[House Report 106-192]
[From the U.S. Government Publishing Office]
106th Congress Report
1st Session HOUSE OF REPRESENTATIVES 106-192
======================================================================
CIVIL ASSET FORFEITURE REFORM ACT
_______
June 18, 1999.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hyde, from the Committee on the Judiciary, submitted the following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 1658]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 1658) to provide a more just and uniform procedure
for Federal civil forfeitures, and for other purposes, having
considered the same, reports favorably thereon with amendments
and recommends that the bill as amended do pass.
TABLE OF CONTENTS
Page
The Amendment.............................................. 2
Purpose and Summary........................................ 2
Background and Need for the Legislation.................... 2
Hearings................................................... 19
Committee Consideration.................................... 20
Vote of the Committee...................................... 20
Committee Oversight Findings............................... 20
Committee on Government Reform Findings.................... 21
New Budget Authority and Tax Expenditures.................. 21
Committee Cost Estimate.................................... 21
Constitutional Authority Statement......................... 21
Section-by-Section Analysis and Discussion................. 21
Changes in Existing Law Made by the Bill, as Reported...... 27
Dissenting Views........................................... 34
The amendments (stated in terms of the page and line
numbers of the introduced bill) are as follows:
Page 6, line 7, strike ``receive'' and insert ``acquired''.
Page 6, line 8, insert ``or inheritance'' after
``probate''.
Page 6, line 9, strike ``receipt'' and insert
``acquisition''.
Page 10, beginning on line 17 strike ``CONFORMING'' and all
that follows through ``AND'' on line 18 and insert
``AMENDMENT''.
Page 10, strike line 20 and all that follows through page
11, line 13.
Page 11, line 14, strike ``(b) Controlled Substances
Act.--''.
Purpose and Summary
H.R. 1658, as reported by the Committee, would create
general rules relating to federal civil forfeiture proceedings
designed to increase the due process safeguards for property
owners whose property has been seized.
Background and Need for the Legislation
I. Antecedents of Civil Asset Forfeiture
Civil asset forfeiture is based on the legal fiction that
an inanimate object can itself be ``guilty'' of wrongdoing,
regardless of whether the object's owner is blameworthy in any
way. This concept descends from a medieval English practice
whereby an object responsible for an accidental death was
forfeited to the king, who ``would provide the [proceeds, the
`deodand'] for masses to be said for the good of the dead man's
soul . . . or [would] insure that the deodand was put to
charitable uses.'' \1\
---------------------------------------------------------------------------
\1\ Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 681
n.16 (1974).
---------------------------------------------------------------------------
The immediate ancestor of modern civil forfeiture law is
English admiralty law. As Oliver Wendell Holmes noted, ``a ship
is the most living of inanimate things. . . . [E]very one gives
a gender to vessels. . . . It is only by supposing the ship to
have been treated as if endowed with personality, that the
arbitrary seeming peculiarities of the maritime law can be made
intelligible.'' \2\
---------------------------------------------------------------------------
\2\ Holmes, Jr., The Common Law 25 (1881).
---------------------------------------------------------------------------
Justice Holmes used this example:
A collision takes place between two vessels, the
Ticonderoga and the Melampus, through the fault of the
Ticonderoga alone. That ship is under a lease at the
time, the lessee has his own master in charge, and the
owner of the vessel has no manner of control over it.
The owner, therefore, is not to blame, and he cannot
even be charged on the ground that the damage was done
by his servants. He is free from personal liability on
elementary principle. Yet it is perfectly settled that
there is a lien on his vessel for the amount of the
damage done, and this
means that the vessel may be arrested and sold to pay
the loss in any admiralty court whose process will
reach her. If a livery-stable keeper lets a horse and
wagon to a customer, who runs a man down by careless
driving, no one would think of claiming a right to
seize the horse and the wagon.\3\
---------------------------------------------------------------------------
\3\ Id.
---------------------------------------------------------------------------
Holmes then provided the rationale:
The ship is the only security available in dealing
with foreigners, and rather than send one's own
citizens to search for a remedy abroad in strange
courts, it is easy to seize the vessel and satisfy the
claim at home, leaving the foreign owners to get their
indemnity as they may be able.\4\
---------------------------------------------------------------------------
\4\ Id. at 26.
II. Federal Civil Asset Forfeiture Statutes
Soon after the creation of the United States, ships and
cargo violating the customs laws were made subject to federal
civil forfeiture.\5\ Such forfeiture was vital to the federal
treasury for, at that time, customs duties constituted over 80%
of federal revenues.\6\
---------------------------------------------------------------------------
\5\ See Act of July 31, 1789, secs. 12, 36, 1 Stat. 39, 47.
\6\ See Piety, Scorched Earth: How the Expansion of Civil
Forfeiture Doctrine Has Laid Waste to Due Process, 45 U. Miami L. Rev.
911, 940 n.137 (1991).
