but the fee limitation I was involved in under the Criminal Justice Act was $10,000. That would not have even covered the out-ofpocket costs that we paid out for an investigator. These are large cases that the Government will have spent years investigating with all of their resources. And, in fact, in that particular case, there was at least one FBI agent, one DEA agent, one Internal Revenue Service agent, and one Customs agent, along with two assistant U.S. attorneys, that investigated that case for a period of approximately 18 months.

Now, to come in and adequately represent my client and prepare him for trial, or to make a decision to plead, I have to investigate the facts. I cannot do that under the limitations currently imposed by the Criminal Justice Act. So, the fact that counsel can be appointed is really a very hollow remedy to a defendant; and you've got to remember, a defendant that is presumed innocent, at least theoretically.

Mr. SHAW. I think we can probably both agree, though, even with all the money in the world you can still hire incompetent counsel.

Mr. BAILOR. Absolutely.

Mr. SHAW. Thank you.

I yield back, Mr. Chairman.

Mr. HUGHES. The gentleman from California, Mr. Lungren, is recognized for 5 minutes.

Mr. LUNGREN. Thank you, Mr. Chairman.

This was supposed to be on money laundering, but you've peaked all of our interests on the question of seizure of assets, and forfeiture, and how it impacts on attorneys. As the member of this panel who brought the Comprehensive Crime Act to the floor to get it passed, and recognizing that we had a 600-and-some page document that was passed in rather contracted circumstances, I'm not going to apologize for that, because I think it was the only way we could do it under the circumstances. But I also want to tell you that I think most people were aware of what we were doing as far as the forfeiture was concerned.

There is a public policy determination that, in fact, we were not getting at those assets that were ill-gotten gains, and that an extraordinary remedy was necessary. And I think that is the overwhelming public policy that was behind that, and I think what my colleague from Florida, Mr. Shaw, said to you is correct: I think it is going to be very difficult to come up with any specific exception, or exemption, that is, for attorneys' fees.

I think we'll be, obviously, willing to look at whether there's something we can do to fine-tune it, but the bottomline is that these folks wouldn't have the money-I mean, presuming that's what we're getting at, the seizure of-or forfeiture-of assets that are ill-gotten gains, or equivalent of ill-gotten gains, they wouldn't have had those assets in the first place in order to hire counsel, if it does prove out that way. And if we can do something to make sure that we can try and balance it, I'm sure we're all willing to do it; but I can just tell you, it's going to be a very, very difficult journey for us. And the argument that, "Well, if they have to have appointed counsel like the poor slob on the street, that that's inadequate." I don't think that's going to carry a whole lot of weight,

frankly, because we have a whole system set up where we do provide court-appointed counsel to those who can't afford it, and we're operating under the assumption that they're getting adequate counsel. If they're not, we have a whole question for the criminal justice system as it is at present.

I don't know if you'd wish to comment on that.

Mr. BAILOR. Well, I would like to suggest that the appointedcounsel situation, as it currently exists in the Federal system of the United States, I do not think is adequate representation. I think there is adequate representation provided in the smaller cases by the Federal Public Defender Service, but I think that whole question and the whole issue of the sixth amendment right to counsel does need a careful reexamination.

Frankly, a large case which involves thousands of man-hours, no attorney, no private attorney, can afford to do that kind of case. And if you go out into the bar right now, you'll find that most law firms, unless they're doing it strictly on a pro bono basis, try and avoid that kind of work.

Mr. LUNGREN. Well, I understand what you're saying. There was a professor at Georgetown Law School who left the year before I got there, who was famous for the very first thing he told law students as they started his class, and it was, "The first principle of law is get the fee first." And what he meant by that was, if you don't you're going to be left behind, and after a while you won't have a practice and you won't be able to defend anybody. But I think we have an overwhelming public policy that we incorporated into the law, with knowledge, and we intend to do that.

Let me just mention one other thing, and this has to go with some statements that were made earlier about the fact that we need more personnel. It's absolutely accurate, we need more personnel. Many of us thought when we enacted the comprehensive crime package that that's exactly what we wanted, and, unfortunately, we haven't been able to back it up with the U.S. attorneys that are necessary.

