Civil Asset Forfeiture Reform Act

Paul Wolf

On Tuesday, May 4th, U.S. Reps. Henry Hyde (R-IL), John Conyers (D-MI), Bob Barr (R-GA), and Barney Frank (D-MA) introduced HR 1658, a bill which would drastically reform the unfair practice of civil asset forfeiture in the United States.

The Racketeering Influenced and Corrupt Organizations Act (RICO) was passed in 1970 as a way to combat organized crime -- the mafia -- by stripping suspects of their financial resources, so that they wouldn't be able to mount multi- million dollar defenses in court. Since then, the practice has become widespread, and law enforcers of all kinds have come to rely on it as a major source of income. People's cars, homes, computers, fax machines, and other valuables are seized, and kept by the individual police departments, or auctioned off for cash.

The way civil asset forfeiture works, the government can put a person's property on trial. The property itself is on trial, as in the absurd sounding case, United States v. One 1974 Cadillac Eldorado Sedan. But because a Cadillac Eldorado Sedan is not a person with Constitutional rights, it can simply be seized without due process. Seized property is presumed guilty, and may be forfeited upon mere hearsay, such as a tip supplied by an informant who stands to gain up to 25% of the forfeited assets. The owners then have to sue the government to get their property back, and most lack the financial resources to do so.

80% of the property forfeited in the U.S. is seized from owners who are never even charged with a crime. This "market driven" approach to law enforcement is nothing other than piracy.

The Civil Asset Forfeiture Reform Act would force the government to prove that seized property is related to a crime, protect owners of property used by someone else to commit a crime, and remove the requirement that property owners post a bond to contest the seizure in court. The bill does not eliminate the unfair and unconstitutional practice of civil asset forfeiture, but it's a step in the right direction.


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MAY 3, 1999

If you were to ask me for the best introduction to the Kafkaesque world of civil asset forfeiture, I would point to an exchange I had with an African American gardener from Tennessee by the name of Willie Jones. I had invited Mr. Jones to testify before the House Judiciary Committee in 1996 in order that he tell the Committee of his experience with our civil asset forfeiture laws. He did, and it went like this:

Mr. Jones: On February 27, 1991, I went to the Metro Airport to board a plane for Houston, Texas, to buy nursery stock. . . . I paid cash for a round-trip ticket . . . and I was detained at the ticket agent. The lady said no one ever paid cash for a ticket. And as I went to the gate, which was gate 6, to board the plane, at that time three officers came up to me and called me by my name, and asked if they could have a word with me, and told me that they had reason to believe that I was carrying currency, had a large amount of currency, drugs. So at that time --

Me: Proceeds of a drug transaction; you had money that was drug money then, that’s what they charged you with?

Mr. Jones: Yes, sir.

Me: Were you carrying a large amount of cash?

Mr. Jones: Yes, sir. I had $9,000.

Me: $9,000 in cash. Why was that, sir? Was your business a cash business?

Mr. Jones: Well, it was going to be if I had found the shrubbery that I liked, by me being -- going out of town, and the nursery business is kind of like the cattle business. You can always do better with cash money.

Me: They would rather be paid in cash than a check, especially since you are from out of town?

Mr. Jones: That is correct. . . . So we proceeded to go out of the airport . . . . I was questioned about had I ever been involved in any drug-related activity, and I told them, no, I had not. So they told me I might as well tell the truth because they was going to find out anyway. So they ran it through on the computer after I presented my driver’s license to them, which everything was -- I had -- it was all in my name. And he ran it through the computer, and one officer told the other one, saying, he is clean. But instead, they said that the dogs hit on the money. So they told me at that time they was going to confiscate the money.

Me: They determined from the dog’s activities that there were traces of drugs on the money?

Mr. Jones: That is what they said.

Me: Therefore, they kept the money?

Mr. Jones: They kept the money.

Me: Did they let you go?

Mr. Jones: They let me go.

Me: Were you charged with anything?

Mr. Jones: No. I asked them to, if they would, if they would count the money and give me a receipt for it. They refused to count the money, and they took the money and told me that I was free to go, that I could still go on to Texas if I wanted to; that the plane had not left.

Me: Of course, your money was gone. You had no point in going to Texas if you can’t buy shrubs.

Mr. Jones: No.

Well, I may not have been any Johnny Cochran that day, but I think the point was made. I should say that happily Mr. Jones got his cash back years later when a federal court ruled in favor of his fourth amendment challenge.

Of course, if you are familiar with civil asset forfeiture, you know that nothing was amiss with Mr. Jones’ experience. The government does not have to convict you of a crime to civilly forfeit your property. Property can be forfeited even if you are acquitted. Even better, the government doesn’t even have to charge you with a crime. All the government need do to seize and confiscate your property is establish that probable cause existed to believe that the property was involved in some crime -- for instance, that it facilitated a crime or represents its proceeds. Probable cause, the same minimal standard needed by a policeman to justify a mere search. Once the government does this, you can only get your property back by going to court and either proving a negative, that your property was not involved in a crime, or establishing some allowed affirmative defense.

