[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]






               FEDERAL ASSET FORFEITURE: USES AND REFORMS

=======================================================================

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON CRIME, TERRORISM,
                 HOMELAND SECURITY, AND INVESTIGATIONS

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 11, 2015

                               __________

                            Serial No. 114-5

                               __________

         Printed for the use of the Committee on the Judiciary

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

      Available via the World Wide Web: http://judiciary.house.gov
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                       COMMITTEE ON THE JUDICIARY

                   BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
    Wisconsin                        JERROLD NADLER, New York
LAMAR S. SMITH, Texas                ZOE LOFGREN, California
STEVE CHABOT, Ohio                   SHEILA JACKSON LEE, Texas
DARRELL E. ISSA, California          STEVE COHEN, Tennessee
J. RANDY FORBES, Virginia            HENRY C. ``HANK'' JOHNSON, Jr.,
STEVE KING, Iowa                       Georgia
TRENT FRANKS, Arizona                PEDRO R. PIERLUISI, Puerto Rico
LOUIE GOHMERT, Texas                 JUDY CHU, California
JIM JORDAN, Ohio                     TED DEUTCH, Florida
TED POE, Texas                       LUIS V. GUTIERREZ, Illinois
JASON CHAFFETZ, Utah                 KAREN BASS, California
TOM MARINO, Pennsylvania             CEDRIC RICHMOND, Louisiana
TREY GOWDY, South Carolina           SUZAN DelBENE, Washington
RAUUL LABRADOR, Idaho                HAKEEM JEFFRIES, New York
BLAKE FARENTHOLD, Texas              DAVID N. CICILLINE, Rhode Island
DOUG COLLINS, Georgia                SCOTT PETERS, California
RON DeSANTIS, Florida
MIMI WALTERS, California
KEN BUCK, Colorado
JOHN RATCLIFFE, Texas
DAVE TROTT, Michigan
MIKE BISHOP, Michigan

           Shelley Husband, Chief of Staff & General Counsel
        Perry Apelbaum, Minority Staff Director & Chief Counsel
                                 ------                                

Subcommittee on Crime, Terrorism, Homeland Security, and Investigations

            F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman

                  LOUIE GOHMERT, Texas, Vice-Chairman

STEVE CHABOT, Ohio                   SHEILA JACKSON LEE, Texas
J. RANDY FORBES, Virginia            PEDRO R. PIERLUISI, Puerto Rico
TED POE, Texas                       JUDY CHU, California
JASON CHAFFETZ, Utah                 LUIS V. GUTIERREZ, Illinois
TREY GOWDY, South Carolina           KAREN BASS, California
RAUUL LABRADOR, Idaho                CEDRIC RICHMOND, Louisiana
KEN BUCK, Colorado
MIKE BISHOP, Michigan

                     Caroline Lynch, Chief Counsel
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                            C O N T E N T S

                              ----------                              

                           FEBRUARY 11, 2015

                                                                   Page

                           OPENING STATEMENTS

The Honorable F. James Sensenbrenner, Jr., a Representative in 
  Congress from the State of Wisconsin, and Chairman, 
  Subcommittee on Crime, Terrorism, Homeland Security, and 
  Investigations.................................................     1
The Honorable Sheila Jackson Lee, a Representative in Congress 
  from the State of Texas, and Ranking Member, Subcommittee on 
  Crime, Terrorism, Homeland Security, and Investigations........     3
The Honorable Bob Goodlatte, a Representative in Congress from 
  the State of Virginia, and Chairman, Committee on the Judiciary     4
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Ranking Member, Committee on 
  the Judiciary..................................................     6

                               WITNESSES

Kenneth A. Blanco, Deputy Assistant Attorney General, Criminal 
  Division, United States Department of Justice
  Oral Testimony.................................................     8
  Prepared Statement.............................................    11
Keith A. Henderson, Prosecuting Attorney, Floyd County, IN
  Oral Testimony.................................................    20
  Prepared Statement.............................................    22
Darpana M. Sheth, Attorney, Institute for Justice
  Oral Testimony.................................................    29
  Prepared Statement.............................................    31
David B. Smith, Attorney, Smith & Zimmerman, PLLC
  Oral Testimony.................................................    55
  Prepared Statement.............................................    57

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Material submitted by the Honorable Sheila Jackson Lee, a 
  Representative in Congress from the State of Texas, and Ranking 
  Member, Subcommittee on Crime, Terrorism, Homeland Security, 
  and Investigations.............................................    83

                                APPENDIX
               Material Submitted for the Hearing Record

Letter from Steve Pearce, Member of Congress.....................   102
Message from Sheriff Scott M. London, Eddy County Sheriff's 
  Office, Carlsbad, New Mexico...................................   103

 
                       FEDERAL ASSET FORFEITURE: 
                            USES AND REFORMS

                              ----------                              


                      WEDNESDAY, FEBRUARY 11, 2015

                        House of Representatives

                   Subcommittee on Crime, Terrorism, 
                 Homeland Security, and Investigations

                       Committee on the Judiciary

                            Washington, DC.

