September 28, 2015

September 28, 2015 | Testimony on Legal Issues

Civil Asset Forfeiture: A System in Need of Reform

Testimony before the Oklahoma State Senate

September 1, 2015

John G. Malcolm,
Director and Ed Gilbertson and Sherry Lindberg Gilbertson Senior Legal Fellow, Edwin Meese III Center for Legal and Judicial Studies
,
The Heritage Foundation

Thank you for inviting me to testify today on Oklahoma’s efforts to examine and reform its civil asset forfeiture laws. My name is John Malcolm. I am the Director and the Ed Gilbertson and Sherry Lindberg Gilbertson Senior Legal Fellow in the Edwin Meese III Center for Legal and Judicial Studies at The Heritage Foundation. The views I express in this testimony are my own, and should not be construed as representing any official position of The Heritage Foundation.

A great many states and Congress are currently considering measures to make the system more fair and to reign in the abuse of civil asset forfeiture laws, and I am pleased that Oklahoma is joining in addressing an area of law urgently in need of reform.

The History of Civil Forfeiture

Civil asset forfeiture is a legal tool whereby law enforcement agencies seize property suspected of being involved in, or the fruits of, illicit activity. It is premised on a legal fiction, albeit one of ancient lineage,[1] that property itself can be guilty of a crime and thereby forfeited to the sovereign. This process does not require any individual to be charged, much less convicted of, any crime related to that property.

The history of civil forfeiture law in the United States can be traced to admiralty and customs law, when vessels found to contain contraband were seized and forfeited, oftentimes because the owner of the cargo or vessel was beyond the reach of U.S. courts. For the next two centuries, other than a brief outburst of activity related to Prohibition, when laws were revised to permit the seizure of vehicles used by bootleggers, forfeiture law largely remained confined to the enforcement of customs law. In 1984, however, with the passage of the Comprehensive Crime Control Act,[2] Congress brought civil asset forfeiture into mainstream law enforcement. The goal was to empower federal law enforcement officials to go after the illegal profits and ill-gotten property of drug kingpins and criminal organizations, thereby undercutting the profit incentives of the illegal drug trade—an admirable goal to be sure and one that remains important today.

While forfeiture law initially had a narrow and commendable goal, its scope has since expanded dramatically. Today, more than 400 federal statutes covering a wide array of crimes authorize forfeiture.[3] In addition, virtually every state has its own body of forfeiture laws. These statutes allow for the seizing of all manner of real and personal property, from a family’s home to a small business’s bank account.

As forfeiture’s reach has grown, so too has the risk of seizing property from innocent people. Unfortunately, there are few procedural protections for innocent property owners. It is fair to characterize forfeiture law as an unlevel playing field that favors law enforcement in nearly every way possible.

Moreover, what began as a means to a laudable end has, in many instances, become the end itself, where law enforcement authorities focus on forfeiting money and property rather than catching and convicting criminals. The reason for this is the perverse profit incentive built into civil forfeiture law: Much, if not all, of the proceeds of successful forfeiture cases are retained by the agencies that do the initial seizing, providing them with a funding mechanism that is totally outside the normal legislative appropriations and oversight process. Police and sheriff’s departments and prosecutors’ offices often end up having a significant budgetary stake in the outcome of forfeiture cases and of the process in general. Indeed, a deputy sheriff in Kane County, Illinois, wrote in a training book that, “All of our home towns are sitting on a tax-liberating gold mine.”[4]

The scope of civil asset forfeiture has also been dramatically expanded by the federal government’s equitable sharing program.[5] Under this program, state and local agencies may partner with the federal government, which prosecutes forfeiture cases under federal law and returns a portion—up to 80 percent—of the proceeds to the original seizing agency. In 2013, the Department of Justice paid out $657 million in equitable sharing payments. Last year, Oklahoma law enforcement agencies received $2.3 million under this program[6]—funds that are, pursuant to federal rules governing the program, completely beyond the jurisdiction of the Oklahoma state legislature. This has the effect of encouraging state and local law enforcement authorities to circumvent state forfeiture laws which make it more difficult to seize and forfeit assets, or which attempt to impose greater controls over how forfeiture funds may be spent.

Hundreds of law enforcement agencies and task forces across the country have grown dependent on forfeiture funds, seizing the equivalent of 20% or more of their annual budgets.[7] It is this direct financial stake in the scale and scope of forfeiture operations that has led some to denounce civil asset forfeiture as “policing for profit.” After all, government agencies should not be permitted to finance themselves independently of the legislative process.

Now, I would like to make something crystal clear. I believe that the vast majority of law enforcement officers are dedicated public servants who perform their duties in a forthright and ethical manner. I also firmly believe that law enforcement authorities play a vital role in our society and have an incredibly difficult and dangerous job to do. Law enforcement authorities should be adequately, indeed generously, funded. That having been said, I recognize that states have many competing needs, policies, and goals. If forfeiture funds were deposited into a general revenue account, rather than retained by law enforcement agencies, there would be much greater accountability and oversight. Other agencies and interest groups must submit budget requests and justify these requests, and there is no reason this principal of good government ought not apply to law enforcement as well. And regardless, even if law enforcement authorities are permitted to keep some or all of the proceeds from forfeitures that they initiate, the process for seizing and forfeiting property from its owners should be open and fair and the uses to which those funds are put should be transparent. To do otherwise will only engender disrespect for the rule of law and will create an unnecessary and regrettable divide between law enforcement authorities and the general public.

Lack of Legal Protections in Civil Asset Forfeiture

One of the main criticisms against civil asset forfeiture is that any property owner who wishes to contest the forfeiture is placed at an extreme disadvantage.[8] Because the legal proceedings are, as noted, against property rather than a person, property owners do not enjoy many of the ordinary constitutional protections that would be afforded to them if they were facing criminal charges.

First, a large number of forfeiture cases never see the inside of a courtroom.[9] At the federal level, some have estimated that as much as 80 percent of cases are handled administratively—that is, the agency that stands to gain financially from the forfeiture gets to act as investigator, prosecutor, judge, and jury. The rules and deadlines governing these proceedings are complicated and opaque, and are replete with technicalities and traps for the unwary (and likely unrepresented) property owner.