Civil asset forfeiture is based on a quaint legal fiction from medieval times that an inanimate object can itself be "guilty" of wrongdoing and forfeitable by the king, regardless of whether the object’s owner is blameworthy in any way. Soon after the creation of the United States, ships and cargo violating the customs laws were made subject to federal civil forfeiture. Such forfeiture was vital to the federal treasury for, at that time, customs duties constituted over 80% of federal revenues. Today, there are scores of federal civil forfeiture statutes ranging from the forfeiture of roosters used in cock-fights to cigarettes seized from smugglers. Most important are the forfeiture statutes contained in our federal anti-drug laws. In recent years, enormous revenues have been generated by federal forfeitures. The amount deposited in the Justice Department’s Assets Forfeiture Fund increased from $27 million in fiscal year 1985 to $338 million in 1996.

It has been six years since I read a column by Stephen Chapman in the Chicago Tribune that gave me an indication that all was not right in the world of civil asset forfeiture. It has been six years since I read series in the Pittsburgh Press, the St. Louis Post- Dispatch and other papers documenting civil forfeiture’s debilitating effect on our system of justice. It has been six years since I read a federal judge’s lament that he was "enormously troubled by the government’s increasing and virtually unchecked use of the civil forfeiture statutes and the disregard for due process that is buried in those statutes." It has been six years since I first introduced legislation to curb the worst abuses in those forfeiture statutes.

Has anything happened in those six years to make me rethink my belief that civil forfeiture was deserving of fundamental reform? Unfortunately not. In fact, things have arguably gotten worse. The Supreme Court ruled that a defense for innocent owners is not mandated by the Constitution, that "a long and unbroken line of cases holds that an owner’s interest in property may be forfeited by reason of the use to which the property is put even though the owner did not know that it was to be put to such use." This despite the fact that in a concurring opinion, Justice Thomas recognized that "[i]mproperly used, forfeiture could become more like a roulette wheel employed to raise revenue from innocent but hapless owners whose property is unforeseeably misused, or a tool wielded to punish those who associate with criminals, than a component of a system of justice."

Have startling abuses of fundamental fairness ceased to occur? Not according to the Seventh Circuit Court of Appeals, which recently saved from financial ruin Anthony Lombardo, the owner of Congress Pizzeria at 2033 N. Milwaukee Avenue in Chicago. The Court ordered the return of $500,000 that had been found by police at the pizzeria and seized, finding the need to remind a U.S. Attorney that "the government may not seize money, even half a million dollars, based on its bare assumption that most people do not have huge sums of money lying about, and if they do, they must be involved in narcotics trafficking or some other sinister activity."

In the decision, the court also found the need to say that "We are certainly not the first court to be ‘enormously troubled by the government’s increasing and virtually unchecked use of the civil forfeiture statutes and the disregard for due process that is buried in those statutes.’" No, nothing has changed. Due process is overdue for some protection.

Civil asset forfeiture does not just impact civil liberties and property rights. It can work at total cross purposes with the professed public policy goals of our government. Both Republicans and Democrats believe it is crucial that more private investment be made in our inner cities in order to offer residents hope of a better life. Republicans may favor enterprise zones and Democrats may favor community reinvestment mandates on banks, but we both seek the same end results. How, then do you explain this: on February 17, 1998, the U.S. Attorney's Office in Houston seized a Red Carpet Motel in a high-crime area of the city. There were no allegations that the hotel owners participated in any crimes. Indeed, motel personnel called the police to the establishment dozens of times to report suspected drug-related activity. However, the government claimed the hotel deserved to be seized and forfeited because management had "failed" to implement all of the "security measures" dictated by law enforcement officials, such as raising room rates. This failure to agree with law enforcement about what security measures were affordable and wise from a legitimate business-operating standpoint was deemed to be "tacit approval" of illegality, subjecting the motel to forfeiture.

Well, the Houston Chronicle in an editorial got it exactly right:

"More than due to shortcomings of the motel owners, this situation appears to be the result of ineffective police work and of . . . prosecutors’ inability to build cases against scofflaws operating in an open drug market.

The prosecution's action in this case is contrary not only to the reasonable exercise of government, but it contradicts government-supported enticements to businesses that locate in areas where high crime rates have thwarted development. Good people should not have to fear property seizure because they operate business in high-crime areas. Nor should they forfeit their property because they have failed to do the work of law enforcement."

After much bad publicity, the government dropped its forfeiture proceedings after exacting a written "agreement" with the motel owners as to certain security measures that the owners would undertake. But this does not detract from the fact that business owners who dare to invest in high crime areas are at the complete mercy of our civil asset forfeiture laws and the predilections of prosecutors.

I think it is obvious that something needs to be done about civil forfeiture run amok. This week, I will be introducing the Civil Asset Forfeiture Reform Act of 1999 with 25 co-sponsors including my Judiciary Committee colleagues John Conyers, Bob Barr and Barney Frank. The bill proposes eight common-sense reforms that will bring a modicum of sanity to our federal civil forfeiture laws:

The bill requires that if a property owner challenges a seizure, the federal government to prove by clear and convincing evidence that property is subject to forfeiture. A federal judge said it best:

"[T]he current allocations of burdens and standards of proof requires that the [owner] prove a negative, that the property was not used in order to facilitate illegal activity, while the government must prove almost nothing. . . . In civil forfeiture cases, where claimants are required to go forward with evidence and exculpate their property by a preponderance of the evidence, all risks are squarely on the claimant. The government, under the current approach, need not produce any admissible evidence and may deprive citizens of property based on the rankest of hearsay and the flimsiest evidence. This result clearly does not reflect the value of private property in our society, and makes the risk of an erroneous deprivation intolerable.

