Gerardo Serrano was driving to Mexico to visit family when he was stopped at the border crossing in Eagle Pass, Texas. Serrano, a U.S. citizen and legal gun owner, had forgotten that he left five low-caliber bullets in the center console of his truck. U.S. Customs and Border Protection agents used his unintentional slip-up as an opportunity to seize and hold Serrano’s truck on the grounds that he was knowingly transporting “munitions of war.”
Serrano was never charged with any crime. After detaining him for four hours, CBP agents told him he was free to go. But they were using civil forfeiture to keep his truck. Serrano was required to post a bond of 10 percent of the value of the truck—around $3,800—just to contest the seizure and get his case before a judge. But for over two years, the agency held Gerardo’s truck without ever filing a forfeiture complaint and taking the matter to a judge.
During those two years, Gerardo spent thousands of dollars on rental cars and payments to insure and register the truck, which he could not drive. No court ever approved the seizure of Gerardo’s truck, and Gerardo never had an opportunity to argue to a judge that he should get the truck back.
What Is Civil Forfeiture?
Welcome to the upside-down world of civil forfeiture, where law enforcement agencies can seize your property without ever charging you with a crime and keep it or its proceeds to pad its budget. Unfortunately, Gerardo’s story is not unique. Tens of thousands of Americans have been stripped of their property and then have faced the necessity and expense of navigating a procedural maze to get it back. Between 2001 and 2018, the Departments of Justice and the Treasury kept more than $42 billion through forfeiture. In just one year, 2016 (the most recent year for which detailed data are publicly available), the Justice Department obtained 13,339 assets valued at more than $1.8 billion through forfeiture.
Civil forfeiture gives law enforcement financial incentives to seize property, and does so without adequate safeguards of property owners’ rights. For example, at the federal level, most forfeitures are accomplished administratively, without any judicial oversight. Once property is seized, the burden is on the property owner to file a claim to contest the seizure. If the owner fails to do so, or files a claim that is deemed late or insufficient by the seizing agency, the property is automatically forfeited. Additionally, under federal and most state laws, once the government proves that the property is more than likely connected to a crime, the burden is on property owners to prove they are innocent; that is, they must prove that they did not know about the illegal use of their property. This completely reverses the presumption of innocence, a hallmark of the American justice system that the Supreme Court has repeatedly clarified applies to civil as well as criminal cases.
Defenders claim that civil forfeiture is a valuable crime-fighting tool. But a recent study published by the Institute for Justice concludes that the nation’s largest forfeiture program does not help police fight crime. Specifically, the study finds:
- More forfeiture proceeds do not translate into more crimes solved, despite claims that forfeiture gives law enforcement more resources to fight crime.
- More forfeiture proceeds do not mean less drug use, even though forfeiture is claimed to rid the streets of drugs by crippling drug dealers and cartels financially.
- When local economics suffer, forfeiture activity increases, suggesting police make greater use of forfeiture when local budgets are tight. A 1 percentage point increase in local unemployment—a standard proxy for fiscal stress—is associated with a statistically significant 9 percentage point increase in seizures of property for forfeiture.
“These results add to a growing body of evidence suggesting that forfeiture’s value in fighting crime is exaggerated and that police do use forfeiture to raise revenue,” said Brian Kelly, an associate professor of economics at Seattle University and the author of the study.
Reform So Far
It is no surprise that reforming civil forfeiture is an issue that crosses party lines. Forfeiture reform is part of both the national Republican and Democratic party platforms. Since 2014, when the Institute for Justice launched its national initiative to end forfeiture abuse, over 350 editorials from outlets, including The Wall Street Journal and The Washington Post, have called for civil forfeiture reform. And polls have repeatedly shown that the overwhelming majority of Americans oppose civil forfeiture. The latest poll in October 2018 found that 63 percent of Americans oppose letting law enforcement keep the proceeds from forfeited property and 69 percent oppose a federal program called Equitable Sharing, which lets local and state agencies work with federal officials to seize property for forfeiture in exchange for up to 80 percent of forfeiture proceeds. This program allows local law enforcement agencies to bypass state laws that limit the use of civil forfeiture or the forfeited assets that agencies can keep.
Five forgotten low-caliber bullets were all it took for Gerardo Serrano to lose his truck. The U.S. Customs and Border Protection Agency found the bullets in the center console of Serrano’s truck and claimed he was trying to smuggle arms into Mexico. Photo credit: Institute for Justice.
