[Congressional Record (Bound Edition), Volume 145 (1999), Part 10]
[House]
[Pages 14118-14122]
[From the U.S. Government Publishing Office, www.gpo.gov]



                   CIVIL ASSET FORFEITURE REFORM ACT

  The SPEAKER pro tempore. Pursuant to House Resolution 216 and rule 
XVIII, the Chair declares the House in the Committee of the Whole House 
on the State of the Union for the consideration of the bill, H.R. 1658.

                              {time}  1406


                     In the Committee of the Whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the State of the Union for the consideration of the bill 
(H.R. 1658) to provide a more just and uniform procedure for Federal 
civil forfeitures, and for other purposes, with Mr. LaHood in the 
chair.
  The Clerk read the title of the bill.
  The CHAIRMAN. Pursuant to the rule, the bill is considered as having 
been read the first time.
  Under the rule, the gentleman from Illinois (Mr. Hyde) and the 
gentleman from Michigan (Mr. Conyers) each will control 30 minutes.
  The Chair recognizes the gentleman from Illinois (Mr. Hyde).
  Mr. HYDE. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, about 6 years ago I was reading a newspaper and I read 
an op ed article in the Chicago Tribune explaining a process that goes 
on in our country, and I must tell the Members, I could not believe it. 
I thought that over 200 years we had ironed out what due process meant, 
what equal protection under the law meant. But I found out that there 
are corners in our legal proceedings into which light needs to be shed. 
One of them concerns civil asset forfeiture.
  There are two kinds of forfeiture, criminal asset forfeiture and 
civil asset forfeiture. What is the difference? The difference is in 
criminal asset forfeiture you must be indicted and convicted. Once that 
happens, the government then may seize your property if your property 
was used, however indirectly, in facilitating the crime for which you 
have been convicted.
  You are a criminal, you are convicted, and they seize your property. 
I have no problem with that. I think that is useful in deterring drug 
deals and extortionists and terrorists. I have no problem with criminal 
asset forfeiture.
  But the other type is civil asset forfeiture. That is a horse of a 
different color. In civil asset forfeiture, the government, the police, 
the gendarmes, can seize your property upon the weakest, most flimsy, 
diaphenous charge, probable cause. Probable cause will let you execute 
a search warrant or maybe frisk somebody, but no, they use probable 
cause as the basis to seize your property. I do not just mean your 
roller skates, they can take your business, they can take your home, 
they can take your farm, they can take your airplane. They take 
anything and everything premised on the weakest of criminal charges, 
probable cause.
  What is also unbelievable is that unless you take action in court, 
you cannot get your property back. They do not have to convict you, 
they do not have to even charge you with a crime, but they have your 
property because they allege probable cause.
  How do you get your business back, your home back? You go to court, 
you hire a lawyer, you post a bond, and then you have to prove within 
10 days, you have 10 days to do all this, you have to prove that your 
property was not involved in a crime. In other words, you prove a 
negative.
  I do not know how you do that. I have been a lawyer since 1950, and I 
do not know how you prove that something did not happen. But 
nonetheless, that is the burden now. Under our jurisprudence, the 
burden of proof should be with the government. If you are guilty of 
anything, then prove it. The standard is beyond a reasonable doubt in a 
criminal case.
  So what we are asking is to turn justice right side up, to switch the 
burden of proof from the poor victim, who has been deprived of his 
property and not convicted of anything, to the government, who has 
seized this property.
  Now, may I suggest there are some incentives for some police 
organizations not to do this, because they share in the proceeds of the 
seized property. It is like the speed trap along the rural highway 
where the sheriff waits for us, takes us to a magistrate, and his 
salary is paid out of the fines he levies against us. We do not have a 
very great chance at equal justice.
  That is the situation here. Civil asset forfeiture as allowed in our 
country today is a throwback to the old Soviet Union, where justice is 
the justice of the government and the citizen did not have a chance.
  So I suggest we remedy this, and that is what we are trying to do.
  The bill before us makes eight changes. First, the burden of proof 
goes to the government, where it belongs.
  Secondly, the standard is clear and convincing. The reason it is not 
a mere, simple preponderance is that this is quasi-criminal. They are 
punishing you when they have taken charge of your assets and of your 
property.
  The next thing it does, it permits the judge to release the property 
pending the disposition in case a hardship exists and you are out of 
business or you have no place to live.
  The third thing is the court can, in an appropriate case, appoint 
counsel. That is important if you are broke, if they have taken your 
property. You need help, you cannot afford a lawyer. The reason some 
organizations resist appointing counsel is because if you cannot get a 
lawyer, you cannot file a claim, so the forfeiture stands. You have a 
disincentive, you are discouraged from filing a claim because you 
cannot pay for a lawyer.
  We also eliminate the bond, and I am happy to see that the gentleman 
from Arkansas (Mr. Hutchinson) eliminates the bond, too.
  Our bill provides an innocent owner defense which is uniform across 
the country. If you own something and somebody else performed a crime 
in it or with it, and you are perfectly innocent and that can be 
established, that is a defense. You can sue the government under my 
bill if they destroy your property, and you can get interest if they 
have held your cash, and you can have 30 days to file your claim, not 
10 or 20.
  Lastly, let me just say this. This bill puts civil liberties and due 
process back in our criminal justice system. I am so delighted at the 
sponsors of this bill, both Democrats and Republicans, liberals and 
conservatives.
  I am also delighted at the organizations that have endorsed it: The 
American Bar Association, the National Rifle Association, the National 
Association of Criminal Defense Lawyers, the American Civil Liberties 
Union, Americans for Tax Reform, the National Association of Realtors, 
the Credit Union National Association, the American Bankers 
Association, National Association of Home Builders, and on and on; the 
U.S. Chamber of Commerce. There is the widest possible spectrum of 
support for this reformation of our civil asset forfeiture laws.
  I beg Members to listen carefully and join me in this essential 
reform.
  Mr. Chairman, I reserve the balance of my time.
  Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, to the Members of the House of Representatives, I would 
like Members to understand that there is wide, wide support not only in 
the committee but among organizations for reforming civil asset 
forfeiture.

