Rand Paul Introduces Asset Forfeiture Reform Bill

Rand Paul introduced a landmark bill last Friday that makes several significant changes to federal asset forfeiture law. It aims to remove the profit incentive by depositing sales proceeds in the Treasury's General Fund instead of giving it directly to the seizing agency.  The government must also show a substantial connection between the property owner and the alleged crime, that the owner "intentionally used the property in connection with the offense" or "knowingly consented or was will-fully blind to the use of the property by another in connection with the offense" before forfeiting property.

It also raises the standard of proof for federal prosecutors to meet before forfeiting property. The bill raises the federal court's standard of proof to "clear and convincing evidence", which makes it higher than many states. Radley Balko reports that the bill also requires states to "abide by state law" when they forfeit property, but that language is not in the current bill so it is hard to know what means exactly and if it applies to both financial and procedural aspects of state forfeiture law.

This is pretty big. Asset forfeiture is a big money maker for actors at all levels of government. The federal asset forfeiture fund had more than $2 billion in net deposits in 2013. The Department of Justice made more than $656 million in equitable sharing payments to law enforcement agencies in the 50 states. Law enforcement in New York and California have received more than $1.2 billion through the program between 2000 and 2013.This is not necessarily a bill that will be greeted with open arms by the law enforcement community.

 These changes have been a long time coming. Henry Hyde proposed raising the burden of proof to clear and convincing evidence almost 20 years ago. His reform efforts were stymied and his bill, passed as the Civil Asset Forfeiture Reform Act in 2000, settled for the lower standard of a preponderance of the evidence, which it stands at today. And while it would curb the problems associated with federal adoption, it would not address the myriad problems of state forfeiture laws. This bill represents a lot of progress though and Senator Paul should be commended for taking up the issue.

News Roundup

• Police in St. Louis are moving in to a new headquarters in the coming weeks. The new building was purchased in 2011 with $2.7 in forfeiture money. “Asset forfeiture money means money we seized from criminal enterprises. So in this case, crime really did pay for the metropolitan police department” said Police Chief Sam Dotson. Though state law directs asset forfeiture money to a fund for schools, that hasn't stopped law enforcement agencies in Missouri from receiving more than $135 million in equitable sharing payments since 2000, more than $14 million of which went to St. Louis Metro PD.
• Mendocino County's District Attorney's office is donating $10,000 in asset forfeiture revenue to a local anti-gang program for schools.
• Newsday chronicles the use of asset forfeiture on Long Island. The article includes some interesting details regarding how forfeiture money was spent in 2013, including $1.3 million for vehicles, $136,000 in out-of-town trips, and $385,000 in weapons and gear.
• A reporter for the Witness out of South Africa details the troubles of the National Prosecutor's Office and its' asset forfeiture unit. An unnamed AFU official blamed the unit's ineffectiveness on the "protracted legal process" that follows a seizure, while others point to infighting within the unit as a source of inefficiency.
• Webpronews discusses the moral quandary of purchasing property seized by police. They close by suggesting "...maybe the Ferrari that you see in that late night ad was once owned by a drug kingpin who now wears an orange outfit and a number. But maybe your local police force pays its salaries with the folding money of innocent out of state travelers."
• MyRecordJournal.com has a piece on how law enforcement in Connecticut use asset forfeiture funds to pay travel expenses. Jonathan Einhorn, a former New Haven police commissioner, is criticizes using forfeiture for travel and says “...[S]tate police have created a slush fund for vacations and travel, and that is just not the purpose.”

Tool or Profit Center?

The Daily Tribune out of Michigan considers the question in a new article on the state's medical marijuana industry. They focus on the use of forfeiture by Oakland County's Narcotics Enforcement Team.

For Oakland County’s Narcotics Enforcement Team, forfeitures totaled $924,358.06 in 2012. That total included $469,167.19 in cash, a share of federal forfeitures totaling $174,676.52, and 140 vehicles seized in drug raids and auctioned for $215,014.35, according to numbers provided by the Oakland County Sheriff’s Office.

In 2013, NET operations cost $1,191,597.40. Forfeitures in property and cash seized totaled $834,519.97.

 But, according to Oakland County Undersheriff Michael McCabe, forfeiture is just a tool against crime, not a money making venture.

