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Civil Asset Forfeiture

Civil asset forfeiture refers to a legal procedure by which the government is able to seize and ultimately forfeit (i.e. taken ownership of) the property of people suspected of wrongdoing – even when those people are never convicted of, or even charged with, a crime. Civil forfeiture should be distinguished from criminal asset forfeiture, by which the government is able to forfeit the property only after a person has been convicted of a crime in court.

Background

Civil asset forfeiture flows from an archaic English legal concept known as “deodand,” which held that inanimate objects could be “guilty” of immoral acts and thus be forfeited to the Crown. The doctrine endured through the centuries and found its way into American law, prior to the Revolution, through the British Navigation Acts. Civil asset forfeiture was later used, and upheld by the U.S. Supreme Court, as a practical necessity for enforcing maritime laws. When property owners resided overseas, but their ship crews tried to evade American customs laws, it was simply impossible for the government to arrest and prosecute the owner, so the contraband was summarily seized here in America.

Proponents of civil forfeiture argue that the process helps to “take the profit out of crime” by allowing police to take the instrumentalities and proceeds of criminal enterprise. Advocates also argue that the large revenue streams generated by civil forfeiture are essential for giving law enforcement agencies the money to properly equip their forces.

Over time, civil asset forfeiture has become particularly useful to the government in enforcing prohibition laws. For example, civil forfeiture was used extensively during alcohol prohibition to seize cars, real estate, and money from organized crime distribution networks. More recently, it has become a very popular tactic in prosecuting the drug war. So popular, in fact, that the Department of Justice’s forfeiture fund has grown from $93.7 million in 1980 to billions of dollars today. State governments tend to be less transparent, but the Institute for Justice found in a 2015 report that state and local law enforcement are also responsible for seizing hundreds of millions of dollars worth of property annually.

Civil forfeiture’s genesis in the legal fiction of inanimate responsibility is the reason why forfeiture actions take the form of in rem, or “against the object,” proceedings. That quirk leads to bizarre case names such as State of Texas v. One Gold Crucifix and United States v. One Parcel of Property Located at 508 Depot Street.

It’s not just a stylistic problem; this legal fiction is the lynchpin for the low burdens of proof and sparse process typically afforded in forfeiture legal proceedings. The owner is not the defendant; the property is, and property isn’t entitled to the same legal safeguards as people.

How does it work in practice?

When government agents suspect wrongdoing, they sometimes initiate proceedings against property that is in some way connected with the suspected criminal activity. With respect to drug laws, that can mean the vehicles used to transport drugs and cash, any cash suspected of being derived from drug sales, or even entire homes where drug activity is suspected of taking place. In business regulation, it can mean the seizure of entire business bank accounts based on an agent’s belief that the deposits don’t look right.

The proceedings are allowed to continue even when there isn’t enough evidence of wrongdoing to charge the owner/possessor with a crime. Even where there is a criminal case, an acquittal of all charges doesn’t necessarily mean the person will have their property returned.

In jurisdictions that allow civil forfeiture, the seizing agency is usually allowed to keep a substantial portion of the proceeds it takes (up to 100% in many areas). Under federal forfeiture law, seizing agencies at the state level are entitled to 80% of the proceeds.

As a testament to the profit motives involved, jurisdictions that have more restrictive forfeiture rules also tend to have more “joint state-federal forfeiture actions,” which proceed under federal forfeiture law through a program known as “equitable sharing.” A law enforcement agency that can only receive 65% of the proceeds by turning the property over to the state treasury can receive 80% by giving it to the federal government instead. For example, in a jurisdiction like North Carolina, where state law does not allow state or local law enforcement to receive any of the proceeds of their forfeitures, law enforcement agencies can still profit from civil forfeiture by partnering with a federal agency, such as the FBI or IRS, which will hand back 80% of the proceeds, notwithstanding state law.

What’s the problem?

When government agencies are given a profit motive to seize private property, abuses are inevitable. Civil forfeiture is no different: abuses are legion at both the state and federal levels.

