[Senate Hearing 114-833]
[From the U.S. Government Publishing Office]







                                                        S. Hrg. 114-833
 
                  THE NEED TO REFORM ASSET FORFEITURE

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

                                HEARING

                               before the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 15, 2015

                               __________

                          Serial No. J-114-11

                               __________

         Printed for the use of the Committee on the Judiciary
         
         
         
         
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             U.S. GOVERNMENT PUBLISHING OFFICE 
 47-423 PDF             WASHINGTON : 2023
        
         
         
         

                       COMMITTEE ON THE JUDICIARY

                  CHARLES E. GRASSLEY, Iowa, Chairman
ORRIN G. HATCH, Utah                 PATRICK J. LEAHY, Vermont,       
JEFF SESSIONS, Alabama                   Ranking Member
LINDSEY O. GRAHAM, South Carolina    DIANNE FEINSTEIN, California
JOHN CORNYN, Texas                   CHARLES E. SCHUMER, New York
MICHAEL S. LEE, Utah                 RICHARD J. DURBIN, Illinois
TED CRUZ, Texas                      SHELDON WHITEHOUSE, Rhode Island
JEFF FLAKE, Arizona                  AMY KLOBUCHAR, Minnesota
DAVID VITTER, Louisiana              AL FRANKEN, Minnesota
DAVID PERDUE, Georgia                CHRISTOPHER A. COONS, Delaware
THOM TILLIS, North Carolina          RICHARD BLUMENTHAL, Connecticut
            Kolan L. Davis, Chief Counsel and Staff Director
      Kristine Lucius, Democratic Chief Counsel and Staff Director
                            C O N T E N T S

                              ----------                              

                       APRIL 15, 2015, 10:06 A.M.

                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Grassley, Hon. Charles E., a U.S. Senator from the State of Iowa.     1
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont.     4

                               WITNESSES

Witness List.....................................................    31
Bach, Jonathan, Cooley LLP, New York, New York...................    12
    prepared statement...........................................    32
Canterbury, Chuck, National President, Fraternal Order of Police, 
  Washington, DC.................................................    10
    prepared statement...........................................    42
Caswell, Russ, Tewksbury, Massachusetts..........................     9
    prepared statement...........................................    49
Paul, Hon. Rand, a U.S. Senator from the State of Kentucky.......     5
    prepared statement...........................................    52
Sheth, Darpana, Attorney, Institute for Justice, Arlington, 
  Virginia.......................................................     7
    prepared statement...........................................    56

                               QUESTIONS

Questions submitted to Jonathan Bach by:
    Senator Grassley.............................................   129
    Senator Vitter...............................................   132
Questions submitted to Chuck Canterbury by:
    Senator Grassley.............................................   129
    Senator Klobuchar............................................   131
    Senator Vitter...............................................   133
Questions submitted to Russ Caswell by Senator Vitter............   135
Questions submitted to Darpana Sheth by:
    Senator Grassley.............................................   129
    Senator Vitter...............................................   134

                                ANSWERS

Responses of Jonathan Bach to questions submitted by:
    Senator Grassley.............................................   136
    Senator Vitter...............................................   139
Responses of Chuck Canterbury to questions submitted by:
    Senator Grassley.............................................   140
    Senator Klobuchar............................................   142
    Senator Vitter...............................................   143
Responses of Russ Caswell to questions submitted by Senator 
  Vitter.........................................................   153
Responses of Darpana Sheth to questions submitted by:
    Senator Grassley.............................................   144
    Senator Vitter...............................................   151

                MISCELLANEOUS SUBMISSIONS FOR THE RECORD

Submitted by Senator Grassley:
    American Civil Liberties Union (ACLU), Washington, DC, et 
      al., organizations representing the interests of criminal 
      justice reform, civil and human rights, faith, business, 
      and community, April 14, 2015, letter......................   158
    American Civil Liberties Union (ACLU), Washington, DC, April 
      15, 2015, letter...........................................   155
    Drug Policy Alliance, Washington, DC, April 22, 2015, letter.   162
    Leadership Conference on Civil and Human Rights, The, 
      Washington, DC, April 15, 2015, letter.....................   165
Submitted by Senator Sessions:
    Collier, Spencer, Secretary of Law Enforcement, Alabama Law 
      Enforcement Agency (ALEA), State of Alabama, Montgomery, 
      Alabama, April 15, 2015, letter............................   168
    Major Cities Chiefs Association (MCCA), et al., law 
      enforcement agencies and associations, statement...........   169

                  ADDITIONAL SUBMISSION FOR THE RECORD

Submission for the record not printed due to voluminous nature, 
  previously printed by the Federal Government, or other criteria 
  determined by the Committee:

    American Civil Liberties Union (ACLU), New York, New York, 
  ``In for
    a Penny: The Rise of America's New Debtors' Prisons,'' 
  October 2010,
    report, https://www.aclu.org/files/assets/InForAPenny_web.pdf



                           THE NEED TO REFORM



                            ASSET FORFEITURE

                              ----------                              


                       WEDNESDAY, APRIL 15, 2015

                              United States Senate,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:06 a.m., in 
Room 226, Dirksen Senate Office Building, Hon. Charles E. 
Grassley, Chairman of the Committee, presiding.
    Present: Senators Grassley, Sessions, Lee, Flake, Perdue, 
Tillis, Leahy, and Klobuchar.

         OPENING STATEMENT OF HON. CHARLES E. GRASSLEY,
             A U.S. SENATOR FROM THE STATE OF IOWA

    Chairman Grassley. Thanks to everybody for their 
attendance.
    Today the Senate Judiciary Committee will hold a hearing on 
the need for asset forfeiture reform. The issue is as old as 
the Constitution. As Madison remarked in Federalist 51, in 
framing a government which is to be administered by man over 
man, the great difficulty lies in this: You must first enable 
the government to control the governed and, in the next place, 
oblige it, meaning the government, to control itself.
    Law enforcement is a principal means by which government is 
enabled to control the governed. Civil asset forfeiture is an 
important and valuable tool for law enforcement to seize 
property associated with criminal activity.
    Civil asset forfeiture allows the Government to seize and 
forfeit foreign-owned boats and planes that were used to 
smuggle drugs. It can be used to seize assets controlled by 
entities tied to foreign terrorist organizations, and it can be 
used to forfeit the property of a defendant who dies before 
conviction might occur.
    The property that the Government obtains through civil 
asset forfeiture can be used to compensate victims and 
otherwise deprive criminal organizations of funding. So, then 
we all recognize the value of civil asset forfeiture.
    Even in the midst of the current reform effort, no bill 
before Congress would abolish civil asset forfeiture and I 
would not support one if it were before the Congress. But as 
asset forfeiture is currently practiced, nothing is obliging 
the Government to control itself. Just the opposite. Civil 
asset forfeiture leads government to exceed its just powers 
over the governed. It encourages law enforcement to take 
shortcuts rather than prosecute or even arrest. Civil asset 
forfeiture enables government and law enforcement to seize 
property without any proof of wrongdoing, and the process 
creates perverse incentives.
    Under adoption and equitable sharing, State and local law 
enforcement can seize property and ask the Federal Government 
to adopt the seizure as if it had been carried out by Federal 
officials.
    If this occurs, the State or locality receives 80 percent 
of the value of the very property that they arrange to have 
forfeited. This incentivizes police to seize particular 
property to obtain a direct financial reward.
    When this occurs without pursuing criminal conviction or 
even an arrest, the chances rise that the rights of innocent 
people will be violated.
    A number of immediate reports have set forth a wide range 
of instances in which individual rights have been infringed, 
especially in cases like traffic stops or in structuring cases, 
such as that of one of my constituents, Carole Hinders, from 
Iowa. Some of the extensive reporting was done by the Des 
Moines Register and the process of contesting forfeiture, as it 
currently operates, is a trap to the unwary.
    In 2000 Congress passed the Civil Asset Forfeiture Reform 
Act. It made some improvements for innocent owners and in 
establishing timeframes. But the most important procedural 
reforms were gutted at the behest of law enforcement. So, the 
abuses that existed in 2000 have grown. Iowans have raised 
their concerns about asset forfeiture with me. It is past time 
to take action to address it.
    The Justice Department has issued policy guidance that it 
believes will end equitable sharing and eliminate forfeiture in 
structuring cases where there is no evidence of any other 
underlying crime.
    The Department of Justice is mistaken. Their policies still 
have loopholes. Its policy would allow equitable sharing for 
joint task forces. It contains a so-called public policy 
exception for guns, ammunition, and child pornography.
    So, I disagree. When law enforcement encounters a crime, it 
should make an arrest and begin prosecution. It is unacceptable 
for the Federal Government to seize and forfeit a gun as the 
Justice Department would allow not only without a conviction, 
not only without a prosecution, but not even with an arrest. 
And the Justice Department's structuring policy would 
supposedly prohibit civil asset forfeiture when there is 
evidence only of structuring. It allows agents to presume there 
is another underlying crime when they cannot find evidence that 
there is not one.
    I have been disappointed with law enforcement's response to 
the call for reform. The Justice Department was invited to 
testify today, but they declined, claiming they could not be 
ready in time. But just 2 months ago, they were ready and they 
were able to testify on this very same subject before the other 
body. But they demonstrated then that they were out of touch 
and unprepared for legislative reform.
    I am also troubled that the Fraternal Order of Police's 
written statement similarly dismisses the need for real reform 
and demonstrates the absurdity of a system of justice in which 
some law enforcement appears to value funding their own 
operations over protecting civil rights.
    No one in law enforcement has offered a constructive 
legislative alternative and I hope to work with them to change 
that environment because legislation is necessary.
    It is necessary to end equitable sharing and its perverse 
incentives to provide due process to individuals whose assets 
have been taken to strengthen the burden of proof, to codify 
the IRS' new structuring policy, and to overturn a Supreme 
Court decision on criminal asset forfeiture.
    A group of bipartisan, bicameral legislators is working to 
develop a bill to reform asset forfeiture. But we should do so 
while recognizing the value of civil asset forfeiture and we 
should continue to allow proceeds to flow to law enforcement so 
long as there is no direct connection between any particular 
asset that is seized and the agency that seizes the asset.
    It is that dynamic that inherently makes the process flawed 
and that makes the Government unable to control itself to the 
detriment of the liberties of the American citizen.
    Beyond legislation, there are problems with the 
administration's asset forfeiture. Time and again I have 
received reports of agencies at all levels of Government 
spending asset forfeiture money at whims and with very little 
oversight.
    In the recent week, I heard from whistleblowers who allege 
that the asset forfeiture division of the U.S. Marshal's office 
is spending that money on lavish office furnishings and 
facilities, like a $22,000 conference table and a $1.8 million 
training facility that lies unused nearly 11 months of the 
year.
    Whistleblowers also allege that asset forfeiture division 
resources have been used selectively to reward friends of 
senior management with agency jobs and lucrative contracting 
positions.
    So, this is a cavalier spending of money and it indicates 
that it is out of control.
    At this point, I would ask unanimous consent to introduce 
into the record three letters. The first is a letter from the 
ACLU in support of bipartisan, bicameral asset reform; the 
second is from the Leadership Conference on Civil and Human 
Rights supporting reform of civil asset laws; the third is a 
letter from 24 organizations outlining a statement of 
principles for achieving effective Federal forfeiture reform.
    Senator Leahy. No objection.
    Chairman Grassley. Thank you.
    [The information appears as submissions for the record.]
    Chairman Grassley. Those organizations include the American 
Conservative Union and their foundation, Americans for Tax 
Reform, the NAACP, the National LGBTQ Task Force Action Fund--
that letter asks us to take such action as to eliminate 
equitable sharing and advance due process in forfeiture 
proceedings.
    The Committee is fortunate to have knowledgeable witnesses 
today and I look forward to their testimony.
    And now, it is time for my friend, Senator Leahy, to speak.

