Two prosecutors have been promoted to leadership positions in the Justice Department’s Asset Forfeiture and Money Laundering Section, where they are supervising a new Criminal Division unit dedicated to complex national and international financial cases.

Seetha Ramachandran (Facebook)

Seetha Ramachandran, who was an Assistant U.S. Attorney in the Southern District of New York; and Jonathan E. Lopez, a former Fraud Section prosecutor who most recently worked in the DOJ’s Office of Legislative Affairs, last month became co-Deputy Chiefs of the Asset Forfeiture and Money Laundering Section, known as AFMLS. Ramachandran and Lopez also will oversee the section’s new Money Laundering and Bank Integrity Unit.

Assistant Attorney General Lanny Breuer of the Criminal Division announced the creation of the unit in October.

Ramachandran had served in the Southern District of New York U.S. Attorney’s Office since 2005. She worked on money laundering and fraud cases, including investigations into alleged multi-million dollar schemes committed against the National Bank of Ethiopia and a customer of a JP Morgan Chase & Co. lockbox facility. Ramachandran also has taught legal writing at Fordham University.

She was a litigation associate at the law firm of Richards, Spears, Kibbe & Orbe LLP from 2003 to 2005 and at the law firm Covington & Burling LLP from 2000 to 2003. Ramachandran also was a law clerk for Judge Richard J. Cardamone of the 2nd U.S. Circuit Court of Appeals from 1999 to 2000.

Ramachandran received her undergraduate degree from Brown University in 1996 and her law degree from Columbia University in 1999.

Lopez had served in the DOJ’s Office of Legislative Affairs for the last year, working on various policy matters, including honest services fraud and sentencing guidelines. He previously was a Senior Litigation Counsel in the Criminal Division Fraud Section from 2006 to 2010, handling Foreign Corrupt Practices Act and fraud cases, including some of the Enron Corp. prosecutions.

He was Assistant U.S. Attorney in the Southern District of Florida from 2003 to 2006, working on child exploitation, identity theft, drug and gun cases. Lopez was also a corporate associated at the law firm of Sidley & Austin LLP from 2000 to 2003.

Lopez received his undergraduate degree from the University of California, Los Angeles, in 1997 and his law degree from Georgetown University Law Center in 2000. He was a member of the Georgetown International Environmental Law Review.

The Justice Department’s new anti-kleptocrat squad is reportedly looking at whether U.S. criminal investigators can assist in recovering assets stolen from Tunisia by ousted President Zine al-Abidine Ben Ali and his family.

The Federal Bureau of Investigation is exploring whether the former Tunisian leader has assets in the U.S. or used U.S. financial institutions to transfer illicit funds, which would bring the matter under U.S. jurisdiction, the Wall Street Journal reported.

The preliminary investigation is being overseen by prosecutors in the Justice Departments’ Asset Forfeiture and Money Laundering Section, part of the Criminal Division in Washington. The section has authorization to hire five lawyers devoted to finding and returning illicit assets taken out of countries by “high-level” foreign officials, part of a Kleptocracy Asset Recovery Initiative announced by Attorney General Eric Holder in a speech in Uganda last July.

The FBI likewise has put more agents on the job by building on U.S. Immigration and Customs Enforcement anti-corruption efforts and a team in the FBI’s Washington Field Office.

“We are going to bring cases against the assets of those around the world who have stolen from their citizenry and have taken money that obviously belongs to their country,” Criminal Division chief Lanny Breuer told the newspaper. “Those people are the embodiment, in some ways, of what’s wrong in these countries.” Breuer did not comment to the paper specifically about the Tunisia case.

Ben Ali fled to Saudi Arabia on Jan. 14 after a popular revolt. Tunisia has accused him of taking money out of the country illegally and issued a warrant for his arrest. The European Union and Switzerland have already moved to freeze assets owned by Ben Ali, his wife and other relatives.

The asset forfeiture section at Justice is headed by former senior counsel to the Deputy Attorney General Jennifer Shasky Calvery, who helped formulate department anti-corruption policy.