    The Subcommittee met, pursuant to call, at 10:03 a.m., in 
room 2141, Rayburn House Office Building, the Honorable F. 
James Sensenbrenner (Chairman of the Subcommittee) presiding.
    Present: Representatives Sensenbrenner, Goodlatte, Chabot, 
Gohmert, Poe, Gowdy, Buck, Bishop, Conyers, Jackson Lee, Chu, 
Bass, and Richmond.
    Staff Present: (Majority) Allison Halataei, Parliamentarian 
& General Counsel; Christopher Grieco, Counsel; Alicia Church, 
Clerk; (Minority) Joe Graupensperger, Counsel; and Veronica 
Eligan, Professional Staff Member.
    Mr. Sensenbrenner. The Subcommittee will come to order. 
Without objection, the Chair will be authorized to declare 
recesses when there are votes in the House. And hearing no 
objection, so ordered.
    The Chair will yield himself some time for an opening 
statement.
    It is hard to believe this can happen in America. The 
Government is seizing billions of dollars of cash and property 
from Americans, often without charging them with a crime. With 
origins in medieval law, civil asset forfeiture is premised on 
the legal fiction that inanimate objects bear moral culpability 
when used for wrongdoing.
    The practice regained prominence as a weapon in the modern 
drug war as law enforcement sought to disrupt criminal 
organizations by seizing the cash that sustains them. The 
practice, however, has proven a far greater affront to civil 
rights than it has been as a weapon against crime.
    While forfeitures have received increased attention in 
recent months, they are still poorly understood. During her 
recent confirmation hearing, Loretta Lynch, President Obama's 
nominee to replace Eric Holder as Attorney General, testified 
that civil asset forfeiture is ``done pursuant to supervision 
by a court, it is done pursuant to a court order, and I believe 
the protections are there.''
    As a United States attorney, Lynch was known for her 
aggressive use of forfeiture provisions. She was, however, 
wrong when she testified that forfeiture is done pursuant to 
supervision by a court and wrong again when she said it was 
done pursuant to a court order. One wonders if she would still 
believe that the protections were there if she properly 
understood how they worked.
    After property is seized, its owner will usually have the 
option of challenging the seizure judicially with the Federal 
court system or administratively with the seizing agency 
itself. Seizures that are not challenged within 30 days of 
receiving notice are automatically forfeited.
    A majority of Federal civil forfeitures are never contested 
largely because of the high cost of retaining counsel, which 
often exceeds the value of the property itself. Because of the 
expense and complexity of the Federal court system and the 
short timeframe, most owners who contest forfeitures do so 
administratively. Thus, contrary to Ms. Lynch's testimony, only 
a small percentage of Federal civil forfeitures have any 
involvement or supervision by a court or a judge.
    I look forward to hearing from our witnesses today about 
whether these administrative processes provide property owners 
with sufficient protections. Better documented has been the 
Justice Department's use of adoption, which occurs when a 
Federal agency adopts a seizure from a State or local law 
enforcement and proceeds with Federal forfeiture.
    Under the Equitable Sharing Program, DOJ returns up to 80 
percent of the forfeited money to State agencies. Federal 
adoption allows police to ignore restrictions in State law by 
working with the Federal Government.
    A 2011 study found that police were, in fact, more likely 
to rely on Federal equitable sharing in States where the law 
made forfeitures more difficult or less rewarding. This 
presents a profound federalism problem and opens law 
enforcement agencies to allegations that they are policing for 
profit.
    After 5 last night, at the last minute before today's 
hearing, DOJ sent new guidance on the revised adoption 
procedures it issued last month. I look forward to learning 
more about the impact of these revised adoption guidelines.
    Just last month, we learned that the DEA, through their 
cold consent searches, may have improperly searched citizens' 
belongings at transportation hubs throughout the country. 
During these searches, DEA seized cash based mainly on the 
suspicion that a large quantity of cash was indicative of 
illegal activity.
    To make matters worse, according to the DOJ Inspector 
General, DEA did not always provide adequate information to 
those who had their cash seized. At times, people did not even 
know which agency had seized their money, making contesting the 
seizure extremely difficult.
    Our Founders understood the virtues of limited government. 
The right to own property is enshrined in the Fifth Amendment, 
which says no person shall be deprived of life, liberty, or 
property without due process of law. Current forfeiture 
provisions mock the spirit and meaning of that passage and 
create serious issues under several other constitutional 
provisions.
    It is no wonder why my former colleague, Henry Hyde, 
described civil asset forfeiture as ``an unrelenting Government 
assault on property rights, fueled by a dangerous and emotional 
vigilante mentality that sanctions shredding the U.S. 
Constitution into meaningless confetti.''
    Hyde led an effort that culminated in the passage of the 
Civil Asset Forfeiture Reform Act, known as CAFRA. It was a 
noble effort, but it plainly fell short. In advancing CAFRA, 
Hyde noted that in 1993, DOJ forfeited $556 million. Post-
CAFRA, in 2012, DOJ seized $4 billion.
    Forfeiture's only defenders seem to be its beneficiaries, 
the law enforcement agencies entitled to keep the proceeds of 
their seizures. The conflict of interest so stark that it takes 
us to another stage, and adequate forfeiture reform is overdue.
    I yield back the balance of my time and recognize the 
gentlewoman from Texas, the new Ranking Member of this 
Subcommittee, Ms. Jackson Lee.
    Ms. Jackson Lee. Thank you very much, Mr. Chairman.
    I look forward to working with you, and I commend you for 
calling the first hearing of this Subcommittee in the 114th 
Congress to focus on the important issue of asset forfeiture.
    I would also like to acknowledge my colleagues, the Ranking 
Member, Mr. Conyers, Ms. Chu, Ms. Bass, and the other Members 
of this Committee who will be working with us in this term on 
what I consider a very important Committee.
    It is especially appropriate that we start with this topic 
because today's hearing concerns foundational principles with 
respect to the relationship between government and its 
citizens. We ask government, largely through law enforcement 
agencies, to help protect us from crime, and we also expect 
that the government will respect our rights and not harm us.
    When we convict someone of a crime, often we deprive him or 
her of liberty. And for that, we put the burden on the 
government to prove guilt beyond a reasonable doubt. When the 
government seeks to use civil forfeiture laws to take someone's 
property, only needing to prove its case by preponderance of 
the evidence, the government is not putting the person in 
prison, but it may be taking someone's home or property that is 
critical to a person's survival or livelihood.
    And of course, seizing even a relatively small amount of 
money may present a hardship for those of lesser means. The 
Government's practice of asset forfeiture involves the intake 
of substantial sums of money. The forfeiture funds maintained 
by the Department of Justice and Department of Treasury 
together take in over $2 billion per year.
    The size of these amounts helps put into focus the tension 
between our property and due process rights on the one hand, 
and the Government's interests in maintaining this funding 
system on the other hand, often relying on civil forfeiture 
procedures involving the low standard of proof.
    That is why we must ensure that the Federal laws that allow 
the forfeiture of money and other assets include necessary 
protections to ensure the innocent do not suffer from wrongful 
confiscation. Unfortunately, it is increasingly apparent that 
our laws are not sufficient in this regard.
    The Chairman is right. We have looked at these issues over 
a period of time on this Committee and on our larger--on the 
full Committee. And I believe this is an important issue to 
take up at this time.
    We must guarantee that innocent owners are given a clear, 
affordable mechanism to successfully challenge unwarranted 
forfeiture, and the burden should not be on them to prove their 
innocence. Or we must end the practice of adoptive forfeitures 
that motivate some State and local law enforcement agencies to 
engage in tactics such as highway interdictions for the purpose 
of seizing assets to raise money.
    And while Federal law enforcement functions should be 
robustly funded through the normal appropriations process, we 
must eliminate any financial benefits that Federal law 
enforcement agencies may receive.
    For a moment, Mr. Chairman, if I might take note of the 
fact that we are operating under a set of laws that we have had 
since 1789 and then the revised statutes of the United States 
approved on June 22, 1874, and a body of laws called the Code 
of Laws of the United States of America. And I only say that to 
stop for a moment and to acknowledge, as the Chairman 
indicated, my presence here as a new Ranking Member and my 
commitment to working with the Chairman.
    But I must take note of the fact that over the last 2 
years, we have had a tumultuous time operating under the 
Criminal Code. We have seen families raise questions about the 
transparency of grand juries. We know that there is a need for 
prison reform.
    I want to thank the Chairman for his overcriminalization 
task force, working with Ranking Member Conyers and Chairman 
Goodlatte, and we know that there is a high rate of 
incarceration. I am hoping, as this Committee proceeds in its 
work, that we can work in a bipartisan manner to address the 
questions of mandatory minimums, prison reform, transparency in 
grand jury, and, yes, the use of lethal force.
    America is a great country, and I am proud to be an 
American. I believe its laws are important laws that exude 
liberty and justice. But I know that we on this Subcommittee, 
working with the full Committee, can find a pathway that treats 
fairly those who lift the hand of the law, who must go out 
every day to protect and serve, and those who are subjected to 
the law.
    My commitment is working with this Committee in a 
bipartisan manner to find that pathway and to give relief to 
mothers of persons such as Trayvon Martin, Eric Garner, Sean 
Bell, Tamir, and many others, who likewise are facing concerns 
that they would like to have addressed.
    With that, Mr. Chairman, I yield back my time.
    Mr. Sensenbrenner. It is now my pleasure to recognize for 
his opening statement the Chairman of the full Committee, the 
gentleman from Virginia, Mr. Goodlatte.
    Mr. Goodlatte. I thank Chairman Sensenbrenner for convening 
this hearing today on the important issue of civil asset 
forfeiture, and I, along with the gentleman from Wisconsin, the 
gentlewoman from Texas, Mrs. Jackson Lee; and the gentleman 
from Michigan, Mr. Conyers; as well as others here today, were 
all serving on this Committee the last time Congress delved 
deeply into forfeiture.
    In 2000, Congress passed CAFRA, the Civil Asset Forfeiture 
Reform Act. CAFRA came from a recognition by this Committee and 
by others that civil asset forfeiture is a useful law 
enforcement tool, but one that needs to be carefully monitored. 
That same recognition exists today, but with the understanding 
that perhaps we need to add to the protections of CAFRA.
    Recent reports by The Washington Post, the New Yorker, and 
others have shown that there are systemic problems in the 
current system of civil forfeiture. We have heard of citizens 
losing their car or home when others in their family have been 
involved in small crimes. We have heard of traffic stops that 
result in innocent people losing the cash they were carrying to 
buy a car or for their small business.
    These stories, along with the recent Department of Justice 
Inspector General report on DEA cold consent encounters, have 
also highlighted the long and complicated process that innocent 
owners must go through to get their property back. As the 
report noted, travelers may be under significant pressure to 
sign away their belongings because of the location of the cold 
consent encounters. The Inspector General also noted that many 
citizens are not even aware of which agency seized their 
property, making contesting the preceding forfeiture action 
extremely difficult.
    I understand two of the witnesses today have represented 
these innocent owners and are familiar with the procedural 
morass of the current system. I look forward to hearing from 
them about how we can change the process to make sure that 
fewer innocent people are caught in the web of civil forfeiture 
while making it easier for those who are to be made whole.
    I also look forward to hearing from law enforcement. As I 
said at the beginning, I believe that civil forfeiture, when 
used appropriately, is a useful law enforcement tool that helps 
to eliminate the profits from criminal enterprises. Like any 
law enforcement tool, if used improperly or without significant 
safeguards, it has the possibility of infringing on the rights 
of citizens.
    The Justice Department, as the largest law enforcement 
agency in the country, has a vital role to play in this. We 
have heard a number of problems stemming from Federal adoptions 
of State seizures. I look forward to hearing from the 
department about how the recently announced changes to the 
department's adoption policy will impact the department's law 
enforcement responsibilities and how the new policy will impact 
law enforcement.
    I also understand there are significant exceptions to the 
so-called ban on Federal adoptions and look forward to hearing 
why those exceptions are in place and how wide the exceptions 
really are and whether or not they are an effective reform.
    I am also eager to hear from our local law enforcement 
officials. As the front line of all efforts to fight crime, it 
is imperative that we make sure that they have the tools they 
need to confront the criminal elements within their 
jurisdiction.
    While there have been changes since the passage of CAFRA 
and many more States now have their own forfeiture laws, the 
resources of our State and local law enforcement to prosecute 
forfeiture actions has not increased. I look forward to hearing 
from Mr. Henderson, a local prosecutor, about the resources at 
his disposal, how important Federal forfeiture is to policing 
and law enforcement in his county, and most importantly, how 
the recently announced DOJ policy will impact his ability to do 
his job.
    I am thankful that we have this opportunity to learn more 
about current civil forfeiture. I am eager to hear about ways 
we can strengthen the procedures and policies to make sure that 
this law enforcement tool can be used without infringing on the 
rights of ordinary Americans.
    I yield back. Thank you, Mr. Chairman.
    Mr. Sensenbrenner. The Chair now recognizes the Ranking 
Member of the Committee, the gentleman from Michigan, Mr. 
Conyers.
    Mr. Conyers. Thank you, Chairman Goodlatte.
    I, first of all, welcome all the witnesses, especially the 
witness from the Institute for Justice and our own witness, 
David Smith from Smith & Zimmerman.
    Members of the Committee and Chairman Sensenbrenner, it has 
become increasingly apparent that the procedures in Federal law 
governing civil asset forfeiture are inadequate from the 
perspective of fundamental fairness. And that is the theme I am 
getting from much of the opening statements.
    The unfairness of these laws and related procedures have 
recently been highlighted by revelations about abuses involving 
adoptive seizures. The practice of adoptive forfeiture allows 
the Federal Government to share the proceeds of the seizures 
with State and local law enforcement agencies and has motivated 
some of these agencies to engage in policing for profit.
    The series of articles in the Washington Post last year, 
entitled ``Stop and Seize,'' detailed how equitable sharing 
motivated some State and local police to engage in abusive and 
coercive traffic stops in order to find pretense to seize 
assets from motorists. I have been hearing about that for a 
long time before I even came to the Congress.
    I commend the Attorney General Eric Holder, who apparently 
conservatives want to keep in that spot for as long as they 
can, for engaging in a review of Federal forfeiture policy. And 
specifically, last month, he was announcing significant changes 
to the Justice Department's procedures governing adoptive 
seizures.
    The changes purport to cease this practice except when 
necessary to protect public safety. But I remain concerned that 
the new policy includes other exceptions, which would allow 
adoptive seizures to continue to a significant degree.
    Yesterday, the Justice Department announces clarifications 
to its policy, and I hope the department's witness will provide 
us as much information about that today as he can. And I hope 
that other witnesses will offer comments on this policy as 
well.
    We must address the fundamental flaws in Federal forfeiture 
law. The problem is much broader, and I think Ranking Member 
Jackson Lee of Texas made some comment in this direction. We 
must address the Federal fundamental flaws in forfeiture law. 
The problem is much broader in scope than the issue of adoptive 
seizures.
    The vast majority of forfeitures processed under the 
Federal law are the result of seizures by Federal law 
enforcement, and we must do more than adjust policies. We must 
change Federal law so that the burden is on the Government to 
prove that a property owner is not innocent, to raise the 
burden of proof on the Government when bringing a case, to send 
the proceeds of forfeitures to the general treasury fund, and 
to codify the elimination of equitable sharing.
    And finally, asset forfeiture reform has long been a 
bipartisan issue, raising serious concerns about fairness and 
due process on both sides of the aisle. We last enacted reform 
to the law in 2000 under the Civil Asset Forfeiture Reform Act, 
which I coauthored with its primary sponsor, the late Henry 
Hyde. And so, we have learned a lot since the passage of that 
law, and that is why I am working with the Chairman of this 
Subcommittee and its Ranking Member to develop legislation 
addressing these issues.
    I thank the Chair, and I return the balance of my time.
    Mr. Sensenbrenner. Before introducing the witnesses, let me 
yield to the gentleman from Virginia, Mr. Goodlatte, for an 
introduction.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    Actually, two brief personal points of privilege. One, I 
would like to note that this is the first hearing in which the 
brand-new portrait of the former Chairman of the Committee and 
current Ranking Member is hanging in the hearing room, and I 
want to again commend the gentleman from Michigan for such a 
wonderful portrait that we are proud to hang in the Committee. 
[Applause.]
    Mr. Sensenbrenner. He looks over us in many ways. 
[Laughter.]
    Mr. Goodlatte. Secondly, I would like to take note that in 
the audience today is a prosecutor who is here for a meeting of 
prosecutors from around the country. Many of them are in town, 
but I am privileged to have one who is the commonwealth 
attorney for the City of Lynchburg, Virginia, Mike Doucette. 
Welcome, we are glad to have you with us here today as well.
    Thank you, Mr. Chairman.
    Mr. Sensenbrenner. Thank you.
    Without objection, other Members' opening statements will 
be made a part of the record.
    Today's witnesses are, first, Mr. Kenneth Blanco. Mr. 
Blanco was appointed to the position of Deputy Assistant 
Attorney General of the U.S. Department of Justice in April of 
2008. His supervisory responsibilities include the Asset 
Forfeiture and Money Laundering Section, Child Exploitation 
Section, Narcotic and Dangerous Drug Section, and matters 
relating to Colombia and Mexico.
    Previously, Mr. Blanco served in various sections of the 
Miami-Dade County State Attorney's Office, including the 
Organized Crime Section, Public Corruption Section, and the 
Major Narcotics Section. He also served in the U.S. Attorney's 
Office for the Southern District of Florida as an assistant 
United States attorney, and served in numerous leadership 
positions.
    He was also detailed to Washington, D.C., to serve as 
general counsel to the 1994 United States Attorney's Office in 
the Executive Office of United States Attorneys. He also served 
as the Chief of the Narcotic and Dangerous Drug Section at DOJ 
prior to his current position. He earned his law degree from 
Georgetown Law Center.
    Mr. Keith Henderson is the prosecuting attorney for Floyd 
County, Indiana. Prior to his four terms as Floyd County 
prosecutor, he was a Crawford County prosecutor and a former 
Indiana State trooper. He previously practiced private law and 
consulting.
    He is a board member of the Indiana Prosecuting Attorneys 
Council and current Chairman of its Ethics Committee. He 
represents Indiana prosecutors on the National District 
Attorneys Board and has served on its Executive Committee since 
2007, which means he is currently serving in his ninth year.
    Mr. Henderson earned his undergraduate degree at Valparaiso 
University and his juris doctor at Brandeis School of Law.
    Third is Darpana Sheth. She is an attorney with the 
Institute for Justice. Her responsibilities include litigating 
property rights cases, as well as economic liberty cases. Prior 
to her role at the Institute for Justice, Ms. Sheth served as 
assistant attorney general for the State of New York. She 
previously practiced law as a litigation associate at the New 
York City law firm of Chadbourne & Parke, LLP.
    She also served as a law clerk to the Honorable Jerome A. 
Holmes of the U.S. Court of Appeals for the 10th Circuit. She 
received her undergraduate degree from the University of 
Pennsylvania and her law degree from Georgetown University Law 
Center.
    Mr. David Smith is in private practice at the law firm of 
Smith & Zimmerman, PLCC. His areas of practice include civil 
and criminal forfeiture, white-collar defense, restitution, and 
fines and criminal appeals.
    Prior to private practice, he was a prosecutor in the 
Criminal Division of the United States Department of Justice 
and at the U.S. attorney's office in Alexandria, Virginia. 
While at DOJ, Mr. Smith served in the Appellate and Narcotic 
Sections of the Criminal Division and as first deputy chief of 
the Asset Forfeiture Office.
    He earned his undergraduate degree from the University of 
Pennsylvania, was a graduate student at Pembroke College, and 
earned his law degree from Yale Law School.
    Without objection, each of the witnesses' statements will 
be entered into the record in its entirety.
    I ask that each witness summarize his or her testimony in 5 
minutes or less. You all know what the red, yellow, and green 
lights mean.
    And Mr. Blanco, you are first.

