by Matt Clarke
While crime may not pay, policing can be very profitable when law enforcement agencies are allowed to seize assets not only from criminals but also people merely suspected of breaking the law. No criminal convictions – or even charges – are needed before property or money can be taken through civil forfeiture. That is because the property itself is “prosecuted” for having been used in a crime or obtained from the proceeds of illicit acts, and the owner has to prove the property is innocent.
The legal precedent for the modern era of civil forfeiture was the U.S. Supreme Court’s decision in Bennis v. Michigan, 516 U.S. 442 (1996). The Court held in Bennis that the innocent owner defense in civil forfeiture cases was not constitutionally required by the due process clause.
Civil forfeiture existed long before that ruling, though, and has a history in maritime law, including piracy and customs enforcement, when the owners of vessels carrying contraband could not be brought before U.S. courts. Instead, law enforcement officials seized the ships and their illegal cargo. Forfeiture of assets due to criminal conduct was traditionally rare and required that the owner of the property be convicted of a crime and the assets somehow tied to that crime.
Civil forfeiture practices today, however, have severely digressed from the original intent of such laws. In July 2016, John Malcolm, vice-president of the Institute for Constitutional Government, defined the practice as “a legal tool whereby law enforcement agencies seize property suspected of being involved in, or the fruits of, illicit activity.” Civil forfeiture rests on the premise that “property itself can be guilty of a crime and thereby forfeited to the sovereign,” and therefore civil forfeiture actions require no conviction, nor even an arrest.
All that is needed to justify an asset seizure is for a law enforcement officer to suspect the property is connected to a crime. Then begins a lopsided process in which prosecutors claim the property should be forfeited and the owner must prove the property has not been used in or obtained through the proceeds of illegal activities.
Due to forfeiture being a civil and not a criminal proceeding, property owners do not have the right to court-appointed counsel. This means that unless the assets are very valuable, attorney fees will quickly exceed their value. Conversely, prosecutors have almost unlimited resources to pursue forfeiture cases. While criminal forfeiture is also used, in cases where criminal charges are filed, the vast majority of property seizures are civil in nature.
According to the Washington Post, state and local law enforcement agencies seized assets worth around $3 billion from 2008 to 2015 – not including federal forfeitures. In 81% of those cases the property owners were not charged with a crime.
U.S. Supreme Court Justice Clarence Thomas recently criticized civil forfeiture, saying “[t]his system – where police can seize property with limited judicial oversight and retain it for their own use – has led to egregious and well-chronicled abuses.” He added that “forfeiture operations frequently target the poor and other groups least able to defend their interests in forfeiture proceedings.” Thomas’ comments came after the Supreme Court, on March 8, 2017, refused to hear a case involving a Texas woman who lost over $200,000 to civil forfeiture; she had not been charged with any crime. See: Leonard v. Texas, 137 S.Ct. 847 (2017).
Texas attorney Steve Jumes has successfully defended several civil forfeiture cases. He explained that his retainer for a complicated case starts at $25,000, though simpler ones can be litigated for less. That is why almost all civil forfeiture cases involving property valued at less than $5,000 are uncontested – including thousands of cell phones, laptops, personal computers and other valuables seized by police every year. In fact, about half of all Texas civil asset forfeiture cases are uncontested.
Civil forfeiture has become addictive for both prosecutors and law enforcement agencies – just as addictive as illicit drugs are to addicts. They have profited enormously from seizing cars, boats, electronics, homes, businesses and large amounts of cash from both criminals and innocent citizens. Law enforcement organizations and prosecutors’ offices, often cash-strapped, have used the money for equipment, furniture, vehicles and new hires they were unable to afford through legislative appropriations. But they needed more seized assets to fulfill an even larger and more grandiose unbudgeted wish list, and quickly became hooked on the easy cash afforded through forfeiture actions. Civil forfeiture is thus also known as “policing for profit.”
Equitable Sharing and Private Profiteering
Civil asset forfeiture practices shifted significantly in 1984 when a new federal statute, the Comprehensive Crime Control Act, permitted law enforcement agencies to retain profits from seized property for their own use. Prior to the 1984 law, forfeiture proceeds were deposited into the federal government’s general fund; afterwards they were placed in the U.S. Department of Justice’s Assets Forfeiture Fund, which allows law enforcement agencies to use money obtained from civil forfeitures outside the standard budgetary process. The 1984 law created an incentive for law enforcement officials to focus on forfeiting assets as a means of generating revenue rather than pursuing criminal convictions.
The federal government also decided to make civil forfeiture more attractive to state and local law enforcement agencies, by sharing with them the proceeds of federal forfeiture cases. Federal forfeiture policies are generally more permissive; in 25 states, local and state agencies that assist in federal investigations are allowed to keep 100% of seized assets. Such “equitable sharing” resulted in federal civil forfeitures skyrocketing to a high of $4.5 billion in 2014 – a significant increase from the $478.7 million seized a decade earlier.
One characteristic of equitable sharing by federal officials is that it allows local law enforcement to seize assets even when there is no state law that permits forfeiture. Further, in cases where state forfeiture laws afford property owners greater rights than under federal law, equitable sharing allows local law enforcement officials to bypass the rights granted pursuant to state statutes.
After learning that police had seized $2.5 billion in civil forfeitures from 2001 to 2014 through the federal equitable sharing program, without warrants or indictments, then-Attorney General Eric Holder imposed new restrictions on federal forfeiture policies in January 2015. According to the Washington Post, the restrictions limited “the ability of state and local law enforcement officials to choose more lenient federal forfeiture guidelines over state law.” But critics contended that limitation was not enough, and argued equitable sharing should be banned entirely because it creates an incentive for forfeiture actions based on the police’s profit motive and greed.