“It’s not about making money; this is not an enterprise system; it’s not a profit-making business,” said McCabe. “The sheriff has always said he’s not in the business to make money. This isn’t a profit center.”

But, he added, “There are other places outside Oakland County that take a different approach than we do.”

News Roundup

Another week of playing catch up...

• Police in Marietta, Georgia have purchased some new gear with the proceeds of asset forfeiture cases. They spent $10,000 acquiring and training in the use of an explosive alternative to the battering ram. Marietta Police Chief Dan Flynn describes the product as a "heavy duty tape" that contains explosives and can be used in doors, windows, and walls. The agency also used $28,000 for two automatic license-plate readers for two of their cruisers. The cameras can scan "thousands of passing vehicle tags per minute" and have drawn the ire of privacy advocates at the ACLU.
• The federal government's $1.2 billion windfall from its case against Toyota will be dumped in the federal Asset Forfeiture Fund. Toyota was penalized for misleading customers and regulators about their vehicles troubles with unintended acceleration. The News-Gazette also notes how much the forfeiture fund's fortunes rest on large fraud cases. Half of the fund's income in 2013 was related to 10 fraud cases and half of its income in 2012 was due to the $2.2 billion received as a result of the Bernie Madoff investigation.
• The San Juan, Texas Police Department spent $2,700 in asset forfeiture revenue to purchase a bomb detecting dog. Seventy-five percent of the cost of the dog was covered by an unnamed grant provided to the department. The department received $87,401 in equitable sharing payments during fiscal year  2013.
• The West Midlands Police and Crime Commissioner (UK) is criticizing the use of recovered assets by the West Midlands Police Department. The agency received £1.9 million in seized criminal assets, but only £300,000 was used for community projects. The rest of the money is being used to "drive up performance on asset recovery". Half of the proceeds from criminal forfeitures in the UK is held by the government while the remaining half is split between the courts, the police, and the Crown Prosecution Service. The proceeds from civil forfeitures are split evenly between the government and the police force. 
• Prosecutors in the Phillipines are still battling for control of the proceeds of the so-called pork barrel scam perpetrated by local politicians.
• Jarrett Dieterle, a former intern at the Manhattan Institute's Center for Legal Policy, has published a history of the Lacey Act, the legislation at the heart of the Gibson Guitar Raid three years ago, in the Georgetown Law Journal. The article is available to download in .pdf format.

News Roundup

It's been awhile since my last update so this will be a big one.

• The most important news is the Supreme Court's 6-3 decision in Kaley v. United States, which has received fairly wide coverage in the media since it was issued in late February. The petitioners in the case attempted to challenge the government's pre-trial seizure of their home and a $500,000 certificate of deposit that were allegedly tied to the sale of stolen property. The Kaleys wanted to challenge the the seizure on the basis of a lack of evidence to support the underlying criminal charges, not the property's connection to the alleged criminal conduct. The Supreme Court decided against the Kaleys, ruling that they could not challenge the grand jury's finding of probable cause that was used by the government to support the seizure. I'll have more analysis on this case next week, but until then you can read coverage of the case at Slate, Reason, and Forbes.

• In addition to their coverage of the Kaley decision, Slate also ran an article about state and local law enforcement in states like Washington and Colorado taking part in the equitable sharing program despite recent changes in their jurisdiction'ss marijuana laws.

•  The US has frozen more than $458 million connected to former Nigerian dictator Sani Abacha. It's being heralded as the largest kleptocracy related forfeiture in history. 

• The Hudson Valley Reporter has a report on the use of forfeiture by law enforcement in Putnam County, New York. The paper reports that Putnam's asset forfeiture unit "oversaw a total of 130 forfeiture cases, most of them involving vehicles. While most defendants chose to forfeit the value of their vehicles, 17 were sold at auction, and 14 were released to lien holders after payment of administrative fees. Fifteen cases involved the forfeiture of cash proceeds of crimes."

•  The Mackinac Center for Public Policy, based in Michigan, has a posted a brief statement that summarizes their view on asset forfeiture.

• The Livingston Daily has a piece on a developing lawsuit regarding the seizure and attempted forfeiture of more than $100,000 in cash from two Michigan businesses. The businesses alleged crime? Routinely making cash deposits totalling less than less than $10,000, the amount which triggers a report to the federal government. The practice is known as "structuring", essentially purposefully depositing money in a way to avoid notice by the federal government.

