S&D E15 - Beyond Bars: Fighting Crime Through Asset Forfeiture

“The bad guys are going to continue to find ways to hide money in plain sight.”

In this episode, Asset Reality’s US Compliance Officer David Tyree shares his experiences with asset seizures while working as a Resident Agent in Charge at the Drug Enforcement Administration (DEA).

David explores the complexities of non-conviction-based forfeiture with our host Aidan Larkin, emphasising the importance of tracing the assets back to criminal activities and the influence of adverse media on law enforcement decisions. They also delve into the global challenges in asset recovery, consider how public and private sector partnerships can help tackle future obstacles in the field, explore the social reuse of seized assets and discuss why criminals prefer jail time over asset confiscation. 

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Timestamps

00:00 - Special Announcement - Register for Seize: London

00:00 - Special Announcement - Virtual Assets Transfer Fundamentals Certification

04:30 - Fighting Crime Through Asset Forfeiture

07:40 - Navigating Controversies in Civil Asset Forfeiture

18:00 - The Challenges of Seizing Cash

24:00 - Civil Forfeiture Process Explained

29:30 - Opportunities in Global Asset Recovery

36:00 - Reinvesting Seized Assets for Community Benefit

40:30 - Solutions in Crypto Asset Seizure and Forfeiture

Resources Mentioned

• United States v. Gonzales, No. 18-8017 (10th Cir. 2019) :: Justia
• Man indicted on money laundering, marijuana charges | Wyoming | gillettenewsrecord.com
• Colorado, Wyoming restaurants accused of laundering drug money (denverpost.com)
• UNODC Factsheet: Money-laundering and related illicit financial activities 

About our Guest‍

David Tyree is the US Compliance Officer for Asset Reality, following a 25-year career as a Special Agent for the United States Drug Enforcement Administration (DEA). Throughout his service, David specialised in identifying, disrupting and dismantling sophisticated money laundering networks around the world, with a strong emphasis on investigating Suspicious Activity Reports (SARs) which resulted in the forfeiture of over $80 million in criminal proceeds.
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Since 2004, David has been a regular instructor for the Department of Justice’s Money Laundering and Asset Recovery Section (MLARS), the United States Attorney’s Office and the United States Department of Justice.

Based on David’s successful contributions to asset forfeiture in the US, he was designated in Federal Court as a money laundering detection and prevention subject matter expert and also consults as a subject matter expert for assetforfeiturelaw.us.

Disclaimer

Our podcasts are for informational purposes only.  They are not intended to provide legal, tax, financial, and/or investment advice. Listeners must consult their own advisors before making decisions on the topics discussed.  

Asset Reality has no responsibility or liability for any decision made or any other acts or omissions in connection with your use of this material.

The views expressed by guests are their own and their appearance on the program does not imply an endorsement of them or any entity they represent. Views and opinions expressed by Asset Reality employees are those of the employees and do not necessarily reflect the views of the company. 

Asset Reality does not guarantee or warrant the accuracy, completeness, timeliness, suitability or validity of the information in any particular podcast and will not be responsible for any claim attributable to errors, omissions, or other inaccuracies of any part of such material. 

Unless stated otherwise, reference to any specific product or entity does not constitute an endorsement or recommendation by Asset Reality. 

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Transcription

Lo Furneaux

Hi. Before we get into today's episode, I have two special announcements for you. Asset Reality is excited to announce our inaugural seized asset conference, Seize:London, taking place on Wednesday, the 13^th of November, where we'll be celebrating the launch of Nick Furneaux’s highly anticipated next book, There's No Such Thing as Crypto Crime. Seize:London will bring together decision makers from key government and law enforcement agencies, as well as select organizations whose work aligns with public sector goals to address the pressing challenges faced by asset recovery practitioners worldwide. If you are in the public sector and would like to join us in person at the iconic OXO Tower for Seize:London on the 13^th of November, please reach out to your Asset Reality point of contact to request sign up information or visit our website. Asset Reality is also excited to announce the upcoming launch of our Virtual Asset Transfer Fundamentals Certification. This instructor led course is designed to equip you with the knowledge and skills to confidently seize and manage virtual assets like cryptocurrency and NFTs. Visit our website for more information and register your interest to be notified about upcoming training sessions. In today's episode, Asset Reality's US compliance officer David Tyree will share his experiences with asset seizures from his former role as a resident agent in charge at the Drug Enforcement Administration. Aidan and David will explore the complexities of non conviction based forfeiture, highlighting the need to trace assets back to criminal activities and how adverse media coverage can affect the decisions of law enforcement. They will also cover global asset recovery challenges, the role of public and private partnerships, the social reuse of seized assets and why some criminals often prefer jail time to losing their stuff. Now that we've set the stage, let's dive into the details with Aidan and David.  

Aidan Larkin

And I'll apologize in advance for any interesting background noise that you might hear during this particular recording. That's due to the latest arrival into the Asset Reality family, which is Daisy, the rescue dog. It was her first day at home with us, and, unfortunately, she was very excited and making lots of noise in the background. So if you hear four paws moving around, it's all to do with Daisy. So thank you for your understanding.  David Tyree, welcome to Seize and Desist podcast. How are you, sir?  

David Tyree

I'm well, sir. How are you? Wonderful.  

Aidan Larkin

I'm very excited to finally be able to get you on this podcast because I think we both know that we could challenge Joe Rogan here in having a a seventeen hour marathon podcast once the two of us get started. We're not known to lack words per se. The the theme of what we're doing around these special one off episodes is exploring some of the big challenges around asset seizure, asset recovery, asset forfeiture, whatever way people wanna frame it based on their geography, and really unpacking some of the challenges. And we can talk about the opportunities. I struggle to think of many better candidates than your good self that has had a very colorful career and working in a lot of the hot spots and being at the coalface of some of the challenges and working for federal agencies, working in conjunction at a task force level with state and local agencies, being the international guy, being stationed overseas. You've had a really good bird's eye view and in the trenches view of why we all want to know this one percent of illicit proceeds intercepted. What is the issue and the big challenge around asset recovery? So I'm really excited to unpack that and hear your stories from the front. Could you maybe give us a bit about your very diverse background and what you've been up to over the last couple of decades?  