As noted by Supreme Court Justice Thomas, “because the law enforcement entity responsible for seizing the property often keeps it, these entities have strong incentives to pursue forfeiture.”
According to Forbes, only eight states prohibit police agencies from keeping the proceeds from civil forfeiture actions: Indiana, Maine, Maryland, Missouri, North Carolina, North Dakota, Ohio and Vermont. New Mexico recently joined that list.
The Institute for Justice, a public-interest law firm with nationally-recognized expertise on civil forfeiture abuses, issued a report titled “Policing for Profit” in 2013. The report graded each state’s forfeiture laws, and Texas and Georgia both received grades of D-, the lowest grade reported. Michigan, Virginia and West Virginia received the same low score; only three states received grades of B or higher.
A 2015 report by the FreedomWorks Foundation also graded states on their civil forfeiture policies. That report granted only one “A” – to New Mexico, after significant reform legislation was passed. More than half the states received grades of “D” or lower.
It is clear that law enforcement agencies and prosecutors profit from civil asset forfeiture, but there are others that benefit as well – including private corporations that sell confiscated property. One such firm is the auction company Property Room, which remits over $500,000 to Tarrant County, Texas and around $18,000 to the Fort Worth Police Department each year. Those funds come from property seized by law enforcement and sold through Property Room. The revenue from the auctions can be a significant portion of the agencies’ budgets; Herschel Tebay, commander of the Tarrant County Narcotics Unit, said one-third of generated revenue in the agency’s budget comes from seized asset auctions.
Property Room holds both live and online auctions. The most common items sold by the company include power tools and electronics, but vehicles are also auctioned, as are watches and other jewelry, coins and musical instruments. Seized guns, military equipment, body armor, drug-related paraphernalia, pornography and alcohol are destroyed.
New York-based Property Room was founded by a former police officer who combined forfeited items from over 3,000 police departments for the online auctions, which generate about $50 million a year for those agencies, combined. Prior to the public auctions, the seized assets are shipped to Property Room’s West Coast warehouse where they are certified, graded, valued and photographed. The property is then sold for up to 80% less than its retail value.
Property Room is not the only company that auctions assets seized by law enforcement agencies – others include www.invaluable.com and www.govdeals.com – but it is one of the largest, and demonstrates how policing for profit also benefits the private sector.
Civil Forfeiture in Tarrant County, Texas
Chapter 59 of the Texas Code of Criminal Procedure allows the forfeiture of property such as cash, homes, land and vehicles in most felony cases and some misdemeanors. To qualify for forfeiture, law enforcement officials need only believe that the property was used in a crime or purchased using the profits of criminal activity.
The Fort Worth Star-Telegram conducted an in-depth investigation into civil forfeiture actions in Tarrant County, Texas, and discovered millions of dollars in forfeited assets were seized each year with little accountability as to how the money was spent.
The tiny community of Euless, located south of Fort Worth, received $2.44 million of $5.24 million in seized property after a multi-year investigation into cigarette smuggling and counterfeit tax stamps resulted in 11 criminal convictions. The Euless police department used the funds for a new radio system and to hire more officers. That seizure was a large percentage of the total $7.2 million in forfeitures by Tarrant County law enforcement officials in 2013. The Star-Telegram also reported that the district attorney’s office had received $3.5 million, which equated to roughly 10% of its budget; only $53,000 of seized assets went to “six nonprofits that benefit victims or prosecution efforts,” as reported by Forbes.
While using assets seized in criminal investigations to hire more police officers may seem sensible, that practice has an inherent flaw. As the money was not appropriated as part of agency budgets, there is no future funding for the newly-hired officers. Thus, the salaries for employees hired using seized assets require additional forfeiture funds, creating a recurring cycle focused on civil forfeiture cases. This pressure on police to find property to seize or lose their jobs can weaken the threshold of discretion that law enforcement agencies exercise when determining whether to seize assets or not.
Perhaps a worse problem is the tendency of government officials who receive funds through asset forfeiture cases to treat it as “mad money,” spending it on a variety of items and activities that would have never received funding through a responsible budgeting process. That trend became so bad that a 2008 Texas Senate Committee on Criminal Justice report called asset seizures “a profit-making, personal account for some law-enforcement officials,” stating they used such funds for campaign expenses, alcohol and “training trips” to Hawaii.
Prompted by the abuses of Chapter 59 forfeitures and the federal equitable sharing program, the Texas legislature passed a law in 2011 to improve transparency with respect to how seized assets are spent. The statute requires each state agency receiving forfeiture funds to file a report with the Attorney General’s office detailing how they were used. That sounds reasonable in theory, but in reality the 2013 report on seized assets generated by the AG’s office indicated that only one agency in Tarrant County, the White Settlement Police Department, had seized around $14,000. It showed no forfeiture assets being used by the district attorney’s office, which is troubling because that office reported $3.5 million in cash, plus 440 computers and 246 vehicles, were seized during fiscal year (FY) 2013.
The Tarrant County district attorney’s office later admitted to spending $843,636 of the seized assets on salaries for an additional 15 full-time employees plus one part-time employee. The Tarrant County Narcotics Unit alone admitted seizing $666,427 in cash, 68 vehicles, 23 computers and 91 other electronic devices in FY 2013. It spent $426,058 of those funds on staff salaries.