Asset recovery is a growing international field, with governments and multi-lateral organizations like the World Bank increasingly seeing it as a way to stop corruption.

The Bank estimates that between $20 and $40 billion is stolen from public coffers each year and that only about $5 billion has been recovered to date. The Bank recently published a handbook for international prosecutors attempting to navigate complicated legal and diplomatic waters to take back assets.

Increasingly, state and local law enforcement agencies are collaborating with the Justice Department to circumvent restrictions on civil forfeiture proceeds, according to a report published Tuesday.

In what is known as “equitable sharing,” state law enforcement agencies turn over seized assets to the federal government or seize them jointly with federal officers. Federal law allows up to 80 percent of the proceeds to be funneled back to the state law enforcement agencies, even in states that require the money to be diverted to non-law enforcement purposes, such as education.

The report, by the libertarian Institute for Justice, says “a substantial number” of law enforcement agencies have grown dependent on civil forfeiture proceeds. A 2008 investigative series by National Public Radio, for example, revealed that some Texas sheriffs’ departments rely on forfeited money for up to one-third of their budget.

In states with strings attached to civil forfeiture proceeds, law enforcement agencies have turned to the federal government in greater numbers. Equitable sharing payments to states nearly doubled from 2000 to 2008 — from a little more than $200 million to $400 million — and the trend is pronounced in states that limit the use of proceeds from civil forfeitures, according to the report, “Policing for Profit: The Abuse of Civil Asset Forfeiture.”

Often, the federal government adopts seizures when the underlying criminal activity is interstate or international in nature, as is commonly the case in drug-related prosecutions, a Justice Department official said. The federal government also takes over some cases that state and local authorities lack resources or expertise to pursue on their own.

Under equitable sharing agreements, state agencies are mandated to spend the funds on law enforcement, regardless of state law. If a state agency flouts federal guidelines, it could be barred from equitable sharing in the future.

“Equitable sharing increases the resources available to state and local law enforcement agencies, enabling them to better serve and protect their communities,” the official said.

Scott Bullock, senior attorney at IJ and a co-author of the report, said such agreements amounted to a loophole exploited by state law enforcement agencies.

“This willingness to really defy elected officials at the state and local level is outrageous,” Bullock said. ”The citizens made the decision that they did not want their law enforcement agencies profiting from forfeiture activity.”

In most states, law enforcement agencies can keep some or all of the proceeds from civil forfeitures. This incentive, according to Bullock, has led to abuses in system that is stacked against private citizens.

The government must show that seized property was involved in criminal activity to forfeit or keep it, but the burden of proof is lower than the “beyond a reasonable doubt” standard required for criminal convictions. The Justice Department must prove involvement by a preponderance of evidence; prosecutors in some states, such as Illinois and Massachusetts, need only show probable cause. Some state agencies have a higher burden of proof than the department, adding to the allure of equitable sharing, which is based on federal standards.

William Cowden, former asset forfeiture chief in the U.S. Attorneys’ Office for the District of Columbia, said federal intervention in state forfeiture cases creates a system of checks and balances. Property owners can contest the forfeiture in federal court, rather than state court, and if they prevail, the government is liable for attorney fees, said Cowden, now a partner at Mallon & McCool.

“The system is built on the premise that good lawyers on the defense side are going to catch this stuff,” he said.

Proceeds from equitable sharing agreements, Cowden added, must be spent on items approved by the federal government, such as police equipment. While the incentive can lead to abuses, state agencies risk losing funding if they spend outside federal guidelines.

“If there’s any indication that they misused the money, it’s going to be disastrous for them the next time around,” Cowden said.

The Civil Asset Forfeiture Reform Act of 2000 added procedural protections for private citizens, but forfeitures have burgeoned since the law’s enactment. The report says that in 2008, the most recent year analyzed by IJ, the Justice Department’s Assets Forfeiture Fund registered more than $1 billion in net assets, compared with $93.7 million in deposits in 1986, the year after the fund was created.

“It’s one of those classic Washington tales where the issue got some attention, which led to an important piece of legislation, and then a lot of people thought the problem was solved,” Bullock said. “But as you can see, that’s not the case.”