David Tyree

Well, sure. And thank you for the opportunity, Aidan. I did cancel on Joey. I'm sorry. I guess everyone calls him Joe Rogan.  

Aidan Larkin

Of course. True friends.  

David Tyree

Well, he calls me a friend. Let's see. We don't always agree. This is a wonderful platform to actually be honest and peel back the onion on asset forfeiture and just trying to disincentivize criminal activity. But as I think you would agree, Aidan, every time you peel back the onion, it reveals tears.  

Aidan Larkin

Makes you cry.  

David Tyree

It does. And so my story, I started with the United States Drug Enforcement Administration in nineteen ninety eight, and my initial assignment was to Albuquerque, New Mexico. I had no real prior law enforcement experience per se. I had been in probation and I've done some cadet work in high school, but when I was assigned to Albuquerque, I was immediately put on a task force, a gang enforcement task force, and their issue was there was over two fifty gangs roaming around the streets of Albuquerque, many of them involved in drug trafficking and all kinds of other crime. We always said we always joke drugs always seem to be the top end, but it can be property crime. It can be fraud. It can be human trafficking, prostitution. Drugs always seem to be involved. And so working with this task force, we were overwhelmed with the violence that was taking place. And I was sent off to work with some incredible investigators from the IRS who taught me about asset forfeiture and money laundering for about a month. And I was redeployed with the team with the marching orders of attacking the assets. So if I can bring you back to 1999 where our main bad guys were driving around in really expensive vehicles, living in really nice homes, but they weren't necessarily touching the drugs, I equate it to the Lidl grocery store. The manager probably isn't pushing in the carts, but he's still aligned with and supporting Lidl. In this case, my job was then to look at these assets that had been acquired by these criminal organizations, and there are federal statutes in the United States that allow us to both charge those targets with money laundering violations. You can't spend over ten thousand dollars of criminal proceeds. It's a five year federal felony. And you can also seize custody of those assets. And essentially, what the message we were sending was crime doesn't pay when the reality is crime was paying quite well.  

Aidan Larkin

Yeah.  

David Tyree

So follow that for five years in New Mexico, eight years in Portland, Oregon. Again, just doing sort of the same thing, money laundering investigations, working with the Department of Justice to educate our state and local counterparts on what money laundering crimes were versus the three phases of money laundering. There's a lot of sunlight between both of those. From there, based on demands in Europe with our, Portuguese counterpart that was brought over to Portugal, worked with the Portuguese, the South Africans, the Cape Veridians, developing competency and asset forfeiture, the Spanish as well. Phenomenal experience. And then by virtue of my experience there, I was brought to Wyoming, which makes no sense to anyone unless you understood that the state of Wyoming doesn't have any money laundering laws at the state level, and was really the birthplace of chartering crypto banks. So I was brought there for essentially six years to disrupt and dismantle money laundering organizations and take all of their criminal proceeds, always messaging to the community that, listen, these bad actors vulnerable in our community. The notion and how we would sell it to the community was we are taking the incentive for criminal activity away from the bad guys by taking away all their assets. And you would think that was very attractive, Aidan. You would think that the community would get behind that. However, as you're well aware, sometimes that was non conviction based asset forfeiture, which the media usually picked up and said, oh, look, DEA is policing for profit. Honestly, a a tightrope.  

Aidan Larkin

I can bet you that a lot of people listening have heard about non conviction based forfeiture, civil forfeiture, and have heard about policing for profit and have heard the anecdotes, but maybe don't really understand what it means and what some of the scandal is around that. Oh, sure. But also the very necessary, and I, for one, am a huge fan.  

David Tyree

Yes.  

Aidan Larkin

You have to have civil forfeiture, non conviction based forfeiture. There's no such thing as a civil society without it. But again, just because you've had we don't get rid of the prison or incarceration system  

David Tyree

Right.  

Aidan Larkin

Because there have been tragic cases where innocent people have been locked up. We learn from the mistakes, so we build in controls and measures. Sure. Could you just unpack that a little bit around the actual the non conviction? Give us a practical of that.  

David Tyree

That is such a great question because in an asset forfeiture case, there is the potential to actually file criminal charges for money laundering. However, that involves traceability. That means, hypothetically, Aidan, if I want to charge you with money laundering and seize vehicles or bank accounts or real property, technically speaking, if that goes criminally, I need to trace all of the money I'm alleged alleging you laundered to drug sales. It's called traceability. It's very challenging for law enforcement. The burden of proof is beyond a reasonable doubt. However, there's an alternative, which is civil forfeiture, which is an administrative forfeiture. It still relies on a burden of proof, which is preponderance of the evidence, but it doesn't necessarily attach to criminal charges. And the reason law enforcement does that, one, the burden of proof is lower. Two, should you, Aidan, come forward and make a claim for return of that property, we get to go into what's called interrogatories and civil deposition. Anything you tell me under oath in that case, I can use in a criminal case. So it is a pathway to disrupt and dismantle criminal organizations. I would never argue it's easier. I just was notified today. I forfeit 1.8 million dollars from 66 bank accounts in Wyoming. Twenty six different claimants came forward. I went into interrogatories. We won. They withdrew their claims in advance of a civil hearing in front of a judge. Very happy about that. I wrote warrants to seize that money and we kept it. Claims were made. I had to write second warrants to keep that money. It's not easier. It's just a different burden. And nor during this particular case, I could not prove knowledge. I could not prove knowledge that the twenty six claimants knew all the money that they were running through their bank accounts were criminal proceeds.  

Aidan Larkin

You took the capital out of circulation?  