Based on those examples, it was clear the effort to increase civil forfeiture transparency in Texas was not working as intended. The federal process was equally flawed. When the Star-Telegram filed over 10 Freedom of Information Act and public records requests, it received a variety of unbelievable responses; some agencies failed to respond at all.
For example, the Dallas/Fort Worth airport, which has its own police department that received $394,856 in equitable sharing funds from federal officials in FY 2013, claimed to have seized no cash that year, only drugs. The DEA and Department of Homeland Security refused to provide any explanation for that apparent discrepancy.
Additionally, the North Texas Financial Crimes Task Force, which is led by the Internal Revenue Service (IRS) and includes officers from six Dallas metropolitan area counties, claimed it was “impossible” to determine which assets were seized in Tarrant County due to how the IRS database was structured.
“Innocent Owners” Can Recover Property ... Sometimes
Texas and most other states have provisions for “innocent owners,” or third parties, to recover their property seized through civil forfeiture actions.
“If someone comes to me and says, ‘I bought this car, it was my separate property and I had no idea that my husband/boyfriend/whatever was going to be using my car in this drug deal,’ then we’ll give it back,” stated Tarrant County Assistant District Attorney Ann Wright, who oversees forfeiture cases. “Parents, same thing,” she added.
However, it’s not as simple as that. When 21-year-old Santa Fe, New Mexico resident Sylvia Solano crashed her father’s BMW and blew .24 on a Breathalyzer, it did not matter that he had not given his daughter permission to use his car. Santa Fe police seized the vehicle and refused to return it. When Greg Solano tried to get his BMW back, the hearing officer denied his request.
“Because I knew she had a prior DWI, [they said] they could take the car,” said Solano, who, ironically, had pushed local officials to pass a DWI forfeiture law when he was the sheriff of Santa Fe County between 2002 and 2010.
“This has changed my perspective on it a lot,” said Solano. “Not just because my car was taken but because the whole process just seemed so stacked against you and seemed so unfair.”
In Moline, Illinois, Judith Wiese, 70, went through a similar experience when her Jeep was seized in August 2015 after her grandson had been arrested for driving with a suspended license due to a previous DWI arrest. Wiese, however, did not know her grandson would be driving with a suspended license. The day after her Jeep was subjected to civil forfeiture, Wiese represented herself in court because she could not afford an attorney. After prolonged legal proceedings and extensive news coverage, she was able to get her vehicle back – over five months later. She still had to pay a $150 towing fee.
Although supporters of civil forfeiture laws claim the threat of forfeiture deters people from driving under the influence or committing other offenses, it also leaves “innocent people fighting for property they weren’t aware was being used in a crime,” Law Newz reported in January 2016.
Straughn Gorman was pulled over during a drive to California to visit his girlfriend. He admitted to the police officer who stopped him that he was carrying cash in his motorhome, but declined to allow a search. Although he was released, the officer alerted another police officer of his suspicions, who pulled Gorman over on the pretext of a moving violation. When Gorman again refused to consent to a search, the officer brought in a drug dog to sniff the vehicle instead. When the dog reacted to narcotics, “a search ensued which uncovered over $167,000 in cash but no drugs of any kind,” yet all the money was seized according to John Malcolm, vice-president for the Institute for Constitutional Government, during his testimony before the Mississippi Asset Forfeiture Transparency Task Force on July 20, 2016.
Gorman took his case to trial and the judge ordered the return of the money because “it was clear that the state troopers had conspired to deprive Gorman of his 4th Amendment rights,” and “the U.S. Attorney’s office handling the case had not disclosed critical facts tying the two traffic stops together.” While Gorman was finally victorious in obtaining the return of his funds, it took over four years and a lengthy court battle. See: United States v.
$167,070.00 in United States Currency, 2015 U.S. Dist. LEXIS 112556 (D. Nev. 2015), affirmed, 859 F.3d 706 (9th Cir. 2017).
Also consider the case of Texas resident Zaher El-Ali, who sold a 2004 Chevy Silverado on credit to a man who was later arrested for possession of cocaine and drunk driving. Local law enforcement officers seized the truck, which was still titled in El-Ali’s name. He decided to challenge the constitutionality of the law that required him to prove his property’s innocence. He lost at all levels – trial court, appellate court and the Texas Supreme Court, which in the past had prided itself on the protection of private property rights. One dissenting Supreme Court justice disagreed with the court’s refusal to hear the case and reliance on a 1957 decision on civil asset forfeiture.
“Forfeiture 2014-style is not forfeiture 1957-style, 21st-century practice merits 21st-century scrutiny,” wrote Justice Don R. Willett, noting that the Texas legislature’s 1989 expansion of civil forfeiture to include a litany of felonies and misdemeanors, and allow prosecutors, courts and police agencies a piece of the action, fundamentally changed the nature of property seizures.
“A generation ago in America, asset forfeiture was limited to wrestling ill-gotten gains from violent criminals. Today it has a distinctive ‘Alice in Wonderland’ flavor, victimizing innocent citizens who’ve done nothing wrong,” Willett stated. See: El-Ali v. State, 428 S.W.3d 824 (Tex. 2014).
Some citizens who were unfortunate enough to drive through an East Texas town would likely agree with Justice Willett. The police in Tenaha would stop out-of-town drivers on pretexts so they could search their cars for cash, phones, electronics or anything else of value. The probability of being stopped in Tenaha was much higher for cars that had out-of-state license plates.