---------------------------------------------------------------------------
Today, there are scores of federal forfeiture statutes,
both civil and criminal.\7\ They range from the forfeiture of
animals utilized in cock-fights and similar enterprises,\8\ to
cigarettes seized from smugglers \9\ to property obtained from
violations of the Racketeer Influenced and Corrupt
Organizations Act.\10\
---------------------------------------------------------------------------
\7\ Criminal forfeiture requires an antecedent criminal conviction
of the property owner.
\8\ See 7 U.S.C. Sec. 2156.
\9\ See 18 U.S.C. Sec. 2344.
\10\ See 18 U.S.C. Sec. 1963.
---------------------------------------------------------------------------
The Comprehensive Drug Abuse Prevention and Control Act of
1970 made civil forfeiture a weapon in the war against drugs.
The Act provides for the forfeiture of:
[a]ll controlled substances which have been
manufactured, distributed, dispensed, or acquired in
violation of this subchapter . . . [a]ll raw materials,
products, and equipment of any kind which are used, or
intended for use, in manufacturing . . . delivering,
importing, or exporting any controlled substance[s] . .
. in violation of this subchapter . . . [a]ll property
which is used, or intended for use, as a container for
[such controlled substances, raw materials, products or
equipment] . . . [a]ll conveyances, including aircraft,
vehicles or vessels, which are used, or intended for
use, to transport, or in any manner to facilitate the
transportation, sale, receipt, possession, or
concealment [of such controlled substances, raw
materials, products or equipment]. \11\
---------------------------------------------------------------------------
\11\ 21 U.S.C. Sec. 881(a).
In 1978, the Act was amended to provide for civil
---------------------------------------------------------------------------
forfeiture of:
[a]ll moneys, negotiable instruments, securities, or other
things of value furnished or intended to be furnished by any
person in exchange for a controlled substance in violation of
this subchapter, all proceeds traceable to such an exchange,
and all moneys, negotiable
instruments, and securities used or intended to be used to
facilitate any violation of this subchapter . . . .'' \12\
---------------------------------------------------------------------------
\12\ Section 301(a)(1) of the Psychotropic Substances Act of 1978
(found at 21 U.S.C. Sec. 881(a)(6)).
In 1984, the Act was amended to provide for the forfeiture
---------------------------------------------------------------------------
of:
[a]ll real property . . . which is used, or intended
to be used, in any manner or part, to commit, or to
facilitate the commission of, a violation of this
subchapter punishable by more than one year's
imprisonment. . . .\13\
---------------------------------------------------------------------------
\13\ Section 306(a) of the Comprehensive Crime Control Act of 1984
(found at 21 U.S.C. Sec. 881(a)(7)).
III. The Success--and Abuse--of Forfeiture
Prior to 1984, the monies realized from federal forfeitures
were deposited in the general fund of the United States
Treasury. Now they primarily go to the Department of Justice's
Assets Forfeiture Fund \14\ and the Department of the
Treasury's Forfeiture Fund.\15\ The money is used for
forfeiture-related expenses and various law enforcement
purposes.\16\
---------------------------------------------------------------------------
\14\ See 28 U.S.C. Sec. 524(c)(4)).
\15\ See 31 U.S.C. Sec. 9703.
\16\ See 28 U.S.C. Sec. 524(c)(1)).
---------------------------------------------------------------------------
In recent years, enormous revenues have been generated by
federal forfeitures. The amount deposited in Justice's Assets
Forfeiture Fund (from both civil and criminal forfeitures)
increased from $27 million in fiscal year 1985 to $556 million
in 1993 and then decreased to $449 million in 1998.\17\ Of the
$338 taken in 1996, $250 million was in cash and $74 million
was in proceeds of forfeitable property; $163 million of the
total was returned to state and local law enforcement agencies
who helped in investigations.\18\ As of the end of 1998, a
total of 24,903 seized assets valued at $1 billion were on
deposit--7,799 cash seizures valued at $349 million, 1,181 real
properties valued at $205 million, 45 businesses valued at $49
million, and 15,878 other assets valued at $398 million.\19\
---------------------------------------------------------------------------
\17\ See Office of National Drug Control Policy, National Drug
Control Strategy: Budget Summary 1999, at 107 (hereinafter cited as
``National Drug Control Strategy''); Civil Asset Forfeiture Reform:
Hearing Before the House Comm. on the Judiciary, 105th Cong., 1st Sess.
116 (1997)(statement of Stefan Cassella)(hereinafter cited as ``1997
Hearing''); U.S. Dept. Of Justice, Asset Forfeiture Fact Sheet (1993);
Annual Report of the Dept. Of Justice Asset Forfeiture Program: 1993,
at 15.