David Tyree

Yeah. Did I take a bite out of crime? I think so. I took all their money. Are they sitting in jail? No. Yeah. But what's the function? Right? Why are they doing this in the first place? Yeah. I think unpacking it is about law enforcement using common sense and remembering they're the good guys, a lot of great women in law enforcement. My point being, there's a proportionality in the United States that's in the Constitution, and there was a time where law enforcement could administratively seize assets from people without any over sight. There was a time where if a vehicle was caught traveling across the interstate or in a neighborhood and they had user amounts of narcotics, the police were seizing the vehicle. That is wrong at so many levels. I understand it in the moment, but that's kind of where investigators need to develop their investigation. Go back to the car company where the vehicle was purchased, paint a picture of this individual, and understand, do their asset exceed their reportable income, and what can you attach to criminality? So when I say policing for profit, investigators oftentimes, Aidan, will seize an asset and sort of cross their fingers and hope the individual from whence the asset was seized walks away. I think that's lazy police work. I'm guilty of it, so I can say that. And it's hard to navigate. So my goal has always been, while at the DEA, I ended up working with Charles Schwab Bank for 14 months, trying to educate the banks and law enforcement on here is the pathway that stands not just the courts, but that media examination. You just don't really wanna be that law enforcement agency on the front page of the Wall Street Journal that looks like you're doing it sloppily, lazily. It could look like you're targeting a certain group economically. We have to be really thoughtful. So my admonition is always to anyone in this line of work is like, you really want to pass the sniff test that we did our due diligence. We were thoughtful. Even at times, and I'm guilty of this, I've returned assets I've seized. I have. Why? Because sitting with cops teaching this, I would ask, why do we do this? Why are we even doing asset forfeiture? And I would hear every time, Aidan, I think you were present with me a couple of weeks ago in DC to hurt them. And I said, do you really wanna sit on the stand and say that you even thought that? We don't take assets away from bad criminal actors to hurt them. We take out the economic incentive to commit crime. And unfortunately, that's been reduced to sort of a bumper sticker, which is follow the money. Well, what does that even mean? Follow it where? Why are we following it? Are we making an impact? Are we making a difference? I firmly believe from my experience that when we've taken assets, seized them, we have actually disrupted narcotics traffickers' ability to reconstitute. You can take their drugs all day long. It is a ninety nine percent profit. You take their money, and not just the cash from the car, but their bank accounts, their homes, their real property. You coordinate with other countries. Now you're impacting crime, and that to me passionately makes a difference. And failing to do that, I think, as a taxpayer now who's not law enforcement, that's a failure of our tax dollars. Gosh. The IRS is probably gonna come after me now. Sorry. I take it back.  

Aidan Larkin

Exactly. Happy record your address for the purpose of this call. There's a lot to unpack there, and I I firmly believe it as well is that if you think of criminal organization as a startup business, I mean, it's their capital. Mhmm. So it's like I'm rewatching The Wire at the moment. And, I mean, there's only so many street level drug deals that will really make an impact. You have to disrupt the heads of these organized crime gangs. You have to disrupt these complex human trafficking structures, no modern slavery structures, terrorist financing structures by truly taking away, could you say, the multimillion dollar bank accounts, the corporate structures, the laundering structures. Otherwise, we're just scratching the surface. But an interesting point you made was about the front page of the Wall Street Journal. I say on record, I'm a true fan of civil forfeiture proportionately. I'm not going to discourage the use of civil forfeiture terms proportionately. Do I want to see a teenager caught with a small quantity of cannabis in a state that doesn't arrest you for owning cannabis? Seeing his grandparents' house seized, would I back that up? Obviously not. But am I going to say that we should not use civil forfeiture as a mechanism across the globe because of those couple of bad cases? Absolutely not. Do you think there's no and then maybe this is impacting one percent. Do you think that there is that additional level of even if we think there's an asset forfeiture case here, worried about adverse media is now influencing law enforcement decisions. In the cases where they actually should be seizing the assets. Is there a worry that, no, the bad press and the blowback to this, maybe it's because of a maybe it's an ethnic minority, maybe it's a particular neighborhood. Do you think that's starting to creep in now to asset forfeiture? Because there's even today, I'm reading another USA Today article about a not for profit group that has been set up to go after what they frame as this excessive amount of unlawful package seizures at a facility and, like, intercepting cash, intercepting jewelry and envelopes. And do you think that's sort of the if you're an average police officer on the front line or a task force leader, do you think that's been happening on the ground, or have you witnessed that?  

David Tyree

Yes. I have witnessed it because it's also a resource issue for prosecutors and law enforcement alike to unpack. And so to your question, I think there is a space for thorough investigation. And there's also, in defense of law enforcement, a lot of times they're not going to disclose each and every fact that they know in an investigation related to an asset seizure. And so without getting into all the tools and tactics that are out there, you mentioned the wire. Well, let's assume law enforcement is intercepting calls and there is a truckload of cash heading through Arkansas. It's not uncommon that maybe the DEA would call the state police in Arkansas to facilitate a traffic stop to seize that money. And so, unfortunately, when the media hears of it, they're thinking, oh my gosh. This driver was the subject of a traffic stop. For whatever reason, ethnicity, it could be anything. And law enforcement doesn't feel compelled to at that time  

Aidan Larkin

The narrative changes.  

David Tyree

Right. But at the same time, I think it's incumbent on law enforcement to circle back and give a follow-up because I understand now as somebody who is not in law enforcement anymore, that it's a frightening situation to be pulled over, have to account and explain for where the source of funds are. But I guess to your second point, see how I made it your point, I think real property now has to be indicted criminally. So if it's the house that you're looking at for facilitation, law enforcement at the federal level now needs to bring that before the court, which I think is great. And I actually believe there's two or three bills pending within Congress at the United States that are asking that a magistrate judge review an affidavit in support of an administrative seizure, and Aidan, I've seized millions and millions of dollars in cash. Just at the train station, bus station, airport, I have always been able to link that money to narcotics trafficking, because there's a lot of tools out there at the federal level that you're able to build and justify and support why it is you've done what you've done. And, unfortunately, we don't talk about that.  