Police officers would ask if the driver was carrying any cash and if they consented to a search of their vehicle. The property would be seized and the district attorney would threaten criminal charges, or worse – such as having state authorities take the drivers’ children – unless they signed a waiver relinquishing their rights to the property. That was what happened to drivers who had committed no crime. Those caught with illicit funds or drugs received lighter sentences in exchange for waiving their rights to the seized assets. [See: PLN, May 2013, p.16].
The forfeiture abuses in Tenaha stopped in August 2012 after the ACLU settled a class-action lawsuit against the town over the searches and improper property seizures. Almost all of the searches and seizures had involved black or Hispanic drivers.
“This was a brazen case of highway robbery, plain and simple,” said ACLU staff attorney Elora Mukherjee. “Law enforcement needs to focus on protecting the communities they serve, not on policing for profit.”
Excessive Forfeitures and Spending Abuses
Another problem with civil asset forfeiture is that it can far exceed the criminal penalties for minor offenses, such as possession of a small amount of drugs. In February 2012, for example, Scott Lee Anderson was arrested in the bedroom of his fraternity house at Texas Christian University (TCU). He was charged with selling pot and pills to an undercover officer, and his computer, iPad, iPhone and 2011 Ford F-150 were seized.
Anderson was one of 23 people arrested who had ties to TCU, following a months-long undercover operation at the university. The total haul of seized property was $46,243 in cash, 15 vehicles valued at over a quarter million dollars, 36 iPhones, iPads and MacBooks worth about $17,500, and nine weapons. The property was subject to civil forfeiture before formal charges were filed.
The criminal prosecutions were anticlimactic. Anderson received 48 months’ probation for two pot sales; the other arrestees also received probation. When they began trying to get their property back, however, they realized their troubles had just started.
In an August 2012 ruling, a judge forfeited Anderson’s iPhone but ordered the return of his iPad and laptop. To get his truck back, he had to pay the Tarrant County Narcotics Unit $17,500. Deals where people pay for the return of their seized property are common.
“We can’t try every case that comes before us because we just don’t have that kind of time,” said DA Ann Wright. “So in some cases, we’ll go ahead and make a settlement offer.”
Earl Patrick Burke, another one of the TCU arrestees, paid $7,500 for the return of his 2007 Cadillac Escalade, but was not able to recover the cash, guns or electronics seized from his home because the attorney fees would have exceeded the value of his property.
“I’m 600 or 700 bucks an hours, so it’s not really cost-effective for him to try and get the [less-valuable items] back,” stated Dan Cogdell, a high-powered Houston attorney who represented Burke and thinks the TCU bust was “a little over the top.”
The stakes can be even higher than cars, computers and large sums of money. Motel owner Russell Caswell, 70, risked losing his entire business due to civil asset forfeiture laws in Massachusetts. State and local law enforcement officers claimed that the motel, valued as high as $1.5 million, was suspected of being a hotbed of drug crimes and prostitution. Prosecutors cited 15 incidents at the motel from 1994 to 2008.
Caswell fought back. With pro bono assistance from then-Institute for Justice attorney Larry Salzman, Caswell pointed out that he had given free rooms to the police to use in drug stings and to observe drug dealers for many years. He seemed bewildered by the government’s attempt to close down his motel.
“I’ve found, which is kind of hard to believe, but I’m responsible for the actions of people I don’t even know, I’ve never even met, and for the most part I have no control over them,” Caswell said in court testimony. “And I have to rent them a room unless I have a real good reason not to or I get accused of discrimination and that kind of thing.
“And when they do something wrong, the government wants to steal my property for the actions of those people, which to me makes absolutely no sense,” he added. “It’s more like we’re in Russia or Venezuela or something.”
“You breed a culture of ‘take first and ask questions later,’” said Salzman. “It’s thuggish behavior.”
Following a four-day bench trial, a federal district court in Boston agreed and held the government had presented a “gross exaggeration” of the evidence and indeed had no authority to seize the motel.
“Having failed to notify Mr. Caswell that he had a significant problem, and having failed to take any steps to advise him on what to do, the government’s resolution of the crime problem should not be to simply take his property,” the court wrote in a January 24, 2013 ruling. See: United States v. 434 Main St., 961 F.Supp.2d 298 (D. Mass. 2013).
In Fraser, Michigan, the IRS seized the bank account of a grocery store owned by Tarik “Terry” Dehko and his daughter in January 2013. Why? They had repeatedly made deposits into the account under the $10,000 limit that triggers mandatory reporting to federal officials. The IRS considered that to be “structuring” under 18 U.S.C. § 5324(a), or an attempt to circumvent the reporting requirements. The Dehkos were not accused of having committed any other offense.
Institute for Justice attorneys assisted the Dehkos, who explained they were making the smaller deposits because their insurance policy only covered cash amounts under $10,000. The IRS eventually returned the funds, but Tarik Dehko and other parties filed a lawsuit challenging the constitutionality of such seizures, which are made without giving the property owners any kind of preliminary hearing. The case was dismissed by a federal district court in June 2014; the plaintiffs appealed, but later moved to dismiss their appeal in 2015. See: Dehko v. Holder, U.S.D.C. (E.D. Mich.), Case No. 4:13-cv-14085-TGB-LJM.
Nor have many prosecutors and law enforcement agencies shown restraint in how they spend forfeiture funds that they retain.
In Fulton County, Georgia, District Attorney Paul Howard spent thousands of dollars obtained from 2010 forfeiture funds on a holiday awards gala where “guests dined on $3,200 worth of sirloin tip beef roast, roasted turkey breast and mini-crab cakes with champagne sauce,” according to an October 2013 news report. He also spent $250 on tickets to see rap artist CeeLo Green and NBA player Dwight Howard, $1,100 on flowers, $800 to pay off eviction fees, $5,600 on a Christmas party, $1,000 on alcohol for another holiday party and over $16,000 on security improvements for his private residence.