A few examples:

  • 22-year-old Joseph Rivers was traveling from Michigan to California to start a career as a music producer. He carried his savings in cash because he’d previously had trouble using his debit card when traveling across multiple states quickly. At a stop in Albuquerque, Rivers was approached by DEA agents who asked what he was doing and whether they could search his belongings. They even called his mother in order to verify his story. After confirming he was telling the truth, the agents seized the $16,000 he was carrying on the grounds that he was transporting it in an unorthodox fashion and that he was headed to a known drug “hot spot,” in this case the city of Los Angeles. Rivers was never charged with a crime.
  • The Hirsch brothers own a distribution company in Long Island, NY. Their entire business account, totaling more than $446,000, was seized by the IRS. Under the Bank Secrecy Act, deposits or withdrawals above $10,000 require the financial institution to notify the federal government. “Structuring,” is a crime that entails making deposits or withdrawals below that threshold in order to evade the reporting requirement. But even when the government doesn’t have enough evidence to charge someone with the crime of structuring, it can still seize their property under the much lower burdens of proof of civil asset forfeiture. It took more than two and a half years of legal wrangling for the Hirsch brothers, who were never charged with a crime, to get their money back. The Hirsch Firm managed to survive, but how many small businesses can withstand such a blow to their bank account?
  • The Caswell family has owned a roadside motel in Tewksbury, MA for decades. Over that time period, a small fraction of the hotel’s guests had been arrested for using their rooms to sell drugs without the owners’ knowledge. The Caswells always cooperated with law enforcement and did what they could to prevent these illegal activities from happening. Nevertheless, the Tewksbury police department in 2013 seized the entire motel, valued at more than $1 million.
  • Jennifer Boatright was travelling from Houston with her boyfriend and her two young children. Carrying enough cash to buy a new car, they passed through a small town called Tenaha, TX. Their car was pulled over because police said they’d been driving in the left lane without passing. They consented to a search of their car, during which the officer said he smelled marijuana (although none was recovered). The officer seized their cash, claiming that they were travelling from a known drug “source city,” in this case Houston. They were taken to the police station at which point a prosecutor presented them with a “choice:” they could sign away their cash as drug proceeds and continue on their way, or they could be charged with felony money laundering and child endangerment, have their assets seized, and have their children turned over to Child Protective Services. They signed away their money.

These are just a handful of the injustices that have been reported.

What the government does with the seized money is often just as scandalous. District attorneys in Oklahoma used forfeited funds to pay off student loans and resided in seized homes rent-free for years. Officials in Texas purchased a margarita machine. Officials in Georgia used forfeited money to pay for booze, parties, and concerts.

Civil asset forfeiture also raises federalism and separation of powers problems.

The “power of the purse” that traditionally resides in the legislature is a check on executive misconduct. It is the responsibility of the legislature, which is accountable to the citizens, to set budget and strategic priorities for law enforcement agencies. When police agencies can self-finance by seizing funds directly from the citizens, that legislative responsibility is undermined and the check on government abuse dissolves.

Similarly, the federal equitable sharing program, which allows local law enforcement agencies to “get a better deal” from the federal government undermines the constitutional principle of federalism. Equitable sharing is an end-run around the sovereignty of the state legislatures to regulate their own police forces. Local law enforcement should receive its priorities from local governments and local citizens, not the Department of Justice or the Internal Revenue Service.

What needs to happen?

Civil asset forfeiture should be abolished. New Mexico’s law, which received unanimous bipartisan support, provides a good example, including restrictions on the ability of local law enforcement to engage in the federal equitable sharing program.

If abolition is not possible, jurisdictions should seek to bolster legal safeguards for innocent people. The burdens of proof the government must meet to forfeit property should be raised. The government should bear the burden of proving both that the property was used for illegal conduct and that there are no innocent owners who stand to lose their rights. Laws should remove the profit motive from civil forfeiture by requiring that the seized proceeds be deposited in the general treasury fund rather than the police department budget. Jurisdictions should also impose transparency requirements so that we know exactly how often seizures are being made and how much money and property is involved.

Conclusion

  • Civil asset forfeiture is an inherently abusive practice that should be abolished.
  • Criminal forfeiture, requiring a conviction, can accomplish the stated goals of law enforcement (e.g. taking the profit out of crime and restoring the property of crime victims) with much less risk of abuse.
  • The profit incentive created when police and prosecutors are allowed to keep the proceeds from their seizures threatens due process and the rule of law. Executive agency self-financing undermines the separation of powers.
  • The federal equitable sharing program undermines constitutional federalism by incentivizing state and local law enforcement agencies to circumvent state laws and partnering with the federal government instead.

Suggested Readings

Dick M. Carpenter II, Lisa Knepper, Angela C. Erickson, & Jennifer McDonald, “Policing for Profit: The Abuse of Civil Asset Forfeiture,” 2nd Edition, Institute for Justice, November 2015.

Dick M. Carpenter II and Larry Salzman, “Seize First, Question Later: The IRS and Civil Forfeiture,” Institute for Justice, February 2015.