   TESTIMONY OF KENNETH A. BLANCO, DEPUTY ASSISTANT ATTORNEY 
GENERAL, CRIMINAL DIVISION, UNITED STATES DEPARTMENT OF JUSTICE

    Mr. Blanco. Thank you, Chairman Goodlatte, Ranking Member 
Conyers, Chairman Sensenbrenner, and Ranking Member Jackson 
Lee, and other Committee Members.
    I appreciate the opportunity to talk to you today about 
asset forfeiture and to discuss some recent misconceptions 
about our law enforcement efforts in this area.
    As you know, asset forfeiture is designed to remove 
criminally tainted assets from circulation, thereby depriving 
criminals of the proceeds of crimes and the tools they have 
used to commit those crimes. By taking criminally tainted 
assets out of circulation and off the streets, we intend to 
break the financial backbone of organized criminal syndicates, 
terrorists, fraudsters, drug cartels, and use these assets to 
compensate victims and deter crime.
    Over the past 15 years, the department has returned 
billions of dollars to victims as a result of forfeiture. 
Nearly half of that was recovered through civil forfeiture. The 
department is proud of its Asset Forfeiture Program.
    However, we are keenly aware of certain concerns raised 
about certain seizures and forfeiture practices. The department 
takes seriously allegations of abuse of the forfeiture program, 
and we are constantly looking forward of ways to improve it.
    Over the past year, the department has been conducting an 
internal review of the Asset Forfeiture Program and the first 
results, the strict limitations on adoptions, were announced 
last month. This means that while State law enforcement 
agencies may undertake asset forfeiture under State law, the 
department will not adopt State seizures to be forfeited under 
Federal law unless certain public safety exceptions exist. The 
review that led to this change in our practice is continuing.
    Now I would like to address some of the most widespread 
misconceptions about civil forfeiture. We are acutely sensitive 
to the misconception and criticism that owners of seized 
property are presumed guilty and, thus, have the burden of 
proving their innocence to regain their property. This is not 
correct. In civil forfeiture, the burden is always on the 
Government. In order to seize an asset, the Government must 
show probable cause, linking that asset or that property to a 
crime.
    Then if the seizure is contested, the Government has the 
burden of proving by a preponderance of the evidence the nexus 
of that property in question to a crime before the Government 
can forfeit that property. If the Government fails to meet this 
burden of linking the property to a crime, the Government loses 
its case.
    In other words, the property's connection to a crime must 
be proven by the Government, not disproven by the owner. Only 
after the Government meets its burden of proving that the 
property is criminally tainted--that is, it represents the 
proceeds of a crime or has facilitated a crime--does the 
Government get the forfeited property. After the Government has 
met its burden and the property is adjudicated or determined to 
be forfeited, the law provides the property owner the 
opportunity to assert an innocent owner claim.
    Critics also claim that civil forfeiture enables the 
Government to take possession of a person's property without 
charging or convicting that person of a crime. The criticism is 
that we can seize and forfeit property in the complete absence 
of a crime. This is not the case. The property seized, the 
Government must have probable cause to believe that it is 
connected to criminal misconduct.
    To forfeit property in a civil proceeding, the Government 
has to prove by a preponderance of the evidence that that 
property was tied to a crime. The Government must always 
demonstrate a nexus to a crime.
    Now in many cases, the assets may be separated by design 
from their true owner and criminal. The tainted property may be 
in the possession of a third party other than the person who 
committed the crime.
    Criminals may be located outside the United States and 
outside the reach of our jurisdiction. The defendant or 
criminal may also be deceased. In these cases, civil forfeiture 
is the only means by which the Government can take these 
criminally tainted assets out of circulation and repay the 
victims.
    Finally, it is important to note that asset forfeiture 
enables the Government to assist and compensate victims of 
crime. In fact, asset forfeiture laws, including civil asset 
forfeiture laws, are the most effective tool in recovering the 
proceeds and property of crime for victims. Since 2000, the 
department has returned over $4 billion in assets to victims of 
crime through asset forfeiture, $1.87 billion of which was 
recovered through civil forfeiture and returned to victims.
    Thank you.
    [The prepared statement of Mr. Blanco follows:]
    
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                               __________
    Mr. Sensenbrenner. Thank you very much, Mr. Blanco.
    Mr. Henderson?

