Testimony

Oversight of Federal Asset Forfeiture: Its Role in Fighting Crime

Subcommittee on Criminal Justice Oversight
Committee on the Judiciary
United States Senate

Mr. Chairman, distinguished members of the subcommittee:

My name is Roger Pilon. I am vice president for legal affairs at the Cato Institute and the director of Cato’s Center for Constitutional Studies.

I want to thank you, Mr. Chairman, and thank Mr. Schumer as well, for inviting me to testify before the subcommittee today on federal asset forfeiture law and practice.

Late last month, as we all know, the House of Representatives passed H.R. 1658, the Civil Asset Forfeiture Reform Act. The vote was by an overwhelming margin of 375 to 48. The bill that passed had been refined over several years by its author, Henry Hyde, chairman of the House Judiciary Committee, whose book on American forfeiture law I edited and the Cato Institute published in 1995. Sponsorship of the House bill was broad and bipartisan. For some time now an equally broad and diverse range of citizens and organizations has urged its passage. (I am attaching copies of several letters indicating the broad support the bill enjoys.) That alone suggests that there is something fundamentally wrong with our forfeiture law and practice, which is why these hearings in the Senate are important.

Preliminary Matters

Before discussing the substance and procedure of the matter, however, I want to make four preliminary points. First, it should be clear that most of those who support the House bill see a role—and an important role—for forfeiture in law enforcement. That is why the bill was written to reform the law, not to abolish it. I say that because some who oppose any changes, or who advocate only minor changes, sometimes charge that opponents of our present law want to abolish that law entirely. That is not true.

Second, it is sometimes said, in a related way, that opponents of our present law are really opponents of the so-called war on drugs, and that the forfeiture reform movement is a stalking horse, the ultimate target being the drug war. Here, too, that is not true. To be sure, many of us are of the view, shared by a growing number of Americans, that the war on drugs, like Prohibition before it, is an extremely costly failure, and that drug use should be treated not as a criminal but as a medical matter. But there is no necessary connection whatever between that view and the view that our forfeiture law needs reform. Indeed, in the House, many of the most ardent supporters of the war on drugs are ardent supporters of forfeiture reform.

Third, although the law enforcement community does not speak with a single voice in opposition to forfeiture reform—indeed, some in that community strongly support reform—it is fair to say that the majority there oppose the House bill. And in support of that opposition, they will cite success after success—the use of forfeiture to deprive drug kingpins of their ill-gotten gains and the tools of their trade, for example. No one can deny those successes, whatever their larger effect. But that is not the point. The point, rather, is that this body of law—because its foundations and practices are so foreign to our system of justice, as I will demonstrate in a moment—leads too often to flagrant miscarriages of justice, to the seizure and forfeiture of property from ordinary, innocent citizens. Given that stark reality, the law needs to be reformed. Just as a man charged with a crime cannot put up as his defense all the good deeds he has done in his life, so too our forfeiture law cannot escape reform simply because it produces many good results. Those results are to its credit. But it is the wrongs that result from our forfeiture law that should concern us—and prompt us to ask just why those wrongs are occurring. After all, it was not for nothing that the House vote was as overwhelming as it was.

Finally, and closely related to my third preliminary point, law enforcement often argues that forfeiture is an important tool in the war on crime. They are right. Forfeiture is an important tool in that effort. And under the House bill it will continue to be an important tool, for most forfeitures will occur in the future exactly as they have in the past. But in a free society, not any forfeiture law or practice will do. To state the point most generally, in our society, law enforcement officials may not use any means they wish in their efforts to reduce or remedy crime. After all, a police state would doubtless reduce crime. But we cannot have a police state in this nation because we have a Constitution and a body of law promulgated under it that limits what police, prosecutors, courts, and Congress may do—both substantively and procedurally.

In fact, it is precisely on that fundamental point—that first principle, the rule of law—that those of us who urge reform ultimately rest our case.1 Modern American asset forfeiture law, especially civil forfeiture, rests on animistic and authoritarian principles, leading to practices that are utterly foreign to our first principles as a nation. Something is terribly wrong when a body of “law” enables officials to stop motorists and other travelers and seize their cash on the spot, returning it, if they do, often years later, only after the person proves his innocence—where such a defense is possible; when that “law” enables officials to seize and sometimes destroy boats, cars, homes, airplanes, and whole businesses because they suspect the property has somehow been “involved” in a crime; or when it encourages officials to maim and even kill in their efforts to seize property for forfeiture to the government.2 Lawyers who come upon this body of law for the first time are often taken aback by the injustice and irrationality of it all. Imagine what the ordinary citizen must think.