But I'm afraid a little misinformation was put on the record a little while ago, where it said that the DEA, the FBI, and the INS-it was also mentioned the IRS, I can't comment on thathave been cut by this Administration. That is absolutely not true. There is more DEA, there is more FBI, there is more INS now than there was when this administration came in. We have had a coordination between the DEA and the FBI that didn't exist before. The INS has had 1,000 people at it in the last year. And with all of those things, it's still inadequate, and I would agree that it is inadequate; but it is not true that this administration has cut personnel in those regards.

They have not given us every increase we want, but I would also say to you the administration sent up a request for a substantial increase in U.S. attorneys last time, that was turned down by this Congress, for which I am very, very sorry, and I think it is going to harm us in the future. But the point that you make, that we do need more people to back up the new tools we gave, is absolutely accurate and I thank you for your statement.

Mr. HUGHES. I just want to, if I might, before we call the next witness, just try to correct a couple of things.

I take issue with my colleague from California when he suggests that the proceedings were contracted and a great deal of consideration did not go into the forfeiture bill. I take exception to that, because this subcommittee worked on forfeiture for some 4 years. The ranking Republican member, Hal Sawyer of Michigan, and myself conducted a number of hearings over an extended period of time, and I might say, parenthetically, that at no time was the question of attorneys' fees raised. That wasn't-

Mr. LUNGREN. Would the chairman yield?

I didn't suggest that we didn't look at it, I didn't suggest that at all. I said I thought we did know what we were doing when we worked on it.

Mr. HUGHES. Well, insofar as attorneys' fees were concerned, let me just suggest that I think it is a matter of balance. I don't think there was any question but attorneys really should be treated any differently if they have knowledge or reason to know. If there are circumstances from which there could be garnered some evidence that the attorney was on notice, that the money was tainted that they received by way of a fee, that's one thing; but if, in fact, in enforcing and implementing the legislation we begin to confiscate, in advance, funds that will deny an individual the right to counsel of his choosing, that's something else again. It's a matter of balance we're talking about, I don't think we're disagreeing.

I mean, I don't disagree with much of what Mr. McCollum said, except I think it is a matter of degree. And I might say that we, perhaps, did not give enough attention to that issue, and we will if need be. If, in fact, in implementing the forfeiture legislation we find that it's being implemented in a fashion which we think does violence to the sixth amendment, then obviously we're going to address that issue.

Insofar as the resources, I also want to take, somewhat, issue with my colleague. Nobody has fought to try to restore funding more than I have. And in the area of the Coast Guard, for instance, there was an effort to cut some 600 billets. Much of that will impact our interdiction efforts at sea.

Insofar as the Drug Enforcement Administration is concerned, the gentleman from California is correct, we do have more numerically; however, we're fighting, as my colleague well knows, to try to restore some slots, some billets, to the Foreign Cooperative Investigation Section of the Drug Enforcement Administration. These are the missions around the world that would assist us in host countries in trying to gather intelligence and do a better job of providing assistance in those countries as well as training and intelligence; they were cut.

In the area of Customs, even though there has been some restoration, they were cut.

In the area of Alcohol, Tobacco and Firearms, we're just restoring the cuts that we saw back in 1981-82. We lost some very seasoned agents, and we're not really back to what was the manning level back in 1981, in the Alcohol, Tobacco and Firearms section of Treasury, which deals with arson, firearms, and explosives.

In the area of Diversion Control at DEA, which deals with the diversion of licit drugs into the illicit market, we zero funded the

diversion investigative units, and they have not been restored to date, although we're making an effort in this Congress to do so.

So, even though this committee has made, really, an effort, and it's been bipartisan in nature, to restore, we still really haven't begun to get serious about dealing with what, in essence, is the single most important problem in this country, substance abuse. I quite agree with you, I think that happens to be the case.

Again, Mr. Bailor, we thank you for your testimony. You've been most helpful. We're going to take, certainly, under advisement many of your recommendations. I think you've provided us a great deal of insight. Thank you very much.

Mr. BAILOR. Thank you, Mr. Chairman.

Mr. HUGHES. Our next witness is Mr. Jerry J. Berman, Chief Legislative Counsel for the American Civil Liberties Union. Mr. Berman has been representing the ACLU since 1977. He's a director of the ACLU Project on Privacy in Technology, and is a frequent witness before congressional panels on privacy issues.