Second, unlike in a criminal case, there is usually no entitlement to representation by counsel or to a preliminary hearing.[10] Forfeitures are often for amounts small enough that it makes no rational economic sense to challenge a property seizure, since in many cases attorneys’ fees will outweigh the value of whatever has been seized. In fact, a recent analysis of 8,480 forfeiture cases involving cash in Oklahoma revealed that nearly 60 percent of them dealt with cash seizures of amounts less than $1,000.[11] The median value of seized currency was only $801. With no preliminary hearing, a person’s property can be tied up for months, even years, potentially creating extreme hardship, especially for those of modest means or those who are trying to run small businesses.[12]

Third, unlike in criminal cases, where prosecutors must prove a defendant’s guilt beyond a reasonable doubt, in civil forfeiture cases in Oklahoma, prosecutors need only establish the basis for the forfeiture by a preponderance of the evidence,[13] an exceedingly low standard given that property at issue could be a person’s life savings or a family’s home. A “clear and convincing” standard would be much more protective of property owners and more appropriate given the quasi-criminal nature of the proceedings,[14] and should not be an unduly burdensome standard for law enforcement authorities to satisfy in meritorious cases.

Fourth, in criminal cases, prosecutors must prove that the person who used or obtained the property subject to forfeiture acted intentionally or at least was willfully blind to its illicit misuse. In a civil forfeiture case, under Oklahoma law, it is incumbent upon the property owner to prove that he did not know that his property was being used for an illegal purpose.[15] This “innocent owner” defense requires property owners to prove a negative—a difficult thing to do—and inverts the legal axiom that in a criminal context, one is innocent until proven guilty.

In an effort to compensate for these deficiencies, some states, most recently New Mexico, have adopted a criminal conviction requirement in civil forfeiture—that is, someone (usually the property owner) must be convicted of a crime before civil forfeiture of associated property is authorized.[16] I understand the sentiment behind such a move. Many of the organizations Heritage has worked with on the forfeiture reform issue espouse such a standard. However, I believe that requiring conviction in all cases (or otherwise abolishing civil forfeiture) may be a bridge too far.

Consider a situation in which law enforcement authorities discover property clearly tied to criminal activity, such as a large sum of money in close proximity to a large quantity of drugs in a stash house, but cannot locate the property’s owner. Clearly nobody will return to claim the property now that the police are on the scene. In such a circumstance, it would make little sense to prevent the property from being forfeited until the owner can be located. Or suppose the owner is located but no charges are filed against him because either he is immunized in return for his cooperation against others or the charges are dismissed because of some procedural irregularity. In such circumstances, civil asset forfeiture might still be appropriate even though no conviction was obtained. Similarly, situations may arise where a property’s owner is beyond the reach of U.S. authorities, and therefore not able to be brought to trial. The property owner could be a fugitive from justice or a resident of a country without an extradition treaty. Circumstances such as these were the primary motivating factor behind the earliest admiralty forfeiture laws. In situations like these, a criminal conviction requirement would make it unduly difficult to achieve a just outcome. While I fully endorse reforming forfeiture laws to make them more fair and transparent, I do not want to throw out the baby with the bath water. Any reform effort should take such circumstances into account.

Perverse Incentives of Forfeiture

Under Oklahoma law, the proceeds of successful forfeitures are deposited into a special revolving fund—managed by district attorneys’ offices—which then disseminate them to the original seizing agencies.[17] Under this arrangement, 100 percent of forfeiture proceeds are retained by law enforcement agencies, and may be spent as they see fit, provided that they finance “enforcement of the controlled dangerous substances laws, drug abuse prevention and drug abuse education.” State law also allows law enforcement agencies to retain forfeited vehicles, aircraft, and vessels, for official use. There is, however, seemingly little oversight of these funds, and it appears that at no point do these funds come under the control of any body outside the law enforcement establishment. At the very least, such an arrangement raises troubling questions of fundamental fairness and impartiality in the enforcement of the law.

Unfortunately, the financial incentive to seize cash and valuable property are so high that forfeiture sometimes warps the priorities of law enforcement officials. Authorities have been known to allow people to commit crimes, just so they can later seize the cash that was earned from those crimes. The City Attorney of Las Cruces, New Mexico, for example, was caught on videotape telling a roomful of people how police officers waited outside a bar hoping that the owner of a 2008 Mercedes would walk out drunk because they “could hardly wait” to get their hands on his vehicle.[18]

In Tewksbury, Massachusetts, Russ Caswell had to fight for years to win back his family-run motel after local authorities partnered with the DEA to seize and forfeit the property. The government’s rationale in that case: there had been 15 drug-related arrests at the Motel Caswell over a 14-year period. In the same period, he had rented over 200,000 rooms. In each case, Mr. Caswell had cooperated with the authorities, even going so far as to offer them free rooms as they conducted drug enforcement operations. During a deposition in that case, one DEA agent admitted that financial gain played a significant role in determining which properties would be selected for forfeiture. Mr. Caswell’s property, which he owned outright and later sold for $2.1 million, was a target too lucrative to pass up.[19]

Regrettably, there have also been alarming instances where the object of law enforcement operations was clearly to seize property rather than arrest suspected criminals. Minnesota’s somewhat infamous Metro Gang Strike Force was shut down after it was revealed that strike force personnel were seizing property from citizens for their own personal use, including television sets, cars, and cash.[20] In another case in Tennessee, officers of the 21st Judicial District Drug Task Force pulled over a refrigerated truck and discovered nearly $500,000 in cash, plastic wrapped and hidden throughout the vehicle. That money may well have been drug money, but the officers had absolutely no interest in arresting the potential courier, or even questioning him about his activities—they were caught on dashboard cameras pressuring the driver into signing away all rights to the money in exchange for his freedom.[21]

Highway stops in general have become a real problem in some areas. A local news investigation in Tennessee revealed that drug task force officers were ten times more likely to patrol the westbound lanes of I-40 than the eastbound lanes.[22] Why? It was well known that illegal drugs from Mexico were transported into Nashville and across the state on the eastbound side of the highway, while the illegal drug profits flowed back on the westbound side of the road. The same thing happened, and may still be happening, in Volusia County, Florida,[23] Tenaha, Texas,[24] and other locations.

