Sharon Cohen Levin has been chief of the Asset Forfeiture* Unit in the Southern District of New York for 15 years, but now, more than ever, her office's unit is under pressure to show results. She has seen forfeiture go from "something that was used occasionally" to a regular part of fraud prosecution.
Her office has responded with record recoveries. Asset Recovery* Watch Editor David Quinones caught up with Cohen Levin to discuss the successes and challenges to disarming criminal enterprises and fraudsters.
David Quinones: You've had a front row seat to the fraud epidemic that has swept through the nation in the past three years. How has this changed the national conversation about asset recovery* forfeiture?
Sharon Levin Cohen: That's completely true, and people are much more aware than they were. It went from something that was used occassionally to being part of every fraud case. They want us to get the money back. That's one of the things that's most important to us here in the Southern District of New York, is to use forfeiture as a mechanism to be able to seize and freeze the crime proceeds so they can be returned to victims. In fact, in the past ten years, our office alone has returned over $1.2 billion dollars to victims of crime.
DQ: Some departments have a tendency to shy away from forfeiture because it is so labor intensive and can be such a costly process. Your district has succeeded, however, and every other week it seems like we're hearing about a new forfeiture or clawback coming from your office. Has the fact that you are located in New York, with all of that jurisdictions varieties of fraud, helped or has it made for more of a challenge?
SLC: At the end of the day, at least this is my characterization, but New York is the financial capital of the world, or at least of the United States. There's a tremendous amount of banks here and a tremendous amount of industry here. Therefore, unfortunately, there's a lot of fraud and fraud proceeds that run through New York. And, we also happen to have an incredibly committed group of law enforcement agents who are here because they want to be here. They are very devoted to these type of cases because they view it as part of a law enforcement or prosecutor's job. To put someone in jail is very, very important, but equally important to the victims is to try to provide them with some type of compensation. Because so much money comes through here we have the opportunity to have these type of cases and be able to work with committed agents who are willing to put in the kind of time and effort that is needed to bring in these kind of forfeiture cases.
DQ: Now that's the good news, but the bad news is that according to some estimates – the World Bank, DOJ and others – less than one percent of criminal proceeds are recovered worldwide. We consider this to be the endgame of financial crime – you don't win unless you get those assets back for victims. How can those numbers be improved, in your opinion?
SLC: I think it just comes down to resources, to having enough agents with the ability to focus on it. There's also legal challenges, in order to be able to seize or freeze crime proceeds so that they are available for forfeiture or restitution we have to actually trace them to the crime. Even though at the end of the day if the defendant is convicted we are going to get a substantial money judgment against the defendant, he may spend all of that and save his legitimate money, and we have no ability under the law right now to seize or freeze what we call "substitute assets" so that they are available to satisfy the judgment. Sometimes there's just money that we can't go after. I think that there certainly could be legislative changes that could help us, but we try to make do with the laws we have at our disposal.
DQ: A lot of our members are from the private sector, so we like to talk about synergy – getting private sector and public sector professionals to work together to break down walls and barriers between them, because a lot of times they're working to the same end.
SLC: I think that's fantastic, and your organization and other organizations that host these conferences where people like me can speak at them and talk about, among other things, when banks file suspicious activity reports how they can provide information that is more useful to law enforcement. I think all of that stuff is terrific. I think communication is the best thing. It's all about meeting and working together.
DQ: We'd be remiss if we didn't mention some of the larger fraud cases you worked on, such as Marc Dreier, the former New York lawyer who ran a multi-million dollar Ponzi scheme*. Do you think that these mega-frauds have made a roadmap for asset recovery* and forfeiture, or are they just too big and unique to provide even examples for everyday forfeitures? Do the same principles apply?
SLC: Exact same principles. The way we worked on Dreier is exactly same way we would work on a $20,000 case. It's exactly the same: We would trace the assets the same way, get the same restraining orders, we would do the same type of analysis and work. We don't have to do as much. There aren't as many records and it didn't occur over such a long period of time, but it's exactly the same methodology.
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