Past misuse of asset forfeiture funds led to an investigation of the Fulton County DA’s Office by the Georgia Bureau of Investigation (GBI). The expenditures reviewed by the GBI included $4,500 for football tickets, $2,400 spent on an office softball team and $20,000 on office parties and retreats. Apparently, the GBI investigation did little to deter such extravagant spending by Fulton County prosecutors.
The Camden County, Georgia sheriff’s office purchased a $90,000 Dodge Viper for a drug awareness program. A spokesman reportedly said the high-end car was to “grab the kids’ attention” and “impress” them.
The district attorney’s office in Worcester County, Massachusetts purchased a Zamboni for almost $1,000, according to a 2013 report by the State Auditor. The ice resurfacing machine was reportedly used to resurface skating rinks in a drug diversion program. In Wisconsin, the Milwaukee County sheriff’s office spent asset forfeiture funds on exercise equipment, a Disney customer training program, and rental horses and boarding for a mounted patrol unit, based on a 2012 audit. The sheriff’s office also purchased a Dodge Ram pickup to transport the horses, as well as nine flat-screen TVs.
Texas DA Ron Sutton used more than $27,000 from a forfeiture fund to fly his office employees, their spouses and a judge to Hawaii for a six-day conference. In 2010, Sutton pleaded guilty to misusing forfeiture money; he was sentenced to two years deferred adjudication plus $20,000 in restitution.
Such expenditures are apparent violations of the Department of Justice’s guidelines for equitable sharing, which require agencies to “avoid any appearance of extravagance, waste, or impropriety.” But the guidelines are essentially a dog with no bite despite the DOJ’s initiation of a compliance team in April 2011. By the end of that year only 11 of the 9,200 agencies involved in the equitable sharing program had been audited, and just 2 of those were found to be in full compliance with the guidelines, according to a Government Accountability Office report.
Forfeiture Bonanzas for Law Enforcement
The corruption rampant in civil asset forfeiture indicates that proceeds from seized property should be overseen and appropriated by elected lawmakers rather than going directly to law enforcement agencies. Some argue that police departments will be severely underfunded without their continued access to forfeiture funds, but that is incorrect because many law enforcement officials have been using the money for extravagant and questionable purchases.
Bal Harbor, Florida, with a population of just 2,574, received in excess of $5 million in federal equitable sharing funds in 2011. What did the town’s police do with all that money? They spent over $23,000 to fly to Chicago, Las Vegas and Los Angeles, where they rented luxury vehicles like a Lincoln Town Car and a Cadillac SRX. They also spent $7,000 on a banquet for police chiefs and $21,000 on an “anti-drug beach bash.”
In 2012, the U.S. Department of Justice shut down the town’s equitable sharing program and demanded repayment of $4.2 million. The DOJ’s criminal division began investigating Bal Harbor the previous year, beginning with an audit of its books to account for $56 million in asset forfeiture funds received between 2008 and 2011. The town did not cooperate with the audit and refused to hand over key documents.
A DOJ letter addressed to Bal Harbor Police Chief Thomas Hunker said the task force maintained by his department and the Glades County Sheriff’s Office had seized assets “without adequate written policies or procedures, prosecutorial oversights, or audits of undercover bank accounts.” The letter demanded the return of $3.1 million in forfeiture funds from 2011, $407,969 in other funds and $709,836 in funds used in violation of strict federal rules; it also barred the town from future participation in the federal equitable sharing program. Hunker was subsequently fired and the town’s narcotics unit disbanded.
In Kansas, the Shawnee County Sheriff’s Office bought a $1.5 million, 10-acre training complex complete with a shooting range, and spent $146,000 on 99 Tasers and $26,000 on gym equipment. The two sheriffs who have served the county since 2008 spent a total of more than $3 million in asset forfeiture funds.
When asked how Shawnee County was able to amass such a huge amount of forfeited property – over four times as much as the second-most-populated county in Kansas – District Attorney Chad Taylor attributed it to the proximity of Interstate 70. In other words, it was the ability to stop and search a large number of vehicles and seize the assets of the drivers, whether they were charged with a crime or not. In Kansas, district attorneys keep 15 to 20% of forfeited assets and the police receive the rest.
According to the Institute for Justice, the DA’s office in Shawnee County spent over $622,000 in forfeiture funds from 2009 to 2014, including almost $12,000 on meals. Taylor reportedly spent $34,000 to remodel his office and donated $1,000 to a non-profit organization run by his wife. He denied any conflict of interest.
The New York Police Department (NYPD) has a unique take on civil forfeiture. A New York City administrative code, drafted in 1881, allows the NYPD to deposit seized funds in its pension account. The code was declared unconstitutional by judges in 1972 and 2002, but the city has yet to rewrite it so it comports with the judicial rulings, and the NYPD continues to apply forfeiture funds to its retirement account.
“1881, think about it! Think how much the world has changed since 1881,” said Steven L. Kessler, who formerly headed the Bronx District Attorney’s forfeiture unit. “The NYPD uses confusion about the code to take money from people who didn’t do anything. There is a cash incentive for the NYPD to take the money – it goes to their pension, it can’t even be used to buy equipment, to throw parties. You see a nice car parked outside of a precinct? That’s the result of civil forfeiture. Now it’s theirs.”