          OPENING STATEMENT OF HON. PATRICK J. LEAHY,
            A U.S. SENATOR FROM THE STATE OF VERMONT

    Senator Leahy. Thank you, Mr. Chairman.
    Asset forfeiture is a powerful tool for law enforcement. It 
does allow the Government to seize the proceeds of crime or 
property that was used in the commission of a crime.
    Every day we know that law enforcement officers use 
forfeiture to seize property associated with child pornography, 
cars, and large quantities of cash of major drug traffickers, 
the bank accounts of those that defraud and steal from innocent 
victims in the U.S. and around the world.
    When used appropriately, the tool deprives criminals of 
their profits. It deters crime. Through its civil asset 
forfeiture program, the Justice Department has returned 
billions of dollars to crime victims. It has put billions more 
to good use by supporting our Nation's crime fighting efforts, 
including a number of what I feel are very innovative public 
safety initiatives.
    But the program has needed significant oversight and 
improvements along the way. Fifteen years ago, the asset 
forfeiture system was in need of repair. Innocent property 
owners were not being afforded adequate due process before 
their property was forfeited. They were forced to--they had to 
do this perfectly--navigate a bureaucratic labyrinth just to 
liberate property that should have been presumptively theirs in 
the first place.
    I cosponsored bipartisan Senate legislation that sought to 
restore real due process rights for property owners and help 
pave the way for reform and Congress eventually came together 
to enact basic safeguards for property owners. We passed the 
Civil Asset Forfeiture Reform Act.
    But despite these reforms, it is clear that some abuses 
persist. We have all seen the troubling reports, roadside stops 
that resemble shakedowns, seizures of bank accounts when there 
is no criminal conduct other than the owner's deposit history. 
And just a look at a story about a dairy farm in today's paper 
will explain that.
    In fact, there seems to be no reaction on the part of the 
authorities to what has happened. Allegations of policing for 
profit; reports of forfeiture funds devolved into slush funds, 
something the Chairman referred to.
    I expect we are going to hear these concerns today. Now, I 
want to think these practices may not be the norm, but the fact 
that they occur at all, that is a problem. Asset forfeiture can 
be a powerful crime fighting tool. I think we should know that. 
But Congress never intended it to be a mere fundraising tool, 
certainly not in my State and I suspect not in any other State.
    The Justice Department is conducting comprehensive review 
of its asset forfeiture program and doing this with an eye 
toward reform. Attorney General Holder has already limited the 
types of seizures the Federal Government will adopt from local 
law enforcement.
    Attorney General Holder also limited the circumstances in 
which it will seize assets based on the crime of structuring.
    I understand more changes are imminent and I am very 
anxious to see them. I think we will give them full 
consideration.
    Seizing and forfeiting the tools used by criminals is an 
effective means to combat crime. But--but--and this is the 
major part--innocent Americans deserve protections from abusive 
asset forfeiture practices.
    So, I believe more reform is needed. I will work with 
Chairman Grassley and the Justice Department and State and 
local law enforcement and others to identify flaws with our 
asset forfeiture program. It is something we all have to be 
involved with, at the Congress level, at the national level in 
law enforcement, the State level, and local level.
    I hope we can come together on a basis to fix what is 
broken. We should be able to get a bipartisan fix, which means 
one that would actually pass, and ensure this important law 
enforcement tool remains consistent with our fundamental 
notions of due process, fair play, and constitutional 
protections.
    Thank you, Mr. Chairman. I apologize for the voice.
    Chairman Grassley. Thank you, Senator Leahy.
    Would Senator Paul come forward, please? And before you 
speak, I want to compliment you on being involved with this 
issue as a leader, as well, and, more importantly, to say that 
you have brought to the attention of the Congress and the 
Nation a lot of issues or a lot of organizations that we do not 
communicate with a lot. So, I want to compliment you beyond 
just this bill.
    Would you proceed, please.

                  STATEMENT OF HON. RAND PAUL,
           A U.S. SENATOR FROM THE STATE OF KENTUCKY

    Senator Paul. Thank you, Mr. Chairman and Ranking Member 
Leahy and Members of the Committee, for allowing me to testify 
today on civil forfeiture reform.
    This Committee has an opportunity to end an injustice, an 
injustice that disproportionately affects minorities and the 
poor, by reforming our civil asset forfeiture laws.
    According to The Washington Post review of seizures done 
under Federal seizure laws, the majority of those who have had 
their property taken were Black, Hispanic, or other minority.
    These laws were originally intended to disrupt criminal 
networks, but they have increasingly been used against innocent 
citizens to strip them of their property without a lawyer to 
defend their rights, without a day in court to hear the charges 
against them, and without due process.
    Civil forfeiture turns justice on its head. Our current 
laws presume you are guilty until you can prove your innocence. 
This is directly in contradiction to what we should stand for 
as a republic.
    Last year, in Philadelphia, Christos Sourovelis watched his 
son get arrested for selling $40 worth of illegal drugs outside 
of his home. A month later, the police were back, but not for 
the son--for the house. The Philadelphia District Attorney 
dropped the case after much scrutiny, but you can see where the 
potential for abuse lies.
    Not all victims are so lucky. There have been over 60,000 
cash seizures made on highways since 2001, without search 
warrants, without indictments, and without convictions, 
totaling more than $2.5 billion. These seizures were done 
through the equitable sharing program. This program provides a 
perverse incentive that encourages government to confiscate 
property because government officials get to keep up to 80 
percent of the proceeds.
    Mandrel Stuart is just one of the people that had his money 
seized as a part of this program. He owned a barbecue 
restaurant called Smoking Roosters in Staunton, Virginia. He 
was stopped for a minor traffic offense and as the police were 
going through, they decided that they would confiscate the 
money he had on hand that he was going to use for supplies to 
buy for his restaurant.
    They found no evidence of wrongdoing. He was never charged 
with a crime, but they still took his money. The prosecutor 
told him that they could have half his money if he accepted a 
plea. Mr. Stewart refused and fought for over a year, but by 
then he had lost his business. He eventually got his money back 
and was never charged.
    We have a big discussion now on who will be our next 
Attorney General. Loretta Lynch became famous for her herculean 
confiscation of private property. She seized over $100 million 
in forfeited funds during her time as U.S. Attorney and then 
skirted the reforms that were put in place 15 years ago to 
protect the innocent by not filing the paperwork that would 
have allowed those reforms to kick in.
    Lynch confiscated nearly $1 million--nearly $0.5 million 
from the Hirsch brothers who owned a family owned business in 
New York and held the money for nearly 2 years. The Hirsch 
brothers were never charged with a crime, much less convicted. 
Yet, it took years and hundreds of thousands of dollars to get 
their money back. When questioned about civil forfeiture, 
Loretta Lynch seemed to be unconcerned with the need for 
reform.
    I think no one who listens to these horrendous abuses of 
our civil liberties should be not moved to think that we really 
do need reform in our country. So, last year I introduced the 
Fifth Amendment Integrity Restoration Act, the FAIR Act, with 
Senators Lee and King. This has also been introduced in the 
House.
    Our bill would end equitable sharing and ensure that State 
laws are being respected and not circumvented. It will raise 
the burden of proof in civil forfeiture cases. Our bill would 
ensure that Government will provide you representation if they 
take your property. The bill would also place the burden of 
proof where it belongs--on the Government, not the accused. It 
would require a conviction before property is forfeited.
    Many people have mentioned that the money can be used for 
victims. I have no problem with that if you are convicted of a 
crime. But in America, they should not take your stuff without 
a conviction. Most importantly, it will end the profit 
incentive by requiring all forfeiture assets to be deposited in 
the Treasury instead of a fund to be used by the agencies that 
seize the property.
    This act is bipartisan and bicameral and has support from 
the Institute for Justice, the ACLU, the National Association 
of Criminal Defense Lawyers, Americans for Tax Reform.
    My hope is as the Committee moves forward, that you will 
use some of our ideas or include some of our ideas in your 
deliberation. I think Americans from all walks of life are 
ready for criminal justice reform and I hope this is the year 
we get it done.
    Thank you.
    [The prepared statement of Senator Paul appears as a 
submission for the record.]
    Chairman Grassley. Thank you, Senator Paul.
    I do not have any questions. Do any of my colleagues have 
questions of our colleague?
    Senator Leahy. I know he has a tough schedule.
    Chairman Grassley. Thank you very much, Senator Paul.
    Senator Paul. Thank you.
    Chairman Grassley. Now, I will call our next group of 
witnesses. We have one panel. Darpana Sheth, an attorney with 
the Institute for Justice. Come while I am reading, please.
    Her practice includes litigation to protect private rights, 
including asset forfeiture cases. She is a graduate of the 
University of Pennsylvania. She obtained her law degree from 
Georgetown University Law School.
    The next person is Russ Caswell. He is the former owner of 
the Motel Caswell, Tewksbury, Massachusetts. The Motel Caswell, 
which had been in the family since the 1950s, became the 
subject of a Federal forfeiture action. The action was resolved 
in 2013 with the assistance of the Institute of Justice.
    Chuck Canterbury has been the National President of the 
Fraternal Order of Police since 2003. Mr. Canterbury began his 
policing career in 1978, Horry County Police Department, 
Conway, South Carolina, serves on a number of important boards, 
and is treasurer of the International Council of Police 
Representative Associations. Mr. Canterbury received his BA 
degree from Coastal Carolina University.
    Jonathan Bach is a lawyer with Cooley in New York. He is 
testifying on behalf of the New York Council of Defense 
Lawyers. Mr. Bach filed an amicus brief in the recent Supreme 
Court case, Kaley v. United States. The Supreme Court discussed 
the brief in its decision.
    Mr. Bach is a member of the American College of Trial 
Lawyers and a graduate of Yale Law School.
    We will go in the order that you were introduced. So, Ms. 
Sheth, will you start out?