The bill allows judges to order property released pending final disposition of forfeiture cases if continued possession by the government would cause the property owners substantial hardship. Even should a property owner prevail in a civil forfeiture proceeding, irreparable damage may have been done to the owner’s interests. For instance, if property is used as a business, its lack of availability for the time necessary to win a victory in court could have forced its owner into bankruptcy. If the property is a car, the owner might not have been able to commute to work until it was won back. If the property is a house, the owner may have been left temporarily homeless. In cases such as this, even when the government’s case is extremely weak, the owner must often settle with the government and lose a certain amount of money in order to get the property back as quickly as possible. My bill provides that an owner may be entitled to release of his seized property pending trial upon a showing of hardship. The owner must show that continued possession by the government will cause substantial hardship, such as preventing him from working, leaving him homeless, or preventing the functioning of a business, and that his hardship outweighs the risk that the property will be destroyed, damaged, lost, concealed, diminished in value or transferred if it is returned.

The bill allows judges to appoint counsel for indigents in civil forfeiture proceedings. There is no Sixth Amendment right to appointed counsel for indigents in civil forfeiture cases. One expert states: "The reason [seizures] are so rarely challenged has nothing to do with the owner’s guilt, and everything to do with the arduous path one must journey against a presumption of guilt, often without the benefit of counsel, and perhaps without any money left after the seizure with which to fight the battle." My bill provides that a federal court may appoint counsel to represent an individual filing a claim in a civil forfeiture proceeding who is financially unable to obtain representation by counsel. In determining whether to appoint counsel, the court shall take into account the claimant’s standing to contest the forfeiture and whether the claim appears to be made in good faith or to be frivolous.

The bill eliminates the requirement that a property owner file a 10% cost bond to challenge the seizure of property. Under current law, a property owner wanting to contest a seizure of property under a civil forfeiture statute must give the court a bond of the lessor $5,000 or ten percent of the value of the property seized (but not less than $250). This has no good justification, being simply an additional financial burden on the claimant and an added deterrent to contesting the forfeiture.

The bill provides a uniform innocent owner defense for all federal civil forfeitures. Despite the lack of a constitutional requirement, many federal civil forfeiture provisions contain some statutory innocent owner defense. For instance, real property used to commit or to facilitate a federal drug crime is forfeitable unless the violation was "committed or omitted without the knowledge or consent of [the] owner." However, some federal civil forfeiture statutes contain no innocent owner defenses.

An innocent owner defense is required by fundamental fairness. My bill provides that an innocent owner’s interest in property shall not be forfeited in any civil forfeiture action. An owner would be considered innocent if he did not know of the conduct giving rise to the forfeiture or upon learning of such conduct, did all that reasonably could be expected under the circumstances to terminate such use. An owner is considered to have taken all the steps that a reasonable person would take if the owner, to the extent permitted by law (1) gave timely notice to an appropriate law enforcement agency of information that led the owner to know that the conduct giving rise to forfeiture would occur or has occurred, and (2) in a timely fashion, revoked or attempted to revoke permission for those engaging in such conduct to use the property or took reasonable steps in consultation with a law enforcement agency to discourage or prevent the illegal use.

The bill allows a property owner to sue the government for the destruction of seized property while in the government’s possession. The federal government is exempted from liability under the Federal Tort Claims Act for damage caused by the handling or storage of property detained by law enforcement officers. However, seized property awaiting forfeiture can be quickly damaged. It cannot be classified as victory when a boat owner gets back, for instance, a rusted and stripped hulk of a vessel. Therefore, my bill amends the Federal Tort Claims Act to allow tort claims based on the destruction, injury, or loss of property that was seized for the purpose of forfeiture, while in the possession of any law enforcement officer. Of course, if seized property is indeed successfully forfeited, no claim would be allowed.

The bill increases the time period a property owner has to challenge a civil forfeiture. Without getting into minutia, let me say that my bill provides a property owner 20-30 days to file a claim.

The bill awards interest to a property owner who is successful in winning money back. Under current law, even if a property owner prevails in a forfeiture action, he will receive no interest for the time period in which he lost use of his property. In cases where money or other negotiable instruments were seized, or money awarded a property owner, this is manifestly unfair. My bill provides that upon entry of judgment for the owner in a forfeiture proceeding, the United States shall be liable for post-judgment interest on any money awarded. The United States shall be liable for pre-judgment interest where currency was seized and in certain other cases.

Civil forfeiture statutes can have a place in law enforcement, provided that they are not abused and they provide a minimum level of protection for property owners. I believe my bill will curtail abuse and establish adequate protections. It will make civil asset forfeiture statutes worthy of our constitution and our system of justice.

Update on HR1658