That’s what happened to Gerald Bryan, a 21-year-old bartender whose home was raided by the NYPD for suspicion of dealing drugs. The police tore out lighting fixtures and smashed through walls during a warrantless search that turned up $4,800 in cash. A year later prosecutors dropped the case, but when Bryan tried to get his money back he was told it had been deposited in the NYPD’s pension fund. He sought assistance from the Bronx Defenders and eventually received a check for $4,800. However, that money came from the city’s general fund – from taxpayers, in part from Bryan himself – rather than the pension fund where his money had been placed. The police pension fund was allowed to keep its ill-gotten gains.
“One possibility is that there are other internal agreements or memorandums that are not public knowledge that supplement the provisions of the statute and allow for such distributions. Though I would suspect that without further litigation, it may never be known exactly how this occurred,” said Vichal Kumar, Bryan’s public defender.
Kessler’s research indicates that 85% of NYPD forfeiture cases involve people who were never charged with a crime. Although the NYPD refuses to account for the assets it seizes, he believes it is a significant portion of the $5.3 million in civil forfeiture funds projected by the city’s Office of Management and Budget in 2014. This means that the NYPD takes millions of dollars in assets from people who are not charged with crimes every year – who may be entirely innocent – to pad its own pension account.
“Despite the federal courts knocking down the city’s forfeiture law time after time, lawmakers just let the NYPD deal with it, and that’s been a disaster,” Kessler noted.
Perhaps the most egregious case of civil forfeiture abuse occurred in Romulus, Michigan, where former police chief Michael St. Andre bought his wife a $75,000 tanning salon, went on gambling trips and, along with members of the town’s vice squad, spent over $40,000 on alcohol and prostitutes, plus took seized property, including marijuana. The police department was accused of improperly spending over $100,000 in forfeiture funds from drug cases. [See: PLN, Jan. 2013, p.30].
St. Andre’s wife, Sandra Vlaz-St. Andre, was sentenced to 7 to 20 years in prison in February 2014 for operating a criminal enterprise, filing a fraudulent tax return, and receiving and concealing stolen property. Michael St. Andre was sentenced in October 2014 to 5 to 20 years for misconduct in office and embezzlement. Three Romulus police officers pleaded no contest to corruption charges and lost their law enforcement certifications; two others were found guilty and received probation.
The Romulus case illustrates the corruptive nature of civil forfeiture, which diminishes the legitimacy of law enforcement agencies that engage in policing for profit. It also diverts money to law enforcement that otherwise could be used for the public good.
According to Courthouse NewsService, the Indiana state constitution requires that all forfeiture funds be sent to the common school fund, which is “used primarily for financing loans for education-technology programs, school construction and charter-school operations.” Despite the rise in civil forfeiture revenue that averaged $1.5 million in 2011 and 2012, the state’s common school fund has not received “a single penny” in the last five years, said Jeana Horner, the lead plaintiff in a lawsuit challenging Indiana’s civil forfeiture practices. Jeana and her husband, Jack, had two vehicles seized after their son was arrested for marijuana possession while driving one of the cars. See: Horner v. Curry, Marion Superior Court (IN), Cause No. 49D06-1602-PL-004804.
“This case shows the lengths to which police and prosecutors will go when they have a direct financial stake in the laws that they enforce,” said Samuel Gedge, an attorney with the Institute for Justice who is representing Horner and other plaintiffs in the lawsuit. “The profit incentive created by civil forfeiture is so strong, officials charged with upholding the law are now the ones breaking it.”
One Indiana Supreme Court Justice has described civil asset forfeiture as an “almost comical deployment of law enforcement Weapons of Mass Destruction.” See: Sargent v. State, 27 N.E.3d 729 (Ind. 2015).
In March 2017, the Indiana Senate passed a bill (SB 8) to reform the state’s civil asset forfeiture law; it would have required prosecutors to first obtain a conviction before they could seize property, and shifted the burden of proof from third-party property owners to the government. Further, civil asset forfeitures would require a showing of “clear and convincing evidence.” The bill failed to pass during the 2017 legislative session.
States Legalize Pot, Federal Civil Forfeiture Remains
Marijuana growers, distributors and users in states that have legalized recreational or medical marijuana may assume they no longer have to worry about violating drug laws, even if marijuana remains illegal under federal law. But what they may not realize is that they could still be hit with civil forfeiture actions under the feds’ equitable sharing program.
The legalization of pot hit drug task forces where it hurt – in the wallet. The federal government processed over $36 million in civil and criminal asset forfeitures in Washington and Colorado between 2002 and 2012. The forfeitures dramatically decreased after 2012, when voters legalized recreational marijuana use in those states.
Federal officials came up with a solution to this apparent problem: they “adopted” local and state forfeiture cases. In effect, the police became bounty hunters for marijuana cases they could not prosecute under state law; they would ask federal agencies to adopt the forfeiture, then reap the rewards under the equitable sharing program. Often, criminal charges were never filed.
That’s what almost happened to Tony Jalali, who owned an office building worth $1.5 million in Anaheim, California; the rent from the building financed his retirement. One of Jalali’s tenants was ReLief Health & Wellness, a medical marijuana dispensary that was legal under California law. Yet, when an Anaheim undercover cop used a legitimate doctor’s recommendation to purchase $37 worth of cannabis from ReLief, the DEA seized the building even though Jalali had not participated in the sale and was not charged with a crime.