Aidan Larkin

But just to be clear, it's still not a conviction based.

David Tyree

Oh, yes.

Aidan Larkin

So let's give a practical example. You talked about sort of Albuquerque, New Mexico, Breaking Bad fans out there will be immediately imagining you tracking down Walter White. If you use that Albuquerque example, you've got someone intercepted in a train station you suspected to be involved in drug trafficking. They've got a bag full of cash. So you as an officer can say, we have someone that has no links to narcotics gangs. He has a bag full of cash, and he doesn't have the legitimate income to justify that he saved all of this up where his grandmother is very generous on every birthday. And, really, it's on them, but you're still going in front of a magistrate to say, this is why I've done this seizure, which in the UK, we have a cash seizure process where I can seize cash. But then I've gotta go in and explain why I've seized it. And there is still that process that they're allowed to come forward to the court and say there's gonna be a cash seizure hearing. Ten days time, if you turn up with your winning lottery stub and say that I cashed out of this bank account and this is why I had a hundred thousand pounds or dollars, then they're quite entitled to get their money back. Is it a similar process in the US without oversight you mentioned in the court?  

David Tyree

So to your question, like the Amtrak train, one comes out of Chicago every day through Albuquerque. And I think the most I had abandoned where a gentleman laid down two FedEx boxes, had 1.8 million dollars in it. We never heard from him again.  

Aidan Larkin

You mean he didn't come forward to claim his 1.8 million dollars and justify the legitimate background as to having that two boxes of cash?  

David Tyree

No. He walked away from the boxes. These are all consensual encounters, by the way. These are nonuniform, hi. I'm with the police. May I speak with you about your travel? These are recorded conversations for the courts. That particular individual laid the two boxes down and walked away, and this was pre 9-11. We thought they were full of precursor chemicals. We gave him a business card as he left, and they found him in the Sacramento River three days later with our business card because he had failed to return with that cash. The question no one asked is, what was he going to do with it once he got to Sacramento? And this is where law enforcement needs to go beyond the cash seizure. Surely, he had some plan in place to reintroduce this into the financial institutions under the reporting thresholds. And I guess to your question, if they filed a claim for that money, in that we provided a receipt, we provided them the documents required to file a claim. And in fact, under a CAFRA, a rule that passed, the government would actually pay for their attorney if they wanted it. It. I don't believe I I might have out of a hundred ish seizures, I can't remember one where they filed a claim. Because in the course of that contact, Aidan, it was all consensual. Believe it or not, we have a problem with people that use the train to transport narcotics, contraband, bulk cash. Do you have anything like that with you today? Most of the time they said, No. May I have your permission to search you and your luggage for those items I just discussed? And that's a consensual search. It's around the Fourth Amendment. Ninety nine percent of the time, they said yes. You would locate the bulk currency and you started a dialogue. Sir, ma'am, I've noticed in your bag, there's what appears to be a significant amount of bulk currency. They would either say, I don't know what you're talking about. That doesn't belong to me. Or they would say, oh, yes. I just sold my house. I said, oh, great. Can you tell me where you do you have a receipt? Can you tell me from what you sold? Like, the train wasn't going anywhere. The train was now stationed, and they couldn't provide any of that information in that moment. And we're and we said, listen. At this point, we're gonna run a narcotics canine. I'm not the typically alerted. We're going to seize this. There's a lot of daylight between seizure and forfeiture. Once we seize that money, we were exploiting the controls of the person that we interviewed, what's their phone number, could we link any of this to other cases, and I would say the vast majority of the time we could. We then had to articulate all of that on paper all the way up to Washington, DC, our DEA headquarters. Attorneys looked at it and agreed with us. To Washington, DC, our DEA headquarters. Attorneys looked at it and agreed with us or said, you need more information. And that at that point, a timeline starts for the individual from once the asset was seized to file a claim. I would tell you, Aidan, honestly, ninety five percent of the time, they didn't. I always prepared my cases like they were going to, and I think that upset my bosses at time. I was preparing for the worst. Maybe that's from childhood trauma instead of preparing for the best. But to your question, if they filed a claim, at that point, we did have to go before the court. I would only explain it. In my career, seizing millions and millions of that in dollars of assets, that happened five percent of the time. Now, to your question, that's a civil forfeiture. It didn't go criminal. If I could go back in time, I probably would have done a lot more digging, gotten beyond that cash seizure to look at the larger organization. I never asked, who are you taking this money to? I could have been really bright in my and thorough.  

Aidan Larkin

But then there's a resource issue as well. And we have this issue around the world, like, how many standalone money laundering investigations are taken on globally?  

David Tyree

Right. It's not very much because it it's a resource issue.  

Aidan Larkin

Yeah. It's a resource. And no one gets elected on a money laundering case, whereas people get elected and people get photographed with no guns and drugs.  

David Tyree

Exactly. You nailed it. No one does a trophy shot of a check from a bank account that was remitted to you pursuant to the execution of a seizure warrant. Now I have those pictures because it was important to me to get those.  

Aidan Larkin

Was it one of the big checks or a small check?  

David Tyree

No. Everyone thought it would be. And I thought that no. In our country, those checks are not even made to DEA. It was made to the US Marshals Service for processing and custody. And immediately, the task force officers were like, well, there goes twenty percent. But that's the process. I just wanted to make a point of saying, like, I also have some real failures, Aidan. We had a case recently where it went all the way to the Supreme Court, and we'd seized a million dollars from a particular defendant. Because we couldn't trace that money specifically to money laundering, which we alleged, we gave it back five hundred thousand dollars five hundred thousand dollars for his legal fees. Now that's a real life story out of Wyoming, and I'm not proud of that. It wasn't my case, so I can at least have some distance, but I can say the investigators were doing a great job on a great case. We say we punched above our weight. We should have in lieu of saying it was laundered funds, we should have said it was proceeds from the sale of narcotics. But once you say it, it sticks. It's tough to change the story midway.  