             STATEMENT OF DARPANA SHETH, ATTORNEY,
           INSTITUTE FOR JUSTICE, ARLINGTON, VIRGINIA

    Ms. Sheth. Good morning, Chairman Grassley, Senator Leahy, 
and distinguished Members of the Committee. Thank you for 
inviting me to testify about the urgent need to reform our 
Federal forfeiture laws.
    Because of the overwhelming recognition across the 
political spectrum on the need to reform these laws, I will 
focus my remarks on two key defects that Congress must address; 
first, the self-financing of law enforcement agencies, which 
inherently distorts law enforcement priorities; and, second, 
the inadequate protection afforded to property owners.
    Current Federal law incentivizes forfeiture by allowing law 
enforcement agencies to keep 100 percent of the proceeds. Even 
with the 2000 CAFRA reforms, Justice Department forfeitures 
have skyrocketed to $4.4 billion last year, while Treasury 
Department forfeitures have soared to $1.6 billion in 2013.
    Any legislation that fails to remove this direct financial 
incentive will be ineffective in the long run.
    Directing forfeiture proceeds back to the very agencies 
responsible for 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 branch of Government closest to the people, 
the power of the purse. 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 
bypass their own State forfeiture laws in favor of more lax 
Federal rules and then receive up to 80 percent of forfeiture 
proceeds.
    The DOJ's new policy does not cure this problem because of 
three major loopholes. It only prohibits adoptive seizures and 
even then carves out an exception for public safety. It only 
provides vague standards of what constitutes sufficient Federal 
involvement for joint investigation seizures. And it does not 
apply if a Federal warrant is obtained after the seizure. And 
this policy could be reversed at any time with the stroke of a 
pen.
    Third, giving law enforcement a direct financial interest 
in the seizure of property violates a central command of due 
process. The administration of justice must be impartial. This 
lack of impartiality is best seen in the fact that almost two-
thirds of all Federal forfeitures are administrative, meaning 
that the process is conducted by the seizing agency itself 
without any judicial involvement.
    But even when courts are involved in civil forfeitures, 
there are inadequate procedures 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 
currency. But I also wanted to highlight how the process turns 
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. Even in judicial civil 
forfeiture proceedings, property owners are presumed guilty 
until they prove their innocence.
    Once the Government shows that the property is more likely 
than not connected to a crime, the burden shifts to property 
owners to affirmatively prove that they did not know of illegal 
activity. The absence of adequate process, married to the 
perverse financial incentives, has led to widespread abuse, 
with a disproportionate impact on minorities and lower income 
individuals.
    Civil forfeiture has treated countless ordinary Americans, 
like Russ Caswell, worse than criminals. Since 2011, civil 
forfeiture has resulted in more than 61,000 currency seizures 
totaling $2.5 billion through so-called highway interdiction, 
all without any search warrants or indictments. And the IRS has 
abused forfeiture to seize almost a quarter of a billion 
dollars from more than 2,500 individuals and small business 
owners under an aggressive and misguided interpretation of 
banking laws. In most of these cases, like Carole Hinders of 
Spirit Lake, Iowa, there was no claim of any criminal activity 
besides a series of cash transactions under $10,000.
    This is not about bad apples in law enforcement. This is 
about fundamentally flawed incentives in the law. The solution 
is not to better police the police through temporary policy 
changes made by agencies. The solution is to end policies that 
distort agency incentives by changing the law.
    Thank you for your time.
    [The prepared statement of Ms. Sheth appears as a 
submission for the record.]
    Chairman Grassley. Thank you for being so on time, as well.
    Mr. Caswell.

                   STATEMENT OF RUSS CASWELL,
                    TEWKSBURY, MASSACHUSETTS

    Mr. Caswell. Thank you, Chairman Grassley, Ranking Member 
Leahy, and Members of the Committee, for the opportunity to 
share my story and testify about the dire need for asset 
forfeiture reform laws.
    I was the owner of Motel Caswell in Tewksbury, Mass. My 
father built the motel in 1955. Since taking over from my 
father in 1984, I have strived to make Motel Caswell an 
affordable, safe place.
    I installed cameras, kept a do-not-rent list at the front 
desk, regularly checked IDs and license plates, and kept the 
property well lit. We always cooperated with police. I have 
even given free rooms to them so they can hold stakeouts and 
arrest any bad guys that may find their way onto my property 
without my knowledge.
    Unfortunately, none of this would matter when the Federal 
agents came knocking in September 2009. Just as my wife and I 
had begun looking forward to a hard-earned retirement, our 
world was turned upside down.
    We received notice that the motel was being subject to 
civil forfeiture. At that time, I had no idea what that was or 
how exactly my motel was being sued and I was not.
    So began my journey into the strange world of civil 
forfeiture, where I was now being asked to prove the innocence 
of my property in crimes that I had nothing to do with.
    The Tewksbury Police Department, working with the U.S. 
Attorney's Office, claimed that our motel facilitated drug 
activity and there was a substantial connection between the 
motel and the drug activity. This came after years with working 
with law enforcement officials to prevent and report crime on 
our property.
    Over the course of 20 years, we rented out more than 
125,000 rooms to guests. The Government's lawsuit identified 15 
arrests over that period as a basis for the forfeiture, 15 
arrests out of 125 rooms rented. That averages to less than one 
per year--one arrest per year.
    I have never been charged with or convicted of a crime in 
my entire life. No one in my family or any of our employees has 
ever been involved in any of those crimes at the motel.
    The next few years could only be described as a living 
nightmare brought to us courtesy of the U.S. Government. 
Immediately, the lawsuit began to drive customers away and our 
long-term tenants were worried about where they may go to live.
    The Tewksbury police and the U.S. Attorney's Office thought 
this would be an easy target because we are a mom-and-pop 
business and not some big corporation, like Motel 6 or Walmart, 
which had similar crimes on their property.
    I also believe our commercially zoned property with no 
mortgage put a bull's eye on our backs in their eyes. After 
borrowing $60,000 to fight the forfeiture action, I was at my 
financial and wit's end. My wife was not in good health and 
watching our retirement dream slip away began to take its toll.
    It was at that time the Institute for Justice offered to 
take the case pro bono. It is because of IJ that I am able to 
say this story has a happy ending, unlike most others.
    After a 4-day trial in Federal court, we finally, in 
January 2013, received the news that we had won. The judge 
agreed that we were innocent owners and that the Government's 
case had no legs to stand on.
    Unfortunately, not everyone can have lawyers willing to 
represent them free of charge. Too many Americans are being 
swept up by civil forfeiture with no means to defend 
themselves.
    I am here today not only to share my story, but to urge you 
to make real changes to the law to make sure this can never 
happen again. As my case shows, when there is profit incentive 
for the agencies doing the forfeiture, justice is hard to find. 
This profit incentive must end.
    In addition, civil forfeiture turns the American 
presumption of innocence on its head. Criminals are presumed 
innocent until proven guilty and the Government must prove 
beyond a reasonable doubt that they are guilty. But under civil 
forfeiture, I had to prove I was innocent. Our forfeiture laws 
are unjust, un-American, and Congress has the power to prevent 
these abuses from continuing.
    I urge this Committee to address the serious flaws in this 
current law.
    Thank you again for the opportunity to testify.
    [The prepared statement of Mr. Caswell appears as a 
submission for the record.]
    Chairman Grassley. Thank you, Mr. Caswell.
    Now, Mr. Canterbury.