[[Page 14119]]



                              {time}  1415

  When we bring together the gentleman from Illinois (Mr. Hyde), 
chairman of Committee on the Judiciary, myself, the ranking member, the 
distinguished gentleman from Massachusetts (Mr. Frank), and the 
gentleman from California (Mr. Farr), then we have a combination that 
covers, I think, the entire political philosophical spectrum of the 
Congress.
  When we bring also the American Civil Liberties Union, the Criminal 
Defense Lawyers, the United States Chamber of Commerce, the Cato 
Institute, and the National Rifle Association, we have a combination of 
organizations that I think they come together every 10 years on a 
legislative agreement.
  But it is wide, it is deserved, it is merited only because we have 
now found a process that is so abominable that it must be corrected, 
and we are very proud to have this wide array of philosophical views 
joining behind the Civil Asset Forfeiture Act, H.R. 1658.
  Would my colleagues believe that, under current law, the government 
can confiscate an individual's private property on a mere showing of 
probable cause and then, even though the person may never have been 
convicted of a crime, require the person to file an action in Federal 
court to prove that the property is not subject to forfeiture in order 
to get the property back?
  Well, that is the state of the law. There is no question that 
forfeiture laws, as Congress has intended to serve legitimate law 
enforcement purposes, and in the greater instances, they do, but they 
are currently susceptible to abuse and abuse that this measure proposes 
to correct.
  There is also a problem for racial minorities. For example, a 10-
month Pittsburgh Press investigation of drug law seizure and forfeiture 
included an examination of court records on 121 sole suspected drug 
courier stops, where money was seized and no drugs were discovered.
  The Pittsburgh Press found that African-American, Latino, and Asian 
persons accounted for 77 percent of these arrests. So this bill before 
us today, the Civil Asset Forfeiture Act, seeks to change this and to 
make Federal civil forfeiture laws more equitable in a number of ways.
  First of all, we change the burden of proof. Very few places in our 
law other than this, if any, require that the person coming in carry 
the burden of proof. Well, not so in forfeiture law. So if a property 
owner challenges a seizure, we want the government to prove by clear 
and convincing evidence that the property is subject to forfeiture. 
There cannot be any problems with that.
  Now it is just the reverse. The government comes in, and the person 
seized has to prove that the property should not have been seized. This 
provision that we correct places the burden of proof where it 
historically belongs under United States jurisprudence within the 
government agency that performed the seizure. It protects individuals 
from the difficult task of proving a negative, in other words, that 
their property was not subject to forfeiture, which may be pretty hard 
to prove.
  Secondly, I think it is important that the bill provide for the 
appointment of legal counsel if the person challenging the forfeiture 
is indigent or cannot otherwise afford proper legal counsel. What this 
provision does is simply recognize that legal representation is 
appropriate, indeed necessary, to defend against this type of 
deprivation of property.
  Now, in determining whether or not to appoint counsel, the court must 
consider whether the claim appears to be made in good faith. Because if 
it is, they should get counsel. If it is not, they should not be 
provided counsel.
  Third, the bill permits a court to provisionally return the seized 
property to the owner before the final adjudication is complete if the 
claimant can prove and demonstrate substantial hardship. Now this could 
occur, for example, if the forfeiture crippled the functioning of a 
business, which oftentimes is the case, prevented an individual from 
working, or left an individual homeless in the case of where homes are 
seized. Individuals lives and livelihoods should not be in peril during 
the course of a legal challenge to a seizure.
  The next thing we do that I think commends the bill to the Members of 
