Justice Department suspends Palmview from asset forfeiture program

The U.S. Department of Justice suspended Palmview from a federal asset forfeiture program last week amid concerns about accounting problems and potentially improper spending.

Interim City Manager Leo Olivares said the Justice Department suspended Palmview from the program on April 24.

Palmview had already started the process of self-reporting several major accounting problems, including improper transfers and mixing state funds with federal money. Finance Director Rachel Chapa said the problems may include improper spending, which remains under investigation.

“They basically said they’re suspending the program, which means we need to freeze any activity on it,” Olivares said.

The Justice Department declined to comment.

Through the asset forfeiture program, the Justice Department confiscates money and property linked to criminal activity. The Justice Department shares the funds with local partners, including the Palmview Police Department.

Palmview received more than $2.2 million through the program during the past seven years, according to financial records provided by the city.

The Justice Department requires local partners to spend the money on law enforcement and follow commonsense rules.

Local partners can’t simply spend less on law enforcement and replace city funding with forfeiture money. Local partners can’t make financial commitments before they receive the forfeiture money, a violation called “anticipation.” And they can’t borrow forfeiture money for regular city expenses.

Palmview, though, broke multiple rules, Chapa said.

The city mixed state forfeiture money, which comes with different rules and reporting requirements, with federal forfeiture money. Palmview also deposited towing registration fees and grant money in the federal forfeiture account.

Budget records show Palmview regularly transferred money between the federal forfeiture account and the general fund, Chapa said, adding that some transfers appear to be reimbursements.

“You’re not supposed to transfer funds from forfeiture to general or from general to forfeiture,” Olivares said. “There’s no revolving doors here.”

The transfers include questionable descriptions, including “Officers Gift Cards” for $400 on Feb. 11, 2013, and “Christmas Party” on Dec. 23, 2015, for $1,100, according to financial records provided by the city.

Justice Department rules specifically prohibit local partners from spending forfeiture money on food or gift cards.

Whether or not the expenditures broke the rules, though, remains unclear. The descriptions may not be accurate or complete. Chapa said she’s searching for documentation that may provide more details.

Primary responsibility for managing the program fell on former police Chief Chris Barrera, but the city manager and City Council approved expenditures. Accountants and auditors also reviewed spending over the years.

Attorney Javier Peña, who represents Barrea, couldn’t immediately comment on the asset forfeiture problems.

Concerned about the situation, the City Council authorized Chapa to conduct an audit. Palmview also created a new, separate account for state asset forfeiture money.

The Justice Department may conduct a desk review or send personnel to Palmview for an on-site review, Olivares said.

“They also wanted to know if there were any criminal violations,” Olivares said, adding that he couldn’t discuss any potential concerns about misappropriation of funds.

Officials already asked Palmview to freeze the account, which contains nearly $51,000, and send the Justice Department an inventory of assets purchased with forfeiture money.

“We told them we would be happy to cooperate,” Olivares said.