Roger Pilon, “Can American Asset Forfeiture Law Be Justified?” New York Law School Law Review 39 (1994): 311.

Sarah Stillman, “Taken: Under Civil Forfeiture, Americans Who Haven’t Been Charged with Wrongdoing Can Be Stripped of Their Cash, Cars, and Even Homes. Is that All We’re Losing?,” The New Yorker, August 12, 2013.

“Arresting Your Property: How Civil Asset Forfeiture Turns Police into Profiteers,” Heritage Foundation, June 2015.

Update Jan 2016

The Justice Department just shut down a huge asset forfeiture program

The Department of Justice announced this week that it’s suspending a controversial program that allows local police departments to keep a large portion of assets seized from citizens under federal law and funnel it into their own coffers.

The “equitable-sharing” program gives police the option of prosecuting asset forfeiture cases under federal instead of state law. Federal forfeiture policies are more permissive than many state policies, allowing police to keep up to 80 percent of assets they seize — even if the people they took from are never charged with a crime.

The DOJ is suspending payments under this program due to budget cuts included in the recent spending bill.

“While we had hoped to minimize any adverse impact on state, local, and tribal law enforcement partners, the Department is deferring for the time being any equitable sharing payments from the Program,” M. Kendall Day, chief of the asset forfeiture and money laundering section, wrote in a letter to state and local law enforcement agencies.

In addition to budget cuts last year, the program has lost $1.2 billion, according to Day’s letter. “The Department does not take this step lightly,” he wrote. “We explored every conceivable option that would have enabled us to preserve some form of meaningful equitable sharing. … Unfortunately, the combined effect of the two reductions totaling $1.2 billion made that impossible.”

Asset forfeiture has become an increasingly contentious practice in recent years. It lets police seize and keep cash and property from people who are never convicted — and in many cases, never charged — with wrongdoing. Recent reports have found that the use of the practice has exploded in recent years, prompting concern that, in some cases, police are motivated more by profits and less by justice.

Criminal justice reformers are cheering the change. “This is a significant deal,” said Lee McGrath, legislative counsel at the Institute for Justice, in an interview. “Local law enforcement responds to incentives. And it’s clear that one of the biggest incentives is the relative payout from federal versus state forfeiture. And this announcement by the DOJ changes the playing field for which law state and local [law enforcement] is going to prefer.”

Previous research by the Institute for Justice has shown that when states have stricter forfeiture laws, cops are more likely to pursue forfeiture cases under federal law as a means of bypassing those stricter state restrictions.

In California, for instance, police are allowed to keep 66.25 percent of forfeiture proceeds under state law, but 80 percent if they opt for the federal equitable sharing route. And forfeiture figures reflect this: In 2013, California police forfeited $28 million worth of cash and property under state law, but $98 million under federal law, according to the Institute for Justice’s research.

It’s unclear how much of the total national forfeiture haul will be affected by the DOJ’s change, since many states don’t make their forfeiture data public. But as the case of California shows, it is potentially significant: In that state in 2013, nearly eight out of every 10 dollars of forfeited property went through federal law. Under this change, that flow of cash would be shut off.

Some law enforcement groups are less than happy with the change. The International Association of Chiefs of Police (IACP) said in a statement that “this decision is detrimental to state, local, and tribal law enforcement agencies and the communities they serve.”

In a letter sent to President Obama, the leaders of Congress, and Attorney General Loretta Lynch, the heads of six law enforcement groups — including the IACP and the National District Attorney’s Association —  wrote to express “profound concern” over the changes: “This shortsighted decision by Congress will have a significant and immediate impact on the ability of law enforcement agencies throughout the nation to protect their communities and provide their citizens with the services they expect and deserve.”

The National Sheriff’s Association was even more critical. “While Congress and the President vacation in peace and tranquility, law enforcement knows all too well that the criminals, terrorists, and criminal aliens do not take a holiday,” the group wrote in a statement.  “Those seeking to do us harm can rest easier knowing one less tool can be used against them.”

But reformers point out that the change doesn’t impact law enforcement’s ability to seize goods from suspected criminals — it only changes their legal options for keeping what they take. The change “does not stop police and prosecutors from chasing criminals,” McGrath said in a statement. “[Police] are frustrated because Congress put on hold their chasing cash.”

Regardless, the change may not be permanent. In its letter, the DOJ hints that it may be able to restart payments later: “By deferring equitable sharing payments now, we preserve our ability to resume equitable sharing payments at a later date should the budget picture improve.” The DOJ hopes to “reinstate sharing distributions as soon as practical and financially feasible,” the letter concludes.