Aidan Larkin

So and this is will hopefully be informative for our listeners. We've covered off those consensual civil forfeiture. You're Walter White who gets off the train, who has the cash, who doesn't fight it. And in those instances, just to make sure I've got I've understood the US system correctly, in those instances then it's an administrative process. If there's no appeal lodged, then they get to keep or sorry. You get you effectively you've had a successful forfeiture case, and not that it gets processed.  

David Tyree

Correct.  

Aidan Larkin

There's no need to go to court, basically, if they don't file a claim. Correct. So what happens then in those situations that obviously make a lot of the headlines where you've got someone at a And, again, I wanna disclaim the fact that to be absolutely crystal clear, it's a really important point that the media will not get the other side of the story. So it is very easy to paint, but I'm not saying that every civil forfeiture case isn't without its mistakes. But I've seen cases that I've been involved in in my former role where this basically career criminal, the media narrative is that he inherited some money. Sure. We know in the background, he didn't actually inherit the money, and he couldn't prove this in x, y, and z. And like you say, there's just some facts that will never reach the surface. But just help me understand and walk me through then the process. Let's say our Walter White character then fights against the seizure and does not consent and claims that this is disproportionate. Is it a case of because it's non conviction based, you basically still have to state your grounds on the balance of probabilities as to why you think that's linked to criminality, the lower burden of proof? Yeah. You're stating your case as to why you believe that asset should be forfeited, and he comes forward and he argues that that just being brought in, is that part of the reforms you talked about? Because I keep reading about the cliche, you know, the police sheriff that stops the guy, takes him pulls him over and takes the fancy car off, the suspected criminal who claims they're not a criminal, and all of a sudden they're using the car and the force. Does that not exist anymore? Because or is that just a bit of war stories? Or is there a new system now that when they're appealed, they have to go to a magistrate or some sort of court process? Is that something new, or has that always existed?  

David Tyree

That's a great question. I would say it's constantly evolving. And so to your question, when the person from whence the asset is seized files a claim for the return of that asset, they are required to provide a notarized statement as to what the source of that funds for that asset is. Once they provide that, then law enforcement has to investigate and either confirm what it is they're reporting or present the broader picture and disclose their investigation, and that is all within the courts. That goes before a magistrate judge who has to determine that a valid claim has been made and a complaint in response has been filed. Once that happens, then the next step in that process is called interrogatories, where the government can ask the individual from once the asset was seized to provide records, and the individual from once the asset was seized can also make demands of the government. That process is civil. It's actually quite professional and friendly. It's not criminal. However, from that state, any information derived can be used in a criminal case. So now, Aidan, to your question, now you've got the Walter White kid saying, Hey, that car that you took from me, I bought with legitimate monies. We say as a government, Cool. Produce your wages and your taxes. Now, if those two things don't align and all of a sudden you've got a ninety thousand dollars car, but you earned fifteen thousand dollars last year, now you're exposing yourself to a different federal crime, which is concealing income.  

Aidan Larkin

You've lied then. Yeah. Oh, yeah. And taxes, you have gone.  

David Tyree

Right. And so that is the draconian nature of this exchange, and that's why it's very rare. I will say, however, in that evolution, when the government seizes a vehicle. Right? Let's say it's a vehicle. We're gonna give it a value of fifty thousand dollars. Now DEA, we've transferred that over to the marshals, and now we're paying daily storage fees, and the value of that car is diminishing daily. Well, our state and local counterparts on our task force say, boy, we'd love to have that car as an undercover force. The rules have changed so much where now it's very burdensome for everybody. We're like, you have to now pay the federal government twenty percent of the value of that vehicle, and it gets to the point where they say, just auction it off. And Aidan, I think in our first conversation about all of this, you asked me, where did they go to get this? Where's the auction? I have no idea. I was prohibited, as was my family and friends, and every year I signed something from attending or participating in those government auctions. But I still don't know where they are. In all of this, I think we as law enforcement, because you and I were both cops, and I call it the lust for the bus. You and I go to a search warrant, and there's sixty thousand dollars sitting on the table next to a scale, some guns and drugs. You and I are doing high fives. The bosses are happy. Everyone's like, oh, look what we got. But I think, and I'm very guilty of this, I never went through the bank documents in the house. In fact, I had a individual who was getting released from prison, and I'd arrested him, took a bunch of drugs. He lived in a mansion, and he asked me about one of the nondrug exhibits that we'd seized, which were a bunch of bank receipts. I said, what is this? He said, That's all the money from my drug dealing in this account. And I said, Tell me about this. And he said, Oh, I would fake concerts, generate posters for concerts that never happened. On the concert poster was one hundred and fifty dollars cash at the door, waters available at thirty dollars a pop. And I would go to the bank with the posters for concerts that never happened and deposit all this money. And this I'm very new at DEA as I'm hearing a story, and all I done was fill an evidence bag with bank deposit receipts. We never seize the account. He was released from custody. He'd done his time and had 262,000 dollars which is more money than I've ever had. And I'm thinking, wow, David, you did a bang up job. So that was when the light bulb came on in my mind, like, you know, I'm being paid fairly well-to-do this job. I need to dig a little bit deeper. This is a repeatable process, and it has impact. And Aidan, I can tell you as a government retiree, I did my time. I did my time for my pension. And what prevents an inmate, a defendant, anywhere in the world to say, I'll go do my jail time because I know when I get out, they don't know where the money is.  