Forfeiture-related traffic stops follow a common pattern. Drivers—usually those with out-of-state license plates—are stopped on some pretext. The officer then engages the driver in conversation and asks whether he is carrying any cash, and whether it is alright if the officer searches the car. If large amounts of currency are found, the officer claims it is somehow drug-related, even if no drugs or traces of drugs are present, and then seizes it. If a driver refuses to consent to a search of his vehicle, which he has a right to do, drug dogs are often brought in.

This is what happened when Straughn Gorman was stopped for a minor traffic violation on a highway in Nevada.[25] Gorman told the trooper he was on his way to California to visit his girlfriend, and intended to move there. He acknowledged that he was carrying cash, but refused to allow a search of his motorhome. The State Trooper let Gorman go, but then contacted another officer and alerted him that Gorman was heading his way, that he believed Gorman’s motorhome had large amounts of currency onboard, and that he should have his drug-sniffing canine standing by to ensure that troopers would have probable cause to search the vehicle. Gorman was pulled over for a second time shortly thereafter, on the pretext of a moving violation. Again, he refused to consent to a search of the vehicle. The second State Trooper had his drug dog sniff the vehicle, and the canine alerted to narcotics. A search ensued which uncovered over $167,000 in cash but no drugs of any kind. The entire sum was seized. Gorman elected to fight the seizure, and his case recently went to trial. The trial court judge ruled that it was clear that the state troopers had conspired to deprive Gorman of his 4th Amendment rights, and worse still, that the U.S. Attorney’s office handling the case had not disclosed critical facts tying the two traffic stops together. The judge ordered that Gorman’s money be returned and invited him to file for attorney’s fees. That case is now being appealed.

Here in Oklahoma, authorities seized $15,555 from William Cicco during a traffic stop near his hometown of Broken Arrow.[26] Cicco, who suffers from stage IV lymphoma, had taken prescription painkillers earlier in the day, and he was arrested for driving while under the influence. Aside from two empty prescription bottles, both of which were in his name, there was scant evidence that the cash he had with him that day was linked to any crime. Nevertheless, authorities accused him of selling narcotics and called in a drug dog, which alerted to the money. The full sum was seized and Cicco faced criminal drug trafficking charges for allegedly transporting illegal drug proceeds. Cicco decided to fight the charges and the forfeiture. He hired an attorney and prevailed in court, but the attorney’s fees alone cost him $2,000—as if he didn’t have enough troubles already.

Motorists are often threatened with criminal charges and pressured to sign away their rights to the property on the spot in exchange for not being arrested. Not surprisingly, many agree to do it because they don’t want to be hauled off to jail and because they know the deck is stacked against them, and it is. In Tenaha, Texas, officials threatened to take children into child protective custody as a means of coercing parents to part with cash and valuables. Tenaha settled a class-action lawsuit on behalf of the dozens of motorists subjected to this treatment, and agreed to a multi-million dollar payout.

The perverse incentives of forfeiture do not stop at the side of the road. The IRS and other agencies have seized and forfeited the bank accounts of individuals and small businesses for alleged “structuring” violations[27]—even when the authorities have no reason whatsoever to believe that the money in those accounts was derived from an illegal source. There are a great many legitimate and sensible reasons why honest businesses make regular cash deposits under $10,000, yet this did not stop the seizure of $63,000 from Maryland dairy farmers Randy and Karen Sowers, or $33,000 from Iowa restauranteur Carole Hinders. Mrs. Hinders was lucky enough to win her money back with the assistance of the public interest law firm, the Institute for Justice.[28] The cash-strapped Sowers, however, were not so fortunate. They agreed to a “settlement” in which the IRS kept roughly $30,000 of the Sowers’ hard earned money.[29]

There are hundreds of documented instances where property or money has been seized from individuals under highly questionable circumstances. There are likely hundreds, if not thousands, more undocumented instances. The simple fact is that the perverse incentives of civil forfeiture encourage the seizure of property and a skewed legal system offers too few protections for innocent property owners.

Forfeiture—A Disproportionate Response

Another problem with civil forfeiture is that some seizures appear to be wildly disproportionate and unfair in relation to the alleged offense. In Detroit, Michigan, authorities raided a “Funk Night” event at the Contemporary Art Institute and seized 40 cars from the 130 attendees, on the theory that the attendees were somehow responsible for the failure by organizers of the event to obtain a proper alcohol permit. Since the cars had transported the guests to the event, they were subject to seizure as “facilitating” property, and each attendee had to pay $900 to get his or her car back. A judge later determined the seizure was unconstitutional.[30]

In Philadelphia, law enforcement authorities have made a disturbing habit of seizing family homes because of minor crimes perpetrated on the property without the knowledge of the property owner. For example, Rochelle Bing’s son, Andrew Bing, sold crack cocaine to an undercover informant working for the Philadelphia police. Because the sales were conducted out of his mother’s house, Philadelphia moved to evict her and forfeit her home. Ms. Bing fought the forfeiture for two years, appearing in court 23 times before prosecutors finally agreed to drop the forfeiture action and let her keep her home.[31] Philadelphia authorities also attempted to seize the home of Chris and Markela Sourovelis, whose son had, unbeknownst to them, sold $40-worth of heroin to an undercover cop.[32] In both instances a crime was unquestionably committed, but do such minor offenses merit rendering families homeless, especially when the home owners were unaware of the crime?

In 2008, the Oklahoma Supreme Court upheld a civil forfeiture of $18,235 in cash that was seized from a car in close proximity to 3.07 grams of marijuana (which is just over one-tenth of an ounce, with a street value of roughly $39).[33] Did that money come from the sale of marijuana? Who knows? The state certainly could not and did not prove that; seemingly, the most they could prove is that he possessed a small amount of marijuana. Instead, the State chose to rely on an Oklahoma law which provides that “[a]ll monies, coin, and currency found in close proximity to any amount of forfeitable substances” is presumed to be forfeitable, and that the burden of proof is on any claimant to rebut that presumption.