Legislators have responded to this clarion call for reform: Since 2014, 33 states and the District of Columbia have reformed their forfeiture laws. Fifteen states now require a criminal conviction (though not necessarily of the property owner) to forfeit most or all types of property using civil forfeiture. The gold standard for reform is New Mexico, which like North Carolina and Nebraska, has abolished civil forfeiture outright. Without a single vote in opposition, Republican Gov. Susana Martinez, (a former prosecutor) signed this landmark reform in 2015. Now, law enforcement in New Mexico can forfeit property only after convicting the owner of a crime. Vitally, all forfeiture money must be deposited in the general fund, removing the financial incentive to seize property and preventing forfeiture from becoming a law- enforcement slush fund.
While other states have not abolished civil forfeiture, they have enacted significant reforms to the civil proceedings. Sixteen states and the District of Columbia now require the government to prove that a property owner knew about illegal use of his property in order to obtain a forfeiture order, thereby restoring the presumption of innocence. Twenty-two states and the District of Columbia have mandated new reporting requirements for seizure and forfeiture activity. And seven states (including Nebraska and New Mexico) and the District of Columbia have passed legislation preventing state and local law enforcement from participating in the federal Equitable Sharing program as a way of bypassing state limits on the use of civil forfeiture.
In March of 2017, Phil Parhamovich was pulled over by the Wyoming Highway Patrol. Officers pressured him to sign a waiver, wrote him a ticket for not wearing a seatbelt, and then took $91,800 in cash they had found in the car. A Wyoming state judge eventually ordered the money returned to Parhamovich in December 2017. Photo credit: Institute for Justice.
At the federal level, Congress recently passed legislation that stops the Internal Revenue Service from using civil forfeiture to raid the bank accounts of small-business owners. The Clyde-Hirsch-Sowers RESPECT (Restraining Excessive Seizure of Property through the Exploitation of Civil Asset Forfeiture Tools) Act, passed as part of broader IRS reforms, is named after Institute for Justice clients who had their entire bank accounts seized solely because they frequently deposited or withdrew cash in amounts under $10,000. Although they were never charged with any crime and the funds were legally earned, the IRS claimed they had “structured” their financial transactions to avoid the reporting requirement for financial transactions of $10,000 or more. Through laws prohibiting “structuring,” the IRS confiscated more than $242 million in more than 2,500 cases from 2005 to 2012. After high-profile media coverage, including a front-page feature in The New York Times and an editorial in The Wall Street Journal, the IRS changed its policy to limit forfeiture for currency “structuring” only to cases when the funds in question are derived from an illegal source or used to conceal illegal activity. The RESPECT Act codifies this policy change so that it cannot be reversed with a stroke of the pen by a future administration. However, it does not address similar “structuring” forfeitures by the Justice Department or any other type of forfeitures.
Reforms Currently in Congress
Broader reform bills have been introduced in the House of Representatives with bipartisan support. Both the Fifth Amendment Integrity Restoration (“FAIR”) Act, H.R. 1895, and the Deterring Undue Enforcement by Protecting Rights Of Citizens from Equitable Sharing and Seizures (“DUE PROCESS”) Act, H.R. 2835, would substantially overhaul federal forfeiture practices, which were last amended almost two decades ago with the Civil Asset Forfeiture Reform Act of 2000.
True to its name, the DUE PROCESS Act, introduced on May 17, 2019, by Rep. James Sensenbrenner, R-Wis., with bipartisan support, provides necessary safeguards for owners fighting to regain property seized by the police.
First, it restores the presumption of innocence by properly placing the burden of proof on the government to show that the property owner knew about illegal use of his property.
Second, it raises the standard of proof in civil-forfeiture proceedings to “clear and convincing evidence.” Under current law, the government needs to meet only a preponderance of evidence standard—i.e., show that property is more likely than not connected to a crime.
Third, for those who cannot afford counsel, the DUE PROCESS Act guarantees legal representation in administrative and judicial forfeiture proceedings.
Fourth, it extends the RESPECT Act’s limits on currency seizures for “structuring” to the Justice Department.
Fifth, it allows defendants an opportunity to contest the pretrial restraint of property needed to pay for counsel, overturning the U.S. Supreme Court’s distressing decision in Kaley v. United States. As Chief Justice John Roberts noted in his dissent, this decision “allow[s] the government to initiate a prosecution and then, at its option, disarm its presumptively innocent opponent by depriving him of his counsel of choice—without even an opportunity to be heard.”