Aidan Larkin

It's one of the most common summaries we always end up giving at conferences, and it's a line I've heard a thousand times, and it's very relevant. And it is that for many career criminals and organized crime gangs, the jail sentence is just a cost of doing business. This is why FATF have designated asset recovery as a priority because that is the impact. It is the deny, deter, disrupt, deprive criminals of their capital to reinvest in their operations. Because what you basically have is borderless criminals with no regulations, no rules of engagement, who can always run faster than governments naturally. So there's always a period of catching up. But if you have them heavily capitalized, not being hit and wobbled and stumbled every now and then with big removals of wealth, removals of capital, or even making people think, actually, I'm doing all my jail time, and I have no assets to come out to. Maybe that person's a bit more cooperative. Maybe that person gives you some intelligence, some information you can use. So I think we're very much aligned that that has been one of the the growing problems is that and as you mentioned about the the realization process, again, it's something that's very inconsistent around the world. And, unfortunately, unlike you, I was not an exciting cop. I worked in a law enforcement director as a criminal tax inspector. I didn't get the proper. I got a badge, but they're not a gun.  

David Tyree

I shouldn't have been trusted with a gun either.  

Aidan Larkin

There's a bunch of reasons that we could sort of zone in on as to why asset recovery struggles globally. One, it's really, really hard. I think, no, to be fair to law enforcement, it is not easy. But I do agree with you that there are tools and mechanisms that are probably not being utilized as well as they could. And I think civil forfeiture, non conviction based forfeiture, the backdrop of the media story's criticism. There's a thousand reasons why it's not being used as widespread. And interestingly, FATF have, in addition to having asset recovery as a priority, the ability to expeditiously seize assets, setting up dedicated seized asset units and agencies, asset management offices as they're known, they've also brought in that countries must have a a non conviction based forfeiture because so many countries could you maybe give just our listeners a brief version of what it looks like when you don't have non conviction based forfeiture? Like, how it all goes horribly wrong. Like, imagine you have to have a body or you have to have a person. What practically are the challenges if a jurisdiction doesn't have non conviction based forfeiture?  

David Tyree

Yes. In including in the state in which I currently live. They have rules around sharing, and there has to be a body attached to the seizure and criminal charges, it becomes incredibly challenging for law enforcement because we would just then go to the lowest hanging fruit. I think that's human nature. It's not a criticism. It's an observation.  

Aidan Larkin

Yeah. You wanna just get it across the line.  

David Tyree

And in Europe, without discussing which countries I was in, it was really challenging. We had some individuals show up with over sixty million dollars in euros for cocaine that we had seized, and our counterparts were challenged by how can they attach that sixty million euros to criminal proceeds because it hadn't yet transacted with with the bad guys. So we brought over the Department of Justice and established treaties and provided some great training because I was there. That's what made it great. But it was that becomes the challenge. And if I can, Aidan, if you'll allow this, without sounding like I'm anywhere on the political spectrum, I believe there's a huge opportunity and a space for marketing asset forfeiture and where those funds that are forfeit go, because I firmly believe that money should go to communities that have been affected by crime. I believe it should go to creating opportunities because we said in the beginning, right, this is about disincentivizing criminal activity. And part of that, part of that is creating opportunity in those areas where crime is running rampant. I say all this and I know my police friends are nodding their heads saying, Now you lost me, David. Now you sound like a hippie. I'm not trying to sound anything other than I'm trying to put a bow on what it is we're doing. And so when I worked in Oregon, for example, the asset forfeiture program in the state, they said any forfeited proceeds of criminal activity only go to drug treatment. A vast majority of my team said that I'm not doing it. And at the time, I understood, but I don't now. As I've gotten older, I'm thinking, why would we care? The money never goes back to DEA. Why would we care where it goes? The idea is now if we could take it full circle, I think it's much more attractive to our communities to say, hey, we took money from the bad guys, and that money is now being reinvested in opportunities in those affected areas. And it can be everything from fiscal responsibility training to education to treatment. If you want to make this sexy and appealing to the community, you have to be transparent about where that money goes once it's been forfeit. Because I've talked to so many people on juries saying, so what did you guys do with the money? Did you go buy cool cars? No. That money doesn't go back to the DEA. In fact, I believe it sits in an asset forfeiture fund, and it can be used for our state and local counterparts for very restrictive outgo. But I'm a big proponent of going back to that community affected by those drug dealing, gun trafficking, human trafficking criminals who, again, are creating a financial opportunity for themselves and others. Let's beat them at their own game and create lawful engagement in those communities and opportunity because now you're actually addressing crime before it even begins. And I know that sounds probably incredibly off the charts wackadoo, but been there, done that. I've seen it work.  

Aidan Larkin

No. I couldn't disagree more with you thinking it's a bad idea. That's why Asset Reality exists. We talk about this. I think people will be surprised at the inconsistency globally as to how seized assets are treated. So to give you an example, there's lots of pockets of really good initiatives, and there's just a lack of consistency globally. And without going down a separate rabbit hole and distracting this thread, this is why there is this inconsistency. Everything we've just discussed for the last forty minutes is the reason why when you then throw in something like digital assets and crypto Yeah. There's so many other challenges out there. Because if we are naming all of these traditional challenges with decades old asset forfeiture legislation, and then you try and throw crypto into this, you can see why things get so much more complicated. But just on the point of reinvestment, different programs exist around the world just for listeners' benefits that everything from, let's say, mafia related assets in Italy and across the Balkans.  

David Tyree

Right.  

