Oversight of Federal Asset Forfeiture: Its Role in Fighting Crime

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Mr. Chairman, distinguished members of the subcommittee:

My name is Roger Pilon. I am vice president for legal affairs atthe Cato Institute and the director of Cato's Center forConstitutional Studies.

I want to thank you, Mr. Chairman, and thank Mr. Schumer aswell, for inviting me to testify before the subcommittee today onfederal asset forfeiture law and practice.

Late last month, as we all know, the House of Representativespassed H.R. 1658, the Civil Asset Forfeiture Reform Act. The votewas by an overwhelming margin of 375 to 48. The bill that passedhad been refined over several years by its author, Henry Hyde,chairman of the House Judiciary Committee, whose book on Americanforfeiture law I edited and the Cato Institute published in 1995.Sponsorship of the House bill was broad and bipartisan. For sometime now an equally broad and diverse range of citizens andorganizations has urged its passage. (I am attaching copies ofseveral letters indicating the broad support the bill enjoys.) Thatalone suggests that there is something fundamentally wrong with ourforfeiture law and practice, which is why these hearings in theSenate are important.

Preliminary Matters

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

Second, it is sometimes said, in a related way, that opponentsof our present law are really opponents of the so-called war ondrugs, and that the forfeiture reform movement is a stalking horse,the ultimate target being the drug war. Here, too, that is nottrue. To be sure, many of us are of the view, shared by a growingnumber of Americans, that the war on drugs, like Prohibition beforeit, is an extremely costly failure, and that drug use should betreated not as a criminal but as a medical matter. But there is nonecessary connection whatever between that view and the view thatour forfeiture law needs reform. Indeed, in the House, many of themost ardent supporters of the war on drugs are ardent supporters offorfeiture reform.

Third, although the law enforcement community does not speakwith a single voice in opposition to forfeiture reform--indeed,some in that community strongly support reform--it is fair to saythat the majority there oppose the House bill. And in support ofthat opposition, they will cite success after success--the use offorfeiture to deprive drug kingpins of their ill-gotten gains andthe tools of their trade, for example. No one can deny thosesuccesses, whatever their larger effect. But that is not the point.The point, rather, is that this body of law--because itsfoundations and practices are so foreign to our system of justice,as I will demonstrate in a moment--leads too often to flagrantmiscarriages of justice, to the seizure and forfeiture of propertyfrom ordinary, innocent citizens. Given that stark reality, the lawneeds to be reformed. Just as a man charged with a crime cannot putup as his defense all the good deeds he has done in his life, sotoo our forfeiture law cannot escape reform simply because itproduces many good results. Those results are to its credit. But itis the wrongs that result from our forfeiture law that shouldconcern us--and prompt us to ask just why those wrongs areoccurring. After all, it was not for nothing that the House votewas as overwhelming as it was.

Finally, and closely related to my third preliminary point, lawenforcement often argues that forfeiture is an important tool inthe war on crime. They are right. Forfeiture is an important toolin that effort. And under the House bill it will continue to be animportant tool, for most forfeitures will occur in the futureexactly as they have in the past. But in a free society, not anyforfeiture law or practice will do. To state the point mostgenerally, in our society, law enforcement officials may not useany means they wish in their efforts to reduce or remedy crime.After all, a police state would doubtless reduce crime. But wecannot have a police state in this nation because we have aConstitution and a body of law promulgated under it that limitswhat police, prosecutors, courts, and Congress may do--bothsubstantively and procedurally.

In fact, it is precisely on that fundamental point--that firstprinciple, the rule of law--that those of us who urge reformultimately rest our case.1Modern American asset forfeiture law, especially civil forfeiture,rests on animistic and authoritarian principles, leading topractices that are utterly foreign to our first principles as anation. Something is terribly wrong when a body of "law" enablesofficials to stop motorists and other travelers and seize theircash on the spot, returning it, if they do, often years later, onlyafter the person proves his innocence--where such a defense ispossible; when that "law" enables officials to seize and sometimesdestroy boats, cars, homes, airplanes, and whole businesses becausethey suspect the property has somehow been "involved" in a crime;or when it encourages officials to maim and even kill in theirefforts to seize property for forfeiture to thegovernment.2 Lawyers whocome upon this body of law for the first time are often taken abackby the injustice and irrationality of it all. Imagine what theordinary citizen must think.

Forfeiture in a Nutshell

The very styling of the relatively few cases that make it tocourt 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 theproperty, not against the person. They are in remproceedings--not for the purpose of gaining jurisdiction over areal person but for the purpose of seizing property for forfeitureto the government. Fantastic as it may sound, it is theproperty that is charged.

How can that be? Finding its origins in the Old Testament and inmedieval doctrine, in the idea that animals and even inanimateobjects involved in wrongdoing could by sacrificed in atonement orforfeited to the Crown, modern forfeiture law, filtered throughearly American admiralty and customs law, has simply carriedforward, uncritically, the practice of charging things.