the House of Representatives is that we create a uniform innocent owner 
defense against forfeiture to prevent people from losing their property 
because of the wrongdoing of others.
  The presumption of innocence is fundamental to the American criminal 
justice system and should be in the case of civil asset forfeiture. 
This basic tenet, however, is seriously compromised whenever assets are 
confiscated, as they are now often seized under these forfeiture 
statutes without proof of wrongdoing by the owner.
  The next thing that we do that I think should attract the attention 
and support of the Members is that we permit individuals who prevail in 
their forfeiture challenges to be able to sue the government if their 
property was destroyed or damaged, what could be more fair than that, 
while it was in government custody. It makes little sense to grant the 
right to reclaim the property only to find that it has lost all or half 
of its value.
  The next item that is in this bill that I commend to the Members' 
attention is the requirement that the government pay successful 
claimant post-judgment interest as well as prejudgment interest on 
currency. This provision prevents the government from gaining a 
windfall on improperly seized property and puts the property owner in 
the position he or she would have been if the property had not been 
seized in the first instance.
  The next thing that we do is eliminate the current requirement that a 
claimant must file a bond before challenging a forfeiture. This lifts a 
financial hurdle to filing a forfeiture challenge.
  Finally, we expand the time to file a forfeiture challenge by 10 days 
from 20 to 30 days, giving additional persons time to learn about their 
rights and file a claim. We believe that this measure is long overdue 
in coming.
  We have had a very thorough and fair hearing in the Committee on the 
Judiciary. Everybody is pleased about it. But I should warn my 
colleagues that a substitute may be offered that would expand the 
categories of crime, that would worsen the measure that is before us, 
expanding categories of crime subject to a civil forfeit, and includes 
a seize now, fish for evidence later provision that allows the 
government to hold the property with no evidence, and then use their 
powerful Federal civil discovery tools to seek more evidence to try to 
build their case.
  So I would like to put our colleagues on notice that there is a 
substitute that would completely reverse the benefits of this bill. I 
urge Members, both Democratic and Republican, to join us in the bill 
that has the widest support both in and out of the House.
  Mr. Chairman, I include the following document, entitled ``The Need 
for H.R. 1658: Recent Cases of Civil Asset Forfeiture Abuses of 
Innocent, Legitimate Businesspeople and Entities'' as follows:

                         The Need for H.R. 1658


 Recent Cases of Civil Asset Forfeiture Abuses of Innocent, Legitimate 
                      Businesspeople and Entities

     Houston, Texas: Red Carpet Motel--Raise Your Prices or Else!
       February 17, 1998, the U.S. Attorney's Office in Houston 
     seized a Red Carpet Motel in a high-crime area of the city. 
     The government's action was based on a negligence theory--
     that the motel owners, GWJ Enterprises Inc. and Hop 
     Enterprises Inc., had somehow ``tacitly approved'' alleged 
     drug activity in the motel's rooms by some of its overnight 
     guests.
       There were no allegations that the hotel owners 
     participated in any crimes. Indeed, motel personnel called 
     the police to the establishment dozens of times to report 
     suspected drug-related activity. U.S. Attorney James DeAtley 
     readily bragged to the press that he envisioned using current 
     civil asset forfeiture laws in the same fashion against 
     similar types of legitimate commercial enterprises, such as 
     apartment complexes.
       The government claimed the hotel deserved to be seized and 
     forfeited because it had ``failed'' to implement all of the 
     ``security measures'' dictated by law enforcement officials. 
     This failure to agree with law enforcement about what 
     security measures were affordable and wise from a legitimate