Aidan Larkin

If you have a building, a business premises, or a personal residence that was owned by the local mafia don, if you then go and seize that, successfully prosecute that person and forfeit their house, do you think many people are gonna turn up to bid on that at auction and buy that property assuming it's not burnt to the ground? So they were forced in Italy and in many of the Balkan jurisdictions to come up with ways, particularly areas that have emerged from conflict. I've seen this in a very small version growing up in Ireland where you know everyone knows who the one person's terrorist, another person's freedom fighter, but there's these politically related asset seizures to when some people are cheering, some people are booing. And the asset just becomes persona non grata. Mhmm. So what do you do as a government agency when you have all of this expensive real estate? So the first experience I've had of it was seeing the it sort of buys in Europe a social reuse of assets. So, you know, it used to be a giant building. Now it's being turned into an orphanage. And we we spoke about this with Joanna Summers recently. By taking these assets that are unsealable, because in a perfect world, sell them, take the proceeds, and then the proceeds can be split amongst court costs, reinvestment in law enforcement, creating a pot of money for community related projects. Now in the UK, a charity can bid out of the proceeds of crime pot. I mean, that's my personal story where I was able to go on trips because I grew up in a conflict area. I was able to go on trips funded by a local charity, which was funded by proceeds of crime money. It's why we're so passionate about this and and the company. But the tragedy is if you may have, on estimate, a low percentage of assets being recovered globally For all the challenges we've described, it means that the pot available for government agencies, good causes, like, that's a small wedge that you're trying to distribute a long way. But I completely agree with your point full circle that if you can then reinvest those in community initiatives and you take the kids off the street at thirteen, fourteen, fifteen because now they're able to play at a flood lip soccer stadium or a football stadium in the UK. If you can do that, then there's less chance of them getting involved in County Line's gangs Yeah. Which then is a bit of a self fulfilling prophecy. And I think it was just dinosaur attitudes in the past, and I've seen this as well in my previous career. The people that they only seize drugs, they only seize guns, they only go after certain types of criminals. They do wanna do that financial stuff in inverted commas. Whereas that's the Southern has big impact. And I I've seen the European cases and the Balkan cases where you've got community initiatives. We've seen things like domestic violence shelters being created out of properties. We've seen things like vehicles. Mhmm. One of the most interesting ones I saw, and I have to put this in the show notes because it was subject to a lot of heated debate after the event, but the intention was good. And it was a it come from your world, from your former DEA job. It was a submarine developed by the cartels to ship narcotics and avoid detection. And, basically, a university had said, we don't want that to be destroyed. We can use that for students and know it's prevents us having to know, like, a, a sort of a marine biology class type of thing. So a perfectly good use. But then the argument is, what happens if they take it? And what happens if it falls into the wrong hands? And what happens if the university sells it and then someone uses it because it's being modified for illicit activity? And you can see where there's complexity, but what I get so frustrated at is that when people run away from the complexity, you're like, no. Figure it out. Like, develop some policies and processes and procedures. Don't either let a valuable asset worth hundreds of thousands of dollars rot in a compound because no one can figure out what to do with it, or likewise, give it away sloppily or auction it off. I've seen cases where assets were seized by a government, I'll not name the government agency, where they seized a large vessel. Sorry. It wasn't seized. The vessel was sold by a navy only to be sold through a couple of middle people. They didn't do the right checks and balances, didn't have the controls in place, and it ended up getting remilitarized again and sold to a non ally. So So we see this happening all the time. You can't control every asset every time, but I do think that one of the big virtuous circles we can create is by helping control that media narrative Mhmm. And being able to say that one of our original taglines was crime pain for society. Being able to say this cash was seized, and now this cash is used to fund a bunch of disadvantaged use on a project, and it's gonna pay for someone's university education or pay for a scholarship because communities can get behind up. So I think that for all the reasons you've listed and conscious of us running out of time, how do you think all the challenges you've listed now translate? Because you talked about transparency, being more transparent with the public. That's almost the curse of crypto seizures Mhmm. Because everyone can watch everything all the time. And we saw governments trying to sell crypto in Germany recently, and it crashes the market, and everyone's pointing fingers and talking about what they're doing. Whereas they can't really talk about the truck. They can't really talk about the real estate as publicly. In your experience, as someone who's been in the DEA, someone who's worked internationally Right. What do you think is one of the big challenges for asset forfeiture and asset seizure over the next couple of years and decade as these state and local agencies, the agencies that don't really have the big federal resource budgets. What do you think is gonna be the big challenges dealing with crypto assets as it becomes more of a mainstream asset to be seized?  

David Tyree

This is the reason I came to work for Asset Reality because the largest inhibitors to investigators is going to be tracing crypto toward it was onboarded and then linking it to whatever fiat currency and then showing that that fiat currency was actually proceeds of a crime. You've added a couple extra steps into that process, which are challenging and overwhelming for investigators. Just to do peer to peer money movement is very challenging for investigators to understand because, look, we don't use it at this point. We should be. I make all you were there, Aidan. I make them all download a wallet. But if it you're so unfamiliar with it because you get paid once a month or every two weeks, you've never opened an LLC, and you really don't deal with cash. I mean, I'm married with three children. I've told you my wallet is cow on cow. So you have to go study the normal in those atmospheres and understand it. And I'll tell you this, Aidan. If I was king or president, all investigators need to be educated by PayPal, Venmo, Apple Cash, Bitcoin Depot, every class they can get, not only looking at it from how a criminal would use it, but how a legitimate person would engage in this. Because in doing so, you study the normal and you can understand what's abnormal. And that's our biggest challenge is gonna be. I met with three different judges in Wyoming to explain crypto. And because it's named crypto, they thought the crypt keeper, and they thought it was very secretive. And I was showing them, I'm like, no, your honor, this is actually the most transparent way you can watch money movement, and we have to demystify it. Anyone over fifty that says they understand crypto, I immediately say, do you? So to your question, I think the bad guys are going to continue to find ways to hide money in plain sight. That's just what they're going to do because ultimately they need to have a paper trail so they can acquire real property, passive income from what looks legitimate. We as law enforcement need to study what's normal, maintain and establish, or in that order, relationships in the public private sector where we can collaborate and say, okay, this looks outside the ordinary. This is probably criminal activity. Let's investigate it. Let's come up with a solution. Let's seize this. And then like I said, once it's seized and forfeit, let's go back to that community that was affected by these criminal organizations and find a way. Ask them. Don't just give them. What would make a difference in your community? How can we use this money? Is it an after school program like you mentioned, Aidan? I'm a big proponent when I was with Schwab, a big proponent of teaching financial literacy to those that don't get that exposure.  

