Mr. BAILOR. Actually, no finding has been made to date. The way that statute works, you operate under the Maritime Seizure Rules, where an assistant U.S. attorney swears out a warrant which is issued by, believe it or not, the clerk of the court, not even a magistrate, which goes out and allows the arrest of those assets. Now, any further proceeding or determination as to the validity of that seizure waits until all the criminal proceedings are over with.

Now, in my particular case, this case is also on appeal, so I'm not exactly sure, while a hearing is scheduled in October, that it will even be decided. To this date no judge, or, as the court is fond of saying, "neutral and detached magistrate," has examined the validity of this seizure. The court simply entered a temporary restraining order, initially, based solely on an affidavit of the Government. No evidence has been taken on that as of yet.

Mr. SHAW. Is there a vehicle by which, under the statute, by which you can petition the court for release of certain assets upon a showing that they were purchased from legitimate sources?

Mr. BAILOR. The statute provides that a bona fide purchaser for value of property can come in and make a claim for relief. There is no specific provision in the statute which covers an attorney. An attorney is in an extremely awkward position: To represent his client, he must learn the facts, both from the client, and, of course, going out and interviewing witnesses. And given the language of the statute, unless that statute is held unconstitutional because of its infringement on the right to counsel, and attorney cannot meet that standard. I have to interview my client. There comes a time when I have to say to him, "OK, what really happened?"

Mr. SHAW. I think that you bring a good point to us, and I think, perhaps, we should revisit the statute by being sure that the defendant, himself, can come in and petition the court for the release of the assets, whether it be for payment of his attorney or anything else, simply upon the showing that the assets were legitimately acquired.

I think, though, to put in an exception that would, in effect, say that an attorney can be paid with illegal funds, and if the Government has to pay that out of the assets that it required, would be an unfair exception. The client has, upon showing-if you would not have taken the case, and upon showing the fact that he does not, could not, gain counsel because his assets are tied up, then it would be the court's requirement to provide counsel for him, which puts him in the same position as anyone without assets.

I think this is going back to what Mr. McCollum said in taking the thing full circle. Is my reasoning flawed by that statement?

Mr. BAILOR. No, I think you are correct as to the procedure that would be followed, but I would like to comment on at least two aspects of that.

Every man steps into our criminal justice system with a presumption of innocence. By seizing these assets prior to conviction, you are penalizing him and his presumption of innocence is gone. In other words, his assets are taken away without any finding of fact by anybody. That's the first aspect of that I wanted to address. The second part of this, Congressman, is, you cannot expect, in large criminal cases, that appointed counsel is adequate. I think this may have changed since I got involved in the Reckmeyer case,

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 INŠ 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.