[[Page 14120]]

     business-operating standpoint was deemed to be the ``tacit 
     approval'' of illegality cited by the prosecutors, subjecting 
     the motel to forfeiture action.
       One of the government's ``recommendations'' refused by the 
     motel owners was to raise room rates. A Houston Chronicle 
     editorial pointed to the absurdity and danger of this 
     government forfeiture theory against legitimate business: 
     ``Perhaps another time, the advice will be to close up shop 
     altogether.'' The editorial went on to make these additional, 
     excellent points:
       ``The prosecution's action in this case is contrary not 
     only to the reasonable exercise of government, but it 
     contradicts government-supported enticements to businesses 
     that locate in areas where high crime rates have thwarted 
     development. Good people should not have to fear property 
     seizure because they operate business in high-crime areas. 
     Nor should they forfeit their property because they have 
     failed to do the work of law enforcement. . . . This case 
     demonstrates clearly the need for lawmakers to make a close-
     re-examination of federal drug forfeiture laws.''  . . . 
     (emphasis added)
       After more bad publicity all over Texas, in July 1998, the 
     government finally released the motel back to the owners and 
     dropped its forfeiture proceedings. It exacted a face-saving, 
     written ``agreement'' with the motel owners. The agreement, 
     however, in fact only put into words the security measures 
     and goals the owners had already undertaken and those which 
     it had always strived to meet.
       The motel owners had lost their business establishment to 
     the government's seizure for several months, suffered a 
     significant loss of good business reputation, and were forced 
     to spend substantial amounts of time and money on hiring an 
     attorney and defending against the government's forfeiture 
     action, which should never have been undertaken in the first 
     place.
       [Source: Houston Chronicle, Mar. 12, 1998 editorial and 
     1998 articles Dallas Morning News, 1998 articles (unreported 
     case)]
     San Jose, California: Aquarius Systems, Inc--Your Buyer, Your 
         Assets!
       October 28, 1998, a federal judge in San Jose, California 
     finally granted summary judgment against the government in a 
     civil forfeiture action, ruling that the government must 
     return to Los Angeles-based Aquarius Systems, Inc. (aka CAF 
     Technologies Inc.) the $296,000 it had seized from it 6 years 
     ago. Aquarius and 4 other computer chip dealer companies had 
     been accused of marketing stolen chips. Federal agents, who 
     participated in this ``sting'' operation, then seized $1.6 
     million of the companies' chip-buying, operating money.
       Unknown to Aquarius Systems, Inc., the buyer used by the 
     company had been operating for his own profit, by purchasing 
     chips for $50.00 each while reporting to his supervisors at 
     the company a unit cost of $296.00 (which at the time was a 
     reasonable price). (The buyer ultimately served a short 
     sentence of conspiracy to buy stolen property.)
       In his ruling ordering the government to return to Aquarius 
     $296,000 of its seized operating money, U.S. District Court 
     Judge Jeremy Fogel blamed the government for dragging its 
     feet on due process, by tying up the company's operating 
     assets for so many years. Ruled the Court: ``It is incumbent 
     upon the government to institute civil forfeiture proceedings 
     expeditiously.'' The judge then denied the government's 
     motion for summary judgment against the company, and granted 
     the company's motion for summary judgment against the 
     government. The Court held that Aquarius Systems knew nothing 
     about what its buyer was doing. As the judge noted, the 
     company was unusual in its ability to stave off ruin from the 
     government's seizure and forfeiture action, and in its 
     ability ``to fight [it] for six years.''
       [Source: The (California) Recorder, Nov. 17, 1998 article 
     (unreported case)]
     Chicago, Illinois: Family-Owned and Operated Congress 
         Pizzeria--Restaurant+Money+3 Handguns=Forfeiture?
       September 3, 1997, Anthony Lombardo, owner and proprietor 
     of the family business, Congress Pizzeria of Chicago, was 
     finally returned over $500,000 in currency improperly seized 
     from his restaurant in early 1993. It took him over four 
     years, and much expensive litigation, all the way to the 
     federal court of appeals for the Seventh Circuit, before 
     former U.S. Attorney and Chief Judge Bauer and his colleagues 
     on the Court ordered the government to return Mr. Lombardo's 
     money.
       Based on the ``confidential informant'' testimony of Josue 
     Torres, the Chicago Police Department conducted a search of 
     Congress Pizzeria. Torres, a crack addict, had been employed 
     as a truck driver for the restaurant up until a few months 
     before he told his story to the police. He told the police 
     that he regularly fenced stolen property at various places in 
     Chicago in order to feed his crack cocaine habit, and that 
     Congress Pizzeria was one of the places in which he did so.
       On this, a warrant was issued to authorize police to search 
     the pizzeria and to seize a camera, a snowblower, a 
     television, and three VCRs, which are items the informant 
     said he had sold to the sons at the restaurant. None of these 
     items were found. During the search, however, the police did 