My point in raising this case is not to criticize the Court’s legal reasoning in affirming that forfeiture, nor do I wish to be understood as endorsing drug legalization or decriminalization in any way. Rather, I cite these examples to point out that some forfeitures can be quite draconian and not commensurate with the crime that was committed (or that can be proven), that the process for obtaining the forfeiture is skewed against property owners, and that such forfeitures can lead to understandable outrage on the part of the general public.

Lack of Accountability and Oversight

It is hardly surprising that, with an influx of cash and no real accountability, some law enforcement officials spend their forfeiture funds in highly questionable ways. In Georgia, the Fulton County District Attorney used forfeiture proceeds to purchase sports tickets, paid for office parties, made donations to a lawyers’ group that inducted him into its hall of fame, and paid for a personal home security system for his private residence.[34] A former sheriff in Camden County, Georgia spent $90,000 of forfeiture funds on a Dodge Viper to impress school kids as part of the Drug Abuse Resistance Education (DARE) program. He also used forfeiture money to pay prison inmates to build a private weekend home for himself, and donated $250,000 to his alma mater to finance a scholarship in his own name.[35] Others have used forfeiture funds to finance lavish “training” trips to exotic locales,[36] to purchase margarita machines[37] and a Zamboni,[38] and, believe it or not, to procure marijuana and prostitutes.[39]

While nothing so egregious has been uncovered, so far as I know, in Oklahoma, this state is not immune from problems. State audits of the forfeiture revolving funds have revealed significant discrepancies and questionable practices pertaining to forfeited assets.[40] In at least a dozen cases, forfeited money, vehicles and firearms were not properly inventoried, and were missing. In two counties, seized money was actually spent before it had been properly forfeited. In other instances, seizing agencies did not turn over forfeiture proceeds to the revolving funds until years after courts had ordered them to do so.

In Beaver County, one assistant district attorney disregarded a court order to sell a forfeited home at auction, instead deciding to live in it rent-free for five years, and paying for his utilities with forfeiture funds too. Another assistant district attorney used $5,000 in forfeiture funds to make student loan payments. The Oklahoma State Auditor & Inspector noted that such an expense blatantly violated the statutory restriction on how these forfeiture funds may be spent, but the district attorney disagreed, citing this particular attorney’s work on drug cases as justification for the expense.[41] That is ludicrous. Though I doubt he intended to do so, this district attorney made one thing exceedingly clear: The purported statutory “limit” on how forfeiture funds may be spent—for the enforcement of drug laws—may be contorted so as to justify nearly any expense.

Additionally, an audit of the Oklahoma Highway Patrol’s participation in the federal equitable sharing program by the Department of Justice’s Office of the Inspector General revealed $1.9 million in unallowable and unsupported expenditures.[42] These funds were improperly used to pay salaries and benefits for non-law enforcement personnel, to finance construction and renovation costs, and to pay contractors’ fees. Seized vehicles were also improperly used by non-law enforcement personnel for non-law enforcement purposes.

Some of the incidents I have just described in Oklahoma can be chalked up to sloppy and inconsistent record keeping. Others are clearly deliberate misuses of forfeited funds and property. Neither situation is acceptable, yet the lack of adequate oversight and accountability perpetuates both. There is a strong public interest in rooting out government corruption, and an equally strong governmental interest in avoiding even the appearance of it. Neither interest is adequately served by the present system.

Funding Law Enforcement Without Civil Forfeiture

Forfeiture proceeds should be redirected to a neutral account or general revenue fund controlled by legislators, and appropriated through normal budgetary processes. Many in the law enforcement community view such a reform as a significant threat. I understand their concerns. Governments at all levels have endured hard times of late, with public funds—always a precious commodity—especially scarce. While many other governmental agencies can reduce the scope of their missions to deal with budget shortfalls, the job of policing our streets and protecting our communities is not often one that can be safely scaled back.

In light of these budget pressures, many have argued that police, sheriffs, and prosecutors will be inadequately funded without their continued control of forfeiture funds. While that is certainly possible, I am skeptical for several reasons.

First, it is worth noting that law enforcement agencies have only had access to forfeiture proceeds as a revenue source since 1985, when Congress first allowed federal agencies to retain the proceeds of their seizures. For two centuries before that, it was a well-established precept that proceeds derived from forfeiture were to be deposited into the general revenue fund.

Second, forfeiture reform is about rebalancing a skewed system, not about reducing the budgets of law enforcement agencies. If a particular agency’s approved budget does not adequately cover its needs, it will likely have a compelling case to make before the legislature as to why its budget allocation should be increased. Again, law enforcement agencies should be generously funded, but they should not be able to write their own check to subsidize their approved budgets, especially utilizing a process that is insufficiently protective of the rights of innocent property owners.

The power of the purse has historically rested with the elected legislators of our communities, our states, and our nation. This has always been considered essential to keeping the various agencies of government accountable to the people. There may well be harm to a particular agency if a legislature does not fully fund it. The harm to society is far greater, however, if that agency is able to circumvent the political process entirely. And given the powerful incentives and procedural deficiencies of current forfeiture law, the risk of abuse is simply too great.

Reforming Civil Forfeiture

There have been some positive developments, particularly at the state level, that may help to ameliorate some of these abuses, which you may wish to consider as you go about the task of reforming your own civil forfeiture law. The Justice Department is engaging in a “top-to-bottom” review of its forfeiture program and has already revised some of its policies regarding the equitable sharing program and seizures in “structuring” cases. Congress is presently debating legislative reforms, such as the Fifth Amendment Integrity Restoration Act,[43] which seeks to rectify many of the inequities in federal forfeiture law.

