U.S Attorney Office for the Southern District of New York, via Associated Press

The federal government runs a multibillion-dollar business in Lower Manhattan with an unusual and diverse revenue stream.

In the last year, the government’s prosecutorial branch in Manhattan has taken in about $160 million from an online poker operation and more than $2 billion from a failed Ponzi scheme. Last week, it even secured a Tyrannosaurus skeleton from Mongolia valued at more than $1 million.

This business is the asset forfeiture unit of the United States attorney’s office in Manhattan. In 2012, the unit recovered about $3 billion in crime proceeds — the largest amount ever recovered by a single United States attorney’s office since the Justice Department established the asset forfeiture program four decades ago. It also accounts for 68 percent of the national total last year from the country’s 93 United States attorney’s offices, according to government figures.

“Asset forfeiture is an important part of the culture here and an example of the government being efficient and bringing home the bacon,” Preet Bharara, the United States attorney in Manhattan, said in a recent interview.

The aggressive use of forfeiture as a legal mechanism to seize and freeze criminal proceeds has long been a hallmark of Manhattan’s federal prosecutors. Securing forfeited assets is a priority of the office in part because many of the largest financial fraud cases are centered in New York.

“To put someone in jail is very important, but equally important is to provide the crime victims with some type of compensation,” said Sharon Cohen Levin, an assistant United States attorney who has run the office’s forfeiture unit for 16 years.

The Justice Department’s program has plenty of critics. Many judges and defense lawyers say that the policies can be arbitrary and harsh. In recent decades, forfeiture powers have greatly expanded, leading to overzealous and mean-spirited conduct by prosecutors, critics say. In 2000, Congress reined in prosecutors with the Civil Asset Forfeiture Reform Act, which instituted a number of changes.

“Congress needs to revisit the forfeiture laws to curb continuing abuses,” said David B. Smith, a defense lawyer in Alexandria, Va., and the author of a leading treatise on forfeiture. “The procedures need to be made more fair, particularly for innocent third parties whose property rights can be easily destroyed without even having an opportunity to challenge the basis for the forfeiture.”

The seized money ends up in different places. Where there are not identifiable victims, as in drug crimes, proceeds are placed in two asset forfeiture funds: one controlled by the Justice Department and the other by the Treasury Department. Most of that money is used to bolster various law enforcement initiatives.

But the majority of the forfeited assets end up back in the hands of defrauded victims.

In March 2012, for instance, as part of a settlement, the publicly held Science Applications International Corporation, the primary contractor on New York’s scandal-ridden CityTime payroll project, forfeited about $500 million in connection with its role in a fraud and kickback scheme.

More than 90 percent of that amount was given back to the city as compensation for its losses on the CityTime project. That money allowed New York to fill more than 2,500 teaching positions that would otherwise have been eliminated in the budget for the coming fiscal year, according to the city.

Bebeto Matthews/Associated Press

Stephen Chernin/Getty Images

Jeffrey Langlois/Palm Beach Daily News, via Associated Press

In certain cases, the forfeiture process can be painstaking and take years to resolve, as in the Adelphia Communications accounting fraud, which led to the largest single distribution of forfeited assets to victims in the Justice Department’s history.

Last spring, a decade after the office began its investigation of the Adelphia fraud, about $730 million was distributed to victims. Adelphia’s former chief executive, John Rigas, and his son Timothy Rigas, who was chief financial officer, are both serving prison time after their convictions and agreed along with other family members to forfeit more than 95 percent of the family’s assets to the government.

The complicated process, overseen by a court-appointed special master, Richard C. Breeden, involved setting up a victim fund and then processing more than 13,000 petitions and verifying monetary losses of the company’s shareholders.

The Adelphia distribution, though, is likely to be dwarfed by the amount of money that the government returns to defrauded investors in the Ponzi scheme orchestrated by Bernard L. Madoff. Mr. Bharara’s office has worked alongside Irving H. Picard, the trustee in the Madoff case, to secure compensation for the victims.

Virtually all of the government’s recovery for Mr. Madoff’s victims comes from the settlement of claims against the estate of Jeffry M. Picower, who died in 2009 and was one of Mr. Madoff’s original and largest investors. Of the $7.2 billion that Mr. Picower’s widow agreed to return to victims, $2.2 billion went to the Justice Department, with the rest going to Mr. Picard for eventual distribution.

Last month, the government named Mr. Breeden, the supervisor of the Adelphia case, to serve as special master to administer the forfeiture proceeds in the Madoff case.

Of the $17.3 billion of actual cash losses in Mr. Madoff’s fraud, the trustee has recovered about $9.3 billion and distributed about $3.7 billion of that to eligible victims. The $2.35 billion seized by prosecutors under forfeiture laws will be doled out separately by the Justice Department, which has said it expects the victim claims process to begin shortly.

Another substantial forfeiture case last year involved Full Tilt Poker and PokerStars, two large online poker Web sites. To settle the government’s lawsuit against them, Full Tilt agreed to forfeit essentially all of its assets and PokerStars agreed to forfeit $547 million — representing revenue from illegal gambling and proceeds from money laundering, according to two people briefed on the case — that will be paid out in several installments. Under the agreement , PokerStars did not admit to any wrongdoing. To date, about $160 million has been forfeited.

But last year’s most exotic forfeiture action involved the Mongolian dinosaur case. Last week, a paleontologist admitted to illegally shipping dinosaur fossils to the United States from Asia. As part of a plea agreement, the paleontologist, Eric Prokopi, agreed to forfeit a Tyrannosaurus skeleton that had been put up for auction for more than $1 million, along with five other dinosaur skeletons.

The fossils will be returned to the Mongolian government; Mr. Prokopi faces a possible prison sentence.

The reptile remnants represent just a fraction of the 2012 forfeiture proceeds secured by Mr. Bharara and his colleagues — proceeds that amounted to more than 60 times the office’s annual budget.

“As I like to joke,” Mr. Bharara said, “that’s a lot better than the investment return of any hedge fund.”