferred to another agency or foreign country pursuant to law, the 
lienholder shall be notified by the Ruling Official of the right to 
select either of the following alternatives:
    (1) Return of property. The lienholder may obtain possession of the 
property after paying the United States, through the Ruling Official, 
the costs and expenses incident to the forfeiture, the amount, if any, 
by which the appraised value of the property exceeds the lienholder's 
net equity in the property, and any amount specified in the Ruling 
Official's decision as a condition to remit the property. The Ruling 
Official, at his or her discretion, may waive costs and expenses 
incident to the forfeiture. The Ruling Official shall forward a copy of 
the decision, a memorandum of disposition, and the original releases to 
the U.S. Marshals Service or other property custodian who shall 
thereafter release the property to the lienholder; or
    (2) Sale of Property and Payment to Lienholder--Subject to the 
provisions of paragraph (j)(9)(i) of this section, upon sale of the 
property, the lienholder may receive the payment of a monetary amount up 
to the sum of the lienholder's net equity, less the expenses and costs 
incident to the forfeiture and sale of the property, and any other 
monetary conditions imposed. The Ruling Official, at his or her 
discretion, may waive costs and expenses incident to the forfeiture.
    (iii) If the lienholder does not notify the Ruling Official of the 
selection of one of the two options set forth above in paragraph 
(j)(7)(ii)(B) of this section within twenty (20) days of the receipt of 
such notification, the Ruling Official shall direct the U.S. Marshal or 
other property custodian to sell the property and pay the lienholder an 
amount up to the net equity, less the costs and expenses incurred 
incident to the forfeiture and sale, and any monetary conditions 
imposed. In the event a lienholder subsequently receives a payment of 
any kind on the debt owed for which he or she has already received 
payment as a result of the granting of

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remission or mitigation, the lienholder shall reimburse the Postal 
Service Fund to the extent of the payment received.
    (iv) Where the lienholder does not comply with the conditions 
imposed upon the release of the property, the property shall be sold 
after forfeiture. From the proceeds of the sale, all costs incident to 
the forfeiture and sale shall first be deducted, and the balance up to 
the net equity, less any monetary conditions, shall be paid to the 
lienholder.
    (8) Provisions applicable to victims. The provisions of this section 
apply to victims of an offense underlying the forfeiture of property, or 
of a related offense, who do not have a present ownership interest in 
the forfeited property (or, in the case of multiple victims of an 
offense, who do not have a present ownership interest in the forfeited 
property that is clearly superior to that of other petitioner victims). 
The provisions of this section apply only with respect to property 
forfeited pursuant to statutes that explicitly authorize restoration or 
remission of forfeited property to victims. Victims who have a superior 
present legally cognizable ownership interest in forfeited property may 
file petitions as other owners, subject to the regulations set forth in 
paragraph (j)(7)(i) of this section. The claims of such owner victims, 
like those of any other owners, shall have priority over the claims of 
any non-owner victims whose claims are recognized pursuant to this 
section.
    (i) Qualifications to file. A victim, as defined in paragraph 
(j)(2)(xxi) of this section, of an offense that was the underlying basis 
for the criminal, civil, or administrative forfeiture of specific 
property, or a victim of a related offense, may be granted remission of 
the forfeiture of that property, if in addition to complying with the 
other applicable provisions of this section, the victim satisfactorily 
demonstrates that:
    (A) A pecuniary loss of a specific amount has been directly caused 
by the criminal offense, or related offense, that resulted in the 
forfeiture, or by a related offense, and that the loss is supported by 
documentary evidence including invoices and receipts;
    (B) The pecuniary loss is the direct result of the illegal acts and 
is not the result of otherwise lawful acts which were committed in the 
course of a criminal offense;
    (C) The victim did not knowingly contribute to, participate in, 
benefit from, or act in a willfully blind manner towards the commission 
of the offense, or related offense, that was the underlying basis of the 
forfeiture;
    (D) The victim has not in fact been compensated for the wrongful 
loss of the property by the perpetrator or others; and
    (E) The victim does not have recourse reasonably available to other 
assets from which to obtain compensation for the wrongful loss of the 
property.
    (ii) Pecuniary loss. The amount of the pecuniary loss suffered by a 
victim for which remission may be granted is limited to the fair market 
value of the property of which the petitioner was deprived as of the 
date of the occurrence of the loss. No allowance shall be made for 
interest foregone or for collateral expenses incurred to recover lost 
property or to seek other recompense.
    (iii) Torts. A tort associated with illegal activity that formed the 
basis for the forfeiture shall not be a basis for remission, unless it 
constitutes the illegal activity itself, nor shall remission be granted 
for physical injuries to a petitioner or for damage to a petitioner's 
property.
    (iv) Denial of petition. In the exercise of his or her discretion, 
the Ruling Official may decline to grant remission where:
    (A) There is substantial difficulty in calculating the pecuniary 
loss incurred by the victim or victims;
    (B) The amount of the remission, if granted, would be small compared 
with the amount of expenses incurred by the government in determining 
whether to grant remission; or
    (C) The total number of victims is large and the monetary amount of 
the remission so small as to make its granting impractical.
    (v) Pro rata basis. In granting remission to multiple victims 
pursuant to this section, the Ruling Official should generally grant 
remission on a pro rata