 STATEMENT OF CHUCK CANTERBURY, NATIONAL PRESIDENT, FRATERNAL 
                ORDER OF POLICE, WASHINGTON, DC

    Mr. Canterbury. Good morning, Mr. Chairman, Senator Leahy, 
other Members of the Committee.
    First, let me say thank you to this Committee for the 
passage of two very important pieces of legislation to the 
floor: the reauthorization of bulletproof vest program and the 
Blue Alert bill. We want to thank you, Chairman Grassley, for 
moving that bill; those two bills mean a lot to the Fraternal 
Order of Police and we thank this Committee for that action.
    The FOP does not disagree that there is a need for civil 
asset forfeiture revision. We have been in regular 
communications with the Justice Department regarding their 
changes to the program, which were announced by Attorney 
General Holder in January.
    It is not a new issue for us and we are pleased that the 
Chairman's staff reached out to us to share his draft 
legislation.
    Many of the provisions in the draft bill which would create 
greater accountability, transparency and oversight of the asset 
forfeiture program are good ones which the FOP will ultimately 
support.
    We are concerned, however, that the reduced timeframes for 
civil asset forfeiture proceedings and expansion of relief 
provisions may overburden the existing system, and we are 
looking for reassurance that that will not happen.
    The draft legislation also proposes changes to the burden 
of proof to a much higher standard. The FOP would like to work 
with you, Senator Grassley, on this standard so that we could 
come with a standard that we all agree is reasonable.
    However, our foremost concern in this draft bill proposes 
the end to the equitable sharing program for State and local 
law enforcement. Federal law enforcement agencies would be able 
to continue to seize property, but would be prohibited from 
sharing any of the assets with local and State agencies, even 
if they were part of the task force which carried out the 
seizure.
    As you know, local law enforcement outnumbers Federal law 
enforcement 8-to-1. The equitable sharing programs are of great 
value to law enforcement and to public safety and the 
communities in which these funds are shared.
    Like any government program, there can be found instances 
of abuse and the FOP supports measures to combat such abuses 
and to improve the integrity of the program. However, to end a 
decades-long program with documented success in deterring and 
fighting crime without careful consideration is simply not 
sound public policy.
    We have been assured that the aim of this reform 
legislation is not to penalize law enforcement or reduce their 
access to resources. The draft bill does provide a percentage 
of the asset forfeiture funds for the Edward Byrne Memorial 
Justice Assistance Grant, as well as $200 million to joint 
local law enforcement operation programs to encourage State and 
local agencies to continue working on these task forces.
    However, there is no guarantee that appropriators will not 
use these funds to replace the existing funds. In our view, the 
ending of the equitable sharing program will result in yet 
another reduction in Federal assistance to State and local law 
enforcement.
    Loss of these funds will greatly reduce the ability of 
State and local agencies to participate in joint operations.
    The changes announced earlier this year by the Justice 
Department did represent significant reform. In the view of the 
FOP, it makes more sense to allow these reforms time to work 
and evaluate their impact before we consider ending the entire 
program.
    I would also like to ask that the Members of the Committee 
consider the interim report from the President's Task Force on 
21st Century Policing. It contains 29 individual 
recommendations and a large number of those call for new or 
additional Federal funds for State and local law enforcement, 
but not one of those recommendations recommended changes in the 
civil asset forfeiture program.
    Now, I understand this was not a comprehensive report and 
they only had 90 days in which to present these suggestions, 
but at no time did anyone on that committee recommend changing 
this program.
    We can be sure of only one thing. If the draft bill is 
enacted as written, there will be even fewer resources 
available to State and local law enforcement and fewer State 
and local law enforcement agencies will be able to participate 
in Federal task forces to combat regional and organized 
criminal threats, including domestic and foreign terrorism.
    Mr. Chairman, in conclusion, the FOP is ready to work with 
the Committee on this asset forfeiture reform. There are many 
areas which we believe there may be broad agreement--preventing 
abuse, increased transparency, and improved due process. Nobody 
takes a backseat on due process more and nobody believes in due 
process any more than the Fraternal Order of Police. Excuse me, 
Mr. Chairman.
    But in the end, ending the equitable sharing program 
completely, without measuring the impact of recent reforms, is 
simply not the way to do this.
    We thank you for having us here today and we commit to 
working with this Committee to come up with equitable sharing 
programs that are not based on lack of due process.
    [The prepared statement of Mr. Canterbury appears as a 
submission for the record.]
    Chairman Grassley. Thank you, Mr. Canterbury.
    Now, Mr. Bach.

