From
imperial England to the colonies of the United States it was used to combat
piracy, tax evasion, and smuggling. It was used during Prohibition to seize the
cars of bootleggers transporting illicit liquor and was brought in to wider
usage by Nixon at the birth of the War on Drugs. It was once considered a legal
backwater, but now it generates hundreds of millions of dollars in revenue for
state, local, and federal law enforcement. It is the practice of asset
forfeiture.
Simply stated, asset forfeiture allows
law enforcement to seize contraband, ill gotten property, and the fruits and tools
of financial crime. Possession of contraband is illegal by definition; one
cannot make a claim of ownership on something that cannot legally be owned. The
same is true of money and property earned through selling drugs or defrauding a
company. Buy a house with money made by running a Ponzi scheme? The house and
your bank account are the product of crime and as such can be seized and
forfeit to law enforcement.
There’s nothing particularly
controversial about denying criminals their illicit gains. However, the issue
becomes thorny when you get in to the legal mechanisms used in forfeiture
proceedings. Criminal proceedings are traditionally conducted in personam, meaning against a person,
and it is the guilt or innocence of the individual that is being decided. Under
British admiralty law however, the seizure and forfeiture of boats and smuggled
goods was based on the legal concept of in
rem. In rem, meaning against the
thing, is a jurisdictional concept that enables a court to take action against
a piece of property, allowing them to take legal action when the property owner
can’t be found or is located outside of the court’s jurisdiction.
An example of this is the English
Navigation Act of 1660, which required goods to be shipped in English vessels. Violation
of the act meant forfeiture of the vessel and the goods on it. The offense was
attached to the property for obvious reasons. An English court would have a
difficult time prosecuting the Danish owners of a smuggling ship sailing out of
France, so they simply took action against the ship. The owner could file a
claim to contest the forfeiture, but the ultimately the guilt or innocence of
the owner was inconsequential because the proceedings were conducted against
the property. It was the property that was in violation of the law, which meant
that a whole shipping vessel could be forfeit due to the criminal actions of a
single crew member.
The use of in rem jurisdiction followed the colonists to America and the
distinction between criminal proceedings and the forfeiture of property was set
in a series of state and federal statutes and court cases. The forfeiture of a
privateer’s vessel was upheld despite a lack of criminal charges in The Palmyra decision issued in 1827 and the
distinction between in rem and in personam legal actions held throughout
Prohibition. In rem statutes were
used after the passage of the Volstead act to affect the seizure and forfeiture
of cars and other property involved in the sale and transportation of alcohol regardless
of criminal charges against the owner. These in rem proceedings taken against property were conducted in civil
court and were not tied to any criminal charges filed against a defendant.
Forfeiture faded with the death of
Prohibition until Nixon’s War on Drugs and the passage of the Comprehensive
Drug Abuse Prevention and Control Act in 1970 revived civil in rem forfeiture. Forfeiture entered
the modern era as a weapon against drug traffickers. Forfeitures were initially
limited to contraband, raw materials and equipment used to manufacture
narcotics, and vehicles used to transport them, and the government only had to
show probable cause in order to forfeit property. Once the prosecutor’s burden
was met it was on the property owner to show by a preponderance of the evidence
that his property was not subject to forfeiture. This is effectively a reversal
of the well established legal standard of “innocent until proven guilty”, made irrelevant by the use of civil courts.
The law was amended in 1978 and
1984 to widen the scope of property subject to forfeiture. These amendments
made profits from the sale of drugs, assets purchased with drug money, items
intended to be traded for drugs, and any real property used to facilitate
narcotics offences eligible for forfeiture. Additional amendments allowed
forfeiture proceeds to be kept by federal agencies and created the federal
equitable sharing program to foster cooperation between federal law enforcement
and state and local police. The program allows participating state and local
law enforcement agencies to receive a portion of forfeiture revenue as a way to
offset the costs of drug enforcement operations.
It has been nearly three decades
since these changes were made and asset forfeiture has taken on a life of its
own. Forty-seven states and the District of Columbia passed civil asset
forfeiture laws, with most of them modeled after the federal statute. As it has
spread it has become a serious revenue generator for state and federal law
enforcement. Use of asset forfeiture by federal agencies exploded after the
reforms in 1984, increasing from $27.2 million in 1985 to $644 million in 1991.
The Department of Justice’s Asset Forfeiture Fund went on to break $500 million
in net deposits in fiscal year 2000, while the most recent accounting figures for
fiscal year 2012 showed more than $4 billion in net deposits and more than $447
million in equitable sharing payments to state and local law enforcement.
Part Two: Equitable Sharing
Part Two: Equitable Sharing