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basis to recognized victims when petitions cannot be granted in full due 
to the limited value of the forfeited property. However, the Ruling 
Official may consider, among others, the following factors in 
establishing appropriate priorities in individual cases:
    (A) The specificity and reliability of the evidence establishing a 
loss;
    (B) The fact that a particular victim is suffering an extreme 
financial hardship;
    (C) The fact that a particular victim has cooperated with the 
government in the investigation related to the forfeiture or to a 
related prosecution or civil action; and
    (D) In the case of petitions filed by multiple victims of related 
offenses, the fact that a particular victim is a victim of the offense 
underlying the forfeiture.
    (vi) Reimbursement. Any petitioner granted remission pursuant to 
this section shall reimburse the Postal Service Fund for the amount 
received to the extent the individual later receives compensation for 
the loss of the property from any other source. The petitioner shall 
surrender the reimbursement upon payment from any secondary source.
    (vii) Claims of financial institution regulatory agencies. In cases 
involving property forfeitable under 18 U.S.C. 981(a)(1)(C) or 
(a)(1)(D), the Ruling Official may decline to grant a petition filed by 
a petitioner in whole or in part due to the lack of sufficient 
forfeitable funds to satisfy both the petition and claims of the 
financial institution regulatory agencies pursuant to 18 U.S.C. 981 
(e)(3) or (7). Generally, claims of financial regulatory agencies 
pursuant to 18 U.S.C. 981(e)(3) or (7) shall take priority over claims 
of victims.
    (9) Miscellaneous Provisions--(i) Priority of payment. Except where 
otherwise provided in this section, costs incurred by the Postal 
Inspection Service and other agencies participating in the forfeiture 
that were incident to the forfeiture, sale, or other disposition of the 
property shall be deducted from the amount available for remission or 
mitigation. Such costs include, but are not limited to, court costs, 
storage costs, brokerage and other sales-related costs, the amount of 
any liens and associated costs paid by the government on the property, 
costs incurred in paying the ordinary and necessary expenses of a 
business seized for forfeiture, awards for information as authorized by 
statute, expenses of trustees or other assistants pursuant to paragraph 
(j)(9)(iii) of this section, investigative or prosecutive costs 
specially incurred incident to the particular forfeiture, and costs 
incurred incident to the processing of the petition(s) for remission or 
mitigation. The remaining balance shall be available for remission or 
mitigation. The Ruling Official shall direct the distribution of the 
remaining balance in the following order of priority, except that he or 
she may exercise discretion in determining the priority between 
petitioners belonging to classes described in paragraphs (j)(9)(iii) and 
(9)(iv) of this section in exceptional circumstances:
    (A) Owners;
    (B) Lienholders;
    (C) Federal financial institution regulatory agencies (pursuant to 
paragraph (j)(9)(vi) of this section, not constituting owners or 
lienholders); and
    (D) Victims not constituting owners or lienholders (pursuant to 
paragraph (j)(8) of this section).
    (ii) Sale or disposition of property prior to ruling. If forfeited 
property has been sold or otherwise disposed of prior to a ruling, the 
Ruling Official may grant relief in the form of a monetary amount. The 
amount realized by the sale of the property is presumed to be the value 
of the property. Monetary relief shall not be greater than the appraised 
value of the property at the time of seizure and shall not exceed the 
amount realized from the sale or other disposition. The proceeds of the 
sale shall be distributed as follows:
    (A) Payment of the government's expenses incurred incident to the 
forfeiture and sale, including court costs and storage charges, if any;
    (B) Payment to the petitioner of an amount up to his or her interest 
in the property;
    (C) Payment to the Postal Service Fund of all other costs and 
expenses incident to the forfeiture;