     ``find'' and seize three unregistered guns, and $506,076 in 
     U.S. currency.
       The money was in a make-shift safe in the family-owned 
     restaurant--a forty-four gallon barrel located inside either 
     a boarded-up elevator or a dumb-water shaft (the record was 
     somewhat unclear). It was wrapped in plastic bags and 
     consisted of mostly small bills--such as might be expected 
     from transactions by a pizzeria.
       The owner's son, Frank Lombardo, was present at the time of 
     the search. He was arrested and charged with possessing 
     unregistered firearms (the guns at the restaurant). At the 
     state court proceeding, the guns case was thrown out, because 
     ``it was not apparent that the guns were contraband per se'' 
     and ``the guns were seized prior to the establishment of 
     probable cause to seize them.'' No other state or federal 
     criminal case was every investigated or charged against the 
     Lombardos or their pizzeria.
       The federal government nonetheless moved to seize and 
     forfeit the $500,000 ``found'' in the pizzeria, under current 
     civil asset forfeiture drug laws. The government's theory of 
     why this money was forfeitable as ``drug money'' was this: 
     The owner's son, Frank Lombardo, was said to have been 
     ``extremely distraught'' and ``visibly shaken when he was 
     told that the money was being seized'' from his family's 
     restaurant; and, said the government, he had ``offered no 
     explanation for the cash horde.'' (Later, Frank went to the 
     police station to explain that the money belonged to his 
     father, the owner of the pizzeria, who was then in Florida.)
       Drug-sniffing dogs were also brought to the police station 
     (not in the pizzeria), to check out the money for the 
     presence of drugs. A narcotics canine named Rambo was 
     instructed to ``fetch dope'' and he grabbed on bundle of 
     money from the table and ripped the packaging apart. To the 
     amazement of the court of appeals, this behavior apparently 
     indicated to the officers the presence of drugs on the money.
       At best, as the Court noted, the dog only identified 
     narcotics on one bundle of the seized currency even though 
     the officers seized 31,392 separate bills in multiple 
     bundles. And, even the government admitted that no one can 
     place much stock in the results of dog sniffs because at 
     least \1/3\ of all the currency circulating in the United 
     States, and perhaps as much as 90-96%, is known to be 
     contaminated with cocaine. (Indeed, as the court of appeals 
     noted, even Attorney General Reno's purse was found by a dog 
     sniff to contain such contaminated currency.)
       On this non-evidence of any nexus between the money and 
     drugs, the government kept the money of Mr. Lombardo and his 
     family Pizzeria for 4 years--until the 7th Circuit finally 
     ruled that it must be returned, in late 1998. The Court held 
     that the government had in fact failed to establish even the 
     cursory burden that it is supposed to shoulder under current 
     law--the establishment of ``probable cause'' to seize 
     property in the first place.
       None of the supposed ``suspicious factors'' cited by the 
     government had ``any bearing on the probable cause 
     determination. The existence of any sum of money, standing 
     alone, is not enough to establish probable cause to believe 
     the money is forfeitable.'' Nor, for the reasons discussed 
     above, was the police-station, drug-sniffing dog episode 
     enough for probable cause. And, ``putting to one side the 
     fact that the state court suppressed the guns as evidence 
     against Frank Lombardo, [there is] no reason to believe that 
     the presence of handguns should necessarily implicate 
     narcotics activity or that their presence need be seen as 
     anything other than protection in a small business setting.''
       In conclusion, the Court wrote: ``We believe the 
     government's conduct in forfeiture cases leaves much to be 
     desired. We are certainly not the first court to be 
     `enormously troubled by the government's increasing and 
     virtually unchecked use of the civil forfeiture statutes and 
     the disregard for due process that is buried in those 
     statutes.' '' (Quoting US v. All Assets of Statewide Auto 
     Parts, Inc., 971 F.2d 896, 905 (2d Cir. 1992))
       [Source: U.S. v. $506,231 in U.S. Currency, 125 F. 3d 442 
     (7th Cir. 1997) (Bauer, J.).]
     North Dakota and Daytona Beach, Florida: Customs versus Bob's 
         Space Racers--Who's Amusement?
       In 1997, on a routine business trip, a large number of 
     circus employees of the Bob's Space Racers Company, of 
     Daytona Beach, Florida, were traveling to Canada. Bob's Space 
     Racers, a privately held company, is one of the leading 
     providers of amusement park games. The company also provides 
     entertainment at traveling circuses.
       As normal, the employees had been provided with their 
     salary and traveling expenses for the project in cash. Thus, 
     each of the 14 employees had several hundred dollars in his 
     or her pockets when the group attempted to cross the border 
     into Canada from North Dakota.
       Customs agents at the North Dakota border seized all their 
     money on the theory that, when the Customs agents aggregated 
     all the money carried by each of the 14 employees, the total 
     came to just over $10,000--the amount of money triggering the 
     regulations about ``declaring'' and filing Customs' ``cash 
     reporting'' forms (Form 4790).