            STATEMENT OF JONATHAN BACH, COOLEY LLP,
                       NEW YORK, NEW YORK

    Mr. Bach. Chairman Grassley, Senator Leahy, distinguished 
Members of this Committee, thank you very much for inviting me 
today.
    Under our current laws, the Government has a right to 
freeze and restrain a criminal defendant's assets at the very 
beginning of a case when it believes those assets are fruits or 
instrumentalities of a crime.
    These restraints serve the Government's interest in 
preserving property for restitution of victims and other law 
enforcement purposes. But because they restrain funds, they 
often make it impossible for the individual accused of a crime 
to hire the lawyer that he or she wishes to have represent them 
in the ongoing criminal case.
    I am not here today to raise any question about the 
Government's right to restrain assets. I am here to question 
whether such restraints can be imposed without permitting the 
individual accused of a crime an opportunity to be heard on the 
question of whether such restraints are valid and justifiable 
in his or her particular case.
    Our current law limits the ability of individuals accused 
of a crime to obtain a meaningful hearing on this very 
important issue. Our current law also limits the ability of 
judges and courts to review the propriety of such restraints in 
individual cases.
    The Supreme Court, in a recent case of Kaley v. United 
States, declined to find that a criminal defendant has a right 
to a hearing to challenge asset restraints other than a hearing 
on the limited question of whether the particular assets under 
restraint can be traced back to the crimes charged.
    Over the past 25 years, courts in the Second Circuit, where 
I practice, have granted individuals whose assets have been 
restrained far broader hearing rights. The experience in the 
Second Circuit has shown that relatively broad pretrial hearing 
rights can be meaningfully accommodated within the judicial 
system without resulting in overload of court dockets or other 
abuse of the system.
    Throughout the quarter of a century during which the Second 
Circuit has recognized a broad hearing right, there have been 
fewer than 30 reported cases at the district court level in 
which defendants have challenged pretrial asset restraints.
    One explanation for this low number is that defense 
attorneys representing clients with restrained assets and, 
thus, with limited, if any, ability to pay attorney's fees, are 
unlikely to devote the time and effort needed to pursue a 
hearing unless they believe there is a genuine possibility that 
they will prevail. In other words, they refrain from seeking 
such hearings where the Government can easily make its case.
    A separate reason for the infrequency of these hearings is 
that district courts have required defendants seeking a hearing 
to first establish that, in fact, they have a genuine need for 
the restrained funds to hire the lawyer of their choice.
    District courts have also allowed the Government to proceed 
at these hearings by presenting only a single witness, 
typically the law enforcement agent assigned to the case who 
summarizes the anticipated testimony of other witnesses in 
hearsay form. That mechanism has also helped courts limit the 
scope of these hearings and keep them within meaningful limits.
    Recognition of a criminal defendant's right to a pretrial 
hearing in the Second Circuit has also had the beneficial 
result of encouraging lawyers to reach resolution by mutual 
agreement, often making any hearing unnecessary.
    A hearing limited solely to the question of whether the 
assets under restraint can be traced back to the crime charged 
serves little or no purpose in many cases where there is no 
dispute that the defendant engaged in the conduct in issue, but 
only a dispute as to whether the conduct constitutes a crime.
    Many defendants admit conduct, but contend that they did 
not have the requisite state of mind to make it a crime. Other 
defendants admit conduct, but argue that the prosecution is 
barred by the statute of limitations. Still other defendants 
admit conduct, but contend that the criminal statute under 
which they were charged is too vague to put them on notice that 
their conduct was a crime.
    Many cases in which conduct is conceded, but the defense 
turns on a different legal concept or principal, often present 
the greatest need for skilled and experienced lawyers capable 
of presenting the nuances of such arguments.
    It is, therefore, critical that defendants with apparently 
strong arguments to make on such grounds not be stripped of 
their assets or deprived of counsel of their choice.
    Chairman Grassley, others, thank you very much for inviting 
me to testify here today.
    [The prepared statement of Mr. Bach appears as a submission 
for the record.]
    Chairman Grassley. I thank all of our witnesses. I am going 
to start with questions, and then Senator Leahy.
    Mr. Canterbury, I am going to give a commentary on your 
testimony. Before I do that, though, at the end of the 
commentary, I was going to ask you this question that I think 
you have answered in your testimony twice. But maybe after my 
commentary, you will want to say more.
    The question was are you willing to engage in constructive 
efforts to develop legislation that would fix the problems and 
that you could support. I think you said twice in your 
testimony that you would do that.
    Mr. Canterbury. Absolutely, Chairman Grassley.
    Chairman Grassley. This is a commentary I have on your 
testimony.
    Asset seizure abuses are not anecdotes. They have formed 
the basis for successful lawsuits and they are inherent in 
perverse incentives of equitable sharing.
    I think most Americans would be offended by the suggestion 
that if equitable sharing funding is not replaced dollar-for-
dollar, quote, ``fewer State and local law enforcement agencies 
will be able to participate in Federal task forces to combat 
regional organized criminal threats, including domestic and 
foreign terrorist threats,'' end of quote.
    The people rightfully expect that police officers will 
always and unconditionally protect them from organized crime 
and terrorism, period, and they expect that all police officers 
would value their civil rights more than Federal funding.
    I expect that law enforcement would be able to successfully 
seek replacement funding if equitable sharing were eliminated, 
unless perhaps these were the kinds of arguments being 
advocated.
    Equitable sharing allows police to end-run the requirements 
that States have enacted to protect their citizens from very 
real abuses, including bounty hunting.
    We have 15 years of experience documenting what happens 
when Federal legislation to prevent abuse is not enacted. So, I 
do not think we have to wait for more abuses for justification 
of the legislation.
    Now, this Committee has been very supportive of law 
enforcement. You recognized this in your opening statement 
about two bills of importance to police officers. But the 
public is becoming increasingly discontent with the record of 
law enforcement in civil rights.
    Already Members of both parties are pushing for hearings 
and even legislation on police brutality and killings.
    So, from me, a bit of advice. I think this is the wrong 
time for law enforcement to display any kind of a tin ear and 
oppose needed reforms.
    Now, you have said you were willing to work for reforms and 
work with us and I appreciate that very much and I have told 
you my other side of the story. And if you want a few seconds 
to respond, I would be glad to. Otherwise, I am going to ask 
Ms. Sheth a question.
    Mr. Canterbury. Senator Grassley, I think as the 
practitioners, rank-and-file officers, the appropriations of 
funds are way beyond our capabilities. But I will tell you, 
from the field level, we are almost down 100,000 officers of 
where we were in 1994. Crime levels are on the rise everywhere 
and it is just a fact of life.
    If there is not adequate funding for State and local law 
enforcement, then our abilities to perform are going to be 
reduced, and we see that all over the country. And the biggest 
problem in law enforcement right now is the lack of training 
funds.
    And we do agree that there are implementation problems with 
money, that it is not appropriated properly within the 
agencies, but that is way beyond the level of the rank-and-file 
police officers in this country.
    But we will gladly work with you to improve that. We 
believe that some reforms are needed and we would be glad to 
work with your staff on that.
    Chairman Grassley. Ms. Sheth, do you have any reaction to 
the testimony of law enforcement today?
    Ms. Sheth. Yes. Thank you, Chairman Grassley. I agree that 
it is simply almost offensive to call these stories anecdotes--
62,000 cases of currency seizures on our highways are not 
anecdotes.
    More than 2,500 cases of structuring seizures are not 
anecdotes. They are statistics that show the deeply entrenched 
financial interests of law enforcement and agencies and in the 
systemic abuse.
    Mr. Canterbury is right that our State and local law 
enforcement should be adequately funded, but that funding 
should not come from this unaccountable revenue stream that 
forfeiture provides.
    As Ranking Member Leahy accurately described, these are 
slush funds. And as The Washington Post reported, since 2008, 
298 police departments and 210 task forces have seized the 
equivalent of 20 percent or more of their annual budgets 
through forfeiture. This is a slush fund that needs to be 
stopped.
    And I would like to correct the record because equitable 
sharing is not what is allowing--it is a windfall for State and 
local law enforcement. It is not a replacement for their 
budget.
    Deputy Sheriff in Kane County, Illinois, has characterized 
this as a tax-liberating goldmine. Law enforcement agencies at 
all levels have relied on these forfeiture funds to pad their 
budgets.
    Current law under the asset forfeiture fund allows State 
and local law enforcement to recoup their expenses in any joint 
investigation and task forces. So, the equitable sharing 
proceeds, the 80 percent they receive is on top of that.
    Chairman Grassley. Senator Leahy.
    Senator Leahy. Thank you.
    Mr. Canterbury, one, I want to thank you. I think everybody 
would join this. You and Mr. Pasco have been a huge help to 
this Committee, certainly over the years I have been a Member, 
and I appreciate that.
    I also know of your own practical experience as a law 
enforcement officer. I think you would probably agree with me 
that if laws are being abused, that is wrong. And some changes 
are needed. I think these changes have to be done carefully.
    We have to understand the importance of asset forfeiture 
funds, assuming they are taken appropriately, how they support 
joint task forces and Federal, State and local law enforcement.
    I think of the Vermont task force. We have a surge in 
heroin trafficking in our State and we could only attack it 
through this joint task force.
    If you lose all asset forfeitures, what would that do to 
joint task forces, not just in my State, but in all our States?
    Mr. Canterbury. I think it would be devastating and it is 
just the lack of State and local money to continue to fund 
officers that are doing county or Statewide task forces where 
they would be retained in their own local jurisdictions.
    For instance, in my State, our criminal law does not allow 
joint-use facilities in--I do not have arrest powers outside of 
my county, and it is only normally through Federal task forces 
that we are able to work large chunks of territory in our State 
and supplement those small sheriff departments that could not 
afford a narcotics or criminal investigation division to do 
organized crime.
    Senator Leahy. We also find that they are used to help 
victims of crime.
    Mr. Canterbury. Well, a number of cases. For instance, in 
New Jersey, the 21 prosecutors there use asset forfeiture money 
to supply law enforcement agencies with NARCAN. Over 800 lives 
have been saved with that money in New Jersey. They have also 
used that money for drug education programs. Same thing in 
Florida, in Broward County. They built 10 Scholastic Family and 
Community Reading Oases to promote literacy. And a lot of those 
funds are used in lower economic areas to help with education 
programs, especially in the area of drug resistance.
    Senator Leahy. Thank you.
    Now, Ms. Sheth, I listened to what Mr. Caswell said about 
property being seized and I referenced an article in today's 
press of another situation in Maryland.
    If property is going to be seized, just as though somebody 
is going to be fined or sent to prison or anything else, you 
have got to have due process. I think we would both agree on 
that.
    You testified about the need to address the inadequate 
procedural safeguards of protecting innocent owners.
    What is the single most important--you have had experience 
in this, so I ask you this: What is the single most important 
procedural reform we could provide in civil asset forfeiture 
cases?
    Ms. Sheth. The single most effective way in terms of 
procedure would be to restore the presumption of innocence. 
Currently, as I said in my testimony, property owners are 
presumed guilty and this is true at the administrative level.
    So, I can walk through basically how a seizure works and 
all the different hurdles property owners have to overcome. The 
deck is really stacked against property owners.
    First, they are not guaranteed counsel and so property 
owners would have to hire counsel to get back property that is 
often worth less than the cost of legal fees it would to get 
their property back.
    Second, once the property is taken, it immediately goes to 
an administrative proceeding and there the property--once 
property has been administratively forfeited, it is presumed 
valid. Property owners have the burden to file a claim timely 
and if they miss that deadline by a single day, their property 
is automatically forfeited. And even when they get to court--so 
even if they do timely file a claim, it gets out of the 
administrative procedures and into court, the burden is on them 
to show that they affirmatively did not know about the illegal 
activity or did not consent to it.
    So, these procedures are all stacked against property 
owners to the benefit of the Government, and that is not the 
way it should be when we are talking about innocent property 
owners.
    Senator Leahy. Thank you. I think, Mr. Chairman, both you 
and I would agree that we want to balance the appropriate needs 