               TESTIMONY OF KEITH A. HENDERSON, 
             PROSECUTING ATTORNEY, FLOYD COUNTY, IN

    Mr. Henderson. Chairman Sensenbrenner, Chairman Goodlatte, 
Ranking Member Jackson Lee, and Ranking Member Conyers, Members 
of the Subcommittee, my name is Keith Henderson. I am the 
prosecuting attorney in Floyd County, Indiana, part of the 
Louisville, Kentucky, metro area.
    I am also here today as a member of the Executive Committee 
for the National District Attorneys Association, NDAA, the 
largest and oldest organization representing prosecutors from 
across the country.
    Civil asset forfeiture laws have changed substantially over 
the years, beginning with the Federal forfeiture program and 
now including forfeiture laws in most States. On Friday, 
January 16th, Attorney General Eric Holder announced changes to 
these civil forfeiture policies under the DOJ that would 
eliminate the ability of State and local law enforcement to 
seize assets and turn them over to Federal authorities for 
forfeiture.
    NDAA as well as law enforcement have expressed concern that 
these policies have not adequately been studied as far as the 
impact on and the direction on State and local governments and 
that a key constituency has been left out of that process. 
Attorney General Holder indicated that State adoptions would be 
prohibited, and I quote, ``except for property that directly 
relates to public safety concerns, including firearms, 
ammunition, explosives, and properties associated with child 
pornography.''
    While we applaud the continued inclusion of these types of 
property, we remain concerned that the decision is yet another 
step in the continued erosion of drug enforcement by the 
Federal Government.
    Asset forfeiture is a tool. It is a tool used by law 
enforcement to go after the pocketbooks of drug dealers. If we 
take away the disincentive for these criminals to profit from 
their crimes, we could jeopardize the safety of our communities 
and drug enforcement.
    Additionally, there is less of an incentive now for locals 
to partner with Federal officials. Agencies such as the FBI and 
DEA need participation from local law enforcement, as these 
Federal agencies rely heavily on local intelligence being 
gathered to aid in the broader investigations. Local police 
must now question the financial feasibility of embedding 
officers with Federal law enforcement with these changes.
    As part of the recent decision, drug forfeitures would be 
severely limited, and adoptions would only be granted through 
very narrow exceptions. For example, under the new policy, DOJ 
will take an adoption if a firearm is involved but might not 
otherwise. This approach seems shortsighted, as very few cases 
involve just firearms.
    The bottom line is this. Drug dealing remains a major crux 
of crime in this country. It is the root cause of many other 
crimes of violence. From murder to property crime to the 
endpoint of the increasing number of drug-ingested deaths, the 
human destruction attributable to drug dealing remains high.
    Criticisms of the program have been offered with stories of 
individuals having assets seized and never returned, regardless 
of the outcome of any criminal charges. Let me be clear. Our 
members strongly support due process under the law and fully 
denounce any seizure of property and other assets of falsely 
accused individuals.
    Several potential reforms could be examined in conjunction 
with a comprehensive study. We do not condone unfair and 
abusive practices, but we must have factual documentation of 
these abuses in order to properly understand what types of 
reform could make the current system more effective.
    Recently, four national law enforcement organizations--the 
Major Cities Chiefs, the Major County Sheriffs, the 
International Association of Chiefs of Police, and the National 
Sheriffs--all signed a letter to the Attorney General regarding 
the Asset Forfeiture Program and included some major policy 
proposals for reforms. We stand with law enforcement in calling 
for these reforms to be reviewed as potential paths forward on 
the Asset Forfeiture Program.
    Finally, NDAA believes that law enforcement and prosecutors 
should always avoid pursuing forfeiture actions when the 
primary purpose is to obtain assets rather than pursue a 
criminal prosecution. We remain hopeful that the Administration 
and DOJ will improve its communication with organizations that 
I have outlined and with NDAA as a means to develop sound, 
practical, and effective policy.
    We stand ready to engage with the department on this issue 
and many others.
    Thank you.
    [The prepared statement of Mr. Henderson follows:]
    
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    Mr. Sensenbrenner. Ms. Sheth?

           TESTIMONY OF DARPANA M. SHETH, ATTORNEY, 
                     INSTITUTE FOR JUSTICE

    Ms. Sheth. Good morning, Mr. Chairman Sensenbrenner, Mr. 
Chairman Goodlatte, Ranking Member Jackson Lee, and Ranking 
Member Conyers, and Members of the Committee.
    Thank you for inviting me to testify about the urgent need 
to reform our Federal forfeiture laws. There is an emerging 
consensus across the political spectrum that the time for 
reform is now. Even the Justice Department and the State and 
local law enforcement have conceded the need for reform.
    In light of this overwhelming consensus, I will focus my 
remarks on two key aspects that Congress must address. First, 
the self-financing of law enforcement agencies, which 
inherently distorts law enforcement priorities. And second, the 
inadequate procedural protections afforded to property owners.
    Current Federal law incentivizes forfeiture by allowing law 
enforcement agencies to keep 100 percent of the proceeds. At a 
time when government at all levels face serious budget 
shortfalls, it is no surprise that forfeiture has become ever 
more attractive. But directing forfeiture proceeds back to the 
very agencies responsible for the forfeiture is antithetical to 
our American constitutional system in three ways.
    First, the self-funding of executive branch agencies 
violates the separation of powers. The Constitution gives 
Congress, the most representative branch of Government, the 
power over the purse. And it is past time for Congress to 
reclaim this power as an important check on the executive 
branch.
    Second, it violates principles of federalism. Under the 
Equitable Sharing Program, State and local law enforcement can 
seize property for a Federal forfeiture action and then share 
in the proceeds. As Mr. Henderson even acknowledges in his 
written statement, this generous bounty encourages State and 
local law enforcement to evade their own stricter State laws in 
favor of more lax Federal rules.
    The DOJ's new policy does not cure this problem, as it 
leaves almost three-quarters of all equitable sharing cases 
untouched.
    Third, giving law enforcement a direct financial incentive 
in the seizure of property violates a central command of due 
process. The administration of justice must be impartial. The 
lack of impartiality is best seen in a single statistic. In the 
last 6 years, almost two-thirds of all Federal forfeitures were 
administrative with the process conducted by the seizing agency 
itself, without any judicial involvement.
    But even when the judicial branch is involved in civil 
forfeitures, there are inadequate safeguards to protect 
property owners. My written testimony details these gaps, 
including the lack of counsel, the low burden of proof on the 
Government, and the absence of a prompt opportunity to contest 
the seizure of cash.
    But I want to highlight a key deficiency. Contrary to Mr. 
Blanco's testimony, the process does, in fact, turn the 
presumption of innocence on its head. In administrative 
proceedings, the forfeiture is presumed valid, and the property 
owner must make the case for its return.
    In civil forfeiture proceedings, it is true that the 
Government must prove the property is connected to a crime. But 
under the innocent owner provision, the burden then shifts to 
the property owners to affirmatively prove they did not know of 
the illegal activity. Consequently, in civil forfeiture, while 
the property might be presumed guilty, property owners very 
much are.
    The absence of adequate process, married to the perverse 
financial incentive, has led to widespread abuse, with a 
disproportionate impact on minorities. If only civil forfeiture 
were limited to the unusual situations like criminals overseas 
or criminals who are deceased, as highlighted by Mr. Blanco or 
in his written statement, like Michael Vick's pit bulls or rare 
dinosaur eggs, we could all pack up and go home. But civil 
forfeiture has treated countless of ordinary Americans worse 
than criminals.
    Since 9/11, civil forfeiture has resulted in more than 
61,000 cash seizures totaling $2.5 billion through highway 
interdictions, all without any search warrants or indictments. 
And there are many like my client Russ Caswell, who stood to 
lose his family-run motel to civil forfeiture, even though he 
did nothing wrong.
    While convicted criminals should not benefit from their 
ill-gotten gains, no one in America should lose their property 
without being convicted of a crime. This is not about bad 
apples in law enforcement. This is fundamentally about bad 
incentives, flawed incentives.
    The solution is not to better police the police. The 
solution is to end policies that distort their incentives. This 
financial incentive and the lack of process undermine our 
public trust in law enforcement and the belief that is so vital 
to our republic that we are a nation ruled by laws and not by 
men.
    Thank you for your time and attention.
    [The prepared statement of Ms. Sheth follows:]
    
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                               __________
    Mr. Sensenbrenner. Thank you very much.
    Mr. Smith?

            TESTIMONY OF DAVID B. SMITH, ATTORNEY, 
                    SMITH & ZIMMERMAN, PLLC

    Mr. Smith. Thank you, Mr. Chairman.
    I only have 5 minutes, and I have been asked to focus my 
remarks on administrative forfeitures, an area that most people 
don't know that much about. And we have heard a little bit 
about it this morning, but I am hoping that the Subcommittee 
will focus some of the reforms on the much-neglected 
administrative process.
    As my colleague Ms. Sheth just mentioned, the vast majority 
of civil forfeiture cases begin and end as administrative 
forfeitures. So a judge never sees those cases.
    I explain in my written statement how Congress vastly 
expanded the scope of administrative forfeitures in two pieces 
of legislation way back in 1984 and 1990. Before 1984, only 
property valued at less than $10,000 was subject to 
administrative forfeiture. The two amendments in 1984 and 1990 
made almost all property subject to administrative forfeiture.
    The main exceptions to that are real estate and property 
valued at over $500,000. And incidentally, currency, which is 
frequently seized, there is no--there is no limit on the amount 
of currency that can be administratively forfeited.
    So considering that I think Ms. Sheth said 67 percent of 
all forfeiture cases are administrative, it deserves a lot more 
attention than it has gotten. And it is largely an invisible 
process, so invisible, indeed, that neither the press nor the 
Justice Department has really focused on what is wrong with it 
because it is very hard--as some Members of this Committee have 
found out, it is very hard to actually find out the facts about 
administrative forfeiture.
    Gathering, I know letters--there have been Washington Post 
stories about letters that Mr. Sensenbrenner has submitted to 
the DEA and other branches of the Government asking for some 
statistics, and they still haven't been answered, months later. 
And that gives you an idea of how difficult it is for anyone to 
find out what is really going on.
    But I know what is going on because I deal with these cases 
constantly, and believe me, it is not a pretty picture. 
Contrary to Mr. Blanco's written statement, administrative 
forfeitures are not surrounded by all sorts of procedural 
protections designed to protect a property owner. He doesn't 
mention what those protections are, and I am not aware of them. 
And I think I would be if they were there.
    He mentions the fact that there is a probable cause 
requirement that is a legal requirement for any forfeiture, and 
it is also a constitutional requirement in the Fourth 
Amendment. But who actually is enforcing that probable cause 
requirement? That is the real issue.
    In an administrative forfeiture, essentially no one is 
enforcing it. There is no judge involved. There is no 
prosecutor involved. The only people who are involved are law 
enforcement agency employees, both on the State and local level 
and that is in adoptive cases, and on the Federal level, the 
Federal seizing agencies are involved in they are supposed to 
assess whether there is probable cause for the forfeiture.
    Unfortunately, I find that in case after case, they fail to 
do so, and it is a systematic failure. It is not just a few bad 
apples, which is the typical explanation you will get from the 
Justice Department or the law enforcement community. It is not 
just a few bad apples. It is a systematic failure to enforce 
this probable cause requirement.
    I want to be discriminating. These seizing agencies are 
vastly different from each other. I find that the DEA and 
Customs and Border Patrol are probably the worst in terms of 
doing their job here. The FBI is one of the best. So I don't 
want to lump everybody in the same boat.
    But you know, DEA and Custom and Border Patrol do an 
enormous percentage of the forfeitures in this country, the 
administrative forfeitures as well. And there is a culture in 
the general counsel's offices of those agencies, which I am 
familiar with, and it is a very bad culture for individual 
property rights.
    The attorneys in these counsel's offices are underworked, 
overpaid, and not committed to enforcing constitutional rights. 
What they are committed to is doing as many administrative 
forfeitures as quickly as possible and thereby eliminating 
those cases from what goes into court.
    And it is a very bad culture, and it is illustrated by all 
sorts of--you don't have to take my word for it. You just have 
to look at some of the cases that have been litigated. I see I 
am over my time already.
    But it is all in there, and I would be happy to answer 
questions about this. I suggested a number of reforms, the 
detailed reforms of the administrative process, and I have also 
submitted an unrelated----
    Mr. Sensenbrenner. The gentleman's time has expired by a 
minute and a half.
    Mr. Smith. Thank you. I apologize.
    [The prepared statement of Mr. Smith follows:]
    