Forfeiture in a Nutshell

The very styling of the relatively few cases that make it to court tells much of the story: United States v. $405,089.23 U.S. Currency;3 United States v. 92 Buena Vista Avenue4; United States v. One Mercedes 560 SEL.5 Civil forfeiture actions are brought against the property, not against the person. They are in rem proceedings—not for the purpose of gaining jurisdiction over a real person but for the purpose of seizing property for forfeiture to the government. Fantastic as it may sound, it is the property that is charged.

How can that be? Finding its origins in the Old Testament and in medieval doctrine, in the idea that animals and even inanimate objects involved in wrongdoing could by sacrificed in atonement or forfeited to the Crown, modern forfeiture law, filtered through early American admiralty and customs law, has simply carried forward, uncritically, the practice of charging things.

Thus, officials today can seize a person’s property, real or chattel, without notice or hearing,6 upon an ex parte showing of mere probable cause to believe that the property has somehow been “involved” in a crime. Neither the owner nor anyone else need be charged with a crime, for the action, again, is against the thing. The allegation of “involvement” may range from a belief that the property is contraband to a belief that it represents the proceeds of crime (even if the property is in the hands of someone not suspected of criminal activity), that it is an instrumentality of crime, or that it somehow “facilitates” crime. And the probable cause showing may be based on nothing more than hearsay, innuendo, or even the paid, self-serving testimony of a party with interests adverse to the property owner.

Once the property is seized, the burden is upon any owner who wants to get his property back to prove its “innocence”—not by a probable-cause but by a preponderance-of-the-evidence standard. Yet that is possible only where innocent-owner defenses have been enacted or allowed.7 In defending the innocence of his accused property, the owner must prove a negative, of course. Moreover, he must do that against the overwhelming resources of the government. And if he has been involved in activity that in any way might lead to criminal charges—however trivial or baseless those charges might ultimately prove to be—he has to weigh the risk of self-incrimination entailed by any effort to get his property back against the value of the property. As a practical matter, the burden is simply too high for many innocent owners, who end up walking away from their loss.

That, in a nutshell, is the state of much of our modern civil asset forfeiture law, despite periodic efforts in the House to reform some areas, and despite court challenges in recent years that have succeeded, when they have, only in chipping away at the doctrine. It is a body of law that enables prosecutors to go directly against property—a ruse that permits the abandonment of elementary notions of due process. And it does so, most notoriously, on the ground that the property is guilty of “facilitating” a crime—a doctrine that is infinitely elastic.

The Procedure of the Matter

To illustrate more fully how this law works in practice, however, it may be useful to distinguish three procedures—administrative, civil, and criminal—through which the government moves to complete a forfeiture after seizing a person’s property.8 Administrative forfeiture is essentially a default proceeding: if no one files a claim to the seized property, it forfeits by default to the government. The Justice Department’s principal spokesman for forfeiture has claimed that 80 percent of forfeitures “are uncontested because in most cases the evidence is so overwhelming that contesting the forfeiture would be pointless.”9 That may be true in many cases. But there are also many other cases that involve amounts too small to make it worth the owner’s contesting the forfeiture, especially in light of the legal fees and the extraordinary burden of proving one’s innocence.

But if an owner does contest the seizure, he has to file a claim and post a “cost bond” amounting to ten percent of the value of the property or $5,000, whichever is less. That does not release the property to the owner, however; incredibly, it is designed to defray the government’s litigation and storage costs. Once the owner files a claim and posts a cost bond, the government has to file a complaint in federal district court. But it can wait up to five years—the statute of limitations—before doing so, whereas the owner has a mere ten days to answer the complaint, failing which the property forfeits to the government. Except in a criminal proceeding, there is no right of counsel, which means, again, that many small seizures end by default to the government.

Worse still, when the owner contests the seizure and posts a cost bond, his situation is perilous; for under many statutes the government has a choice. It can file a civil complaint, initiating a civil forfeiture action; or it can include a forfeiture count in a criminal indictment. Think about the dilemma that puts the owner in. If the government initiates a civil action in response to his contesting the seizure, not only can it wear him down through long and costly discovery but, through that very process, it can try to generate evidence for a subsequent criminal prosecution. Thus, the effort to get his property back exposes the owner to the risk of self-incrimination—even when the actions that led to the seizure in the first place prove ultimately to be trivial or innocent. And even if he is not indicted, the procedural hurdle the owner faces is daunting: whereas the government has to show the court simply that there is probable cause to believe that the property is subject to forfeiture—which it can do using rank hearsay evidence, inadmissible in a normal trial—the owner, once the burden shifts, has to prove the property’s “innocence” by a preponderance of the evidence, with no hearsay allowed.