\18\ See 1997 Hearing at 116 (statement of Stefan Cassella). Under
``adoptive forfeiture'', state and local law enforcement officers seize
property and then bring it to a federal agency for forfeiture (provided
that the property is forfeitable under federal law). The federal
government then returns as much as 80% of the net proceeds to the state
or local agency that initiated the case. Also, state and local law
enforcement agencies that have cooperated in federal law enforcement
actions often receive a percentage of the net proceeds.
The Committee is concerned about two aspects of adopted forfeiture.
The first is that since property or funds returned to state or local
law enforcement agencies through adoptive forfeiture can be kept by
these entities, the process can be used to bypass provisions of state
laws or state constitutions that dictate that property forfeited
(pursuant to state forfeiture provisions) should be used for non-law
enforcement purposes such as elementary and primary education. A recent
series in the Kansas City Star highlighted this problem in Missouri.
See Karen Dillon, Missouri Police Find Ways to Keep Cash Meant for
Schools, Kansas City Star, Jan. 2, 6, 11, 20, 21, Feb. 5, 9, 10, 12,
27, Mar. 14, 25, Apr. 23, May 7, 8, 1999. Second, while the property
returned through adoptive forfeiture must be used for law enforcement
purposes, state and local governing bodies do not exercise their normal
oversight role over how the property is used since it is not
appropriated through the normal legislative process. Consequently,
there have been many disturbing reports of state and local law
enforcement using forfeited property, or the proceeds from its sale,
for unnecessary or needlessly extravagant expenditures and uses. See,
e.g., Hyde, Forfeiting Our Property Rights: Is Your Property Safe from
Seizure? 37 (1995)(hereinafter cited as ``Forfeiting Our Property
Rights''). The Committee plans to continue to closely monitor these two
issues. In addition, the Committee urges state and local law
enforcement agencies to use forfeited property only for legitimate
purposes and urges local communities to engage in oversight over the
use by their law enforcement agencies of forfeited property (while not
unduly limiting the flexibility of law enforcement).
\19\ See National Drug Control Strategy at 108.
---------------------------------------------------------------------------
So, federal forfeiture has proven to be a great monetary
success. And, as former Attorney General Richard Thornburgh
said: ``[I]t is truly satisfying to think that it is now
possible for a drug dealer to serve time in a forfeiture-
financed prison, after being arrested by agents driving a
forfeiture-provided automobile, while working in a forfeiture-
funded sting operation.'' \20\
---------------------------------------------------------------------------
\20\ Richard Thornburgh, Address Before the Cleveland City Club
Forum Luncheon (May 11, 1990).
---------------------------------------------------------------------------
The purposes of federal forfeiture were set out by Stefan
Cassella, Assistant Chief, Asset Forfeiture and Money
Laundering Section, Criminal Division, U.S. Department of
Justice, in testimony before this Committee: \21\
---------------------------------------------------------------------------
\21\ 1997 Hearing at 112.
Asset forfeiture has become one of the most powerful
and important tools that federal law enforcement can
employ against all manner of criminals and criminal
organizations--from drug dealers to terrorists to white
collar criminals who prey on the vulnerable for
financial gain. . . .
Federal law enforcement agencies use the forfeiture
laws for a variety of reasons, both time-honored and
new. . . . [They] allow the government to seize
contraband--property that it is simply unlawful to
possess, such as illegal drugs, unregistered machine
guns, pornographic materials, smuggled goods and
counterfeit money.
Forfeiture is also used to abate nuisances and to
take the instrumentalities of crime out of circulation.
If drug dealers are using a ``crack house'' to sell
drugs to children as they pass by on the way to school,
the building is a danger to the health and safety of
the neighborhood. Under the forfeiture laws, we can
shut it down. If a boat or truck is being used to
smuggle illegal aliens across the border, we can
forfeit the vessel or vehicle to prevent its being used
time and again for the same purpose. The same is true
for an airplane used to fly cocaine from Peru into
Southern California, or a printing press used to mint
phony $100 bills.
The government also uses forfeiture to take the
profit out of crime, and to return property to victims.
No one has any right to retain the money gained from
bribery, extortion, illegal gambling, or drug dealing.
With the forfeiture laws, we can separate the criminal
from his profits--and any property traceable to it--
thus removing the incentive others may have to commit
similar crimes tomorrow. And if the crime is one that
has victims--like carjacking or fraud--we can use the
forfeiture laws to recover the property and restore it
to the owners far more effectively than the restitution
statutes permit.
Finally, forfeiture undeniably provides both a
deterrent against crime and a measure of punishment for
the criminal. Many criminals fear the loss of their
vacation homes, fancy cars, businesses and bloated bank
accounts far more than the prospect of a jail sentence.
However, a number of years ago, as forfeiture revenues were
approaching their peaks, some disquieting rumblings were heard.
The Second Circuit stated that ``[w]e continue 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.'' \22\ Newspaper and
television exposes appeared alleging that apparently innocent
property owners were having their property taken by federal and
local law enforcement officers with nothing that could be
called due process.\23\
---------------------------------------------------------------------------
\22\ United States v. All Assets of Statewide Auto Parts, Inc., 971
F.2d 896, 905 (2nd Cir. 1992).