[[Page 14121]]

       Customs had no basis for ``aggregating'' the money of the 
     employees. And there was no reason to believe the employees 
     were part of any conspiracy to smuggle money out of the 
     country without filing the appropriate Customs forms. Indeed, 
     the company informed Customs that the money was legitimate 
     traveling expenses.
       Into 1998, at least, the company was still trying to get 
     Customs to remit the employee travel expenses seized.
       [Source: National Association of Criminal Defense Lawyers 
     (NACDL) Asset Forfeiture Abuse Task Force Co-Chair David B. 
     Smith, Alexandria, Virginia (unreported case)]
     Haleyville, Alabama: Doctor, Beware Your Banker?
       In 1996, after many years and much costly litigation, Dr. 
     Richard Lowe of the small northwest Alabama town of 
     Haleyville, was finally returned his wrongfully seized life 
     savings of almost $3 million, when the 11th Circuit Court of 
     Federal Appeals ordered the government to return it.
       Dr. Lowe, MD, is something of a throwback. He's a country 
     doctor in small-town America, who still charged $5.00 for an 
     office visit in 1997. He drives a used car and lives in a 
     very modest home.
       When he was a small child in the Depression, he lost $4.52 
     in savings when the local bank failed in his home town in 
     rural Alabama. His parents lost all of their savings when 
     that bank collapsed. Because of that experience, he has 
     always hoarded cash. He'd empty his pockets at night into 
     shoe boxes in a closet at home. Over the years, he had 
     accumulated several boxes of cash in the back of a closet in 
     his home.
       In 1988, he consolidated his savings in the First Bank of 
     Roanoke, Alabama--in order to set up a charitable account for 
     a small private K-12 school in his hometown that was about to 
     fail. He transferred all of his life savings into the 
     consolidated account. At the time the government first 
     wrongfully seized his account, in June 1991, Dr. Lowe had 
     given the school over $900,000, had saved it from collapse, 
     and was still contributing to it.
       In the fall of 1990, his wife was urging him to do 
     something about the boxes of money in the closet. The Doctor 
     said OK, you count it and we'll put it in the school's 
     account. It came to $316,911 in denominations of ones, fives, 
     tens and twenties. Some of the bills were as much as 20 years 
     old. Dr. Lowe took the money to the bank and gave it to the 
     bank president, who was a longtime friend and former neighbor 
     of Dr. Lowe's.
       This is the first cash that had ever been placed in the 
     bank account. All the other money had been transferred by 
     check from other banks when CD's matured.
       The bank president knew the Doctor was obsessive about 
     anonymity; he did not want to be known as a ``rich doctor.'' 
     So, instead of depositing the money to the account, the bank 
     president just put the money in the bank vault. He gave the 
     Doctor a receipt for the deposit, but he chose to simply put 
     the money in the bank's vault. Then, with some of the money 
     over the next 6 weeks, the bank president went to neighboring 
     banks in the vicinity of Roanoke, and bought $6,000, $7,000, 
     and $8,000 cashier's checks, and then credited it to Dr. 
     Lowe's account.
       When some of the other banks thought it was peculiar that 
     the Roanoke bank president was doing this, they made a report 
     to authorities. When FBI agents came to interview the bank 
     president, he told them exactly what he had done and why. He 
     told them that it was his idea and not Dr. Lowe's. And he 
     told them that as he understood the reporting laws, he had 
     done nothing wrong.
       Still, the FBI and U.S. Attorney decided to seize Dr. 
     Lowe's account. They did not just seize the $316,000 in cash 
     deposits. They seized his entire account--his entire life 
     savings of some $2.5 million, at the time.
       The bank president and his son, who was vice president, 
     were both indicted. The bank president later made a deal with 
     the government to plead guilty to structuring/reporting 
     violations, in exchange for the government's dismissal of 
     charges against his son. And, a full two years after the 
     seizure and attempted forfeiture of the Doctor's accounts, 
     during which time all of his money was held by the 
     government, the government decided to indict Dr. Lowe as 
     well, for the alleged reporting transgressions of his banker.
       It is, however, not violation of law, and certainly no 
     crime, for a bank to send cash to another domestic financial 
     institution. That is not within the definition of illegal 
     ``structuring.'' In short, there was no offense here, by even 
     the banker, let alone the totally innocent, ignorant bank 
     customer, Dr. Lowe.
       Prosecutors kept pursuing their case against the Doctor 
     anyway. With just one more week to go before his trial was to 
     start, the prosecutors balked at taking their shoddy case to 
     a jury. The government, to save face, offered the Doctor a 
     ``pretrial diversion'' rather than simply dismissing the 
     case, as they should have done. Under the diversion, the 
     Doctor had to agree to stay out of trouble for one year and 
     the case would be dismissed. Of course, the Doctor had no 
     trouble staying out of trouble, as he had never done anything 
     wrong to begin with, or in his entire life.
       Still, even then, the U.S. Attorney General's office in 