But on the other hand, once the owner contests the seizure the government can respond with an outright indictment. In some ways, of course, the owner would be better off under those circumstances: the burden of proof would be on the government; the standard of proof would be beyond a reasonable doubt; and forfeiture, where it is included as a count in the indictment, would follow only upon conviction. But who wants to face a criminal indictment and trial just to get his property back? At the same time, who wants to go through a civil action either, against the government, just to get his property back, especially at the risk of ultimately being indicted? Faced with that dilemma, is it any wonder that owners often simply walk away from their loss when the government seizes their property? Is that the kind of dilemma we want to put often innocent citizens in? As Chairman Hyde put it, “the system is stacked against innocent citizens and in favor of government”?10 After all, prosecutors are not empowered simply to score victories and enrich government coffers. They have an obligation to do justice as well. Regrettably, the conflict of interest is so stark under our forfeiture laws that it is all too easy to shirk that obligation.

From this much, then, it should be clear just why the House bill puts the burden of proof on the government—where it should have been all along—and why it requires the government to discharge that burden by clear and convincing evidence. In a free society, if government takes a person’s property, it had better have good reason for doing so, not simply probable cause, not even a mere preponderance of the evidence, but clear and convincing evidence. These are, after all, quasi-criminal proceedings: the allegation is that the property is ill-gotten, or contraband, or that it facilitated a crime. Even though they may be styled “civil,” these are much closer to criminal proceedings than to any ordinary civil action involving a private dispute or even a dispute with the government. If the government is going to allege criminal activity as the ground for its taking private property, it should at least have clear and convincing evidence to support that allegation.

Returning to Substance

We return, finally, to the substance of the matter and to a point made at the outset, namely, that under the House bill, most forfeitures will continue exactly as they have until now. For if Justice is right about most forfeitures not being contested due to the overwhelming evidence that supports them, that will not change even if the government does carry the burden of proof and carries it by a higher standard of evidence. Drug dealers will still not contest a seizure if it means running the risk of an indictment: it’s simply too easy to recoup that loss through another deal. And where there are parallel criminal proceedings, there too the process will continue as it does today; for if there is enough evidence to prosecute a criminal action, there is probably more than enough evidence to effect a civil forfeiture.

What will change is that innocent owners will finally get a break. Here, we are not talking about contraband but about the other two most common substantive rationales for forfeiture—ill-gotten gain (or the proceeds of crime) and “facilitation.” Taking first the proceeds rationale, with the burden on the government to prove, by clear and convincing evidence, that the money or property it seized was derived from crime, it will be more difficult to turn a seizure into a forfeiture, especially if the owner is in fact innocent—which is exactly as it should be. Does that mean that some innocent owners may still lose their property—and that some guilty owners may keep theirs. Of course it does. Justice can never be perfect, but it can be better than it is today. Again, we cannot fight crime by any means. In a free society, we err on the side of the innocent, not against them.

In the case of facilitation forfeiture, the issues are not as easy because the rationale is not as rational. The idea that property that “facilitates” a crime is thereby forfeitable to the government takes us to the darkest roots of forfeiture and to the greatest abuses in our own time. For the “instruments” of crime can be read so broadly as to include anything even “involved” in a crime. Indeed, for the crime of failing to fill out a customs form saying that he was taking more than $10,000 in U.S. currency out of the country, Mr. Hosep Bajakajian and his family, fearful of making such a declaration, would have forfeited the legally-acquired $357,144 they had in their possession as they waited to board an airplane in Los Angeles in 1994—but for the five-to-four decision of the Supreme Court last year saying that the statute allowing the forfeiture of anything “involved” in the crime violated the Excessive Fines Clause of the Eighth Amendment.11 Whole bank accounts have been lost due to a single questionable deposit: the account “facilitated” the laundering of money. And stories of a home lost when one member of a family made an illegal phone call from it are too numerous to recount.12

No one has ever offered a satisfactory justification for facilitation forfeiture, although a Justice Department spokesman, attempting recently to explain why the Department did not limit itself to criminal forfeitures, inadvertently exposed the irrationality of the doctrine. The “most important” reason for doing civil forfeitures, he said, is because “criminal forfeiture is limited to the property of the defendant. If the defendant uses someone else’s property to commit a crime, criminal forfeiture accomplishes nothing [for the government]. Only civil forfeiture will reach the property” (original emphasis).13