Larry Salzman, a former attorney with the Institute for Justice who now works for the Pacific Legal Foundation, represented Jalali. The San Francisco Chronicle reported in August 2016 that prosecutors dropped the case to seize the office building. Salzman believed it was because Jalali “got lawyers who were experts on civil forfeiture who were prepared to fight back,” according to the newspaper.
Jalali is not alone. The U.S. Attorney for the Central District of California threatened 525 marijuana businesses and filed 30 forfeiture actions against landlords in 2012 and 2013.
James Slatic was the owner of Med-West Distribution, a medical marijuana shop in San Diego. Although his business complied with the state of California’s marijuana laws, it was seized by the DEA and San Diego police, along with $324,000 in business proceeds, in January 2016. In addition to the seizure, the police also took money from his family’s personal bank accounts, which included those of his teenage daughters. Slatic contested the forfeiture in San Diego County Superior Court.
Over a year later, in May 2017, the court ordered the DA’s office to return the funds seized from the family’s personal accounts.
“It’s about time,” Slatic wrote in a statement. “We did nothing wrong. My business operated openly and legally for more than two years; we paid taxes and had a retirement program for our 35 employees. No one broke any laws, but the District Attorney swooped in and took everything from me and my family, even though they had no connection to my business. Our lives were turned upside down. It felt like we were robbed – by the police.”
Perhaps in response to the court-ordered return of the seized funds, two weeks later the district attorney filed charges against Slatic, four of his employees and his attorney, claiming they were illegally producing hash oil. Referring to the 16-month delay in bringing charges, DA Bonnie Dumanis said, “We wanted to be thorough and make sure we got it right.” The civil forfeiture case for the $324,000 seized from Med-West remains pending.
“Civil forfeiture takes the American principle of innocent until proven guilty and flips it on its head, treating property owners worse than criminals by making them prove their innocence,” said Allison Daniel, an attorney with the Institute for Justice. By requiring people to prove the innocence of their seized assets, he argued the system treats property owners worse than criminals who are actually convicted of a crime.
In August 2013, U.S. Deputy Attorney General James Cole announced new guidelines for federal agencies that de-emphasized enforcement of marijuana laws in states where it is legal, so long as the offense did not involve giving pot to children or transporting it across state lines.
But Cole also noted the guidelines would not alter the authority of the Department of Justice to enforce federal marijuana laws, regardless of state law. Fear of federal prosecution and civil forfeiture has led Wells Fargo Bank – one of the largest banks in Colorado – to decline financial dealings with the state’s marijuana industry.
Pushback and Reforms
Due to the many documented abuses in civil asset forfeiture programs, several states have enacted reform measures in recent years.
In Minnesota, the Metro Gang Strike Force, which is composed of officers from a number of police agencies, seized cash, cars, electronics and jewelry from people who were never charged with a crime. The disclosure of those abuses in 2009 led to a settlement of $840,000 awarded to 96 victims targeted by the Strike Force. It also created a push in the legislature to reform the state’s civil forfeiture laws, which led to the passage of SF 874 – a bill that requires a criminal conviction or admission of criminal conduct before forfeiture can take place. Further, the legislation placed the burden of proof on the government; under prior law, property owners had to prove their property was not used in or obtained with the proceeds of a crime. SF 874 essentially eliminated civil forfeiture by local law enforcement agencies in Minnesota.
“No one acquitted in criminal court should lose his property in civil court,” said Lee McGrath, executive director of the Minnesota chapter of the Institute for Justice. “This change makes Minnesota’s law consistent with the great American presumption that a person and his property are innocent until proven guilty.”
SF 874 faced stiff opposition from law enforcement officials and was on hold in the legislature until the Minneapolis Star Tribune called the foot-dragging by state lawmakers an “outrage.” The bill then mustered broad bi-partisan support and passed; the reforms went into effect on August 1, 2014.
The average value of property seized in Minnesota prior to SF 874 was $1,250. Only 4% of forfeitures exceeded $5,000, and in one case police seized a nylon bag valued at just $22. Due to the low value of seizures and high cost of fighting civil forfeiture, less than 5% of Minnesota forfeiture cases were contested by property owners.
In Tennessee, where law enforcement agencies can keep 100% of seized assets, state Rep. Barrett Rich, a former state trooper, introduced a bill to require a warrant before assets are forfeited. That version did not pass, but an amended bill with more modest reforms did. The legislation gave property owners the right to an immediate hearing before a judge, whereas previously they had to wait up to a year for a hearing.
Civil forfeiture reform in Tennessee was driven by a series of high-profile investigative reports by Nashville TV NewsChannel 5 journalist Phil Williams. Not only did Williams report on cash being taken from innocent motorists under false pretexts, he also investigated whether cars were being intercepted more often when they were inbound into a metropolitan area and presumably carrying drugs, or outbound and presumably carrying cash from the drug sales. His research found that a driver was much more likely to be stopped leaving rather than entering city areas. Thus, there was an inference that police were more interested in intercepting and seizing money from drug sales than stopping drug trafficking.
After passing a bill that made it easier for police to seize property through civil forfeiture in 2013, the Utah legislature reversed course a bit, unanimously approving a 2014 reform bill. Among other things, that legislation, SB 256, reinstated a ban on using the federal equitable sharing program to circumvent state due process protections. It also reinstated a 75-day deadline for prosecutors to file forfeiture actions; if they missed the deadline, the property would be returned to its owner.