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                               __________
    Mr. Sensenbrenner. We will now to go questions under the 5-
minute rule. The Chair yields himself 5 minutes.
    Mr. Henderson, in your submitted testimony, you wrote, 
``Law enforcement and prosecutors should avoid pursuing 
forfeitures actions when the primary purpose is to obtain 
assets rather than pursue a prosecutable case.'' Now there is a 
lot of evidence to the contrary, and let me just mention three 
of them.
    In Volusia County, Florida, the sheriff's department set up 
a forfeiture trap to stop motorists traveling Interstate 95 and 
seized over $5,000 a day from motorists over a 3-year period, 
over $8 million total. In three-quarters of the seizures, no 
criminal charges were filed.
    In Shelby County, Texas, court records from 2006 to 2008 
showed nearly 200 cases in which Tenaha police seized cash and 
property from motorists. Again, 75 percent of the time, no 
charges were filed.
    A local Nashville TV station found that by about a 3-to-1 
ratio, the police were pulling over suspected drug couriers as 
they were leaving Nashville rather than when they were entering 
the city. This suggests that there is more interest in seizing 
cash than keeping drugs off the street.
    Now, if the goal is to pursue prosecutable cases, why isn't 
criminal forfeiture sufficient? Mr. Henderson?
    Mr. Henderson. Yes, the cases you have cited, again going 
back to NDAA, the policy of the national prosecutors, State and 
local prosecutors, as well as my home State of Indiana, there 
is a difference between chasing the money and chasing the 
criminals. But the priorities in those particular cases--and I 
don't want to speak specifically about the facts because I am 
not that familiar with them. But in those cases where the 
primary purpose is to chase the money, that would not be 
supported by prosecutors.
    I think the priorities in those particular examples have 
been turned upside down. I think that that is why we need an 
open discussion on reform.
    But I don't want to confuse that with, Chairman, with the 
idea that people who deal in illicit drugs should be allowed to 
profit from it as well because it is a tool that can be used to 
discourage those that deal drugs for profit.
    And if I could finally say is that drugs would not be 
dealt, but for profit. That is why they are on the street from 
the top all the way down.
    Mr. Sensenbrenner. Okay.
    Mr. Henderson. And that is how they end up in those hands.
    Mr. Sensenbrenner. Well, you also testified, ``Local 
prosecutors have no choice but to access assets forfeited under 
Federal law'' to get around what you see is an unwise State 
limitations on forfeiture. Now I guess there are two ways for 
us to go about reform, and I am not advocating either one of 
them at this time.
    You know, one is to simply repeal the possibility of 
adoption as a way of getting around State law and send you back 
to Indianapolis to try to get the State law changed, and other 
prosecutors have their own State capitals. The other thing is 
to completely repeal civil asset forfeiture and require it to 
be criminal asset forfeiture, which means that you have got to 
indict somebody or file a charge.
    Can you tell me how you would reform this so as to avoid 
either of those possibilities being discussed around here?
    Mr. Henderson. I believe that there are some States that 
have gotten it right, and I believe there is judicial review. 
You know, I am always concerned when the review is only 
administrative. I think judicial review would go a long way 
toward due process.
    I believe some States----
    Mr. Sensenbrenner. Would you advocate mandatory judicial 
review, meaning that the property is seized, and it 
automatically goes to court rather than any type of 
administrative review when somebody's property is seized and 
they don't know what agency seized them, and there is only 30 
days for them to contest it?
    Mr. Henderson. I would be much more comfortable with a 
judge making the decision under whatever law is applicable in 
that State or in the case of Federal law versus an 
administrative. However, I am certain there are logistic issues 
when it comes to the Federal----
    Mr. Sensenbrenner. Of course, there are. Because it is so 
simple do it and keep the money and let the time limit expire.
    The gentlewoman from Texas, Ms. Jackson Lee.
    Ms. Jackson Lee. Mr. Chairman, thank you very much.
    Let me as well express my appreciation to the witnesses 
today.
    Mr. Chairman, I would like to ask unanimous consent to 
submit into the record a letter from the ACLU, dated February 
11, 2015, regarding the endorsement of the Fifth Amendment 
Integrity Restoration Act.
    Mr. Sensenbrenner. Without objection.
    [The information referred to follows:]
    