• Forfeiture is being scrutinized in Nevada after two lawsuits were filed against the Humboldt County Sheriff's Department. Sheriff's deputies seized $50,000 in cash and two cashier's checks from one man and $13,800 in cash and a .40 caliber handgun from another. No arrests were made, no drugs were found, and no charges have been filed against the property owners.

The Office of the Inspector General's Audit of the DEA's Adoptive Seizure Process

The Office of Inspector General has completed an audit of the DEA's adoptive seizure program. Reason hones in on the number of civil and administrative forfeiture and AFR has a few notes as well.

The stated objective of the study was "to assess the design and implementation of the DEA’s adoptive seizure process" and I can't help but feel that the study conducted was woefully inadequate to draw any kind of meaningful conclusion about the adoptive forfeiture process. The testing and sampling lacked the depth required to provide either the public or the DEA anything other than a superficial impression of the adoptive forfeiture process.

The are a myriad of issues with the report that cripple its usefulness. The sample of cases/assets pulled by the investigators were culled from a single division of the DEA, which covered only 4 states: Georgia, Tennessee, North Carolina, and South Carolina. The report does not fully explain how cases were selected, nor does it explain why 58 assets that were subject to preliminary testing were not included in the detailed testing phase. The final testing sample consisted of only 63 adoptive assets. How representative of the process those 63 cases are is decidedly unknown, no context is given, nor a total count from which they were pulled. 

The testing phase of the study consisted of comparing adoption requests with guidelines set in the DEA manual. Under DEA guidelines, the field manager reviewing an adoption request from a state or local agency must consider several factors before approving the adoption. Most notably the manager must consider whether or not a state/local prosecutor has declined to move forward with the forfeiture in state court. Twenty-three of the 63 cases responded to the question with a "No", a response which interviewees was due to the prosecutor either not declining to move ahead (obviously), there was not a "sufficient amount of drugs" associated with the seizure to move ahead in state court (a bald-faced way for local entities to skirt state law), or the state/local prosecutor only handles criminal cases and the adopted assets were forfeit under through civil or administrative procedure. Unfortunately, the states these cases were pulled from do not require local law enforcement to take the case to a local prosecutor before transferring it to the feds so the purpose of this test is puzzling.

Another important factor for the field manager to consider is whether or not the case satisfies the fed's burden of proof in a forfeiture hearing. This is done by considering three aspects of the seizure; if it is the product of a federal or state judicial warrant, an arrest was made for a felony violation of state law or the federal Constolled Substances Act, and if drugs or other contraband were confiscated at the time the property was seized. Twenty-two of the 63 requests satisfied atleast one of the three conditions. The remaining 41 cases were approved by a legal team at DEA headquarters. 

The implication here, as Scott Meiner points out at AFR, is that those remaining cases were approved despite lacking all of the above. More puzzling, however, is the way the research team treats this aspect of the adoption process. They responded to this discovery by reviewing supporting documentation for those 41 cases to "determine whether there was a record that probable cause had been established" but never attempted to determine if the information actually a established a legally sufficient amount of probable cause. Moreover, they do not look into the process used by DEA headquarters to approve those forfeitures, citing a desire to focus on field agents. This strikes me as either lazy, shortsighted, or both. If two-thirds of your cases are deemed to lack a sufficient amount of evidence to establish a burden of proof by agents in the field and are then passed on to the DEA's crack legal team for approval and you can't be bothered to dig into the process used at DEA headquarters then a very significant portion of the adoptive forfeiture process is being neglected They make no notes about what background information was found and the reasons those adoption requests were approved ostensibly become yet another mystery of the forfeiture process.

The investigators conclude that the DEA generally follows its internal guidelines and controls, and makes  three recommendations regarding record keeping. Suitably, the recommendations are all rather droll bureaucratic adjustments to paperwork.The investigators cite a need for more complete records and recommend DEA create additional records documenting denied adoption requests. They also suggest changes to adoption request paperwork to "include questions pertaining to whether state and local law enforcement agencies followed state forfeiture laws, if applicable, before seeking a federal adoption." The final recommendation relates to equitable sharing requests left pending due to problems with the requesting agency (for example, suspension from the program) and records not being updated in the computer system.. The DEA concurred with all three recommendations in their response to the report.