In New Mexico, bipartisan legislation passed in 2015, HB 560, significantly reformed that state’s civil forfeiture laws. The reforms required a criminal conviction as a prerequisite to asset forfeiture, and seized funds now go to the state’s general fund rather than law enforcement agencies. Further, limitations on local and state agency participation in the federal equitable sharing program were implemented. The legislation had been pushed by ACLU-New Mexico, the Rio Grande Foundation, the New Mexico Drug Policy Alliance and the Institute for Justice.
“For years police could seize people’s cash, cars, and houses without even accusing anyone of a crime,” said ACLU-New Mexico executive director Peter Simonson. “Today, we have ended this unfair practice in New Mexico and replaced it with a model that is just and constitutional.”
In Georgia, after previous bills failed to pass, new limitations on civil asset forfeiture went into effect on July 1, 2015 after HB 233 was signed into law. Those limitations were very modest, though: Law enforcement agencies are required to be more transparent about seized property and can only use forfeiture funds for law enforcement purposes. Georgia continues to have some of the most egregious civil forfeiture practices.
A new law in California prohibits state law enforcement agencies from keeping seized property valued at less than $40,000 in federal cases unless a criminal conviction is obtained. The law went into effect in January 2017.
Despite earlier failed attempts to reform the state’s asset forfeiture laws, the Arizona Senate passed HB 2477 on April 3, 2017. Introduced by Rep. Eddie Farnsworth, the bill initially faced opposition from law enforcement agencies and activists, but still passed the state senate unanimously.
HB 2477 requires prosecutors “to establish a higher evidentiary standard for asset forfeiture” and provide “clear and convincing evidence” that the seized property was linked to a crime, though the requirement of a criminal conviction prior to an asset forfeiture proceeding was not included.
Further, the legislation addresses a loophole that allows “prosecutors to bypass more stringent state asset forfeiture laws by passing cases off to the federal government.” The bill restricts the transfer of asset forfeiture cases from a state to federal agency if the seized property “did not involve a federal agency” or “involves a violation of a state law and no violation of a federal law.” HB 2477 also lowered the threshold for which transfers were permitted from $100,000 to $75,000. The bill was signed by Governor Doug Ducey on April 12, 2017.
In July 2017, Connecticut Governor Dannel Malloy signed into law HB 7146, which places restrictions on the state’s civil forfeiture practices. The bill requires an arrest before property can be seized, and assets must be returned absent a conviction or guilty plea.
And in Pennsylvania, on June 29, 2017, Governor Tom Wolf signed SB 8, a bill that reformed forfeiture proceedings.
“While I support further reforms to expand the role of a criminal conviction in asset forfeiture, this bill is a step forward to create higher burdens of proof imposed on the seizure of private property by the government,” the governor said in a statement. “Further, the bill increases transparency and accountability for law enforcement organizations and protects property owners who are not directly involved in a suspected criminal act.”
The legislation requires a higher burden of proof for the government in forfeiture cases, and includes protections for innocent owners, increased transparency, a prohibition on the pre-forfeiture seizure of real property without a hearing and protections for persons seeking the return of their property after being acquitted of a crime.
Other legislative civil forfeiture reforms were passed in Illinois and Colorado. Currently, 14 states require a criminal conviction before civil forfeiture actions can proceed. Reform efforts in other states have been unsuccessful, however.
Beyond legislation, the judiciary is starting to take a closer look at civil forfeiture, too. On June 20, 2017, the Court of Appeals for the D.C. Circuit issued a ruling in favor of Angela Rodriquez and Joyce Copeland, who lost $17,900 in a New York forfeiture proceeding. They had not been charged with any crime; the money was seized because a drug dog “alerted” to a backpack that contained the cash. The appellate court found the legal process in the forfeiture action was “onerous, unfair, and unrealistic,” and reversed the dismissal of their lawsuit by the district court. See: United States v. Seventeen Thousand Nine Hundred Dollars ($17,900.00) in United States Currency, 2017 U.S. App. LEXIS 10813 (D.C. Cir. 2017).
Recent strides in reforming civil asset forfeiture laws have come a long way, but further efforts are needed to prohibit property seizures when there is no criminal conviction. In addition, the burden of proof for determining whether assets were used in or acquired as a result of illegal acts should always be on the government, not property owners. Protections for innocent or third-party owners of seized property must be expanded.
Local law enforcement agencies should not be allowed to circumvent state laws by handling off forfeiture cases to federal officials, then receiving a share of the proceeds through the equitable sharing program. Nor should law enforcement agencies and prosecutors’ offices directly receive funds from asset forfeitures, as that creates a corrupting incentive which shifts their focus from solving and prosecuting crimes to chasing after forfeiture money.
Until such reforms are implemented we can expect to continue seeing forfeiture abuses; one way to solve that problem is to eliminate civil forfeiture altogether, and limit property seizures to criminal cases where defendants are afforded due process, legal counsel and, of course, a presumption of innocence.
Sources: Fort Worth Star-Telegram, www.heritage.org, www.slate.com, www.justice.gov, www.washingtontimes.com, www.economist.com, www.buzzfeed.com, www.ij.org, www.krqe.com, www.politifact.com, www.myfoxatlanta.com, www.NewsChannel5.com, www.huffingtonpost.com, www.texasobserver.com, www.gothamist.com, www.foxnews.com, www.forbes.com, www.minnpost.com, www.personalliberty.com, Miami Herald, www.courthousenews.org, www.lawnewz.com, www.washingtonpost.com, www.aclu.org, www.thecrimereport.org, Cato Institute, www.governing.com, www.activistpost.com, San Francisco Chronicle, www.reason.com, www.governor.pa.gov, www.propertyroom.com, San Diego Union-Tribune, www.watchdog.org
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