\23\ See, e.g., Brazil & Berry, Tainted Cash or Easy Money?,
Orlando Sentinel, June 14-17, 1992; Schneider & Flaherty, Presumed
Guilty: The Law's Victims in the War on Drugs, Pitt. Press, Aug. 11-16,
1991; Poor & Rose, Hooked on the Drug War, St. Louis Post-Dispatch,
Apr. 28-May 5, 1991, Oct. 6-11, 20, 1991.
---------------------------------------------------------------------------
Congress investigated these charges through a series of
hearing held by the House Committee on Government Operations'
Subcommittee on Legislation and National Security under then-
Chairman John Conyers \24\ and then by this Committee.\25\
---------------------------------------------------------------------------
\24\ See Review of Federal Asset Forfeiture Program: Hearing Before
the Subcomm. on Legislation and National Security of the House Comm. on
Government Operations, 103rd Cong., 1st Sess. (1993); Department of
Justice Asset Forfeiture Program: Hearing Before the Subcomm. on
Legislation and National Security of the House Comm. on Government
Operations, 102nd Cong., 2nd Sess. (1992).
\25\ See 1997 Hearing; Civil Asset Forfeiture Reform Act: Hearing
Before the House Comm. on the Judiciary, 104th Cong., 2nd Sess.
(1996)(hereinafter cited as ``1996 Hearing'').
---------------------------------------------------------------------------
The stories of two of the witnesses at the Judiciary
Committee hearings provide a sampling of the types of abuses
that have surfaced. Willie Jones (and his attorney E.E. (Bo)
Edwards III) testified before the Judiciary Committee on July
22, 1996. Mr. Jones' testified as follows: \26\
---------------------------------------------------------------------------
\26\ 1996 Hearing at 12-14.
[Chairman] Hyde: Would you please state your name and where
you live.
Mr. Jones: My name is Willie Jones. I live in Nashville,
Tennessee.
1Mr. Hyde: Very well, sir. Would you tell us your story
involving asset forfeiture.
Mr. Jones: Yes. On February 27, 1991, I went to the Metro
Airport to board a plane for Houston, TX, to buy nursery stock.
I was stopped in the airport after paying cash for my ticket.
Mr. Hyde: What business are you engaged in or were you
engaged in?
Mr. Jones: I am engaged in landscaping.
Mr. Jones: I paid cash for a round-trip ticket to Houston,
TX, and I was detained at the ticket agent. The lady said no
one ever paid cash for a ticket. And as I went to the gate,
which was gate 6, to board the plane, at that time three
officers came up to me and called me by my name, and asked if
they could have a word with me, and told me that they had
reason to believe that I was carrying currency, had a large
amount of currency, drugs. So at that time----
Mr. Hyde: Proceeds of a drug transaction; you had money
that was drug money then, that's what they charged you with?
Mr. Jones: Yes, sir.
Mr. Hyde: Were you carrying a large amount of cash?
Mr. Jones: Yes, sir. I had $9,000.
Mr. Hyde: $9,000 in cash. Why was that, sir? Was your
business a cash business?
Mr. Jones: Well, it was going to be if I had found the
shrubbery that I liked, by me being--going out of town, and the
nursery business is kind of like the cattle business. You can
always do better with cash money.
Mr. Hyde: They would rather be paid in cash than a check,
especially since you are from out of town?
Mr. Jones: That is correct.
Mr. Jones: So we proceeded to go out of the airport. . . .
I was questioned about had I ever been involved in any drug-
related activity, and I told them, no, I had not. So they told
me I might as well tell the truth because they was going to
find out anyway. So they ran it through on the computer after I
presented my driver's license to them, which everything was--I
had--it was all in my name. And he ran it through the computer,
and one officer told the other one, saying, he is clean. But
instead, they said that the dogs hit on the money. So they told
me at that time they was going to confiscate the money.
Mr. Hyde: They determined from the dog's activities that
there were traces of drugs on the money?
Mr. Jones: That is what they said.
Mr. Hyde: That is what they claimed? \27\
---------------------------------------------------------------------------
\27\ A federal court later found that ``[t]he presence of trace
narcotics on currency does not yield any relevant information
whatsoever about the currency's history. A bill may be contaminated by
proximity to a large quantity of cocaine, by its passage through the
contaminated sorting machines at the Federal Reserve Banks, or by
contact with other contaminated bills in the wallet or at the bank.''
Jones v. U.S. Drug Enforcement Administration, 819 F. Supp. 698, 720
(M.D. Tenn. 1993)(citation omitted).
---------------------------------------------------------------------------
Mr. Jones: Yes, sir.
Mr. Hyde: Therefore, they kept the money?
Mr. Jones: They kept the money.
Mr. Hyde: Did they let you go?