Research Update

I've fully compiled the available data on equitable sharing payments from the Department of Justice's website. The dataset includes more than 34,000 payments made to state and local law enforcement agencies between 2000 and 2012. I've begun cleaning up and verifying the data, making sure it was all copied correctly. Due to differences in rounding, some of the totals in the data set are different than the totals listed on the DOJ site, so I've begun the process of double checking the totals to make sure nothing was copied incorrectly. I've also begun coding agency locations, cleaning up typos from the source data, and consolidating cases where the same agency appears under multiple names. Here are a few quick takeaways from first glances at the data.

• The DOJ made more than $4 billion in equitable sharing payments between 2000 and 2012.
• California has by far been the largest recipient of equitable sharing revenue, recording more than $600 million dollars in the time period covered, nearly 15% of the total. Over that time period payments exploded from $29 million in fiscal year 2000 to over $82 million in 2012, an increase of more than 181%.
• The top 10 recipient states are California, New York, Florida, Texas, Georgia, Illinois, North Carolina, Missouri, Ohio, and Michigan, raking in a combined $2.6 billion.
• The largest payments to individual departments were paid out to the agencies in Virginia and West Virginia, which was revenue from a federal settlement with Purdue Pharmaceuticals regarding their marketing and sale of oxycontin. 
• There are a number of puzzlingly small amounts paid out, which are particularly confusing given the stated requirements for a case to be federally adoped. For exampe, Marion Police Department in Indiana received a payment of $4 from sales proceeds. In fact, there were 151 equitable sharing payments made that totaled less than $100 dollars, begging the questions how and what kind of seizures and forfeitures taken on by federal agencies would result in such small pay outs.

All told, I have barely scratched the surface of this massive pile of data and will be periodically updating the site with observations as I make my way through the correction and clean up process. Stay tuned for some big news coming up as I seek to expand the scope of my research and build a proper website and develop a real online presence. 

News Roundup

• Federal prosecutors are attempting to seize $25 million in assets from notorious mobster and FBI informant Whitey Bulger. This is in addition to the $822,000 already seized from Bulger's Santa Monica residence, with the feds contending that all proceeds of his illicit activities must be forfeit, not just his profits.
• A US District Judge has ordered the forfeiture of a building in New York City estimated to be worth between $500 and $700 million. The value of the property has soared since the government moved to seize it in 2008 and it is being billed as the “the largest real property forfeiture” in United States history. - Link to the Judge's Order
• Law enforcement agencies in Rhode Island are deciding what to do with an expected $230 million payday. The payments stem from Google's forfeiture of $500 million to the federal government in 2011. The award to the North Providence Police Department is 10 times its annual budget and the payment to Rhode Island's Attorney General is double its yearly budget. 
• Business Week details how federal agencies auction seized property.
• The Jacksonville, NC police department and the Duplin County Sheriff's Office received a combined $366,000 through the equitable sharing program.
• Agencies in the Philippines are seeking the forfeiture of money connected to the 'pork barrel' graft probe that lead to protests throughout the country.
• Two departments in Texas received a combined $699,000 in forfeiture proceeds connected to a case involving a web-based pill mill.
• The Mendocino county DA and Auditor-Controller are battling over the use of $315,000 in asset forfeiture funds. The Auditor's office is disputing DA Eyster's planned use of the revenue to "pay for basically all of his office expenses", which would be a violation of forfeiture spending guidelines.

Asset Forfeiture in America: The Federal Equitable Sharing Program

The Equitable Sharing Program was created in 1986 under President Ronald Reagan and was designed as a way to foster cooperation between state and local law enforcement and the federal government in the battle against illicit drugs. Participating agencies receive a portion of forfeiture proceeds and may use the money to supplement their budgets. The money is often used to purchase new equipment and to cover costs associated with narcotics investigations, such as overtime pay for investigating officers.

The program was welcomed by state and local law enforcement. A survey conducted by the Department of Justice in 1987 found that 96% of participating agencies believed the program enhanced cooperation with the federal government and 99% reported a willingness to contribute to joint investigations to receive more money. Payments increased from $17.1 million in the first year to $279 million just five years later and, most recently, more than $447 million in equitable sharing payments in 2012.