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                               __________
    Ms. Jackson Lee. If I might, and to the witnesses, our time 
is short. Questions may be long. If you can be pithy in your 
answers, I would appreciate it.
    The new policy announced by the Attorney General in January 
purports to end the Federal adoption of State seizures except 
in limited circumstances. This practice involves Federal law 
enforcement sharing up to 80 percent of the proceeds of these 
seizures for State and local law enforcement agencies, which 
has raised concerns that these agencies are motivated to engage 
in seizures for profit.
    Mr. Blanco, if you will, the new policy, under this policy, 
adoptive seizures and equitable sharing may take place if a 
State or local law enforcement agent seizes assets while 
participating in joint operations with Federal agencies. But 
doesn't this exemption still allow a huge volume of adoptive 
seizures to continue if the Federal agents are added to task 
forces only to serve in minor roles to call them ``joint 
operations.''
    And I am just going to give you a subset. And then under 
this new policy, adoptive seizures may take place if the 
seizures take place pursuant to warrants issued by Federal 
courts. Doesn't this allow States with Federal agents to 
subvert the new policy by simply having more seizures done 
through the Federal warrants?
    You can just be brief in your answer.
    Mr. Blanco. Thank you, Congresswoman, for the opportunity 
to answer that question and to address that issue head on.
    As the Congresswoman has so aptly pointed out, the new 
adoption policy issued by the Federal Government really takes 
out all of those adoptions that I think the Congresswoman had 
talked about. What the Congresswoman is talking about now are 
what was never adoptions.
    When Federal agencies do joint investigations or are on 
task forces with State and locals, which is critical to law 
enforcement, those are not adoptive cases. Those are cases that 
are done under the supervision and under the authority of 
Federal Government, and our Federal policies and guidelines 
apply. So those are not adoptions in those instances.
    And let me go further by saying that with respect to the 
seizure of those assets, when you talk about equitable sharing 
at the end of the day, two very different things. One is the 
forfeiture of the property, which we must go through the 
procedures in order to forfeit it. Once that property is 
forfeited, then there is a potential that that law enforcement 
agency may get some money back or some asset back.
    There is no guarantee that they will. And in fact, many 
instances these task forces operate, for example, with the 
fraud task forces or task forces having to do with anything 
other than narcotics, they get no money back.
    Ms. Jackson Lee. Let me just leave on the table, if I 
might, the underlying point of the question was couldn't there 
be sidestepping of these orders? I am not going to pursue it 
with you. I am going to leave it on the table, if you will, 
sidestepping by dragging in, if you will, of Federal officers?
    And so, we have a lot to consider. Let me move on to Mr. 
Henderson. But I thank you for hitting the question straight 
on.
    Mr. Henderson, first of all, we count on prosecutors in 
local jurisdictions to be the people's lawyer. We understand 
the responsibilities, and as I indicated in my opening remarks, 
there are a number of issues that I hope the prosecutors will 
join us on in trying to explore.
    In this instance, might I say why should we allow State and 
local law enforcement agencies to ignore the asset forfeiture 
laws of their own States, which may be more restrictive than 
Federal law, and pursue seizures by in essence dragging in or 
bringing in Federal agencies in order to receive the proceeds? 
Let me have a subset to that.
    The Washington Post, in recent articles about adoptive 
forfeitures and highway interdictions by State and local 
police, the Post examined 400 cases in which people challenged 
seizures and received some money back. And the majority were 
Black, Hispanic, or another minority.
    Of course, this raised the serious issue of racial 
profiling and concerns that minorities are being 
disproportionately targeted. Would you comment on that, those 
two questions, please?
    Mr. Henderson. Yes, Congresswoman. Every State is 
different, and certainly in a State like Indiana, there would 
be very few, if any, seizures under the old law. And it is part 
of the Indiana constitution, and so as it stands, none of those 
monies would be returned into the general fund, nor would those 
funds be returned to law enforcement. It would go into a some 
sort of guaranteed fund for school----
    Ms. Jackson Lee. But if your law were more restrictive, 
would you want to be under that law just for the rights of the 
citizens involved? If--apparently, your State law is not, but 
if it was?
    Mr. Henderson. Well, I believe there would be no incentive 
at that point to spend the resources to pursue these, 
especially these larger adoption cases. And if I may just give 
one brief example?
    Ms. Jackson Lee. And what about the racial profiling?
    Mr. Henderson. Well, clearly, a separate issue. But there 
is no room for racial profiling anywhere in this country, nor 
should it be occurring. And that is with proper supervision and 
proper training.
    And to the extent that that is happening, that should be 
dealt with at that local jurisdiction or with that particular 
State agency. Our laws are such in this country and in all 
States that that would be strictly forbidden. So, again, that 
would be a particular department issue.
    Mr. Sensenbrenner. The time of the gentlewoman has expired.
    Ms. Jackson Lee. I thank you.
    Mr. Sensenbrenner. The gentleman from Virginia, Chairman 
Goodlatte.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    Mr. Blanco, one of the key points from the Inspector 
General's report on cold consent searches is that the general 
public doesn't know their rights when confronted in seizure 
situations and often turns over money because they are 
pressured or believe they have to do so. And they are, as I 
noted in my opening statement, in an uncomfortable situation.
    What can the Justice Department do to fix this?
    Mr. Blanco. Thank you, Chairman, for that question.
    I am not familiar with the OIG's report. I am not familiar 
with that instance, but I can tell you what the Federal 
Government can do in order to----
    Mr. Goodlatte. Let me back up. You are not familiar with 
the Inspector General's report on----
    Mr. Blanco. I have not read that report, no.
    Mr. Goodlatte. Well, don't you think it would have been a 
good idea to read that before you came here today?
    Mr. Blanco. I am happy to read it, Mr. Chairperson.
    Mr. Goodlatte. Please do.
    Mr. Blanco. But I can tell you two things. One is the 
Federal Government can definitely get involved by training 
individuals, by training officers, and by supervision. By 
providing in place, or putting in place, guidelines for them in 
how they approach individuals and how they do their job, which 
we do on a regular basis.
    I think there is also a way to make sure that the public 
knows what their rights are, and I think the Federal Government 
can do those things in lockstep, as well as training its law 
enforcement officers.
    Mr. Goodlatte. What about not adopting cases in which 
certain Federal guidelines have not been followed?
    Mr. Blanco. Well, I think, Chairman, that at this point, if 
you take a look at the adoptions which has been much of the 
criticism that has come out, at least our first step in 
reviewing our process. And as you know, we are taking a very 
extensive top-to-bottom review of the process.
    Federal adoptions of State cases have been eliminated, 
Chairperson. What you have right now are for specific 
exceptions, and those are public safety exceptions. So that is 
not even on the table.
    Mr. Goodlatte. Let me stop you, because I have limited 
time, and go to Ms. Sheth. In his written testimony, Mr. Blanco 
quotes Justice Kennedy and states, ``No interest of any owner 
is forfeited if he can show he did not know of or consent to 
the crime.'' How realistic of a statement is that in practice?
    Ms. Sheth. Practically speaking, that is not a realistic 
statement. As I explained, many forfeitures, 64 percent, are 
administrative. And in that circumstances, the forfeiture is 
presumed valid.
    So property owners--maybe it is helpful to walk through how 
ordinary seizures work. Initially, the seizure must be based on 
probable cause.
    Mr. Goodlatte. Better walk fast because I only have a 
limited amount of time. Go ahead. [Laughter.]
    Ms. Sheth. Initially, the seizure must be based on probable 
cause, and that is usually an on-the-ground determination by 
police officers. There is no check on that. The only check in 
administrative forfeitures is by the seizing agency itself.
    To the extent it even gets to a civil forfeiture, which is 
only when a property owner files a claim, then they still face 
these burdens of needing to hire counsel because there is no 
guarantee to counsel. They need to affirmatively prove that 
they are innocent of a crime and that they did not know of the 
illegal activity.
    Mr. Goodlatte. Okay.
    Ms. Sheth. So it is very difficult, and this process stacks 
the deck against innocent property owners.
    Mr. Goodlatte. Let me follow up with Mr. Smith on that. You 
note in your testimony that few attorneys or petitioners 
understand the administrative process to recover seized assets 
and ask that agencies include a detailed description of the 
process within their notice of seizure. However, you also note 
the technicalities of this process make it difficult for 
attorneys to properly file an appeal.
    What changes can we make to the process for administrative 
forfeitures that will make it more understandable for 
petitioners and attorneys alike?
    Mr. Smith. Thank you for that question.
    In my written materials, I have made a number of 
suggestions. And actually, I have even further suggestions for 
reforming the administrative forfeiture process that are not 
included here, but which the Members of the Committee are aware 
of.
    I chose to focus here because I figured I had very little 
time----
    Mr. Goodlatte. You have very little time because I have got 
one more question to ask Mr. Henderson.
    Mr. Smith. But basically, the ones that are in my written 
submission here fall into two categories, Mr. Goodlatte. One is 
a particular----
    Mr. Goodlatte. You are going to have to submit them in 
writing. I am sorry.
    Mr. Henderson, do you have the manpower to prosecute 
forfeiture cases in your county in the absence of DOJ adoption 
policies, and what will happen to the cases that DOJ would have 
taken under the previous policy?
    Mr. Henderson. In my county, no. I do not have those 
resources, especially in the instances where there are criminal 
enterprises, if you will. In my written comments, I spoke of, 
you know, garages, barber shops, cash businesses that are being 
used as fronts. That is one of the areas that local--generally 
local authorities and a majority of prosecutors offices in this 
country are not major metropolitan areas and have a very 
difficult time handling those kinds of assets and in that type 
of procedure.
    There is a provision to allow outside counsel to take 
contingency fees, if you will. Personally, I have never been a 
fan of that and have not made use of that. But I know there are 
some instances of that occurring.
    Mr. Sensenbrenner. The time of the gentleman has expired.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    Mr. Sensenbrenner. Before recognizing Mr. Conyers, let me 
say, Mr. Blanco, I am going to reserve the right to recall you.
    Mr. Blanco. Thank you.
    Mr. Sensenbrenner. You know, I am absolutely shocked that 
you have come as a Justice Department witness to this hearing 
without reading the Inspector General's report that is directly 
on point. You know, IG's reports are designed to give the 
department an opportunity to clean up its own act, rather than 
having Congress to give you a kick in the behind to do that.
    Now, apparently, a kick is necessary. And you know, I will 
be honest to say that you came up here without being prepared 
with the major point that the Inspector General's report is 
making.
    The gentleman from Michigan, Mr. Conyers.
    Mr. Conyers. Thank you.
    Attorney Sheth, let us talk about a very unpleasant 
subject, racial profiling, which we got laws against it, and 
everybody has preached about it. But it is still happening, and 
I think to a greater extent than many of us are aware.
    And I just want to see how you and Attorney Smith think 
this thing plays into more problems when we come to asset 
forfeiture?
    Ms. Sheth. Sure. Unfortunately, there are no hard 
statistics on the disproportionate impact of civil forfeiture 
on minorities and those of lower income. But a study or 
examination by the Washington Post revealed that in 400 Federal 
court cases they examined in which people contested seizures 
and received their money back because there was absolutely no 
grounds for the seizure, the majority were Black, Hispanic, or 
another minority.
    And even the DOJ itself has implicitly acknowledged that 
cold consent encounters are more often associated with racial 
profiling than contacts based on previously acquired 
information, and that is revealed in the OIG report from 
January 2015.
    If I may just briefly address some of the points that Mr. 
Henderson raised? There is no better way to ensure that the 
primary purpose of asset forfeiture is not to benefit from 
those assets than simply to eliminate the ability of law 
enforcement to retain those assets.
    Also, a point of clarification. Mr. Henderson is, 
unfortunately, wrong on the point about Indiana law. While the 
Indiana constitution does require forfeitures to go to the 
common school fund, Indiana statute allows for law enforcement 
expenses of forfeiture to be paid out of forfeiture proceeds, 
and indeed, the Indiana attorney general has taken the formal 
legal position that because these are civil and not criminal 
proceedings, civil forfeitures are not required to go to the 
common school fund.
    Mr. Conyers. Thank you.
    Do you have anything to add to that, David Smith?
    Mr. Smith. Yes. Yes, Mr. Conyers. I appreciate that fact 
that we do have some statistics on racial disparities in this 
area. But you don't need a report or statistics to know that 
that is the case because we have seen dozens and dozens of 
newspaper stories for decades now, since the--since the late 
'80's when forfeiture abuse first came to the attention of the 
public through the press. And time after time, the stories have 
focused on that theme that minorities are targeted by the 
highway patrols for these outrageous stops where they are just 
looking for money. They are not trying to enforce the law 
through these stops.
    You know, they talk about we are looking for terrorists on 
the highway. That is what they actually tell some of the--the 
Virginia State Police will stop a motorist and say, you know, 
we are out here looking for terrorists and drug dealers, and 
then they get around to saying, by the way, do you have any 
cash in your car? And that is what they are really after.
    So it is really a disgraceful situation. And by the way, I 
want to compliment Mr. Henderson for bringing up the very 
distasteful subject of how many DAs in Indiana actually hire 
private outside counsel to do all of their civil forfeiture 
cases, all of them. It is like a contract.
    Mr. Conyers. Other States do that, too, do you know?
    Mr. Smith. I am not aware of it happening in any State 
except Indiana. And there is no statute saying that, you know, 
go ahead and do this. It is just a practice that has developed, 
and I compliment Mr. Henderson for saying he doesn't approve of 
it.
    But apparently, it is a practice that most DAs in Indiana 
do follow.
    Mr. Conyers. Okay. Thank you.
    Ms. Sheth. Well, to clarify, the Indiana statute 
specifically authorizes prosecutors to hire private attorneys. 
The contingency fee agreement is what it is, by practice, and 
it is usually up to 30 percent.
    To answer your question, what can be done for the racial 
profiling is to require the DOJ to actually track statistics. 
Greater transparency in reporting about how it is affecting 
minorities and how many stops are minorities.
    Mr. Conyers. Thank you.
    Mr. Chairman, I would like to close by asking unanimous 
consent to put The Washington Post series by Robert O'Harrow in 
the record.*
---------------------------------------------------------------------------
    *Note: The submitted material, an investiative series by The 
Washington Post, is not reprinted in this record but is on file with 
the Subcommittee, and can also be accessed at:

      http://docs.house.gov/Committee/Calendar/
      ByEvent.aspx?EventID=102930.
    Mr. Sensenbrenner. Without objection.
    The gentleman from Colorado, Mr. Buck.
    Mr. Buck. Thank you, Mr. Chairman.
    Mr. Blanco, quick questions for you. You mentioned in your 
opening statement that asset forfeiture is designed to break 
the financial backbone of organized criminal syndicates and 
drug cartels. Correct?
    Mr. Blanco. That is correct, sir.
    Mr. Buck. And I take it you were in the Southern District 
of Florida. My memory was that there were huge minimums in 
order to justify prosecution, especially in the cocaine area. I 
don't know if it was 50 kilos or 100 kilos, but it was large 
quantities that you folks were dealing with.
    Mr. Blanco. It varied, sir, depending on whether you were a 
State prosecutor or a Federal prosecutor.
    Mr. Buck. Oh, I am talking about Federal. You were in the 
U.S. attorney's office.
    Mr. Blanco. We had mandatory minimums, yes, on those cases.
    Mr. Buck. Okay. And they were huge?
    Mr. Blanco. Yes.
    Mr. Buck. All right. It would take a very large forfeiture 
to break the backbone of the drug cartels that you were dealing 
with in the Southern District of Florida?
    Mr. Blanco. Congressman, let me answer that question in 
this way----
    Mr. Buck. Well, it is kind of a yes or no question. I take 
it, these drug cartels deal with huge amounts of cash. You are 
not talking about taking $10,000 from somebody and being able 
to put--and this is your quote. ``Break the financial backbone 
of a drug cartel.''
    Mr. Blanco. That is right.
    Mr. Buck. It has got to be a large forfeiture to break the 
financial backbone.
    Mr. Blanco. Congressman, but sophisticated drug cartels and 
syndicates don't keep their money in one place. They keep them 
in different places, and they have different people moving the 
money around. They do it either through smurfs, or they do it 
through couriers, or they do it through bank accounts and other 
third-party gatekeepers.
    So when you find a stash, the amount that you are talking 
about, yes, it can happen. But what really drives them is the 
way that they can move their money and hide their money. And 
when you take that--when you take that possibility----
    Mr. Buck. So a series of small forfeitures could also break 
the financial backbone?
    Mr. Blanco. That is correct, Congressman.
    Mr. Buck. All right. How many backbones have these adoptive 
forfeitures broken?
    Mr. Blanco. Pardon me, sir?
    Mr. Buck. Name a drug cartel. Name an organization, a 
syndicate that adoptive forfeitures from States, name one that 
has been broken by those forfeitures.
    Mr. Blanco. I can tell you there have been several, 
particularly with the Mexican cartels, who move their money 
with smurfs and couriers. Every amount of money you take from 
them is money that they cannot reinvest in their organization.
    Mr. Buck. Can you tell me about one that has been broken 
with these stops----
    Mr. Blanco. Yes, I can. The Zeta Cartel is a cartel that we 
take money from on a regular basis. And in many instances, it 
is very difficult for their gatekeepers on the border to 
continue. They have to pay their people.
    Mr. Buck. And these are adoptive forfeitures. These are not 
Federal forfeitures?
    Mr. Blanco. I am talking about forfeitures in general, sir. 
Adoptive forfeitures, which no longer exist in the Federal 
Government without exceptions with public safety----
    Mr. Buck. We are going to get to the exceptions. But I am 
asking you, it seems to me that the adoptive forfeitures tend 
to be much smaller than the Federal forfeitures, and I am 
asking you. You are talking about forfeitures, the purpose is 
to break backbones. Do adoptive forfeitures break backbones, or 
do they just supplement funding for local law enforcement 
agencies?
    Mr. Blanco. I believe, Congressman, that they do break the 
backbone of these cartels and these organizations. For example, 
in my experience----
    Mr. Buck. Let me ask you this. What is the percentage of 
adoptive forfeitures that are over, say, $100,000?
    Mr. Blanco. Depends on where you live, Congressman. I can 
tell you in my district, in Miami, when I was both a State and 
Federal prosecutor, it wasn't that unusual to open the trunk of 
a car and find $50,000 to $100,000 of which no one knew who 
owned that money. And that would probably be an adoptive 
forfeiture, sir.
    Mr. Buck. And that would go through--the State would work 
with the Federal Government on that?
    Mr. Blanco. Depending on whether the Federal Government was 
involved, and it can go through two ways, Congressman. It can 
go through the administrative forfeiture procedure, where it 
gets forfeited administratively because no one in their right 
mind is going to go claim $100,000----
    Mr. Buck. Especially if it has white powder on it.
    Mr. Blanco. Well, or it is in the trunk of a car, or it is 
stuck in a dashboard, or it is stuck in other areas of the car. 
Or it can go judicial, which means the U.S. attorney's office 
is then reviewing that matter and will file a civil forfeiture 
claim. Or indict the money along with an individual, or decide 
to give that money back.
    Mr. Buck. I understand the different types of forfeiture. 
Let me ask you something. What is the burden of proof in a 
forfeiture case? I think you mentioned preponderance of the 
evidence.
    Mr. Blanco. It is preponderance.
    Mr. Buck. What is the burden of proof if no one shows up, 
if it is uncontested?
    Mr. Blanco. If it is uncontested, there is no need to have 
a burden of proof because, more often than not, Congressman, in 
my experience, the reason that they don't show up is because 
they want to distance themselves from the tainted money or the 
tainted action.
    Mr. Buck. Your experience is different than mine. If 
someone can't afford a lawyer, they don't show up to court to 
contest, do they?
    Mr. Blanco. I think, Congressman, in some instances, that 
may be true.
    Mr. Buck. And that tends to be in the lower amounts. In 
other words, $1,000 is found, and that money is the subject of 
a forfeiture action. Someone doesn't show up to contest that, 
there is no burden of proof.
    Mr. Blanco. Congressman, I don't have that statistic in 
front of me. I can tell you that I think it is across the 
board. I am not so sure it is just the small denominations of 
money.
    But I understand your point, and I have to tell you, I 
empathize with your concern. And that is one of the concerns 
that we are taking with us when we do our review.
    I don't think that what you are saying is outrageous, 
Congressman. I think it is right, and I think we need to take a 
look at it. And I think it is important to look at it.
    Mr. Sensenbrenner. The time of the gentleman has expired.
    The gentlewoman from California, Ms. Bass.
    Ms. Bass. I want to thank the Chair and the Ranking Member 
for this hearing, and I am really glad that the Committee is 
going to look into this issue.
    And I just have to tell you, years ago I remember when some 
of these laws were being passed around--asset forfeiture--that 
many folks in communities were hoping that some of the 
resources would actually go for drug treatment or other 
resources in the community. And clearly, that hasn't happened.
    I did want to ask you about one particular area. I would 
like for you to talk about what happens to forfeitures related 
to the prosecution of child sex traffickers? So a recent report 
on the issue says that Federal prosecutors aren't aggressively 
pursuing restitution for victims of sex trafficking, even 
though it is required under TVPA.
    And I am wondering if Mr. Blanco could answer that, and 
perhaps Mr. Smith can comment?
    Mr. Blanco. Thank you, Congresswoman.
    That is something very important to me, as you might 
imagine, in what I supervise at the Department of Justice. I 
have to tell you that the Federal Government, particularly in 
child exploitation cases and child trafficking, is trying to do 
everything that we can.
    If what you are saying is a concern out there, I am happy 
to take it back. But I got to tell you, that is an area that we 
must take a closer look at, and it is an area that we must 
begin either seizing those funds. And not only funds, but 
assets, in the facilities that are carrying out such a 
horrendous kind of crime, whether there are buses that are 
used, cars that are used. All the assets and the whole weight 
of the Federal Government should really come into that plan.
    Ms. Bass. And it is my understanding that one of the 
reasons why there is some confusion around this is because in 
some jurisdictions, the girls are still charged as criminals 
when, in my opinion, if you are a child, you should never be 
charged as a prostitute if you are under the age of consent. 
That doesn't seem to make sense at all.
    So I don't know if you have any suggestions. You know, one, 
if any of the panel is familiar with confusion around this, 
what kind of reforms you might suggest that we make because, 
clearly, these girls need resources. One of the reasons why 
they stay with pimps is because they have no place else to go, 
nothing else to do.
    Mr. Blanco. I agree. I can tell you, federally, I don't 
recall a case where we have indicted a child. That is generally 
done on the State side.
    Ms. Bass. I didn't mean indict the child.
    Mr. Blanco. Oh, okay.
    Ms. Bass. I meant that because the child was considered a 
criminal.
    Mr. Blanco. Oh, okay.
    Ms. Bass. Not that, you know, so you are going to give 
money to somebody who is a criminal when that person should 
have never been considered a criminal.
    Mr. Blanco. I got you. I got you.
    Ms. Bass. Anybody else want to comment on that?
    Ms. Sheth. I will just note that I know one of the 
justifications asserted for civil forfeiture is to compensate 
the crime victims, and Mr. Blanco has said that the DOJ has 
returned over $4 billion to crime victims, and $1.87 billion of 
that was recovered through civil forfeiture. Presumably, 
hopefully, some of that money would help victims like of sex 
trafficking.
    But in fact, that $4 billion represents approximately only 
13 percent of seizure and forfeiture values, and that is from 
2000 to August 2014. So it is a very minor portion of the 
revenue being generated.
    Ms. Bass. Is there a way that the revenue that is seized 
could be used for resources for girls, victims? Could money be 
targeted that way? Is it ever targeted as to----
    Ms. Sheth. Well, that could be, and that is exactly the 
role of Congress that when forfeiture proceeds come in, it 
shouldn't go back to the law enforcement agencies for them to 
unilaterally decide how it should be spent. It should go to 
Congress.
    Now Congress can allocate that money as it sees fit, and 
that is exactly where it should go and to eliminate that profit 
incentive and compensate crime victims and do other revenue-
neutral kind of things. And to be fair, as law enforcement 
agencies do need the money and do need resources, they should 
be adequately funded to fight crime.
    Ms. Bass. Sure.
    Ms. Sheth. But that is the role of Congress or the 
legislative branch to ensure.
    Mr. Blanco. Congresswoman, we have in the past used these 
funds to compensate victims of sex crimes. And there also is a 
provision----
    Ms. Bass. Child sex trafficking----
    Mr. Blanco. I can say sex crimes, I am not sure--but I can 
certainly look at that. There is also a provision in those 
agencies that are part of the equitable sharing that they can 
use these proceeds that they receive back for community 
projects and services. That may be one of them that they could 
use that for, and I will look into that.
    Ms. Bass. And maybe, you know, to my colleagues, as we are 
considering reforms in this area, maybe that is something that 