Mr. Jones: They let me go.
Mr. Hyde: Were you charged with anything?
Mr. Jones: No. I asked them to, if they would, if they
would count the money and give me a receipt for it. They
refused to count the money, and they took the money and told me
that I was free to go, that I could still go on to Texas if I
wanted to; that the plane had not left.
Mr. Hyde: Of course, your money was gone. You had no point
in going to Texas if you can't buy shrubs.
Mr. Jones: No.
Willie Jones did not challenge the forfeiture under the
normal mechanism provided by law \28\ because he could not come
up with the 10% cost bond required.\29\ He instead filed suit
in federal district court alleging that his Fourth Amendment
right to be secure against unreasonable searches and seizures
had been violated.\30\ The court determined that the ``frisk''
which produced the $9,000 in currency was an unconstitutional
search,\31\ and that the seizure of the currency was undertaken
with no probable cause and therefore an unconstitutional
seizure.\32\ The court did determine that there was
``insufficient proof that the officers' investigation of Mr.
Jones [who is African-American] himself was racially
motivated[,]'' but that other investigations were so
motivated.\33\
---------------------------------------------------------------------------
\28\ The money was seized pursuant to 21 U.S.C. Sec. 881(a)(6),
under which ``[a]ll moneys . . . furnished or intended to be furnished
by any person in exchange for a controlled substance . . .'' are
subject to civil forfeiture. If Jones challenged the forfeiture, he
would have the burden of proving by a preponderance of the evidence
that the currency was not subject to forfeiture, provided that the
government first showed probable cause that the currency was subject to
forfeiture. See 19 U.S.C. Sec. 1615.
\29\ See 1996 Hearing at 15 (statement of E.E. (Bo) Edwards III).
See 19 U.S.C. Sec. 1608.
\30\ Jones, 819 F. Supp. at 716.
\31\ See id. at 718.
\32\ See id. at 721. Probable cause is ``a reasonable ground for
belief of guilt, supported by less than prima facie proof but more than
mere suspicion.'' Id. (citation omitted).
\33\ See id. at 723.
---------------------------------------------------------------------------
The court's final comments gave rise for pause:
The Court also observes that the statutory scheme as
well as its administrative implementation provide
substantial opportunity for abuse and potentiality for
corruption. [Drug Interdiction Unit] personnel
encourage airline employees as well as hotel and motel
employees to report ``suspicious'' travelers and reward
them with a percentage of the forfeited proceeds. The
forfeited monies are divided and distributed by the
Department of Justice among the Metropolitan Nashville
Airport and the Metropolitan Nashville Police
Department partners in the DIU and itself. As to the
local agencies, these monies are ``off-budget'' in that
there is no requirement to account to legislative
bodies for its receipt or expenditure. Thus, the law
enforcement agency has a direct financial interest in
the enforcement of these laws. The previous history in
this country of an analogous kind of financial interest
on the part of law enforcement officers--i.e., salaries
of constables, sheriffs, magistrates, etc., based on
fees and fines--is an unsavory and embarrassing scar on
the administration of justice. The obviously dangerous
potentiality for abuse extant in the forfeiture scheme
should trigger, at the very least, heightened scrutiny
by the courts when a seizure is contested.\34\
---------------------------------------------------------------------------
\34\ Id. at 724.
Mr. Jones's case typifies the kind that this Committee is
gravely concerned about--except that this time there was a
happy ending. Individuals very likely innocent of any crime
justifying forfeiture meet some sort of ``drug courier''
profile [here, by buying an airplane ticket with cash] and are
subject to a search or investigation. If they have large sums
of cash, it is seized. They may not be tried for a crime (Civil
forfeiture requires no related criminal conviction or even
criminal charge. However, if there is a prosecution, acquittal
does not bar a subsequent forfeiture action. The government
need only show probable cause for the seizure to justify a
civil forfeiture.). To get their property back, owners have to
overcome tremendous procedural hurdles such as posting a cost
bond and having to prove their property was ``innocent'' (once
probable cause has been shown). The abuse seems even worse
under certain state forfeiture laws.\35\
---------------------------------------------------------------------------
\35\ See Forfeiting Our Property Rights at 38-40.
---------------------------------------------------------------------------
Billy Munnerlyn testified before the Judiciary Committee on
June 11, 1997. Following is a short summary of his experience
with federal civil forfeiture laws:
For years Billy Munnerlyn and his wife Karon owned
and operated a successful air charter service out of
Las Vegas, Nevada. In October 1989, Mr. Munnerlyn was
hired for a routine job--flying Albert Wright,
identified as a ``businessman,'' from Little Rock,
Arkansas, to Ontario, California. When the plane
landed, DEA agents seized Mr. Wright's luggage and the
$2.7 million inside. Both he and Mr. Munnerlyn were
arrested. The DEA confiscated the airplane, the $8,500
charter fee for the flight, and all of Munnerlyn's
business records. Although drug trafficking charges
against Mr. Munnerlyn were quickly dropped for lack of
evidence, the government refused to release his
airplane. (Similar charges against Mr. Wright--who,
unbeknownst to Munnerlyn, was a convicted cocaine
dealer--were eventually dropped as well.) Mr. Munnerlyn
spent over $85,000 in legal fees trying to get his
plane back, money raised by selling his three other
planes. A Los Angeles jury decided his airplane should
be returned because they found Munnerlyn had no
knowledge Wright was transporting drug money--only to
have a U.S. district judge reverse the jury verdict.