Mr. Berman is accompanied by Mr. Ron Plesser. Mr. Plesser is an attorney with the law firm of Blum, Nash & Railsback in Washington, DC. He is a former chief counsel of the Federal Privacy Protection Study Commission, and has assisted in the development of the Right to Financial Privacy Act. He is a former chairman of the Committee on Privacy of the Section on Individual Rights of the American Bar Association.

We're just delighted to have you, Mr. Berman, and, Mr. Plesser. We have read your statement, and we hope that you can summarize for us. Again, welcome.

STATEMENT OF JERRY J. BERMAN, CHIEF LEGISLATIVE COUNSEL, THE AMERICAN CIVIL LIBERTIES UNION, ACCOMPANIED BY RONALD L. PLESSER, ESQ., BLUM, NASH & RAILSBACK, WASHINGTON, DC

Mr. BERMAN. Thank you very much, Chairman Hughes. I will go through the statement in an abbreviated form.

First of all on behalf of both Ron and myself, we want to thank you for the opportunity to testify on this significant legislation. As you know the ACLU is a nonpartisan organization of over 250,000 members dedicated to the defense of civil liberties guaranteed by the Bill of Rights.

We recognize that money laundering is a serious and growing problem in the United States and that legislation may be necessary to deal with it. However, as the chairman mentioned at the start of these hearings, we agree that that legislation has to be a balance between legitimate law enforcement needs and the privacy and civil liberties of citizens. For this reason we strongly oppose the administration's proposal, H.R. 2786, because we do not believe it is narrowly focused or balanced. Instead, we view it as a prosecutor's wish list and a serious threat to civil liberties on three different grounds:

First of all, our major objection is that it would evisecrate the modest protections afforded customer bank records in the Right to Financial Privacy Act of 1978.

Second of all, we are concerned about the breadth of conduct made criminal under the money-laundering provisions of this act. We believe it reaches conduct which is traditionally prosecuted under state and local law and we think it would make prosecutable conduct which may and should be left legal. The sweep of the statute affects the volume of bank records which might be subject to the exception to notice and legal process under the Right to Financial Privacy Act amendments.

For these reasons we believe the administration's approach should be rejected. However, at the outset, while we focus on our objection to the administration's proposal, we do believe that a balanced approach is possible. For example, we have no objection to the chairman's proposal, a narrowly focused money-laundering crime which doesn't tamper with the Right to Financial Privacy Act. Even Congressman McCollum's bill may be acceptable although we are concerned about the mens rea requirements of the crime of money laundering. We have no fundamental objection if his amendments to the Privacy Act are designed to clarify authority which the Government already has.

So, we're saying that balanced legislation is possible. But let us turn to the content of the administration bill.

Mr. Chairman and members of the committee, we live in a record society. In order to do business, to obtain credit, to bank, to live our lives, we increasingly turn over personal information to third-party record holders. Bank records are a case in point. Through credit card transactions, loan applications, checking accounts, bank records are personal information about our finances, tastes, opinions, and travels. Today, with computerization, they are readily accessible for investigatory purposes.

Unfortunately, the Supreme Court has not extended privacy protection to third-party records. In 1976, the court specifically rejected the privacy protection for bank records. Congress, in response, passed the Right to Financial Privacy Act in 1978. It was a compromise between privacy advocates who wanted formal progress and strict standards and notice before any bank records could be obtained and between law enforcement agencies which wanted flexibility in certain circumstances.

Under the act, in most circumstances-this is important to understand in the context of what the administration is requestingcitizens must be given notice that their bank records are being requested and they have a chance to challenge it in court. However, there are a number of exceptions under the act: Grand jury subpoena, a search warrant, and you can go to a court and ask for a delay of notice for bank records in a number of circumstances, including where there may be tampering with evidence or the possibility that notice would seriously interfere with a law enforcement investigation. There's no reasonable suspicion or probable-cause standard to obtain records. The standards are lower for bank records, under current law, than for Government access to cable subscriber information pursuant to the Telecommunications Act which Congress passed last year.

Now, the amendments in the money-laundering proposal of the administration would seriously weaken the act. First of all, section 3(a) would add an exception to the privacy protection of the act: It