Several states have recently passed forfeiture reform measures. For instances, Maine, North Dakota, and Vermont require that forfeiture funds be deposited into the state’s general treasury, and Missouri places those funds into an account earmarked for public education. Others, such as Connecticut, Florida, and Utah, have raised the standard of proof that the government must establish for a “preponderance of the evidence” to “clear and convincing evidence,”[44] while Nebraska and Wisconsin require proof “beyond a reasonable doubt” to justify forfeiture.[45] Others, such as the District of Columbia, place the burden on the government to prove that an owner either did know, or was willfully blind to the fact, that his property was being used for an illegal purpose. Washington, D.C.’s reform also raised the burden of proof to “clear and convincing” when the property being seized is real property.[46] And Minnesota, North Carolina, New Mexico, and Colorado have essentially abolished civil forfeiture at the state level, requiring a conviction or guilty plea from the property owner before a forfeiture proceeding can be instituted.[47]

Recently, The Heritage Foundation’s Meese Center released Arresting Your Property, a detailed report on civil asset forfeiture.[48] In it, we propose nine common-sense measures, some of which may be pertinent to and suitable for your purposes, that are intended to serve as guiding principles of forfeiture reform:

  1. Restore Legislative Control of Forfeiture Proceeds By Redirecting Them to the General Fund. Law enforcement should not be a profit center. Lawmakers should bar law enforcement agencies from retaining the forfeiture funds they generate and mandate that these proceeds go instead to a jurisdiction’s General Fund.
  2. Eliminate Equitable Sharing. The federal government should not be encouraging state and local law enforcement to bypass state and local laws. Equitable Sharing hampers state efforts to protect innocent property owners and reinforces the profit motives at the core of forfeiture abuse. Internal Justice Department policy changes are insufficient; the program should be abolished. Until then, states should consider policy reforms that disallow their law enforcement agencies from bypassing their own laws.
  3. Raise the Burden of Proof. The government should be required to demonstrate that property is subject to forfeiture by “clear and convincing evidence,” a standard significantly higher than the current “preponderance of the evidence.”
  4. Reaffirm the Presumption of Innocence. Property owners should not have to disprove the government’s case; rather, the burden should be on prosecutors to demonstrate that owners knew their property was being used in the commission of a crime.
  5. Ban ‘Bartering.’ Property owners should not be pressured into waiving their rights on the side of a road or in the heat of the moment. All law enforcement agents should be barred from “bartering”—offering to let property owners go if they sign away their property on the spot.
  6. Provide for Indigent Defense. Forfeiture is a highly complex system that most citizens are ill-prepared to face alone. Because of its quasi-criminal nature, claimants who cannot afford counsel should be able to petition a court for the appointment of counsel at the government’s expense, and victorious property owners who retained counsel should be afforded a chance to recoup their attorney’s fees.
  7. Protect Property Owners’ Rights in Administrative Forfeitures. Most federal civil forfeiture cases begin and end in the bowels of a federal agency. Agencies should be required to reform their internal procedures to make the process fairer and more transparent, clearly advising potential claimants about their rights to contest a seizure and to legal representation. Property owners should also be afforded the right to a prompt pre-seizure or immediate post-seizure hearing before a judge.
  8. Ensure Transparency Through Reporting Requirements. Law enforcement agencies involved in civil forfeiture cases should be required to record the details of their seizures and forfeitures. These reports should specify what was seized, the amount or value of the seized goods, the alleged criminal conduct giving rise to the forfeiture, whether anyone was ever arrested for, or convicted of, said criminal conduct, whether the forfeiture action was challenged, the final disposition of the property or currency, and how forfeiture funds have been spent.
  9. Provide for Review of Forfeiture Settlements. Given the complexity of forfeiture law and the tremendous pressure that property owners face to settle forfeiture cases (sometimes because they are threatened with criminal charges if they continue to contest the forfeiture), in cases in which a claimant is not represented by counsel, any proposed settlement should be reviewed by a neutral third party, preferably a judge.

These reforms have been endorsed by 15 bipartisan national organizations, from the American Civil Liberties Union to the Institute for Justice. The full report is attached to this testimony.

The recently introduced Senate Bill 838, the Personal Asset Protection Act, proposes a number of these reforms. It would require that the government prove that property is subject to forfeiture by “clear and convincing” evidence, a more appropriate standard than the current “preponderance of the evidence” standard. Authorities would still be able to seek forfeiture of currency found in proximity to controlled substances, but would now have to prove that the money actually did come from illegal narcotics sales. It would also redirect forfeiture proceeds to the state’s general revenue fund, eliminating the financial incentives that have so warped forfeiture.

While I am not endorsing this or any other particular piece of legislation, I would encourage you to seriously consider the sort of reforms this bill contains, with two caveats.

First, as I have noted, I am skeptical of the necessity for a criminal conviction in all forfeiture cases. There are circumstances where property is undeniably linked to criminality, but where that property’s owner is simply beyond the reach of U.S. authorities, or where criminal prosecution may be otherwise impossible or unadvisable. In my view, such circumstances should be taken into consideration as part of any reform effort. Regardless, enhancing procedural protections for property owners will help ensure a fair system that protects the innocent.

Second, SB 838 does not address the continued use of the equitable sharing program by Oklahoma law enforcement agencies. Equitable sharing represents a significant loophole in state forfeiture laws, since state and local agencies can circumvent any new, more restrictive laws simply by partnering with federal authorities. Preventing this is an important component of successful reform, and I encourage Oklahoma to consider a measure aimed at doing so.

Addressing the financial incentives of forfeiture is crucial. The best policy would be to restore legislative control of forfeiture funds. Alternatively, Oklahoma could consider creating an oversight committee made up of retired judges and prosecutors and other interested and responsible members of the public (in other words, knowledgeable individuals who are not directly affiliated with the law enforcement office seeking the funds) that would be charged with approving the use of forfeiture funds by law enforcement authorities and with monitoring whether those funds were, in fact, used in the approved manner. I would note that, to at least some degree, Oklahoma is already doing this by conducting compliance audits every two years; however, this system could be strengthened through a more accountable, front-end approval process, more rigorous oversight, and more regular audits. While this would not eliminate the profit motive of law enforcement agencies, it would at least provide the public with a greater degree of confidence that forfeiture proceeds were being used in an appropriate manner that would best serve the public’s needs.