Participation in the Equitable Sharing Program comes in two primary forms. One is the joint investigation, where federal law enforcement agencies collaborate with state and local agencies on an investigation. The forfeiture is processed in federal court and the federal agency receives 20% of the forfeiture. Any state or local agencies involved in the investigation receive a portion of the proceeds based on their contribution to the case and can receive a maximum of 80%. The money must be spent for law enforcement purposes and is made directly to the agency.

The other way state and local police participate is referred to as federal adoption. Local law enforcement can request for a federal agency to take a forfeiture case from them and prosecute the case in federal court. The property must meet certain thresholds to be adopted however the agency taking the case needs not to have contributed to the investigation. Proceeds are distributed similar to joint investigations; the federal agency keeps 20% and the local agency receives a portion based on their contribution, up to 80% of the total.

In both instances legal proceedings are moved from state to federal court. Though many states based their statutes on the federal law, there are a litany of differences between federal law and many state statutes, including how much money law enforcement may receive and different rules for court. North Carolina does not have a civil in rem forfeiture statute and forfeiture can only occur after the conclusion of a criminal trial, Hawaii only allows its law enforcement agencies to keep 45% of forfeiture proceeds, and several states require prosecutors to meet a higher standard of proof. Moving a case to federal court may allow an agency to receive more money than they would if they forfeit the property themselves. It also may make forfeiting the property easier due to a lower standard of proof or the lack of a conviction requirement.

There are other reasons that a local agency may hand a forfeiture case to the federal government. A local prosecutor may decline to take the case and the only way the property can be forfeit is if it is adopted by a federal agency. Additionally, certain types of property require certain types of infrastructure or expertise to house and maintain. A small department simply may not have the ability to house or maintain a yacht or a plane while they battle the property owner in court. There is the risk that by the time the case comes to a close the property would be rendered worthless by damage or age.

The Equitable Sharing Program continues to be a boon for both federal and state officials after 27 years. Payments to the states increased more than $244 million in the past decade, but this explosive growth has not come without a price or without controversy. Legal and constitutional questions remain about the processes used in civil in rem forfeiture and how financial incentives may be corrupting and distorting law enforcement's priorities.

Part Three: Controversy

Introduction

Welcome to the new Forfeiture Report. I thought long and hard after my hiatus from the previous iteration of this site and decided that a relaunch was in order. Why? Well, the answer is simple; the blog was a mess. It needed some trimming, some tightening, and a new focus. I’ve washed the previous posts from the site and I will sort through them to salvage what I can, but from here on out I will be focused on new content.

The new Forfeiture Report will be research focused, with a smattering of news commentary and legal analysis. Back in 2009, when my interest in drug policy led me down the trail of civil asset forfeiture, one of the first setbacks I ran in to was the lack of readily available data and research. My searches through JSTOR, Academic Search Premier, Westlaw, and Lexis-Nexis yielded disappointing results. There were many notable scholarly articles on the legal processes and constitutional issues, but only a couple of empirical studies. 

In terms of visible public organizations, the Institute for Justice, who published the excellent Policing for Profit when I well in to the first draft of my thesis, appears to be the only national group conducting research on asset forfeiture. There are smaller groups, such as Forfeiture Endangers American Rights (FEAR) and my former employer Americans for Forfeiture Reform (AFR), who do excellent work on the issue but are not actively pursuing a research agenda. The Cato Institute, who published the late Henry Hyde’s seminal treatise Forfeiting Our Property Rights, likewise does an excellent job publicizing the problems of forfeiture, but does not seem to be working on any kind of data projects or empirical studies. 

The focus of this site will be on combing through the available data and analyzing it. There is a proverbial mountain of data available publicly from the federal Department of Justice and several state agencies, such as California’s Attorney General, that sits ignored and unaddressed. In the coming weeks and months I will be using DOJ data to create Equitable Sharing Profiles of each of the 50 states. Commentary on current forfeiture related news will be mixed in, as well as discussion of the many Supreme Court decisions and the legal reasoning behind them that has led us to this point. 

The intent here is to go beyond activist horror stories of abuse and contribute something more to the criminal justice research community. My ultimate goal is to create a searchable database that can be used by activists and academics, as well as ordinary citizens and law makers, who find themselves as I did 4 years ago, wandering through the dark in search of information. The information is out there just waiting to be turned in to something consumable. If not me, then who?