Munnerlyn eventually was forced to settle with the
government, paying $7,000 for the return of his plane.
He then discovered DEA agents had caused about $100,000
of damage to the aircraft. Under federal law the agency
cannot be held liable for damage. Unable to raise
enough money to restart his air charter business,
Munnerlyn had to declare personal bankruptcy. He is now
driving a truck for a living.\36\
---------------------------------------------------------------------------
\36\ Id. at 12 (based on reporting by Schneider & Flaherty &
Miniter, ``Property Seizures on Trial,'' Insight, Feb. 22, 1993, at 10,
33).
For Mr. Munnerlyn, there was no happy ending.
Neither the state of the law nor its usage have improved in
recent years. Since 1974, many observers assumed that the
Constitution mandated an ``innocent owner'' defense to a civil
forfeiture. However, in 1996, the Supreme Court in Bennis v.
Michigan \37\ ruled that the defense was mandated by neither
the due process clause of the Fourteenth Amendment (and
presumably that of the Fifth Amendment) nor the just
compensation clause of the Fifth Amendment. The Court found
that ``a long and unbroken line of cases holds that an owner's
interest in property may be forfeited by reason of the use to
which the property is put even though the owner did not know
that it was to be put to such use.'' \38\
---------------------------------------------------------------------------
\37\ 516 U.S. 442 (1996).
\38\ Id. at 446.
---------------------------------------------------------------------------
The dissenting justices in Bennis argued that:
The logic of the Court's analysis would permit the
States to exercise virtually unbridled power to
confiscate vast amounts of property where professional
criminals have engaged in illegal acts. Some airline
passengers have marijuana cigarettes in their luggage;
some hotel guests are thieves; some spectators at
professional sports events carry concealed weapons; and
some hitchhikers are prostitutes. The State surely may
impose strict obligations on the owners of airlines,
hotels, stadiums, and vehicles to exercise a high
degree of care to prevent others from making illegal
use of their property, but neither logic nor history
supports the Court's apparent assumption that their
complete innocence imposes no constitutional impediment
to the seizure of their property simply because it
provided the locus for a criminal transaction.\39\
---------------------------------------------------------------------------
\39\ Id. at 458-59 (Stevens, J., Souter, J., and Breyer, J.,
dissenting).
And, Justice Thomas stated in his concurrence that,
``[i]mproperly used, forfeiture could become more like a
roulette wheel employed to raise revenue from innocent but
hapless owners whose property is unforeseeably misused, or a
tool wielded to punish those who associate with criminals, than
a component of a system of justice.'' \40\
---------------------------------------------------------------------------
\40\ Id. at 456 (Thomas, J., concurring).
---------------------------------------------------------------------------
The Seventh Circuit recently issued a decision containing a
stinging rebuke of the federal government's use of civil
forfeiture. United States v. $506,231 in U.S. Currency \41\
involved the Congress Pizzeria in Chicago. In 1997, the court
ordered the return to Anthony Lombardo, the owner and
proprietor of this family-owned business, of over $500,000 in
currency improperly seized by police from the restaurant in
1993. The court found the need to remind a U.S. Attorney that
``the government may not seize money, even half a million
dollars, based on its bare assumption that most people do not
have huge sums of money lying about, and if they do, they must
be involved in narcotics trafficking or some other sinister
activity.'' \42\ The court also found the need to say that
``[w]e 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.' '' \43\
---------------------------------------------------------------------------
\41\ 125 F.3d 442 (7th Cir. 1997).
\42\ Id. at 454 (emphasis in original).
\43\ Id., quoting U.S. v. All Assets of Statewide Auto Parts, 971
F.2d at 905.
---------------------------------------------------------------------------
Civil asset forfeiture does not just impact civil liberties
and property rights. It can work at total cross purposes with
the professed public policy goals of the federal government.
Few will argue against the proposition that more private
investment needs to be made in our inner cities in order to
offer residents hope of a better life. How, then, would anyone
explain the actions in 1998 of the U.S. Attorney's Office in
Houston in seizing a Red Carpet Motel in a high-crime area of
the city? \44\ 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 in the motel's rooms by some of its
overnight guests. However, the government claimed the hotel
deserved to be seized and forfeited because management had
failed to implement all of the ``security measures'' dictated
by law enforcement officials, such as raising room rates. This
failure to agree with law enforcement about what security
measures were affordable and wise from a legitimate business-
operating standpoint was deemed to be ``tacit approval'' of
illegality, subjecting the motel to forfeiture. The U.S.
