Government agencies take possession of all types of property after criminal investigations. In addition to confiscating cars, weapons and drug money, the government also seizes real estate, including apartment complexes, convenience stores, warehouses and single family homes. And much of this property is made available to the public through one company: EG&G.

The Department of the Treasury through the United States Customs Service has designated EG&G Technical Services of Gaithersburg, Maryland, as the prime contractor responsible for the storage, maintenance, transportation and sale of seized and abandoned property. Agencies participating in this program include the U.S. Customs Service, IRS Criminal Investigation, U.S. Secret Service and the Bureau of Alcohol, Tobacco and Firearms.

"After a criminal investigation, the government may seize real estate connected with the lawsuit," says Wendy Wilson, director of marketing and sales for EG&G Technical Services.

EG&G takes custody of the property after it is seized by one of the agencies. It then manages the property, such as an apartment complex or a convenience store, while the case is underway, which may be anywhere from 6 months to 3 years. "In Indian Wells, California, we ran a golf course and country club for the U.S. Customs Service for 2 years before the case was cleared and [the property was] ready to sell," Wilson recalls.

Once the case is adjudicated, the property is forfeited to the government through a court order. "This is normally done through a plea agreement with the violators," says Wilson. "The agreement says the property will be forfeited to the U.S. government. At that point a final order of forfeiture is filed, and the title of the property goes to the U.S. government."

EG&G conducts a title search to clear up any encumbrances on the property. "The Department of the Treasury's policy is to pay off any liens and taxes so that they can sell the property free and clear," Wilson says. "Once this process is completed, then the property is ready to be sold." Over the past 2 years, EG&G has sold 83 properties in the Southeast for $16.4 million.

Methods of Sale

Property seized by the government does not have to be sold by auction. The requirement is that the property has to be offered to the public and EG&G has found that the auction method is the best way to involve the public. The company focuses much of its efforts on advertising through a combination of print and Internet ads as well as articles in local newspapers.

Another sales approach is listing the property with a broker. "Generally we use the broker method of sale when it's a very specific type of property with limited interest," Wilson explains. "But in the case of single family homes, we've found that the auction process works very well."

Selling on the Internet is also a way EG&G sells properties. "We've been doing that for about 4 months now, and it's working well. We post the property on the Internet, and people are required to register beforehand and put down a deposit. Then they actually place their bids online," says Wilson. A current list of real estate for sale can be found at EG&G's Web site, www.treas.gov/auctions/customs.

In addition to various types of real estate, EG&G deals with vacant land. "I would say the majority of what we sell are single family residences," Wilson says. "It really varies. In the next couple of months we will have a lot of vacant land to sell in North Carolina."

Who Will Start the Bidding?

EG&G does not determine the price at which a property will sell. In an open-bidding type auction, the people who bid actually set the price for properties. Occasionally the government will set a minimum price. "Generally what the government is looking for is to recoup the cost that they had invested in the property. In addition to the liens and taxes that the Treasury Department pays off before we put it up for sale, there are also investigative costs," Wilson explains.

The buyer generally depends on the type of property. Single family homes are usually purchased by homebuyers who plan to live in the house. Commercial buildings are sold primarily to businesses or investors.

Interesting Cases

"Many of the properties that we get are either from money laundering cases or drug trafficking," says Wilson. "Also, the Secret Service is responsible for enforcing credit card and food stamp fraud. We have had a few convenience stores that were seized as a result of food stamp fraud."

EG&G is currently working on the sale of an office building in Irvine, California, that was forfeited to the government as part of an offshore sports gambling case. The violators accepted wagers and paid winnings to their bettors. "That was fine until they began generating so much money that they couldn't make all of their payments out of their location in Antigua, so they started issuing checks out of a bank in the U.S. They ran $300 million in wagers and winnings through their Web site. But, they failed to register their activity with the IRS, and they did not pay federal excise taxes on their business. That is where they ran afoul of the law," Wilson says. Various money laundering statutes were also violated. A 1995 Lamborghini Diablo and a beachfront condominium in Newport Beach, California, were also forfeited in this case.

"Last year we sold a warehouse in Miami that was seized by the U.S. Customs Service after someone informed them about guns and more than $1 million in drugs stored in that warehouse," she recalls. On Miami Beach last May, EG&G sold a condo unit for the IRS for $232,000.

Sales proceeds go into the U.S. Treasury Asset Forfeiture Fund, which is used for law enforcement activities and restitution to victims of crime. This fund was created by an act passed by Congress in 1992 to hold deposits of seized currency and revenues from the sale and remission of forfeited property.


©2002 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.