Finally, the DUE PROCESS Act increases oversight and transparency of federal forfeiture programs by requiring an annual audit of federal civil forfeitures and by creating two publicly available databases on the use of civil forfeiture. As far as the bill goes, however, it does not address the core financial incentives fueling abuse.
Rustem Kazazi was planning to use $58,100, packed in a carry-on suitcase, to fix up a house and purchase a property in Albania. But, without charging him with any crime, the Customs and Border Protection Agency seized his money at Cleveland Hopkins International Airport. Six months later, with the help of the Institute for Justice, a federal judge ordered CBP to return the money. Photo credit: Institute for Justice.
The FAIR Act, introduced on March 27, 2019, by Rep. Tim Walberg, R-Mich., and Rep. Jamie Raskin, D-Md., and four other co-sponsors of both parties, provides for comprehensive reform. In addition to the first four procedural protections provided by the DUE PROCESS Act, the FAIR Act removes the financial incentive of law-enforcement agencies to seize and forfeit property in two ways. First, it redirects all forfeiture proceeds from the Department of Justice’s Assets Forfeiture Fund to the General Fund of the U.S. Treasury, restoring Congress’s constitutional authority to appropriate funds.
Second, the FAIR Act abolishes the Equitable Sharing Program and thereby prevents state and local law enforcement from evading their own stricter state laws by partnering with federal authorities. Congress should not undermine states that are seeking to protect their citizens’ constitutional rights and govern their own law-enforcement practices. The FAIR Act is key to respecting principles of federalism.
Administrative Forfeitures Still Unaddressed
While both federal bills go a long way toward addressing the deficiencies of federal forfeiture law, neither addresses administrative forfeitures, which constitute most federal forfeitures. There is a widespread misconception that forfeitures are overseen by a judge. But most forfeitures at the federal level are done by the seizing agency itself, without any judicial involvement. This means that the seizing agency acts as investigator, prosecutor, and jury while the property owners never see a judge or have their day in court. Without judicial review, the sole determination of whether forfeiture is warranted is made by the seizing agency, which stands to gain financially from the proceeds. Indeed, 88 percent of all civil forfeitures pursued by the Justice Department are processed administratively, rather than judicially.
Nurse Anthonia Nwaorie was planning to start a medical clinic in Nigeria when the Customs and Border Protection Agency seized $41,377 of her money at Houston International Airport. Unknowingly, she was in violation of a federal law requiring travelers to file a report when they leave the country with more than $10,000 in cash. Eventually, the CBP offered to give the money back if Nwaorie signed a Hold Harmless Agreement. Nwaorie is now the class representative in a class action lawsuit seeking to stop the CBP’s practice of asking property owners to waive their rights in order to get their property returned. Photo credit: Institute for Justice.
In many of these cases, the value of the property seized is worth less than the cost of hiring an attorney. So even those who can afford counsel make the rational economic decision not to contest the forfeiture when doing so would cost more than their property. Additionally, as noted above, the decision as to whether a claim is timely or sufficient is made, not by a judicial officer, but by officials within the seizing agency. In any other kind of federal civil-enforcement action, the government is required to file a complaint before an enforcement action occurs. There is no legitimate reason for reversing this procedure in forfeiture cases by requiring the property owner to file a claim in order to trigger the government’s duty to file a complaint.
Administrative forfeitures should be abolished to ensure that property owners have the full legal protections available in the judicial system. Ultimately, however, the best reform remains to abolish civil forfeiture altogether and replace it with criminal forfeiture.
In a just system, forfeiture acts as a form of punishment for those who have been found guilty of wrongdoing. If an individual has not been found guilty, then no punishment is appropriate. No one in America should lose their property without being convicted of a crime.
As for Gerardo, he ultimately got his truck back but only after he filed a federal class-action lawsuit challenging the constitutionality of CBP’s practices. In addition to seeking damages, the class action seeks a court order requiring CBP to provide prompt hearings to all owners of vehicles it seizes. The lawsuit is currently before the U.S. Court of Appeals for the Fifth Circuit, which will hear argument next term.
Ms. Sheth is a senior attorney at the Institute for Justice and director of its National Initiative to End Forfeiture Abuse. She represents Gerardo Serrano in his federal class action lawsuit.