of law enforcement, but also the basic rights of people. I 
think that can be done, but I will work with you on this.
    Chairman Grassley. And we know in the Senate if we do not 
get some bipartisan agreement, nothing is going to happen. So, 
we will have to continue to talk.
    Senator Leahy. Thank you.
    Chairman Grassley. Senator Lee.
    Senator Lee. Thank you, Chairman Grassley, for organizing 
this hearing on this very important topic.
    Thanks to each of you for coming to talk to us about it 
today.
    The Constitution says that no person shall be deprived of 
life, liberty, or property without due process of law. Despite 
this protection that we have in our Constitution, the testimony 
today and recent news reports indicate that due process is 
often ignored when it comes to civil asset forfeiture.
    While we all agree that crime should not pay, Federal 
forfeiture laws have enabled and even, in some cases, 
incentivized law enforcement practices that have great 
potential to threaten our liberty.
    That is why I am a cosponsor of the FAIR Act, along with my 
colleague, Senator Rand Paul. I look forward to working with my 
fellow legislators to eliminate the profit incentive that 
forfeiture creates and to adopt procedures that have a greater 
capacity to protect our constitutional rights.
    Ms. Sheth, I wanted to ask you a few questions. The 
Department of Justice recently announced changes to its 
equitable sharing program and you have described how exceptions 
to that policy still allow equitable sharing with the States.
    But what about the Federal system? To what extent is the 
profit incentive a problem within the Federal system itself and 
do you think we need to reform the ability of Federal agencies 
to keep the money and the property that they seize in civil 
asset forfeiture?
    Ms. Sheth. Yes. Absolutely, yes. Any reform that does not 
target that profit incentive at the Federal level will be 
ineffective. That was the problem with the CAFRA reform back in 
2000 and that will continue to be a problem until it is 
addressed.
    It is what is driving and fueling the abuse that we see. 
Before 1985, proceeds from civil forfeitures went to a general 
fund where Congress had control over how that money was spent. 
But in 1985, the law was changed to create the asset forfeiture 
fund, giving the Justice Department direct control, what 
Chairman Grassley referred to as that direct connection between 
forfeiture proceeds and how it is spent.
    And since that time, the funds have grown exponentially. In 
1986, after the forfeiture fund was created, there was only 
$93.7 million in deposits. Twenty years later, annual deposits 
regularly top over $1 billion. And the same is true with the 
Treasury forfeiture fund.
    It is not enough to simply end equitable sharing. Congress 
needs to reclaim its control and oversight over this 
unaccountable funding stream.
    Senator Lee. So, you are talking about a very sharp 
departure, a very sharp shift that happened. You had pre-1985 
and you had post-1985 and you saw roughly a tenfold increase.
    Ms. Sheth. Exactly.
    Senator Lee. Or more as a result of that change. That is 
fascinating. These things, I take it, you do not regard as 
coincidental.
    Ms. Sheth. No. I think there is a direct correlation. It is 
a financial incentive. People respond to incentives.
    Senator Lee. Now, many of the problematic forfeitures tend 
to arise in the context of structuring and the Department of 
Justice and IRS recently announced new policies regarding 
structuring forfeitures.
    Are these policies adequate, in your opinion, and if not, 
what additional reforms do you think ought to be made?
    Ms. Sheth. No. Again, these policy changes are not 
adequate. Again, they could be reversible by the next 
commissioner or the next administration. They need to be 
codified. But even these policy changes contain loopholes for 
exceptional cases.
    For example, the IRS Commissioner himself testified that 
those exceptional cases could include repeated instances. So, 
we could have someone like Carole Hinders, again, still fall 
under that same trap.
    And to give you an idea of the scope of the problem, annual 
seizures have increased fivefold over the 8 years from 2005 to 
2012. In at least one-third of those cases, there is no claim 
of any criminal activity besides a series of cash transactions 
under $10,000. And 80 percent of those structuring cases done 
by the IRS are civil, not criminal.
    So, that is certainly something that needs to be addressed. 
In addition, those policy changes are not retroactive to 
pending cases. So, people who currently already had the 
injustice done to them have no resource.
    The heart of the problem really is to clarify the standard 
of intent that is required. To be guilty of a crime, a person 
has to have a guilty mind or a mens rea and right now under 
current law that is not there.
    The law needs to be changed to show that willfully evading 
the reporting requirements by structuring transactions is what 
is a felony.
    Senator Lee. Okay. My time has expired. But if we get 
another round or if you have an opportunity in response to 
questions from my other colleagues, I want to talk to you more 
later, if we get the chance, about what we can do to undo the 
problem that you describe in which people are effectively 
deemed guilty until proven innocent and what we need to do to 
shift that burden of proof back around.
    Thank you, Mr. Chairman.
    Chairman Grassley. I think we will have time for a second 
round, if you want a second round.
    Senator Tillis.
    Senator Tillis. Thank you, Mr. Chair.
    To follow up on the discussion that Senator Lee was having 
of pre-1985 and post-1985, I just want to make sure I have the 
numbers right. I think asset forfeitures in the 1986 timeframe 
were about $93 million, $94 million. By 2008, it was $1 
billion. And by 2010, it was $2.5 billion. There has been a 
real escalation.
    Ms. Sheth. And currently that is $4.4 billion annually in 
this last year.
    Senator Tillis. Mr. Canterbury, I just want to get your 
sense as to the Fraternal Order of Police. Are they really 
making a judgment about the fairness and the appropriateness of 
seizures, or are they concerned with the funding risk that 
would come from refining it and bending that curve in the other 
direction?
    In other words, is there a strong ideological bias toward 
the way we do it today, or is it really a concern of making 
sure law enforcement officers have adequate funding?
    Mr. Canterbury. Well, I think it is adequate funding is 
always one of our number 1 issues. And we do not disagree that 
there can be due process issues that need to be resolved or 
strengthened. We do not want innocent people to lose their 
money, Senator Tillis.
    Senator Tillis. This question is either for Ms. Sheth--is 
that the correct pronunciation?
    Ms. Sheth. Yes.
    Senator Tillis. Or for Mr. Bach. And it has to do more with 
the standard of proof and about how we should look at reforms.
    But what about earlier in the cycle? In other words, what 
kind of discussions or recommendations are there with respect 
to before the seizure decision is made?
    In other words, when you are out there, and someone is 
about to make a decision based on a relatively low standard or 
a standard that certainly biases someone who is in a position 
to make a seizure decision, has there been discussion about 
moving further up into the chain so you have fewer cases like 
Mr. Caswell's case that you are actually adjudicating? And, any 
current recommendations or focus on that?
    Ms. Sheth. Certainly, the problem is that the standard is 
probable cause to seize and police officers and the law 
enforcement community and the courts have thought that simply 
carrying too much money can be probable cause of a crime, even 
when it is not connected to anything else, even when no drugs 
are found or drug paraphernalia, and that is a huge problem.
    In terms of moving things up in the timeline, even after it 
is seized, there should be a prompt opportunity to contest that 
seizure, and that is something that the Federal courts in New 
York, in DC, in Chicago, have all enacted, that the Due Process 
Clause requires a prompt opportunity for people like Mr. 
Caswell or innocent property owners to show that even if the 
police had on-the-ground probable cause determination, there is 
other evidence out there that shows, I am innocent.
    Senator Tillis. Mr. Bach, why don't you go ahead and 
respond? I have another point.
    Mr. Bach [off microphone]. The very process which proceeds 
with just the prosecution. The defense, the defendant did not 
have an opportunity to participate in the determination or even 
a right to be heard.
    So, a determination of probable cause is made behind closed 
doors, in secret by a grand jury, that is the way our process 
works, and then the restraint is imposed as a result of that 
determination and only then do we get to the question of 
whether the defendant can have any say. And now the Supreme 
Court has said they can only have say on a very limited aspect 
of that, but not more.
    Senator Tillis. By the way, Mr. Canterbury, when I am 
thinking about these seizures, I am not only thinking about a 
man or woman in uniform making this decision, I am thinking 
about the IRS; I am thinking about one case in North Carolina 
where the EPA and Homeland Security did a joint raid on a 
couple about an hour from my home. So, I am thinking more 
broadly, not just in terms of the area that you would focus.
    In Mr. Caswell's case, once you have gotten to the point to 
where you are trying to seek relief, what kinds of things could 
we do to expedite the process or make it less burdensome for 
someone who was in Mr. Caswell's position in terms of direction 
of reforms?
    Ms. Sheth. Certainly, providing counsel would be a huge 
step. Beyond that, it would be to shorten the timeframe. The 
Government has a significant amount of time to file a 
forfeiture action after property has been seized or restrained 
and to shorten that timeframe while providing counsel so that 
it does not burden the property owner to try to comply with 
those timelines.
    In addition, Mr. Caswell's case is a great example of how 
even the current law has been undermined by judicial 
interpretation. So, under current law, forfeitures are very 
broad. They consider all sorts of facilitating property.
    CAFRA was intended to mean that facilitation would be 
instrumentalities. So, the house that is used to store drugs, 
the place that is used to manufacture drugs, not simply 
incidental use of the property, for example, by third-party 
renters. And under current law, that was a very difficult thing 
to prove.
    That substantial connection needs to be clarified and we 
would recommend codifying the decision in Caswell into current 
law.
    Senator Tillis. Thank you. Thank you, Mr. Chair.
    Chairman Grassley. Senator Sessions.
    Senator Sessions. Thank you, Mr. Chairman.
    There have been concerns about forfeiture and I think we 
should listen to those concerns. But, colleagues, it is 
unthinkable that we would make it harder for the Government to 
take money from a drug dealer than it is for a businessperson 
to defend themselves in a lawsuit.
    It is perfectly appropriate, as you try to deter illegal 
behavior, to take the profit out of it. Criminal violators 
ought not to be able to keep their ill-gotten gains.
    I mean, you catch somebody with $200,000 and a dope dealer, 
he should not keep the money. He should not be able to use the 
money to hire a lawyer any more than a bank robber gets to use 
the money he got from the bank to pay for his lawyer or give to 
his children or anything else he might like to do with the ill-
gotten gains.
    It is an historic part of American and English law before 
America was founded. It is not a criminal case. It is not an 
action to put somebody in jail. It is an action in rem against 
the product; in this case, the product of the illegal 
transactions.
    And the way the cases work, colleagues, so often is that 
individuals whose money is stolen or money they may have stolen 
or taken by the Federal officers, that money, you make a claim 
against it. Do you not, Ms. Sheth, Mr. Bach? You make a claim 
to get your money returned.
    Ms. Sheth. To correct the record, actually, the standard is 
preponderance of the evidence, not probable cause. But what you 
are describing, when the drug dealer is actually convicted, 
that is fine. Once you actually get a conviction, that it is, 
in fact, a drug dealer, then that is great and it is 
preponderance of the evidence.
    Senator Sessions. Well, you would agree that it is a 
separate action.
    Ms. Sheth. It is a separate action.
    Senator Sessions. You have got two things. One thing is, 
are you trying to put--or you have the proof to put somebody in 
jail. Another thing is, an action in rem against the cash that 
may have been seized and as a result of that, you get a court 
hearing.
    Ms. Sheth. So, if I could just explain the origins of this, 
because I think there is a little bit of a misunderstanding.
    These are archaic laws that are based on the legal fiction 
that property itself is guilty. At the time of our founding, 
they were limiting to enforcing customs duties because they 
provided 80 to 90 percent of our revenue.
    Senator Sessions. But it is the same principle, absolutely 
the same principle of ancient origin.
    Ms. Sheth. It is the same principle that----
    Senator Sessions. You are correct. And you are not taking 
somebody's liberty and the person, all they have to do is to 
make a claim for the property and if they can prove it is a 
lawful source, it is produced from a lawful source or 
otherwise, they get to keep it. If they cannot prove that, then 
they do not.
    That is what happens. And what happens so often in the 
cases is--Chief, I am sure you have seen it--the person with 
the money never shows up to even claim the money. Is that not 
correct?
    Mr. Canterbury. A lot of these cases are that way and/or 
they cede the money over in the investigation.
    Senator Sessions. And the reason is because they do not 
have any basis to show it was anything other than dope money. 
That is the problem and many of the cases, I would suggest, are 
cash seized in drug-related transactions. A large percentage of 
them are not contested because they have to produce documents 
to say where they got it.
    Well, I got it from the lottery. Well, what lottery? Your 
name is on a check. Let us see a copy of the check. What bank 
did you deposit it to? Who cashed the check? They do not have 
an answer for that. They have done nothing in their lives but 