[[Page 63]]

    (D) In the case of victims, payment of any amount up to the amount 
of his or her loss; and
    (E) Payment of the balance remaining, if any, to the Postal Service 
Fund.
    (iii) Trustees and other assistants. In the exercise of his or her 
discretion, the Ruling Official may use the services of a trustee, other 
government official, or appointed contractors to notify potential 
petitioners, process petitions, and make recommendations to the Ruling 
Official on the distribution of property to petitioners. The expense for 
such assistance shall be paid out of the forfeited funds.
    (iv) Other agencies of the United States. Where another agency of 
the United States is entitled to remission or mitigation of forfeited 
assets because of an interest that is recognizable under these 
regulations, or is eligible for such transfer pursuant to 18 U.S.C. 
981(e)(6), such agency shall request the transfer in writing, in 
addition to complying with the provisions of paragraphs (j)(3) through 
(5) of this section. The decision to make such transfer shall be made in 
writing by the Ruling Official.
    (v) Financial institution regulatory agencies. A Ruling Official may 
direct the transfer of property under 18 U.S.C. 981(e) to certain 
federal financial institution regulatory agencies or an entity acting in 
their behalf, upon receipt of a written request, in lieu of ruling on a 
petition for remission or mitigation.
    (vi) Transfers to foreign governments. A Ruling Official may decline 
to grant remission to any petitioner other than an owner or lienholder 
so that forfeited assets may be transferred to a foreign government 
pursuant to 18 U.S.C. 981(i)(1), 19 U.S.C. 1616a(c)(2), or 21 U.S.C. 
881(e)(1)(E).
    (vii) Filing by attorneys. (A) A petition for remission or 
mitigation may be filed by a petitioner or by his or her attorney or 
legal guardian. If an attorney files on behalf of the petitioner, the 
petition must include a signed and sworn statement by the client-
petitioner stating that:
    (1) The attorney has the authority to represent the petitioner in 
this proceeding;
    (2) The petitioner has fully reviewed the petition; and
    (3) The petition is truthful and accurate in every respect.
    (B) Verbal notification of representation is not acceptable. 
Responses and notification of rulings shall not be sent to an attorney 
claiming to represent a petitioner unless a written notice of 
representation is filed. No extensions of time shall be granted due to 
delays in submission of the notice of representation.
    (viii) Consolidated petitions. At the discretion of the Ruling 
Official in individual cases, a petition may be filed by one petitioner 
on behalf of other petitioners, provided the petitions are based on 
similar underlying facts, and the petitioner who files the petition has 
written authority to do so on behalf of the other petitioners. This 
authority must be either expressed in documents giving the petitioner 
the authority to file petitions for remission, or reasonably implied 
from documents giving the petitioner express authority to file claims or 
lawsuits related to the course of conduct in question on behalf of these 
other petitioners. An insurer or an administrator of an employee benefit 
plan, for example, which itself has standing to file a petition as a 
``victim'' within the meaning of paragraph (j)(2)(xxi) of this section, 
may also file a petition on behalf of all its insured or plan 
beneficiaries for any claims they may have based on co-payments made to 
the perpetrator of the offense underlying the forfeiture or the 
perpetrator of a ``related offense'' within the meaning of paragraph 
(j)(2)(xviii) of this section, if the authority to file claims or 
lawsuits is contained in the document or documents establishing the 
plan. Where such a petition is filed, any amounts granted as a remission 
must be transferred to the other petitioners, not the party filing the 
petition; although, in his or her discretion, the Ruling Official may 
use the actual petitioner as an intermediary for transferring the 
amounts authorized as a remission to the other petitioners.

[52 FR 4497, Feb. 12, 1987; 52 FR 5765, Feb. 26, 1987, as amended at 54 
FR 47520, Nov. 15, 1989; 56 FR 20361, May 3, 1991; 57 FR 32726, July 23, 
1992; 59 FR 31154, June 17, 1994; 59 FR 35852, July 14, 1994; 60 FR 
5581, Jan. 30, 1995; 60 FR 8306, Feb. 14, 1995; 62 FR 31726, June 11, 
1997]

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