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

Once the property is seized, the burden is upon any owner whowants to get his property back to prove its "innocence"--not by aprobable-cause but by a preponderance-of-the-evidence standard. Yetthat is possible only where innocent-owner defenses have beenenacted or allowed.7 Indefending the innocence of his accused property, the owner mustprove a negative, of course. Moreover, he must do that against theoverwhelming resources of the government. And if he has beeninvolved in activity that in any way might lead to criminalcharges--however trivial or baseless those charges might ultimatelyprove to be--he has to weigh the risk of self-incriminationentailed by any effort to get his property back against the valueof the property. As a practical matter, the burden is simply toohigh for many innocent owners, who end up walking away from theirloss.

That, in a nutshell, is the state of much of our modern civilasset forfeiture law, despite periodic efforts in the House toreform some areas, and despite court challenges in recent yearsthat have succeeded, when they have, only in chipping away at thedoctrine. It is a body of law that enables prosecutors to godirectly against property--a ruse that permits the abandonment ofelementary notions of due process. And it does so, mostnotoriously, 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 threeprocedures--administrative, civil, and criminal--through which thegovernment moves to complete a forfeiture after seizing a person'sproperty.8 Administrativeforfeiture is essentially a default proceeding: if no one files aclaim to the seized property, it forfeits by default to thegovernment. The Justice Department's principal spokesman forforfeiture has claimed that 80 percent of forfeitures "areuncontested because in most cases the evidence is so overwhelmingthat contesting the forfeiture would be pointless."9 That may be true in many cases. Butthere are also many other cases that involve amounts too small tomake it worth the owner's contesting the forfeiture, especially inlight of the legal fees and the extraordinary burden of provingone's innocence.

But if an owner does contest the seizure, he has to file a claimand post a "cost bond" amounting to ten percent of the value of theproperty or $5,000, whichever is less. That does not release theproperty to the owner, however; incredibly, it is designed todefray the government's litigation and storage costs. Once theowner files a claim and posts a cost bond, the government has tofile a complaint in federal district court. But it can wait up tofive years--the statute of limitations--before doing so, whereasthe owner has a mere ten days to answer the complaint, failingwhich the property forfeits to the government. Except in a criminalproceeding, there is no right of counsel, which means, again, thatmany small seizures end by default to the government.

Worse still, when the owner contests the seizure and posts acost bond, his situation is perilous; for under many statutes thegovernment has a choice. It can file a civil complaint, initiatinga civil forfeiture action; or it can include a forfeiture count ina criminal indictment. Think about the dilemma that puts the ownerin. If the government initiates a civil action in response to hiscontesting the seizure, not only can it wear him down through longand costly discovery but, through that very process, it can try togenerate evidence for a subsequent criminal prosecution. Thus, theeffort to get his property back exposes the owner to the risk ofself-incrimination--even when the actions that led to the seizurein the first place prove ultimately to be trivial or innocent. Andeven if he is not indicted, the procedural hurdle the owner facesis daunting: whereas the government has to show the court simplythat there is probable cause to believe that the property issubject 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 preponderanceof the evidence, with no hearsay allowed.

But on the other hand, once the owner contests the seizure thegovernment 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 ofproof would be beyond a reasonable doubt; and forfeiture, where itis included as a count in the indictment, would follow only uponconviction. But who wants to face a criminal indictment and trialjust to get his property back? At the same time, who wants to gothrough a civil action either, against the government, just to gethis property back, especially at the risk of ultimately beingindicted? Faced with that dilemma, is it any wonder that ownersoften simply walk away from their loss when the government seizestheir property? Is that the kind of dilemma we want to put ofteninnocent citizens in? As Chairman Hyde put it, "the system isstacked against innocent citizens and in favor ofgovernment"?10 After all,prosecutors are not empowered simply to score victories and enrichgovernment coffers. They have an obligation to do justice as well.Regrettably, the conflict of interest is so stark under ourforfeiture laws that it is all too easy to shirk thatobligation.

From this much, then, it should be clear just why the House billputs the burden of proof on the government--where it should havebeen all along--and why it requires the government to dischargethat burden by clear and convincing evidence. In a free society, ifgovernment takes a person's property, it had better have goodreason for doing so, not simply probable cause, not even a merepreponderance of the evidence, but clear and convincing evidence.These are, after all, quasi-criminal proceedings: the allegation isthat the property is ill-gotten, or contraband, or that itfacilitated a crime. Even though they may be styled "civil," theseare much closer to criminal proceedings than to any ordinary civilaction involving a private dispute or even a dispute with thegovernment. If the government is going to allege criminal activityas the ground for its taking private property, it should at leasthave clear and convincing evidence to support that allegation.

Returning to Substance

We return, finally, to the substance of the matter and to apoint made at the outset, namely, that under the House bill, mostforfeitures will continue exactly as they have until now. For ifJustice is right about most forfeitures not being contested due tothe overwhelming evidence that supports them, that will not changeeven if the government does carry the burden of proof and carriesit by a higher standard of evidence. Drug dealers will still notcontest a seizure if it means running the risk of an indictment:it's simply too easy to recoup that loss through another deal. Andwhere there are parallel criminal proceedings, there too theprocess will continue as it does today; for if there is enoughevidence to prosecute a criminal action, there is probably morethan enough evidence to effect a civil forfeiture.