Despite forfeiture’s noble intentions, the many stories of innocent victims and law enforcement abuses—too many to ignore—indicate that the pendulum has swung too far in favor of law enforcement and that systemic problems exist that should be rectified. Yet, in reforming civil forfeiture laws, we must be careful not to swing the pendulum too far in the opposite direction. For the sake of all citizens, the process must be made fair and transparent, and the profit incentive in forfeiture should be abolished, or at the very least severely constrained and subjected to considerable oversight. Civil asset forfeiture should remain focused on its original purpose of depriving criminals of their ill-gotten gains, but we must be sure that it is criminals and only criminals who are being impacted.

Thank you for your invitation to testify today. I would be happy to answer any questions you may have.

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About the Author

John Malcolm Director, Edwin Meese III Center for Legal and Judicial Studies, and the Ed Gilbertson and Sherry Lindberg Gilbertson Senior Legal Fellow
Edwin Meese III Center for Legal and Judicial Studies

Related Issues: Legal Issues

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[1] See, e.g., Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 680–686 (1974) (discussing history of forfeiture); Charles Doyle, Cong. Research Serv., Crime and Forfeiture (2015), available at http://fas.org/sgp/crs/misc/97-139.pdf (discussing history of forfeiture); Donald J. Boudreaux & A. C. Pritchard, Civil Forfeiture and the War on Drugs: Lessons from Economics and History, 33 San Diego L. Rev. 79, 135 (1996).

[2] Pub.L. 98-473, 98 Stat. 1976 (1984).

[3] For a list of many of these statutes, see Doyle, supra note 2.

[4] Robert O’Harrow, Jr., Michael Sallah, & Gabe Silverman, Stop and Seize, Wash. Post, Sep. 6, 2014, available at http://www.washingtonpost.com/sf/investigative/2014/09/06/stop-and-seize/.

[5] 21 U.S.C. § 881(e)(3) provides the Attorney General with authority to transfer property forfeited under federal law to participating state and local law enforcement agencies.

[6] See Department of Justice FY 2014 Asset Forfeiture Fund Reports to Congress (2015), available at http://www.justice.gov/afp/reports-congress/reports-congress-6.

[7] O’Harrow, supra note 5.

[8] In 2000, Congress passed the Civil Asset Forfeiture Reform Act (CAFRA), which was designed to provide claimants with some modest additional protections, including affording an owner the opportunity to petition the court for release of certain kinds of property pending the completion of forfeiture proceedings, establishing an “innocent owner’s” defense, allowing an indigent claimant who is already represented by court-appointed counsel in connection with a related federal criminal case to request the assistance of court-appointed counsel to contest the forfeiture, and requiring the government to pay attorney’s fees and costs if it loses a forfeiture action. Property owners, however, are rarely apprised of their rights under CAFRA, and because most forfeitures are administrative, its provisions are rarely invoked.

[9] See Federal Asset Forfeiture: Uses and Reforms, Hearing Before the Subcomm. on Crime, Terrorism, Homeland Security, and Investigations of the H. Comm. on the Judiciary, 114th Cong. (2015) (testimony of David B. Smith), available at http://judiciary.house.gov/_cache/files/e1528de2-86fc-4bc4-b1d2-0fd1075ff554/smith-testimony.pdf.

[10] CAFRA codified the right to a pre-seizure hearing in real property cases, as originally articulated by the Supreme Court in United States v. James Daniel Good Real Property, 510 U.S. 43 (1993). See 18 U.S.C. § 985. However, this right exists only if the property is physically seized. “Constructively” seizing the property, such as posting a notice of complaint or filing a lis pendens notice, carries no such right. Consequently, actual seizure by the government of real property is rare so as to avoid this hearing requirement.

[11] See Clifton Adcock & Ben Fenwick, Asset Forfeiture: Do Police Seize Innocent People’s Money?, OklahomaWatch, Aug. 31, 2015, available at http://oklahomawatch.org/2015/08/31/asset-forfeiture-do-police-seize-innocent-peoples-money/.

[12] In 2012, the assets of Bi-County Distributors, Inc., a small, family-run business that sold snacks, candy, and cigarettes to local convenience stores, were seized over alleged structuring violations. For two and a half years, the federal government retained the assets without filing a forfeiture action or charging the owners with a crime. Held Up: Feds Use Civil Forfeiture to Seize More than $446,000 from Innocent Family Business; Deny Hearing for More than Two Years, Institute For Justice Litigation Backgrounder, available at http://www.ij.org/long-island-forfeiture-backgrounder.

[13] 63 OK Stat § 63-2-506 (G).

[14] There is a long history of jurisprudence blurring the line between civil and criminal proceedings in forfeiture cases. In Boyd v. United States, 116 U.S. 616, 634 (1886), the Supreme Court determined that “forfeitures incurred by the commission of offenses against the law are…quasi-criminal [in] nature.” Relying on its holding in Boyd, the Court applied the exclusionary rule, previously reserved for criminal prosecutions, to certain civil forfeiture cases in One 1958 Plymouth Sedan v. Pennsylvania, 380 U.S. 693 (1965). The Court also acknowledged in Austin v. United States, 509 U.S. 602 (1993), that certain forfeitures are bound by the limits of the Excessive Fines Clause. And in U.S. v. Bajakajian, 524 U.S. 321 (1998), the Court adopted a gross disproportionality test to determine whether such a forfeiture violates the Excessive Fines Clause.

[15] 63 OK Stat § 63-2-503 (2014).

[16] New Mexico House Bill 560, signed by Governor Susanna Martinez on April 10, 2015. Available at http://www.sos.state.nm.us/uploads/files/CH152-HB560-2015(1).pdf.

[17] 63 OK Stat § 63-2-506(L)(3).

[18] See Laura Sullivan, Police Can Seize and Sell Assets Even When the Owner Broke No Law, NPR (Nov. 10, 2014), http://www.npr.org/blogs/thetwo-way/2014/11/10/363102433/police-can-seize-and-sell-assets-even-when-the-owner-broke-no-law.