That is a striking admission. Proceeding “normally,” against the accused, we can’t reach the property of someone else. Thus, when Billy Munnerlyn, who ran a charter jet service, accepted a fare from a man who turned out, unknown to Mr. Munnerlyn, to be carrying drug money, the government could not have seized his plane unless it had brought a civil action—not against the drug dealer, nor even against Mr. Munnerlyn, who did no wrong, of course, but against the plane.14 For the plane, you see, was “guilty” for having “facilitated” the crime. Yet the same Justice official who tells us how to reach property of people who haven’t committed a crime says also that “property doesn’t commit crimes; people do.”15 Just so. Then why charge the plane? Why? Because that’s the only way the government can get the property of someone who’s not guilty—by personifying the property and charging it with “facilitating” a crime. We’re right back with the “goring ox” of antiquity and with a rationale that no one any longer believes, if anyone ever did.

Unfortunately, the House bill does not do away, once and for all, with facilitation forfeiture. Nevertheless, it does mitigate the effects of the doctrine by incorporating in all federal forfeiture statutes a fairly robust innocent-owner defense. Here again, the bill may not be perfect—and that defense may need to be strengthened—but the breadth of coverage is much greater than under current law.

Conclusion

In sum, the House has presented the Senate with an opportunity to help correct the considerable injustices that have been taking place for too long in this nation under the banner of forfeiture law. As I noted earlier, under the House bill, most forfeitures will go on as they have in the past. The illegitimate forfeitures, the ones that should never have taken place to begin with, will mostly fail—as they should—assuming they are even undertaken. Those, however, are a small fraction of all forfeitures, yet they have given the law enforcement community—to say nothing of the victims—the greatest problems; for they have given all of forfeiture a bad name, which is why this bill should be welcomed even—indeed, especially—by law enforcement. But above all, it should be welcomed by every American who wants to see our law and legal institutions grounded on our first principles as a nation. Forfeiture has a place in law enforcement, but like every tool in that effort, it must spring from principles of justice if it is to serve justice.

Thank you, Mr. Chairman and Mr. Schumer, for the opportunity to testify before the subcommittee today.


NOTES:

1. I have discussed the issues that follow more fully in Roger Pilon, “Can American Asset Forfeiture Law Be Justified?” 39 New York Law School Law Review 311 (1994).

2. For those and many more examples of abuses perpetrated under our forfeiture law, see Henry Hyde, Forfeiting Our Property Rights (1995).

3. 518 U.S. 267 (1996).

4. 507 U.S. 111 (1993).

5. 919 F.2d 327 (5th Cir. 1990).

6. In the case of real property, that changed after 1993 when the Supreme Court ruled that owners had to be given notice and an opportunity to be heard before their real property could be seized. United States v. James Daniel Good Property, 510 U.S. 43 (1993).

7. Thus, in Bennis v. Michigan, 516 U.S. 442 (1996), a case the Supreme Court decided under state law, Mrs. Bennis lost her half-interest in the family car when officials seized the car after her husband used it for an assignation with a prostitute. Although Mrs. Bennis was given “due process,” nothing she could have said in any proceeding would have made a difference since the law provided no innocent-owner defense. Wronged by her husband, she was wronged again by the Michigan law.

8. For a detailed discussion of forfeiture law, see David B. Smith, Prosecution and Defense of Forfeiture Cases (1998).

9. Stefan D. Cassella, “Forfeiture Is Reasonable, and It Works,” Criminal Law and Procedure News (The Federalist Society), vol. 1, no. 2 (Spring 1997), at 8.

10. Hyde, supra note 2, at 8.

11. United States v. Bajakajian, 524 U.S. 321 (1998). See Roger Pilon, “High Court Reins In Overweening Government,” Wall Street Journal, June 23, 1998, at A20.

12. See, e.g., United States v. Real Estate Known as 916 Douglas Ave., 903 F.2d 490 (7th Cir. 1990), cert. denied, 111 S. Ct. 1090 (1991).

13. Cassella, supra note 9, at 4. For a critique, see Roger Pilon, “Forfeiting Reason,” Criminal Law and Procedure News, supra note 9, at 1ff.

14. For a discussion of this case, see Hyde, supra note 2, at 12.

15. Cassella, supra note 9, at 4.