we could consider as well.
    And looks like I am out of time. Yield back my time.
    Mr. Sensenbrenner. Thank you.
    The gentleman from South Carolina, Mr. Gowdy?
    Mr. Gowdy. Thank you, Mr. Chairman.
    Ms. Sheth, I have been out of the courtroom for a long 
time, and I think the whole world has changed since I was last 
there. I want to give you a chance to tell me how much of it 
has changed. Can you still waive your right to remain silent 
and confess, even to the most heinous of crimes?
    Ms. Sheth. I am sorry?
    Mr. Gowdy. Can you still waive your Fifth Amendment right 
and confess?
    Ms. Sheth. Yes. Yes, that is correct.
    Mr. Gowdy. Can you still waive your right to a jury trial 
and plead guilty?
    Ms. Sheth. Yes.
    Mr. Gowdy. Can you still waive your right to a jury trial 
and have a bench trial?
    Ms. Sheth. Yes.
    Mr. Gowdy. Can you still waive your right to counsel and 
proceed pro se, no matter how stupid that may be?
    Ms. Sheth. Yes.
    Mr. Gowdy. Can you still waive your right to appeal for 
everything except ineffective assistance of counsel?
    Ms. Sheth. Yes.
    Mr. Gowdy. Can you still waive your right to appeal even in 
a capital case and expedite your own execution?
    Ms. Sheth. Yes.
    Mr. Gowdy. I am just wondering why you can't waive whatever 
property interest you may have in a piece of forfeited 
property. If you can do all of that, then you ought to be able 
to waive your right--I will let you think about that for a 
second because I want to go to the two district attorneys.
    Mr. District Attorney, I will bet you did not go to law 
school and become a district attorney because you had an 
interest in being a revenue producer for your county or your 
State?
    Mr. Henderson. That is correct, Congressman.
    Mr. Gowdy. And the same would be true for Mr. Blanco. So 
what strikes me as a pretty easy remedy here--well, before we 
get to the remedy, Mr. Blanco, are you aware of any States that 
don't have asset forfeiture laws?
    Mr. Blanco. I believe all States have considered and all 
States have passed some form of an asset forfeiture law.
    Mr. Gowdy. All right. And being the good lawyer that you 
are, you are sitting there wondering, well, if a State already 
has asset forfeiture laws, why are they coming to the Feds? 
What is it about the Federal system that makes it more 
attractive than pursuing your own State remedy?
    So the remedy I would propose to the two of you all is I 
would get the Attorney General or the new Attorney General to 
sit down with the district attorneys. I would take the 
financial incentive out of it for district attorneys and law 
enforcement. I don't know a single cop or prosecutor that went 
into the business to be a revenue producer. Let the money go to 
the general fund.
    If that is the hang-up, if that is the issue is that cops 
and prosecutors are somehow going to benefit financially from 
this forfeiture, then just take that away and send it to the 
general fund because I don't know a prosecutor or a cop that 
majored in business or economics. They don't want to be in that 
business.
    But I do want to ask you, Mr. District Attorney, in 
Indiana, who provides the funding for your office?
    Mr. Henderson. The counties provide most of the funding for 
our offices in Indiana.
    Mr. Gowdy. And it is the exact same way in South Carolina. 
Now how many of your State laws are passed in the capital of 
Indiana? How many are passed by the State legislature?
    Mr. Henderson. All the States laws are passed by the State 
legislature.
    Mr. Gowdy. All of them. Same in South Carolina. All the 
laws are passed in Columbia, but not all the funding comes from 
Columbia. So all the laws are passed at the State level in 
Indiana, but all your funding doesn't come from the State 
level.
    Mr. Henderson. That is correct.
    Mr. Gowdy. So it strikes me that if you want to take the 
money out of prosecution and out of law enforcement, they 
should fully fund your office.
    Mr. Henderson. Certainly, Congressman, that would be the 
case. But let me also say that the money generally would go 
back to the criminal with the money. Because if you are asking 
the prosecutor or the police to devote resources toward 
forfeiting money and taking that limited resource that the 
county or State has given us in order to pursue civil actions, 
I would hazard a guess that that just wouldn't happen.
    And I put in my paper, too, the practice of embedding 
officers with the Feds. So you have county sheriffs and chiefs 
of police that are paying their officers, taking them out of 
the community, and lending them, if you will, to the Federal 
authorities so that they could work together so that they can 
produce intelligence.
    I believe and, in fact, the chiefs and sheriffs in my area 
made sure to tell me this before I came here today, in that 
they will have to pull those people back because they can't 
justify that to the community. And so, and if that is the 
outcome, that is the outcome. But I do not see any widespread 
forfeiture of drug funds or any other illegally obtained funds 
if there is not an incentive.
    And if I could just quickly say finally----
    Mr. Gowdy. Well, I am almost out of time. But there are two 
things that are going to kill us, and I am talking to you as a 
former DA, not as a fledgling Member of Congress.
    The two things that are going to kill us is if we ever 
start trading prison time for asset forfeiture and if we are 
perceived as being more interested in the finances than the 
enforcement. So I would tell your State reps and my State reps 
fully fund your office and let you do your job and get you out 
of the revenue producing business.
    Mr. Henderson. I agree.
    Mr. Sensenbrenner. The time of the gentleman has expired.
    The gentlewoman from California, Ms. Chu.
    Ms. Chu. Mr. Blanco, just yesterday there was the directive 
issued, and it required the Federal prosecutor to justify in 
writing whether there should be a joint task force. But it 
seemed that the new directive doesn't prescribe the importance 
of any particular factor.
    Could you describe a situation in which a Federal 
prosecutor may find one, but not all of the factors to be 
present and still find insufficient Federal law enforcement 
oversight or participation? For example, could you walk us 
through how a prosecutor would determine whether Federal 
forfeiture should apply in situations where Federal authorities 
are not involved in the investigation leading up to the seizure 
but were only pulled in at the time of the actual seizure?
    Mr. Blanco. Tthank you, Congresswoman, for that question. I 
think it is an important issue to discuss.
    Obviously, every case is very fact specific. So I can't 
give you a cookie-cutter of what might happen. But for 
instance, in what you just described, there could be a 
situation where there is a Federal investigation going on for 
which the Federal Government may not want to tip its hand that 
these individuals are being investigated.
    For example, that there is either a confidential source or 
a wiretap on individuals. We know they have a car filled with 
cocaine or money, and it is traveling. We may contact a State 
and local law enforcement officer and either tip off that this 
car has the contraband in it or let them know that they should 
be on the lookout for this car, and they will then determine 
their own probable cause to stop that vehicle.
    At that instance, that becomes a State and Federal 
investigation. They are assisting the Federal Government. As 
the Congresswoman knows, Federal agencies, as great as they 
are, and we are--Federal investigative agencies are the best in 
the world. There is no question about it. Can't do their jobs 
without their State and local partners.
    The element of a task force situation, which I have been 
involved with in many instances, is critical to law enforcement 
not just in this area, but law enforcement in general. So that 
would be an area where I would look at.
    And I, as a Federal prosecutor, and what I would expect for 
that assistant United States attorney to do is to look at that 
scenario and determine is this a situation where their 
participation was necessary? Is this a situation in which they 
were asked to participate? Or is this a situation where that 
State and local law enforcement officer on her own decided, or 
his own, decided to use State laws to either stop that car or 
create their own investigations?
    Ms. Chu. So let me ask, the new directive places a great 
deal of discretion on the Federal prosecutors to determine 
whether the seizure by State and local law enforcement should 
be treated as Federal forfeiture. Will there be a review 
process of these decisions?
    Mr. Blanco. That is a good question, Chairperson. That is 
something that I will take back to the department with me, and 
we will certainly talk about it. I won't commit to it, but it 
sounds very fair to me.
    Ms. Chu. Thank you.
    Ms. Sheth, there is this incredible incentive for State and 
local law enforcement to do these seizures, and it is troubling 
that someone with the authority to seize property should be 
incentivized to do so. Could you walk us through reforms that 
could balance the monetary needs of local and State law 
enforcement for these assets while reducing the negative 
incentives that the Equitable Sharing Program creates?
    Ms. Sheth. Sure. As an initial matter, the Equitable 
Sharing Program should be abolished. To give you an idea of the 
scope of the Equitable Sharing Program, since 9/11, the amount 
of cash seizures have totaled $2.5 billion.
    Now the ability of State and local law enforcement to 
generate that revenue, they should, as Representative Gowdy 
suggested, should be adequately funded, and that should come 
from the State level or through maybe other revenue-neutral 
Federal grants. But it should not come from civil forfeiture by 
seizing property owners' property without any adequate process.
    One of the examples should be to abolish adoptive seizures 
in their entirety. The additional, it should be--there is no--I 
am not saying that we shouldn't have joint task forces, but 
that monetary incentive should be abolished. And similarly, at 
the Federal level, the profit incentive should be abolished.
    And by increasing different procedural safeguards, like the 
right to counsel or like increasing the burden of proof on the 
Government from preponderance of the evidence to clear and 
convincing or restoring the presumption of innocence on 
property owners, to put the burden rightly on the Government to 
prove knowledge.
    Also the ability to have a prompt opportunity to contest 
the seizure. Right now, under Federal law, that is only allowed 
for for other kinds of property, but not cash, and that should 
be provided for cash seizures as well.
    Finally----
    Mr. Sensenbrenner. Excuse me. Go ahead.
    Ms. Sheth. Oh, okay. Sorry. Finally, increased transparency 
and reporting would also go a long way. For example, putting 
the CATS database online or how property is distributed under 
equitable sharing requests.
    Mr. Blanco had said something about whether or not State 
and local law enforcement actually receive any of the proceeds. 
I would question how many equitable sharing requests were 
denied.
    Mr. Sensenbrenner. The time of the gentlewoman has expired.
    This concludes today's hearing, and thanks to all witnesses 
and Members for attending.
    Without objection, all Members will have 5 legislative days 
within which to submit additional written questions for the 
witnesses or additional materials for the record.
    And without objection, the hearing is adjourned.
    [Whereupon, at 12:01 p.m., the Subcommittee was adjourned.]




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