[19] See United States v. 434 Main Street, Tewksbury, Mass. (The Motel Caswell) Federal & Local Law Enforcement Agencies Try to Take Family Motel from Innocent Owners, Institute for Justice, available at https://www.ij.org/massachusetts-civil-forfeiture; Melissa Quinn, After Having His Motel Seized by the Government, Victim of Civil Asset Forfeiture Reflects on His Fight, Daily Signal (May 7, 2015), http://dailysignal.com/2015/05/07/after-having-his-motel-seized-by-the-government-victim-of-civil-asset-forfeiture-reflects-on-his-fight/.

[20] See Randy Furst, Victims of Metro Gang Strike Force Awarded $840,000, Star Tribune (July 23, 2012), http://www.startribune.com/local/minneapolis/163478566.html. Minnesota now requires a criminal conviction before civil forfeiture proceedings can be initiated, and the standard of proof has been raised to “clear and convincing evidence.” See Ilya Somin, Minnesota Adopts Law Curbing Asset Forfeiture Abuse, Volokh Conspiracy (May 10, 2014), http://www.washingtonpost.com/news/volokh-conspiracy/wp/2014/05/10/minnesota-adopts-law-curbing-asset-forfeiture-abuse/.

[21] Phil Williams, Video Shows Officer Offering Truckers Freedom For Cash, News Channel 5 (May 7, 2011), available at http://www.scrippsmedia.com/newschannel5/news/newschannel-5-investigates/policing-for-profit/265578721.html.

[22] See, e.g., Phil Williams, I-40 Search Raises New Policing for ProfitQuestions, News Channel 5 (Nov. 11, 2014), http://www.jrn.com/newschannel5/news/newschannel-5-investigates/policing-for-profit/I-40-Search-Raises-New-Policing-For-Profit-Questions-282197971.html; Officer Larry Bates: Liar, Thief, and the Face of Asset Forfeiturein Tennessee, Republic Magazine, http://www.republicmagazine.com/videos/officer-larry-bates-liar-thief-and-the-face-of-asset-forfeiture-in-tennessee.html; Phil Williams, Middle Tennessee Police Profiting Off Drug Trade?, News Channel 5 (May 16, 2011), http://www.jrn.com/newschannel5/news/newschannel-5-investigates/policing-for-profit/265578741.html.

[23] See, e.g., James Bovard, Seizure Fever: The War on Property Rights, The Freeman (Jan. 1, 1996), http://fee.org/freeman/detail/seizure-fever-the-war-on-property-rights/; Roger Pilon, Americas Frightening Policing for ProfitNightmare, Nat’l Interest (Jan 23, 2015), http://nationalinterest.org/feature/americas-frightening-policing-profit-nightmare-12094; Jeff Brazil & Steve Berry, Tainted Cash or Easy Money?, Orlando Sentinel (June 14, 1992), http://articles.orlandosentinel.com/1992-06-14/news/9206131060_1_seizures-kea-drug-squad.

[24] See, e.g., Elora Mukherjee, Settlement Means No More Highway Robbery in Tenaha, Texas, ACLU Blog (Aug. 9, 2012), https://www.aclu.org/blog/criminal-law-reform-racial-justice/settlement-means-no-more-highway-robbery-tenaha-texas; Sarah Stillman, TAKEN: Under Civil Forfeiture, Americans Who Havent Been Charged with Wrongdoing Can Be Stripped of Their Cash, Cars, and Even Homes. Is That All Were Losing?, New Yorker, Aug. 12, 2013, available at http://www.newyorker.com/magazine/2013/08/12/taken.

[25] United States v. $167,070.00 in United States Currency, No. 3:13–CV–00324–LRH–VPC, 2015 WL 3658069 (D. Nev. June 12, 2015).

[26] Adcock, supra note 12.

[27] See 31 U.S.C § 5324.

[28] See, e.g., Shaila Dewan, I.R.S. Asset Seizure Case Is Dropped by Prosecutors, N.Y. Times, Dec. 13, 2014, available at http://www.nytimes.com/2014/12/14/us/irs-asset-forfeiture-case-is-dropped-.html?_r=0; Chris Carson, Iowa Restaurant to Close Its Doors After IRS Seizes Accounts; No Crime Committed, KDAT (Oct. 29, 2014), http://kdat.com/iowa-restaurant-to-close-its-doors-after-irs-seizes-accounts-no-crime-committed/.

[29] See, e.g., Jonathan Turley, Federal Prosecutors Seize Creamerys Accounts Under Terror Financing Law, jonathanturley.org (June 28, 2013), http://jonathanturley.org/2013/06/28/federal-prosecutors-seize-creamarys-accounts-under-terror-financing-law/; Md. Farmer Settles Federal Financial Probe, CBS Baltimore (May 31, 2012), http://baltimore.cbslocal.com/2012/05/31/md-farmer-settles-federal-financial-probe/; Paul Strand, Felon Farmers? Law Criminalizes Legitimate Businesses, CBN News (Oct. 1, 2012), http://www.cbn.com/cbnnews/us/2012/july/felon-farmers-law-criminalizes-legitimate-businesses/.

[30] See, e.g., Press Release, Federal Judge Rules CAID Raid Arrests and Car Seizures Unconstitutional, ACLU (2012), available at https://www.aclu.org/criminal-law-reform/federal-judge-rules-caid-raid-arrests-and-car-seizures-unconstitutional; Lee DeVito, John Oliver Revisits the Funkiest Shakedown in Human History,the CAID Raid, Metro Times (Oct. 7, 2014), http://www.metrotimes.com/Blogs/archives/2014/10/07/john-oliver-revisits-the-funkiest-shakedown-in-human-history-the-caid-raid.

[31] Isaiah Thompson, Law to Clean Up NuisancesCosts Innocent People Their Homes, ProPublica (Aug. 5, 2013), available at http://www.propublica.org/article/law-to-clean-up-nuisances-costs-innocent-people-their-homes.