     Birmingham refused to drop its civil asset forfeiture action 
     against Dr. Lowe's life savings account--clinging to the fact 
     that, under current law, the burden remained on the Doctor to 
     prove his money innocent!
       While prosecutors now understood there was no 
     ``structuring'' violation by anyone, as they had initially 
     asserted they changed their theory to this Alice in 
     Wonderland claim: Dr. Lowe's account was forfeitable under 
     civil asset forfeiture laws because the bank had failed to 
     file with the government the required regulatory reporting 
     form, a Cash Transaction Report (CRT), upon receipt of Dr. 
     Lowe's $300,000 in currency. At best, this was a violation by 
     the bank, not the customer. Yet, the government deemed this 
     enough to proceed in a civil forfeiture action against the 
     Doctor's life savings--to force him to meet his burden of 
     proof under current law, or else lose his property 
     permanently.
       The federal district court judge did rule that there was 
     nothing wrong with the underlying account until the $300,000 
     cash deposit. And thus, he held that these monies should be 
     returned to the Doctor. This was 3 years after the 
     government's initial seizure--for 3 years, Dr. Lowe was 
     denied access to any of his life savings.
       The federal district court judge erred in ruling for the 
     government on the $300,000 in currency, ``finding'' without 
     any evidence that the Doctor ``must have exhorted'' the bank 
     president (his words) not to file the technical CRT with the 
     government, even though the government itself had never even 
     noticed that a CRT had not been filed when it started its 
     action against Dr. Lowe, the bank president and his son.
       Dr. Lowe somehow had the wherewithal to continue his long 
     fight against the government's wrongful taking of his money, 
     and appealed to the 11th Circuit Court of Appeals. Finally, 
     in late 1996, the court of appeals vindicated Dr. Lowe. It 
     reversed the lower court's erroneous ruling, holding that, 
     even under current, distorted civil asset forfeiture law, the 
     Doctor had shown by evidence clear beyond a preponderance 
     that he knew nothing of the banker's actions.
       Meanwhile, though, he was without access to any of his 
     seized life savings for 3 years, and without access to 
     $300,000 of his accounts (which he had donated to the private 
     school) for 6 years. He faced a wrongful indictment and 
     threat of criminal trial. And he endured the financial, 
     physical and emotional devastation of lengthy, costly 
     litigation against a U.S. Attorneys Office blindly pursuing 
     his assets, no matter the shoddy nature of its case.
       Perhaps the government thought it could simply sear ``the 
     old man'' out? The impact of this experience on him was so 
     severe that Dr. Lowe had to be hospitalized at least once for 
     stress and high blood pressure. Very few victims of such 
     governmental abuse would have been able to keep fighting to 
     win, as did the extraordinary Dr. Lowe.
       [Source: Hearing before the U.S. House Judiciary Committee, 
     on H.R. 1835 (105th Congress), June 11, 1997 (Testimony of 
     National Association of Criminal Defense Lawyers (NACDL) 
     Asset Forfeiture Abuse Task Force Co-Chair E.E. Edwards III, 
     Nashville, Tennessee) (unpublished case)]
     Kent, Washington: Maya's Restaurant--The Sins of the Brother?
       In 1993, in the Seattle suburb of Kent, Washington, police 
     officers stormed Maya's Mexican food restaurant in the middle 
     of business hours, ordering customers out of the 
     establishment, and telling the patrons that the restaurant 
     was being forfeited because ``the owners were drug dealers.'' 
     Local newspapers prominently publicized that Maya's 
     restaurant had been closed and seized by the government for 
     ``drug dealing.''
       Exequiel Soltero is the president and sole stockholder in 
     Soltero Corp., the small business owner of the restaurant. 
     The actual allegation was that his brother had sold a few 
     grams of cocaine in the men's restroom of the restaurant at 
     some point.
       Exequiel Soltero and the Soltero Corporation Inc. were 
     completely innocent of any wrongdoing and had no knowledge 
     whatsover of the brother's suspected drug sale inside the 
     restaurant. According to the informant relied upon by the law 
     enforcement officers, the brother had told him that he was 
     part owner of the restaurant. This was not true. It was 
     nothing but puffery from the brother. The officers never made 
     any attempt to check it out. If they had, they would have 
     easily learned that Exequiel Soltero was the sole owner of 
     the Soltero Corp., Inc., and Maya's.
       There was no notice or any opportunity for Mr. Soltero to 
     be heard before the well-publicized, business-ruining raid 
     and seizure of his restaurant. Fortunately, Mr. Soltero was 
     able to hire a lawyer to contest the government's seizure and 
     forfeiture action, but not until his restaurant had already 
     been raided and his business had suffered an onslaught of 
     negative media attention about being seized for ``drug 
     dealing.'' Further his restaurant was shut down for 5 days 
     before his lawyer was able to get it re-opened.
       Finally, when Mr. Soltero volunteered to take, and passed, 
     a polygraph test conducted by a police polygraph examiner, 
     the case was dismissed. However the reckless raid, seizure 
     and forfeiture quest by the authorities cost