Aidan Larkin

Yeah. Education and awareness for scams and scams involving crypto as well.  

David Tyree

Yeah. I was taught, you know, through my job at DEA about we got financial management classes on how to manage your retirement. I'm talking about creating opportunity. So now you've got that fifteen year old who's thinking, I'm just gonna go pedal dope to make a living. And you've got someone else who's being funded from asset forfeiture saying, oh, or here's an alternative. Why don't you come to us after school? We're gonna teach you about how to use the stock market.  

Aidan Larkin

There's just all of those opportunities with such a big fund. And and people forget that the biggest seizures, the biggest crypto seizures in the world are civil forfeiture seizures. Mhmm. So I think that it's quite clear that civil forfeiture has a road map, and it would be a wonderful problem to have to think, what are we gonna do with all of this excess forfeited funds? Because crypto is outstripping regular seizures by such a phenomenal amount. Is it a case of looking for and and just to wrap us up, is it a case of looking for what is this global solution to the asset forfeiture problem? Is it more education for officers, more education for prosecutors and judges? How do you join it up? Is it task force systems? What's the quick solution of you again? If you're king for a day, how do you think you solve this problem?  

David Tyree

It's a collaborative effort, and we have to involve the private sector who's actually also engaged at at onboarding and moving fiat to crypto. There's multiple we're doing this as you know it as the reality, and we're bringing everyone together with a shared vision of, hey, this is a complex problem, and there is a complex solution. But if we put our minds together with a set goal that we can all agree upon, which is the bad guys shouldn't be making a profit off the ill affected in our communities, those that are exploited, that is a very noble cause, and that noble cause needs to drive decision makers, policymakers. And we also need to be willing to admit where we've made mistakes and repair those mistakes and say, and our program is now transparent. And we may not be able to disclose everything about this case in the beginning, and it might look stinky to everyone because, what, FedEx boxes are being interdicted at the Memphis airport. That, you know, on its face is abnormal. We know this. Let's investigate. Bad actors transact that way. Drug trafficking, human trafficking, you name it. These are cash intensive industries. I believe, Aidan, it's going to move to crypto. I believe the bad guys know that cops are looking at cash. The media is letting everyone know. And if we don't get in front of this now with a really solid understanding of what it is we're looking at and what's normal and what's abnormal, then we might as well wave the white flag because they will continue to exploit every opportunity to outsmart us. And I just feel like as cops, as prosecutors, we're being paid by the taxpayers. We need to be so good at our jobs. Where can we afford to be mediocre? I know you didn't handle a gun, but you can't be a bad shot and be in law enforcement. That's not a good idea. And I'll finish with, this is the time we have to be interested. We have to be interesting, and we have to be able to be reductive in our process so police on the street can take action quickly, efficiently, effectively, and stand the media test. And also do the follow-up. Do the follow-up and make sure they need to put themselves in the place of that person from whence they're taking the asset and work it that hard. Fight it that hard to demonstrate its criminal proceeds. And if you're wrong, be willing to say, hey, your honor or boss, I dug into this, and I made a mistake. This guy actually looks like he won this money at the casino. Now I checked, and he didn't bring in a bunch of money to launder at the casino. He actually won on the slots, and that's where this this cash is from. I went to the casino. They provided video. Do your investigation. And then be humble enough to call the guy and say, hey. I thought this was proceeds of crime. I've investigated. And they should do that before a claim is made, by the way. Yeah. That to me, that's the world I wanna live in, Aidan.  

Aidan Larkin

And I think that's the inherent bit, which is we've talked about and we will be talking about it in more detail in future episodes. This is where a lot of the immutability of the blockchain Uh-huh. Gives you like, the cast iron, it's not even subjective. It's a case of this wallet was used on the dark web, this person controls that wallet. So your ability to have an absolute slam dunk civil forfeiture case. And what we're finding is globally, if I track a victim's case from San Francisco to an exchange that's in, you know, somewhere in Southeast Asia, for example, if I can lay claim to that and say, I suspect that's criminal proceeds and here's my evidence, no one's coming forward to say, oh, yes. That wallet that's been linked to the dark web, no narcotics and child exploitation, that belongs to me. I'd like my stuff back. And we're hearing wonderful statistics about the sheer strike rate on those types of seizures that I think could be a really strong step in the right direction and a sort of positive thing on the horizon for moving this one percent needle in asset recovery, and that's what this is all about. Ultimately, as you know, is fighting the good fight. David, thank you so much for your time, sir. As I expected, this could be part one of seventeen. I think we'll have to go into our long form one next, and no doubt we'll have a bunch more of these conversations. So, look, thank you again for your for taking the time, and keep fighting the good fight, buddy.  

David Tyree

Thank you, sir. It's a pleasure and an honor.  

Aidan Larkin

Thank you.  

Lo Furneaux

We appreciate David for taking the time to share his valuable insights and experiences with us today. If you've enjoyed today's conversation, please like and subscribe to the Seize & Desist podcast on your preferred platform, and leave us a comment with your suggestions for future topics or guests you'd like to hear from. Next time, Aidan will be joined by Miles Fuller, the director of government solutions at TaxBit. They'll be exploring the challenges of enforcing tax compliance in cryptocurrency transactions, how to use on and off chain data to trace criminal assets, and the suitability of existing legislation for digital asset seizures. You won't wanna miss it. Don't forget to visit our website to apply to attend our inaugural conference, Seize:London, on the 13^th of November or to register your interest in our virtual asset transfer fundamental certification. Seize & Desist is brought to you by Asset Reality. Thank you for listening. Our podcasts are for informational purposes only. They are not intended to provide legal, tax, financial, and or investment advice. Listeners must consult their own advisers before making any decisions on the topics being discussed.