sell dope and they made a bunch of money from it.
    Chief, once the money is forfeited, you do not give it back 
to the person to purchase the drugs. That would not make sense. 
So, the Government takes the money. And what is wrong with 
having the law enforcement officers who did the investigations 
and expended taxpayers' money to prove the case and seized this 
illegal drug money, what is wrong with them keeping the money?
    Mr. Canterbury. We do not see anything wrong with it.
    Senator Sessions. I do not either. The administration has 
even stopped adopting cases that are products of State 
officers' work. A Federal prosecutor, as I was, has interstate 
subpoena power. They have trained prosecutors who are skilled 
at handling these cases.
    They go before Federal judges who do not cheat people and 
they are able to handle the case where a busy district attorney 
with a murder case on his docket tomorrow is not often able to 
do.
    I think it makes no sense to say that the Federal 
Government cannot prosecute the case and share some of the 
proceeds with the local police officer who helped maybe 
interdict a major drug dealer.
    Chairman Grassley. Senator Flake.
    Senator Flake. Thank you, Mr. Chairman. Thank you all. I 
apologize for not being here earlier and I apologize if I am 
plowing old ground here, as well.
    I wanted to first make a comment. I think we all understand 
that, you are probably right, about 95 percent of this is maybe 
dope money or whatever else and they never come to claim it 
because they cannot prove a lawful source, but, I think, we are 
all concerned or ought to be concerned about the other 5 
percent and I think that we need to make sure that their rights 
are protected and sometimes I think they get swept up into this 
and go through a process they should not have to go through in 
order to get their lawful property back.
    But in January 2015, DOJ had announced its revised position 
on adoptive seizures and this policy included a public safety 
exemption for items such as firearms, ammunition and 
explosives. I want to just better understand this a little bit.
    So, if I could just understand, of the overall adoptive 
seizures, do you know how many of these involved items included 
in the public safety exemption? We will start on the left.
    Ms. Sheth. Unfortunately, no. But we do know that most of 
the seizures are not actually adoptive seizures under equitable 
sharing. Most of them are what are known as joint investigative 
seizures and those are about 80 percent.
    So, even under the new policy, though, to address the 
public safety exception, the reason it is not satisfactory is 
because even beyond those four non-exhaustive categories of 
firearms, ammunition, explosives, and property related to child 
pornography, the policy gives the Assistant Attorney General of 
the Criminal Division sole discretion to authorize exceptions 
in public safety beyond those categories.
    So, there is no real standard of how that should be 
enforced. And since it just was announced, it is too early to 
say how it is going to be enforced.
    Senator Flake. Criminal forfeiture, is that sufficient to 
take care of these contraband items?
    Ms. Sheth. Exactly. Criminal forfeiture would be sufficient 
and there is no need for the public safety exemption for 
adoptive seizures.
    Senator Flake. And are you aware of any State that does not 
allow for civil asset forfeiture of public safety items like 
this?
    Ms. Sheth. North Carolina does not allow for civil 
forfeiture, period, and many States are now engaged in 
comprehensive reform, including the District of Columbia, to 
reverse this trend of the abuse of civil forfeiture.
    Senator Flake. Mr. Canterbury, you mentioned in your 
testimony that you are ready to work with this Committee on 
this issue, specifically improving due process.
    One such proposed reform is increasing the burden, as we 
have talked about here, from preponderance of the evidence to 
clear and convincing. But you testified that FOP does not 
support increasing this standard at this time.
    Does that mean at some point we can get to it or what is 
your feeling there?
    Mr. Canterbury. We would like to have further discussions 
and we would also like to separate the criminal asset 
forfeiture funds from civil asset where there is no criminal 
activity involved at all, and we would also like to see what 
the DOJ changes actually do before we jump to any conclusions.
    They have only been in existence a few months. When they 
came into existence, we had very little to say about them and I 
think you would have expected, if we were concerned about them, 
not adopting our criminal cases, we would have been here 
raising that issue.
    But we do not think they have been around long enough to 
really demonstrate whether they are going to work and we 
believe some of those changes are going to slow down innocent 
victims from having their assets taken.
    Senator Flake. Thank you, Mr. Chairman.
    Chairman Grassley. We will do a second round and I have 
just a couple of questions that I want to ask. I am going to 
start with Mr. Caswell.
    Of course, I express sorry for all the trouble you had to 
go through because of law enforcement overreach. Could you give 
us the reasons why you think your property was targeted for 
asset seizure perhaps compared to any other properties you 
might know something about?
    Mr. Caswell. Well, there is a DEA agent that testified that 
they will not go after a property unless the owner has at least 
$50,000 worth of equity in it. Now, the motel was paid off and 
I just sold it for $2.1 million, and that is what they were 
after.
    Right up the street from us there is as Motel 6 and a Home 
Depot that have had more problems than we have had and they did 
not go after them. They gave the Motel 6 a warning. They never 
gave us a warning. They never came to me and said I ought to be 
doing anything different or all that.
    They just saw us as a soft target with a big financial gain 
for themselves and that is why I feel they went after us 
instead of any other businesses there. It was all about money. 
It was not about drugs.
    Chairman Grassley. And for you, Mr. Bach, did the hearing 
process that the Second Circuit provided before Kaley work 
efficiently?
    Mr. Bach. It works very efficiently. Often, there is no 
need for a court to get involved. Just the prospect of a 
hearing encourages the defense lawyer and the prosecutor to 
talk to each other, figure out what is reasonable in a given 
case, and work it out without having to take any of the court's 
time. So, it is very efficient.
    Chairman Grassley. I think that I should call on Senator 
Perdue, because you have not had your first chance to ask 
questions.
    Senator Perdue, are you ready to go? We were doing a second 
round, but since you were not here for the first round, I ought 
to let you in.
    Senator Perdue. I am, Mr. Chairman. Thank you so much for 
the forbearance.
    First, thank you all for being here. I apologize I missed 
your opening testimony.
    Am I correct, Ms. Sheth, that in understanding from your 
testimony that you want to see not only the elimination of the 
equitable sharing program, but also all forms of civil asset 
forfeiture at the Federal level? Would you speak to that, 
please?
    Ms. Sheth. No. Ideally, that would be great to get rid of 
civil forfeiture entirely, but no. What we are proposing is to 
get rid of the funding, restore congressional control over 
forfeitures both in criminal and civil so that proceeds from 
forfeiture go directly back to Congress, for this body and the 
House of Representatives to decide how that money should be 
spent, not the Department of Justice or Treasury.
    Senator Perdue. So, if it comes off the table or is reduced 
dramatically, what are the top two or three reforms that you 
would see to the current system for the Institute for Justice 
that you guys would like to see?
    Ms. Sheth. Most significantly is to eliminate that profit 
incentive and the ability of the DOJ and the Treasury 
Department to self-finance, by requiring proceeds to go to the 
general fund, and to abolish equitable sharing.
    Equitable sharing was enacted back in 1985 and at that 
time, State and local law enforcement did not have their own 
State forfeiture laws. So, there is no reason why they need to 
rely on Federal laws to do an end run around their own State 
laws.
    Additionally, we should restore the presumption of 
innocence by placing the burden of proof on the Government to 
show that the property owner actually was guilty or was a drug 
dealer or was somehow involved in a crime.
    We should also provide a right to counsel, especially for 
those who cannot afford counsel. Without the assistance of 
counsel, Mr. Caswell might have thrown in the towel and settled 
that forfeiture action.
    And finally, we need to raise the burden of proof on the 
Government from preponderance of the evidence to at least clear 
and convincing, which is the highest standard under civil 
proceedings.
    And finally, to clarify the mens rea requirement for 
structuring and also provide for a prompt hearing, not just for 
criminal forfeitures in the context of Kaley, but also in civil 
forfeitures so that property owners have an opportunity to 
contest the seizure of their property.
    Finally, we should also do some transparency and beef up 
the reporting requirements so we understand how the money is 
being spent and how forfeiture is being used by both the 
Departments of Justice and Treasury.
    Senator Perdue. Would you give us your observations on the 
Kaley decision from the Supreme Court last year, as well, 
briefly?
    Ms. Sheth. Sure. I agree completely with Mr. Bach that it 
was wrongly decided. And I will go one step further, because it 
is not just the right to counsel that is at stake in those 
situations.
    We are talking very much about punishing people before 
trial. They have not been judged to be guilty by a jury and 
their assets are being taken, property is being taken from them 
without that finding of guilt, and they have no opportunity to 
contest that.
    And so beyond just they should have an opportunity to 
contest the seizure, when that money is needed to provide 
counsel, what about the person that needs that money to pay 
their rent, that needs that money to pay their utilities or pay 
their mortgage? Are they supposed to be penalized without any 
sort of opportunity?
    So, Kaley should have been decided in terms of the Sixth 
Amendment right to counsel, but also, more importantly, the 
Fifth Amendment right to process, to protect property.
    Senator Perdue. My time is about up. Mr. Canterbury, could 
you give us a brief--discuss the FOP's position on recent 
policy changes made by the Attorney General?
    Mr. Canterbury. Sir, we are waiting to see what happens 
with them. I mean, they have been put in place. They have only 
been there since January and we really do not have any 
anecdotal information to determine whether or not they are 
going to assist in the problem.
    So, we just think they need to be there a little bit longer 
so we can see what the results are.
    Senator Perdue. In your organization's view, though, what 
is the right way to find the balance here?
    Mr. Canterbury. As far as the equitable sharing, it is a 
funding issue for law enforcement. And we are asked to do a 
tremendous number of things that would normally be either 
Federal or State responsibility and without the funds that are 
derived from equitable sharing, a lot of those things are going 
to slip through the cracks.
    Senator Perdue. I see. My time is up, Mr. Chairman. Thank 
you.
    Chairman Grassley [off microphone]. A 1:30 appointment. So, 
it will be Senator Lee and then Senator Sessions and then 
Senator Flake, if all of you want to ask questions. Go ahead, 
Senator Lee.
    Senator Lee. Ms. Sheth, I would like to kind of pick up 
where we left off before and just talk about what we need to do 
to solve the problem of burden shifting. What would be the 
ideal kind of legislation, as you would envision it, and how 
would it change the burden?
    Ms. Sheth. Sure. At initial step, the administrative 
forfeitures should be wholesale revised. The burden should not 
be on property owners from the beginning to respond to an 
agency with a direct financial interest in the outcome of this.
    When property is taken, it should be the burden of the 
Government to file--at least take the initial step and show--
file a complaint in Federal court, just like all other civil 
proceedings.
    Beyond that, once the Government--the standard of proof in 
civil proceedings should be elevated from mere preponderance of 
the evidence to clear and convincing, and then the Government 
should also bear the burden of showing that the property owner 
knew about or consented to the illegal activity.
    Under this regime, there would still be an affirmative 
defense for innocent property owners like Mr. Caswell to show 
that they took all reasonable measures to mitigate that or to 
stop the illegal use of their property, but the burden should 
not be on them to prove a negative that they did not know about 
something.
    Senator Lee. So, under the status quo as it operates, in 
your experience, how hard is it generally for an innocent 
person to get his or her property back once it has been seized 
in a civil asset forfeiture proceeding?
    Ms. Sheth. It is very difficult. It is extremely hard 
because, as I testified before, the deck is stacked against 
property owners. You are not guarantee counsel and often the 
property is worth less than the amount of legal fees.
    The agency will immediately start administrative 
forfeitures and the burden is on property owners to timely file 
a claim.
    There have been numerous reports of even the notices that 
property owners get are unclear. People do not know what agency 
of all the--between the State and local that seize their 
property, where are they supposed to file this claim. And there 
is no good cause exception. If the property owner misses that 
deadline by a single day or even just minutes late from the 
filing deadline, it is administratively forfeited and that is 
it.
    If they are lucky enough to survive all these loopholes and 
make it to Federal court by timely filing a claim, then, again, 
these burdens are still stacked against property owners.
    And even in the end, they might be able to recover 
attorney's fees, but that provision has also been gutted. And 
so very frequently property owners do not actually get--recover 
their attorney's fees under CAFRA.
    So, it is a system that is stacked against property owners 
and that needs to change.