[32] Joel Mathis, D.A. Drops Forfeiture Cases That Drew National Attention, Philadelphia (Dec. 19, 2014), available at http://www.phillymag.com/news/2014/12/19/d-drops-forfeiture-cases-drew-national-attention/.

[33] State ex rel. Campbell v. Eighteen Thousand Two Hundred Thirty-Five Dollars, 184 P.3d 1078 (Okla. 2008). According to a survey conducted in May 2015 by Forbes magazine, this amount would have a street value of roughly $39.00. See All 50 States Ranked By The Cost Of Weed (Hint: Oregon Wins), Forbes, May 12, 2015, available at http://www.forbes.com/sites/frankbi/2015/05/12/the-most-and-least-expensive-states-to-buy-marijuana/.

[34] See Report: Fulton DA Spent Public Funds on Parties, Athens Banner-Herald (June 7, 2013), http://onlineathens.com/local-news/2013-06-07/report-fulton-da-spent-public-funds-parties.

[35] See, e.g., Paul Pinkham, Georgia Inmates Reportedly Did Work out of State, Florida Times-Union, Oct. 14, 2007, available at http://jacksonville.com/tu-online/stories/101407/met_208183322.shtml; John Burnett, Sheriff Under Scrutiny over Drug Money Spending, NPR (June 18, 2008), http://www.npr.org/templates/story/story.php?storyId=91638378; Terry Dickson, Former Camden Sheriff Challenges Incumbent to Get Job Back, jacksonville.com (July 30, 2012), http://jacksonville.com/news/crime/2012-07-30/story/former-camden-sheriff-challenges-incumbent-get-job-back; Teresa Stepzinski & Terry Dickson, A Tool to Fight Crime or Just a Lot of Flash?, Florida Times-Union, Aug. 7, 2002, available at http://jacksonville.com/tu-online/stories/080702/met_10114798.html.

[36] See Mark Collette, As New Questions Emerge, Former District Attorney Garza Speaks About Forfeiture Funds, caller.com (Jan. 22, 2012), http://www.caller.com/news/as-new-questions-emerge-former-district-attorney.

[37] See Renee Lee, Montgomery DA Says Funds Used for Liquor at Cook-off, Chron (Mar. 18, 2008), http://www.chron.com/neighborhood/humble-news/article/Montgomery-DA-says-funds-used-for-liquor-at-1757341.php.

[38] See Laura Krantz & Jessica Trufant, Audit: Worcester DAs Office Bought Zamboni, Lawn Gear with Forfeited Drug Money, MetroWest Daily News (Feb. 15, 2013), http://www.metrowestdailynews.com/x1522323792/Audit-Worcester-DAs-office-bought-Zamboni-lawn-gear-with-forfeited-drug-money#ixzz2LH4vHjJv.

[39] See Melanie Scott Dorsey, Ex-Romulus Police Chief, Wife, 5 Officers Head to Trial, Detroit Free Press, Sept. 27, 2012, available at http://www.freep.com/article/20120927/NEWS02/309270120/Ex-Romulus-police-chief-wife-5-officers-head-to-trial; Dave Bartkowiak, Jr., Ex-Romulus Police Chief Sentenced for Corruption, Click On Detroit (Oct. 17, 2014), http://www.clickondetroit.com/news/exromulus-police-chief-sentenced-for-corruption/29196354; Guy Burns, Romulus Police Chiefs Wife, Patrica St. Andre, Gets 7 to 20 Years in Prison for Operating Criminal Enterprise, mlive.com (Feb. 20, 2014), http://www.mlive.com/news/detroit/index.ssf/2014/02/romulus_police_chiefs_wife_pat.html.

[40] See Clifton Adcock, Law Enforcement Seizures Misspent, Missing, OklahomaWatch (July 15, 2015), http://oklahomawatch.org/2015/07/15/law-enforcement-seizures-misspent-missing/.

[41] See Oklahoma State Auditor & Inspector Statutory Report: District Attorney, District 11 (2014) available at https://www.sai.ok.gov/Search%20Reports/database/DA11WebFinal.pdf.

[42] See Office of the Inspector Gen., U.S. Dep’t of Justice, Audit of the Oklahoma Highway Patrol’s Equitable Sharing Program Activities (2013), available at http://www.justice.gov/oig/reports/2013/g6013014.pdf.

[43] FAIR Act, S. 255, 114th Cong. (2015), available at http://www.paul.senate.gov/files/documents/ALB15102.pdf. The companion bill in the House of Representatives is H.R. 540.

[44] Conn. Gen. Stat. § 54-36h (b); Fla. Stat. § 932.704 (8); Utah Code 24-1-4 (6)(c).

[45] Neb. Rev. Stat. 28-431 (4); Wisconsin Statute section 973.076(3) establishes that the “state shall have the burden of satisfying or convincing to a reasonable certainty by the greater weight of the credible evidence” that property is subject to civil forfeiture.

[46] See Jason Snead & Andrew Kloster, Washington, D.C., Civil Forfeiture Reform: A Model for the States, Heritage Foundation Issue Brief No. 4312 (Dec. 5, 2014) available at http://www.heritage.org/research/reports/2014/12/washington-dc-civil-forfeiture-reform-a-model-for-the-states.

[47] Regarding Minnesota, see https://www.revisor.mn.gov/bills/text.php?version=latest&session=ls88&number=SF0874&session_year=2014&session_number=0&format=pdf; http://dailysignal.com/2014/05/16/minnesota-raises-bar-forfeiture-reform/. In North Carolina, civil forfeiture actions (G.S. G.S. § 1-532) are initiated pursuant to G.S. § 14-2.3, which requires that forfeiture actions be filed within three years of the date of conviction. Colorado Revised Statutes 16-13-307 requires that a property owner be convicted of a specified offense before a judgment of forfeiture may be entered. For New Mexico, see New Mexico, supra note 16.

[48] Available at www.heritage.org/forfeiturereform. For a sampling of instances of abuses and questionable civil forfeitures, see www.heritage.org/forfeitureabuse.