[[Page 14122]]

     him thousands of dollars in lost profits for the several days 
     his restaurant was shut down, as well as significant, 
     lingering damages to his good business reputation. And he 
     suffered the loss of substantial legal fees fighting the 
     seizure of his business.
       [Source: National Association of Criminal Defense Lawyers 
     (NACDL) Asset Forfeiture Abuse Task Force Co-Chair Richard 
     Troberman, Seattle, Washington (unreported case)]


  Notes on Recent Cases and Hyde/Conyers Asset Forfeiture Reform Act, 
                               H.R. 1658

       Each of the above cases demonstrates the importance of the 
     Hyde/Conyers Asset Forfeiture Reform Act. Several features of 
     the legislation would deter governmental abuse of innocent 
     Americans and legitimate business under the civil asset 
     forfeiture laws.
       Placing the burden of proof where it belongs, on the 
     government--to prove its takings of private property are 
     justified, by a clear and convincing standard of evidence--
     should curb reckless seizures and forfeiture actions like 
     those described above. Now, the government can seize and 
     pursue forfeiture against private property without any regard 
     to its evidence, or lack thereof, without any burden of 
     proof. The burden is borne by the citizen or business, to 
     prove the negative, that the property seized is in fact 
     innocent.
       The clarification of a uniform innocent owner defense will 
     also protect businesses and other property owners and 
     stakeholders from wrongful seizures and forfeiture actions, 
     based now on nothing more than a ``negligence'' theory of 
     civil asset forfeiture liability. The uniform innocent owner 
     provision will protect all innocent owners, no matter which 
     particular federal civil asset forfeiture provision is 
     invoked against their property.
       The Hyde/Conyers Asset Forfeiture Reform Act will also 
     place a time-clock on forfeiture actions by the government, 
     akin to the Speedy Trial Act, which protects persons accused 
     of crime. This will prevent the type of post-seizure, foot-
     dragging in civil forfeiture cases like those above, in which 
     the government can simply wear down and bankrupt innocent 
     individuals and businesses, who cannot withstand the loss of 
     operating assets and lengthy litigation against the 
     government.
       The court-appointed counsel provision will ensure a fair 
     fight against the government's forfeiture actions--even for 
     those with less financial resources than the individuals and 
     businesses described above. This is especially important to 
     those the government can otherwise render indigent, and 
     unable to afford counsel, simply by seizing all of their 
     assets.

  Mr. Chairman, I reserve the balance of my time.
  The CHAIRMAN. The Committee will rise informally.
  The Speaker pro tempore (Mr. Bryant) assumed the chair.

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