Cowden cautioned against drawing conclusions from the net assets alone. The vast majority of the deposits, he said, stem from massive federal investigations, not state hand-offs. The sum also reflects the department’s increased commitment in recent years to training federal prosecutors in forfeiture law — training that is financed with forfeiture proceeds.

“It may not be a perfect solution, but forfeiture is a very effective law enforcement tool, and one of the beauties of it is it pays for itself,” Cowden said.

The report gives each state an “evasion grade,” which measures the extent to which state and local law enforcement agencies attempt to bypass limits in state law. Maine, Delaware, Idaho, North Dakota, South Dakota and Wyoming all notched As — meaning their law enforcement agencies rarely if ever participate in equitable sharing.

But this group, with the exception of Maine and North Dakota, scored abysmally on another test: the strength of the forfeiture laws themselves. The law enforcement agencies in these states don’t need equitable sharing because their laws are permissive, the report says.

Conversely, the states that regulate the use of proceeds, usually directing them to a general fund or a neutral fund, received low evasion grades. Several states flunked, including Ohio, California, New York, Georgia and Texas.

To read the full report, click here.

The Principal Deputy Chief of Justice Department’s Asset Forfeiture and Money Laundering Section has stepped down for a job at Wells Fargo & Co., a spokeswoman said, a little more than a week after the head of the unit announced he was moving on.

Lester Joseph, the former Principal Deputy Chief for the Asset Forfeiture and Money Laundering Section (Photo courtesy Anti-Money Laundering Audit and Compliance Forum)

Lester Joseph, who began at the financial services giant on Monday, had been the No. 2 official in the section since 2002. Section Chief Richard Weber announced on Feb. 18 that he was leaving the department to lead a new economic crimes bureau in the Manhattan district attorney’s office. The section also recently suffered the loss of Deputy Chief Pamela Dempsey, who died of leukemia in February.

Joseph will manage a new financial investigations unit out of the company’s office in Tysons Corner. He could not be reached from comment.

Joseph had been a supervisor in the section since 1991, and before that he was a trial lawyer in the Organized Crime and Racketeering Section. In his role as Principal Deputy, Joseph helped manage the investigation and prosecution of several major banks and corporations, including Credit Suisse Group AG and Lloyds TSB Bank.

The companies have agreed to pay state and federal authorities $536 million and $350 million, respectively, to settle allegations that they violated sanctions by stripping identifying information from transactions originating in Iran and other countries.

Joseph also was involved in investigations that culminated in deferred prosecution agreements with American Express Bank International, Union Bank of California, N.A., BankAtlantic, and Banco Popular de Puerto Rico.

“We wish Les well as he pursues a new opportunity and are grateful for his service to the Department and the American people,” said spokeswoman Laura Sweeney.

In the past year, the Criminal Division has seen turnover in several areas, including AFMLS, the Fraud Section, the Public Integrity Section, the Narcotics and Dangerous Drugs Section and the Office of Enforcement Operations.

Last year, Denis McInerney, formerly of Davis Polk & Warwell in New York, replaced Steve Tyrrell as chief of the Fraud Section. Tyrrell began work as a partner at Weil, Gotshal & Manges earlier this year. Several deputy chief positions in the Fraud Section are vacant or will be soon.

The Public Integrity Section and the Narcotics & Dangerous Drug Section are also without chiefs, after the departures of  William Welch II and Paul O’Brien, respectively.  Welch returned to the U.S. Attorney’s Office for the District of Massachusetts in October, and O’Brien recently shifted to the Criminal Division’s Office of Enforcement Operations, replacing Maureen Killion, who retired as Director.

Raymond Hulser is acting chief of the Public Integrity Section, and Wayne Raabe is acting chief of the narcotics section.

Breuer said at a conference last week that a new Public Integrity Chief would selected “soon.”

UPDATE (March 2, 12:25 p.m.): A reader has pointed out an omission on my part. In September, the Criminal Division also lost Steven Parent, who had been the division’s Executive Officer since 2003.