Audit Report on the New York City Police Department’s Controls Over Seized Property

Executive Summary

The New York City Police Department (NYPD) is responsible for maintaining a safe environment by performing a wide array of law enforcement, public safety, traffic management, counterterror, and emergency response roles.

The NYPD’s Property Clerk Division (PCD) is charged with accepting, cataloging, safeguarding, storing, returning, or otherwise legally disposing of all property that comes into the custody of the NYPD. The NYPD acquires custody of two types of seized property: (1) property taken in connection with arrests or as investigatory evidence that will be forfeited if court proceedings result in a judgment or order that so directs; and (2) property retained for safekeeping purposes.

Approximately two-thirds of all property the NYPD takes in is evidence required for criminal cases. Other categories of NYPD-acquired property include found property, decedents’ property, and property confiscated in connection with forfeiture proceedings. The NYPD’s Civil Enforcement Unit (CEU) is legally authorized to pursue forfeiture under New York State (State) law of any property that was used to facilitate a crime or constitutes the proceeds of a crime. One of the CEU’s main forfeiture initiatives focuses on vehicles used during crimes involving illegal firearms.  The NYPD also holds property no longer needed as evidence or for further investigation pending its further disposition.

The types of property received by the PCD include cash, jewelry, weapons, vehicles, and other general property of every description. The NYPD returns property that is not subject to forfeiture proceedings and that can be legally returned to its rightful owner; destroys contraband; and disposes of any unclaimed property. The PCD works with outside auctioneers to auction off property and vehicles. Unclaimed property is disposed of through online public auctions once the retention period for it expires. The NYPD deposits unclaimed cash into the City’s general fund. In August 2017, New York City enacted Local Law 131 of 2017, requiring the NYPD to release annual reports providing data on seized property and retained property.^[1]

Federal law authorizes the United States Departments of the Treasury (Treasury) and Justice (DOJ) to share revenue from federally forfeited property with participating state and local law enforcement agencies such as the NYPD through the Equitable Sharing Program. State forfeiture laws also enable the NYPD to receive revenues from State District Attorneys’ (DAs’) offices in each county of the State, including the five counties in New York City. Each DA determines whether property identified in an investigation or court proceeding involving the NYPD is subject to forfeiture and works in conjunction with the NYPD’s Asset Forfeiture Unit (AFU) to pursue forfeiture of such property.

Audit Findings and Conclusion

The NYPD does not have adequate controls over the collection, recording, and reporting of seized property and related revenue. The NYPD’s Property Evidence Tracking System (PETS)—the computer system used by the NYPD during our audit scope period to track seized property—has significant weaknesses, including that it cannot be used to track seized property on an aggregate level; and that it does not have adequate data input controls, which weakens its reliability. As a result of the inadequacy of its controls, the NYPD cannot efficiently and effectively determine whether the property in its custody is being properly maintained and disposed of. In addition, the audit also identified unaccounted-for gaps in the PETS invoice numbers, which could signify that transactions that should have been recorded were not or that transactions were inappropriately deleted. NYPD officials informed us that the PETS system is being updated with advanced functions for reporting and input controls and that they anticipate PETS 2.0 will be rolled out in June 2021.

We also identified discrepancies in the data concerning seized property and retained property that the NYPD reported to the public for Calendar Years 2017 and 2018 pursuant to the requirements of Local Law 131. Specifically, for four of the eight categories of information that the NYPD was mandated to report, the information reported was not supported by the backup documentation supplied by the NYPD for one or both years. In addition, the NYPD did not maintain supporting documentation for the amounts recorded in FMS that represented revenue received by the District Attorneys’ Offices. Further, the NYPD did not report the required data on seized and returned property timely.

The audit also found that the cash receipts the NYPD recorded in FMS as revenue for Fiscal Years 2017, 2018, and 2019 did not match the supporting documentation for DOJ and Treasury receipts. Further, the NYPD incorrectly classified some entries in FMS. Finally, the NYPD did not perform a timely reconciliation of the vehicle auction sales and did not timely bill its vendors for its share of vehicle auction sales proceeds.

Audit Recommendations

Based on the audit, we make 16 recommendations, including the following:

• The NYPD should ensure that PETS 2.0 is designed with adequate reporting capabilities so that it can track and report on the location and disposition of seized property on an aggregate basis and utilize that capability to ensure that the property is being properly maintained and promptly disposed of.
• The NYPD should ensure PETS 2.0 is designed with appropriate input controls relating to edit checks and data validation.
• The NYPD should ensure that any unaccounted-for invoice numbers are appropriately investigated, documented, and approved and that adequate documentation is maintained for skipped invoices.
• The NYPD should ensure that adequate reconciliations are performed of revenues received and that information is checked for accuracy before the Local Law 131 report is posted on its website.
• The NYPD should maintain a cash receipts record of the revenues it receives from the State that includes all relevant information to adequately track receipts.
• The NYPD should post the annual Local Law 131 report on its website timely and comply with all the reporting requirements.
• The NYPD should ensure that there is adequate supervisory review over the tracking of seized and forfeited revenue to ensure that reconciliations and follow-ups on discrepancies are performed.
• The NYPD should ensure that there is adequate supervisory review over the entries made in FMS to ensure they are correctly classified and applied to the correct fiscal year.
• The NYPD should develop a process for reconciling reviews of auction vendor revenues and monitor its implementation.

Agency Response

In its response, the NYPD agreed with 14 of the audit’s 16 recommendations. However, in contrast with the audit’s findings, the NYPD stated in its response that it already is in compliance with 8 of the 14 recommendations. Of the remaining two recommendations, the NYPD stated that it disagreed with the need for one (#3) and will take the other under advisement (#8). The NYPD also took issue with the report’s presentation of a number of the audit’s findings. After carefully considering the NYPD’s arguments, however, we find that none of them warrants a modification of any of those findings.

[1] Seized property is defined as property over which the NYPD’s property clerk has obtained custody, where the ownership has not been adjudicated, that is held for safekeeping, as arrest evidence, for forfeiture, or as investigatory evidence. Retained property is defined as property or U.S. currency in which the NYPD has obtained an ownership interest and has been transferred to the general fund because ownership was waived or forfeited or because it remains unclaimed after the period for claiming.