What will change is that innocent owners will finallyget a break. Here, we are not talking about contraband but aboutthe other two most common substantive rationales forforfeiture--ill-gotten gain (or the proceeds of crime) and"facilitation." Taking first the proceeds rationale, with theburden on the government to prove, by clear and convincingevidence, that the money or property it seized was derived fromcrime, it will be more difficult to turn a seizure into aforfeiture, especially if the owner is in fact innocent--which isexactly as it should be. Does that mean that some innocent ownersmay still lose their property--and that some guilty owners may keeptheirs. Of course it does. Justice can never be perfect, but it canbe better than it is today. Again, we cannot fight crime by anymeans. In a free society, we err on the side of the innocent, notagainst them.

In the case of facilitation forfeiture, the issues are not aseasy because the rationale is not as rational. The idea thatproperty that "facilitates" a crime is thereby forfeitable to thegovernment takes us to the darkest roots of forfeiture and to thegreatest abuses in our own time. For the "instruments" of crime canbe read so broadly as to include anything even "involved" in acrime. Indeed, for the crime of failing to fill out a customs formsaying that he was taking more than $10,000 in U.S. currency out ofthe country, Mr. Hosep Bajakajian and his family, fearful of makingsuch a declaration, would have forfeited the legally-acquired$357,144 they had in their possession as they waited to board anairplane in Los Angeles in 1994--but for the five-to-four decisionof the Supreme Court last year saying that the statute allowing theforfeiture of anything "involved" in the crime violated theExcessive Fines Clause of the Eighth Amendment.11 Whole bank accounts have been lost due to asingle questionable deposit: the account "facilitated" thelaundering of money. And stories of a home lost when one member ofa family made an illegal phone call from it are too numerous torecount.12

No one has ever offered a satisfactory justification forfacilitation forfeiture, although a Justice Department spokesman,attempting recently to explain why the Department did not limititself to criminal forfeitures, inadvertently exposed theirrationality of the doctrine. The "most important" reason fordoing civil forfeitures, he said, is because "criminal forfeitureis limited to the property of the defendant. If thedefendant uses someone else's property to commit a crime, criminalforfeiture accomplishes nothing [for the government]. Only civilforfeiture will reach the property" (originalemphasis).13

That is a striking admission. Proceeding "normally," against theaccused, we can't reach the property of someone else. Thus, whenBilly Munnerlyn, who ran a charter jet service, accepted a farefrom a man who turned out, unknown to Mr. Munnerlyn, to be carryingdrug money, the government could not have seized his plane unlessit had brought a civil action--not against the drug dealer, noreven against Mr. Munnerlyn, who did no wrong, of course, butagainst the plane.14 Forthe plane, you see, was "guilty" for having "facilitated" thecrime. Yet the same Justice official who tells us how to reachproperty 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 ofsomeone who's not guilty--by personifying the property andcharging it with "facilitating" a crime. We're right backwith the "goring ox" of antiquity and with a rationale that no oneany longer believes, if anyone ever did.

Unfortunately, the House bill does not do away, once and forall, with facilitation forfeiture. Nevertheless, it does mitigatethe effects of the doctrine by incorporating in all federalforfeiture statutes a fairly robust innocent-owner defense. Hereagain, the bill may not be perfect--and that defense may need to bestrengthened--but the breadth of coverage is much greater thanunder current law.

Conclusion

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

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


NOTES:

1. I have discussed the issues thatfollow more fully in Roger Pilon, "Can American Asset ForfeitureLaw Be Justified?" 39 New York Law School Law Review 311(1994).

2. For those and many more examplesof 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 ownershad to be given notice and an opportunity to be heard before theirreal property could be seized. United States v. James DanielGood Property, 510 U.S. 43 (1993).

7. Thus, in Bennis v.Michigan, 516 U.S. 442 (1996), a case the Supreme Courtdecided under state law, Mrs. Bennis lost her half-interest in thefamily car when officials seized the car after her husband used itfor an assignation with a prostitute. Although Mrs. Bennis wasgiven "due process," nothing she could have said in any proceedingwould have made a difference since the law provided noinnocent-owner defense. Wronged by her husband, she was wrongedagain by the Michigan law.

8. For a detailed discussion offorfeiture law, see David B. Smith, Prosecution and Defense ofForfeiture Cases (1998).

9. Stefan D. Cassella, "ForfeitureIs Reasonable, and It Works," Criminal Law and ProcedureNews (The Federalist Society), vol. 1, no. 2 (Spring 1997), at8.

10. Hyde, supra note 2,at 8.

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

12. See, e.g., UnitedStates 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 note9, at 4. For a critique, see Roger Pilon, "Forfeiting Reason,"Criminal Law and Procedure News, supra note 9, at1ff.

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

15. Cassella, supra note9, at 4.

Roger Pilon

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