Attorney 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.
---------------------------------------------------------------------------
\44\ See Deborah Tedford, Hotel Owners Agree to Beef Up Security,
Houston Chron., July 18, 1998; Steve Brewer, Seizure of Hotel Sets
Precedent, Houston Chron., March 7, 1998; Deborah Tedford, No Vacancy
for Drug Dealers: Feds Seize Hotel, Houston Chron., Feb. 18, 1998.
---------------------------------------------------------------------------
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.'' \45\ The editorial then correctly noted
that:
---------------------------------------------------------------------------
\45\ U.S. Attorney Here Overstepped Bounds in Motel Seizure,
Houston Chron., Mar. 12, 1998.
More than due to shortcomings of the motel owners,
this situation appears to be the result of ineffective
police work and of . . . prosecutors' inability to
build cases against scofflaws operating in an open drug
market.
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.
After much bad publicity, the government dropped its
forfeiture proceedings after exacting a written ``agreement''
with the motel owners as to certain security measures that the
owners would undertake. The motel owners had lost their motel
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. The resolution does not detract from the fact that
business owners who dare to invest in high crime areas are at
the complete mercy of our civil asset forfeiture laws and the
predilections of prosecutors.
IV. H.R. 1658, the Civil Asset Forfeiture Reform Act
H.R. 1658 is designed to make federal civil forfeiture
procedures fair to property owners and to give owners innocent
of any wrongdoing the means to recover their property and make
themselves whole after wrongful government seizures. H.R. 1658
amends the rules governing all civil forfeitures under federal
law except those contained in the Tariff Act of 1930 or the
Internal Revenue Code of 1986.
The Eight Core Reforms of H.R. 1658
1. Burden of Proof
When a property owner goes to federal court to challenge
the seizure of property under a federal civil forfeiture law,
the government is required to make an initial showing of
probable cause that the property is subject to forfeiture.
Under current law, the property owner must then establish by a
preponderance of the evidence that the property is not subject
to forfeiture. \46\ The government can meet its burden without
having obtained a criminal conviction or even having charged
the owner with a crime. Since the government doesn't need the
proof beyond a reasonable doubt required for a criminal
conviction, even the acquittal of the owner does not bar
forfeiture of the property allegedly used in a crime. The
probable cause the government needs is the lowest standard of
proof in the criminal law. It is the same standard required to
obtain a search warrant and can be established by evidence with
a low indicia of reliability such as hearsay.\47\
---------------------------------------------------------------------------
\46\ See 19 U.S.C. Sec. 1615.
\47\ See United States v. A Single Family Residence and Real
Property Located at 900 Rio Vista Blvd., Ft. Lauderdale, 803 F.2d 625,
629 n.2 (11th Cir. 1986).
---------------------------------------------------------------------------
Allowing property to be forfeited upon a mere showing of
probable cause can be criticized on many levels:
[T]he current allocation of burdens and standards of
proof requires that the [owner] prove a negative, that
the property was not used in order to facilitate
illegal activity, while the government must prove
almost nothing. This creates a great risk of erroneous,
irreversible deprivation. ``The function of a standard
of proof, as that concept is embodied in the Due
Process Clause and in the realm of fact finding, is to
`instruct the fact finder concerning the degree of
confidence our society thinks he should have in the
correctness of factual conclusions for a particular
type of adjudication.' '' Addington v. Texas, 441 U.S.
418, 423 . . . (1979) . . . The allocation of burdens
and standards of proof implicates similar concerns and
is of greater importance since it decides who must go
forward with evidence and who bears the risk of loss
should proof not rise to the standard set. In civil
forfeiture cases, where claimants are required to go
forward with evidence and exculpate their property by a
preponderance of the evidence, all risks are squarely
on the claimant. The government, under the current
approach, need not produce any admissible evidence and
may deprive citizens of property based on the rankest
of hearsay and the flimsiest evidence. This result
clearly does not reflect the value of private property
in our society, and makes the risk of an erroneous
deprivation intolerable.\48\
---------------------------------------------------------------------------
\48\ United States v. $12,390, 956 F.2d 801, 811(8th Cir.
1992)(Beam, J., dissenting).
Some federal courts have even intimated that probable cause
---------------------------------------------------------------------------
is an unconstitutional standard:
The Supreme Court . . . has recently expanded the
constitutional protections applicable in forfeiture
proceedings to include those of the Eighth Amendment. .
. . We therefore agree with the Second Circuit: ``Good
and Austin reopen the question of whether the quantum
of evidence the government needs to show in order to
obtain a warrant in rem allowing seizure --probable
cause--suffices to meet the requirements of due
process.'' United States v. One Parcel of Property
Located at 194 Quaker Farms Road, 85 F.3d 985, 990 (2nd
Cir.), cert denied . . . 117 S. Ct. 304 . . . (1996).