    Senator Lee. And just to be clear, you do not, I take it, 
have a problem with the Government seizing property that was 
involved in a crime, seizing property from someone who was 
involved in a crime and where guilt is adequately proven.
    Ms. Sheth. Right. And that is criminal forfeiture and 
nothing that we are talking about today or that the Institute 
for Justice recommends is changing criminal forfeiture. This is 
all pursuant to civil forfeiture, this archaic legal fiction 
that property itself--that cannot act or think--is somehow 
guilty.
    Senator Lee. Right. My understanding is that some trace the 
civil forfeiture laws that we have today back to what was known 
at common law as the Deodand, which was based on a theory that 
the object--an object that was used in killing somebody, 
sometimes by accident, needed to be forfeited and seized, in 
part, because of a superstition that it was evil, the thing 
itself was evil.
    Do you share that view that that is sort of where it came 
from?
    Ms. Sheth. Yes. That is exactly where it came from. It was 
the medieval origins, the superstitious belief that objects 
independently acted to commit crimes.
    In the U.S., civil forfeiture traces its origins to the 
practical necessity of obtaining jurisdiction over property 
when the owner was overseas or was not available to have 
jurisdiction over, and that justification is no longer true.
    There are many cases. The people that we are talking about 
are right there. Courts have jurisdiction over the person and 
can bring a criminal forfeiture action.
    Even during Prohibition, which expanded forfeiture, it was 
limited to instrumentality, so the vehicle that was 
transporting illegal liquor. It was not this catch-all of all 
property, no matter how tenuously connected to a crime. And the 
Supreme Court has made clear, over and over again, that 
forfeiture is drastic. It is not favored. In fact, is a 
draconian method.
    So, we do need to rein it in from the 1980s and this 
constant expansion and proliferation.
    Senator Lee. Thank you. I do not know who is next.
    Senator Sessions. I am next, right?
    Well, look, Chief, I am very unhappy. You need not to be 
defensive about this. What has been going on with taking and 
seizing and forfeiting through a government judicial process, 
illegal gains from criminal enterprises, is not wrong and it 
should not have a burden of proof higher than a normal civil 
case and should not have a burden of proof higher than probable 
cause, which is what you can indict somebody and put them in 
jail for murder on.
    It should not be a higher standard than a police officer 
can arrest a person, take them to the jailhouse, and lock them 
up on probable cause.
    I am amazed that the Department of Justice would say they 
won't adopt these cases anymore. This is going to fix 
something?
    So, you have a local district attorney and a local police 
officer in a small town, they catch a guy hauling drugs and he 
has got frequently half a million dollars or $1 million in 
cash. He is coming from Texas or Miami.
    The local DA is going to be facing a big-town lawyer, he 
does not have the ability to issue subpoenas to Miami or Laredo 
or Phoenix or New York. And so, the case goes to a Federal 
court.
    The money is taken. The claim is made to the Federal 
officials. It goes before a Federal judge and you have a case 
and they have Federal prosecutors using Federal law and there 
is no problem with dual jurisdictions.
    Federal law and State law compliment each other all the 
time. And so the case goes up and if the guy can prove that he 
took it out of his bank account, prove it was a bonus from his 
work, prove it is his saving account, he gets the money back.
    The Department of Justice has stopped having Federal 
prosecutors take these cases over, leaving it, oftentimes, on 
overworked local police officers and prosecutors, local county 
attorneys. And there is nothing wrong with--once the forfeiture 
is being accomplished, I think then that the money be given to 
the officers who helped develop the case.
    You can say that creates an incentive, it does. And, Mr. 
Caswell, I am not saying there cannot be abuses in this system. 
Humanity runs systems and we have had examples of police 
officers shooting people without justification. We have seen 
that in the news. So, things do happen. But that does not mean 
you eliminate the ability of police officers to arrest 
somebody.
    All right. Mr. Caswell, I think we should be open about 
this. We have a letter from the Alabama Law Enforcement Agency, 
Spencer Collier, who is the head of that agency, strongly 
supporting continuing the law and pointing out the moneys that 
are often seized from these people.
    He said in his letter to me, to Senator Grassley, in just 
the past 2 weeks, State law enforcement officers--this means 
the State troopers--initiated stops that led to $750,000 in 
seizures. Most people do not carry $750,000 in their car.
    So, I have that letter. I would offer it to the record. And 
a letter from the Major Cities Chiefs Association, the Major 
County Sheriffs' Association, the International Association of 
Chiefs of Police, the National Sheriffs' Association, the 
National District Attorneys Association, and the Association of 
State Criminal Investigative Agencies, and others I'm sure will 
be commenting once they find out the dramatic actions that 
would be taken that would undermine, I think, a good procedure.
    [The information appears as submissions for the record.]
    Senator Sessions. Now, I do think our colleagues are 
correct to say are there problems. Structuring can be abused. I 
think it has always been complained about and people have made 
some valid points about it.
    The IRS has great powers and maybe that is necessary. The 
very concept of--if a hotel owner is using the hotel or his 
house, a homeowner, to move drugs, it is forfeitable. Now, if 
the house or the motel has no equity or it is being rented, 
then you are not going to have a forfeiture action, obviously, 
undertaken because there is no equity to receive, to obtain. 
There is nothing, I think, wrong with that.
    So, I would say we--and, Ms. Sheth, on the standard of 
proof, I think you are correct. Probable cause to arrest 
someone or to indict someone is the standard. Preponderance of 
the evidence is a higher standard than that. You have to have 
that to prevail in a forfeiture case, right?
    Ms. Sheth. Only when it is in court and most of these are 
done administratively without any judicial supervision. In 
fact, that is 64 percent of cases.
    Senator Sessions. Well, they end there, but they can appeal 
to court, can they not?
    Ms. Sheth. No. In fact, no. If they have missed the 
deadline to----
    Senator Sessions. Well, if they miss the deadline----
    Ms. Sheth. Because they do not have counsel and they do not 
know----
    Senator Sessions. If you miss the deadline you are out. 
Surely you know that. You can get the court on your cases and 
clear and convincing is an extraordinarily high standard and I 
think should not be adopted, when Senator Perdue's business can 
be sued on a probable cause standard.
    Thank you.
    Senator Flake. Thank you. Just one quick question. In 1999, 
the total value of asset forfeiture recoveries by the 
Department of Justice was approximately $535 million. Then in 
2000, when the Reform Act was passed, that number dropped to 
$312 million. So, $535 million to $312 million, a decrease of 
about 40 percent.
    In 2001, total asset forfeiture by DOJ was under $200 
million, a decrease of 36.3 percent. However, in 2008, asset 
forfeiture recoveries surpassed $1 billion. Based on those 
numbers, it looks like reforms were initially successful, but 
then it ramped up again.
    Mr. Bach, do you have any explanation for that or why has 
it gone this way?
    Mr. Bach. That is not something that I have studied in 
particular. Maybe Ms. Sheth can shed some light on that.
    Senator Flake. Ms. Sheth?
    Ms. Sheth. Yes. It is precisely because of this profit 
incentive. With all due respect, the problem with law 
enforcement receiving this money directly is because it skews 
law enforcement priorities from pursuing justice and pursuing 
criminals to padding their own budget, and this is best seen 
perhaps by an investigation that Tennessee did of its local law 
enforcement and the drug task forces.
    It found that officers in the drug task force were 10 times 
more likely to patrol the westbound lanes of I-40 rather than 
the eastbound lanes. And why is that? It is because the illegal 
drugs from Mexico were being transported into Nashville on the 
eastbound lanes and it was only on the westbound lanes that the 
money was flowing.
    So, these civil forfeiture laws are actually skewing law 
enforcement objectives from curtailing the influx of drugs to 
pursuing cash. And it is my opinion--and, I think, the opinion 
of most Americans--that we should be enforcing both sides of 
that highway, stopping drugs, as well as stopping the money and 
disarming criminals.
    It is probably no surprise then that there are low 
clearance rates for violent crimes because instead of pursuing 
solving these kinds of violent crimes like murders, instead we 
are focusing on a drug trade, but even not for drug kingpins, 
for low-level activity, and that needs to stop by 
disincentivizing the profit incentive.
    Senator Flake. Mr. Canterbury, do you dispute the findings 
of that study?
    Mr. Canterbury. Senator, we are just trying to catch 
criminals. Whether they have got the money or the cash or the 
drugs, if they involved in criminal activity, as far as we are 
concerned, they are criminals. And I think eastbound-westbound 
does not matter. We are trying to get both off the street. If 
you have got the money, you are keeping more drugs off the 
street as well.
    And I disagree with the violent crime. I think law 
enforcement in this country has done a great job on violent 
crime. Those stats are down. Larceny crimes are up, burglaries 
are up, but violent crime has been down.
    So, I think that is quite a stretch.
    Senator Flake. But this study showing 10 times more likely 
to patrol westbound lanes as opposed to eastbound lanes, do you 
think there are problems with the methodology of the study?
    Mr. Canterbury. I have not seen the study, but it sounds to 
me like there would be. It does not sound like something that 
local law enforcement would be engaged in. When you are doing 
highway interdictions to look for money or drugs, it is the 
exact same criminal characteristics. We do not smell money if 
it drives by.
    Senator Flake. Ms. Sheth, you support that study.
    Ms. Sheth. Yes. I stand by this study. I would also like to 
note the hypocrisy that basically carrying too much cash has 
become a crime and if people cannot document the way they spent 
it or the way they have received it, it can be seized by the 
Government.
    Yet, the Treasury Department and the Justice Department 
have not kept good of their own recordkeeping of how they are 
spending forfeiture funds, and that kind of hypocrisy shows the 
abuse of civil forfeiture laws and there needs to be more 
transparency in reporting so we do know exactly how the money 
is being spent and how highways are being enforced.
    Senator Flake. Thank you. Back to you, Senator Sessions.
    Senator Sessions [presiding]. Thank you. I think we should 
listen to the concerns that have been raised. I do not say that 
no change should be done in this process, but police officers 
go where the criminals are. If they are on the west lane 
hauling dope money by the millions of dollars, I do not see 
anything wrong with somebody making that choice that this is an 
avenue drug dealers use a lot.
    So, we will listen. I know Senator Grassley is serious 
about this issue. Members of the Committee care about it and 
want to make sure that this area is properly and professionally 
handled. But we will have to make some big decisions. Are we 
going to end sharing? I think that would be a huge detriment to 
law enforcement.
    I think it is a big mistake not to allow the Federal 
Government to adopt cases where they can assist their local law 
enforcement brothers.
    We take gun cases in Federal court. If it is a violation of 
State law or Federal law, Federal court cases have mandatory 
sentences and many of those are adopted in Federal court. We 
are not going to stop that. I do not think it is wrong for the 
Federal Government to adopt State cases.
    Thank you all. Anything else? We will keep the record open 
for 1 week for further questions.
    We are adjourned.
    [Whereupon, at 11:46 a.m., the hearing was adjourned.]
    [Additional material submitted for the record follows.]

                            A P P E N D I X

              Additional Material Submitted for the Record

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        Questions Submitted to Jonathan Bach, Chuck Canterbury,
                 and Darpana Sheth by Senator Grassley

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      Questions Submitted to Chuck Canterbury by Senator Klobuchar

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         Questions Submitted to Jonathan Bach by Senator Vitter

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       Questions Submitted to Chuck Canterbury by Senator Vitter

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         Questions Submitted to Darpana Sheth by Senator Vitter

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         Questions Submitted to Russ Caswell by Senator Vitter

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 Responses of Jonathan Bach to Questions Submitted by Senator Grassley

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  Responses of Jonathan Bach to Questions Submitted by Senator Vitter

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               Responses of Chuck Canterbury to Questions
                     Submitted by Senator Grassley

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               Responses of Chuck Canterbury to Questions
                     Submitted by Senator Klobuchar

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 Responses of Chuck Canterbury to Questions Submitted by Senator Vitter

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 Responses of Darpana Sheth to Questions Submitted by Senator Grassley

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  Responses of Darpana Sheth to Questions Submitted by Senator Vitter

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   Responses of Russ Caswell to Questions Submitted by Senator Vitter



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