[W]e observe that allowing the government to forfeit
property based on a mere showing of probable cause is a
``constitutional anomaly. . . .'' As the Supreme Court
has explained, burdens of proof are intended in part to
``indicate the relative importance attached to the
ultimate decision.'' . . . The stakes are exceedingly
high in a forfeiture proceeding: Claimants are
threatened with permanent deprivation of their
property, from their hard-earned money, to their sole
means of transport, to their homes. We would find it
surprising were the Constitution to permit such an
important decision to turn on a meager burden of proof
like probable cause.\49\
---------------------------------------------------------------------------
\49\ United States v. $49,576, 116 F.3d 425, 429 (9th Cir.
1997)(citations omitted).
This Committee finds probable cause too low a standard of
proof for the government to meet. Therefore, H.R. 1658 provides
that the burden of proof should not shift to a property owner
upon a showing of probable cause, but should remain with the
government with a standard of clear and convincing evidence
that the property is subject to forfeiture.
Why ``clear and convincing evidence'' and not ``a
preponderance of the evidence?'' The Justice Department used to
argue that federal civil forfeiture provisions were not
designed to punish anybody. Justice argued that forfeiture
served purely remedial functions--such as to remove the
instruments of the drug trade and thereby protect the community
from the threat of continued drug dealing, and to compensate
the government for the expense of law enforcement activity and
for its expenditure on societal problems resulting from the
drug trade. The Department made this argument in order to
provide a rationale for not applying to civil forfeitures the
Eighth Amendment's prohibition against excessive fines. In its
1993 decision in Austin v. United States, \50\ the Supreme
Court rejected Justice's argument, finding that:
---------------------------------------------------------------------------
\50\ 509 U.S. 602 (1993).
In light of the historical understanding of forfeiture as
punishment, the clear focus of [the instant forfeiture
provisions] on the culpability of the owner, and the evidence
that Congress understood those provisions as serving to deter
and to punish, we cannot conclude that [the provisions serve]
solely a remedial purpose. We therefore conclude that
forfeiture under these provisions constitutes ``payment to a
sovereign as punishment for some offense. . . .'' \51\
---------------------------------------------------------------------------
\51\ Id. at 621-22 (footnote omitted), quoting Browning-Ferris
Industries of Vermont, Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 265
(1989).
One might ask, punishment for what? Clearly, the punishment
is for a property owner's alleged involvement in drug
trafficking. Civil forfeiture is being used to punish a
property owner for alleged criminal activity. The general civil
standard of proof--preponderance of the evidence--is too low a
standard to assign to the government in this type of case. A
higher standard of proof is needed that recognizes that in
reality the government is alleging that a crime has taken
place. As the Supreme Court has said, civil forfeiture actions
are in essence ``quasi- criminal in character'' designed ``like
a criminal proceeding . . . to penalize for the commission of
an offense against the law.'' \52\ Since civil forfeiture
doesn't threaten imprisonment, proof beyond a reasonable doubt
is not necessary.\53\ The intermediate standard--clear and
convincing evidence--is more appropriate.
---------------------------------------------------------------------------
\52\ One 1958 Plymouth Sedan v. Pennsylvania, 380 U.S. 693, 700
(1965).
\53\ Some states do require proof beyond a reasonable doubt. The
Supreme Court of Nevada has ruled that because of the ``quasi-criminal
nature of forfeiture actions,'' ``[p]roof beyond a reasonable doubt is
therefore appropriate in order that the innocent not be permanently
deprived of their property.'' A 1983 Volkswagen v. Country of Washoe,
101 Nev. 222, 224, 699 P.2d 108, 109 (Nev. 1985). Others provide only
for criminal forfeiture in most situations, which of course leads to
the same result. See, e.g., Cal. Health and Safety Code Sec. 11470.
---------------------------------------------------------------------------
The Florida Supreme Court has ruled that the Florida
Constitution mandates a clear and convincing evidence standard
in civil forfeiture proceedings commenced under Florida law,
stating that:
In forfeiture proceedings the state impinges on basis
constitutional rights of individuals who may never have
been formally charged with any civil or criminal
wrongdoing. This Court has consistently held that the
[Florida] Constitution requires substantial burdens of
proof where state action may deprive individuals of
basic rights.\54\
---------------------------------------------------------------------------
\54\ Department of Law Enforcement v. Real Property, 588 So.2d 957,
967 (Fla. 1991). See also Cal. Health and Safety Code Sec. 11470 (clear
and convincing evidence in cases involving drug proceeds over $25,000);
N.Y. Civ. Prac. L. & R. Sec. Sec. 1311(1), 1310(6) (clear and
convincing evidence in drug cases); Wisc. Stat. Ann. Sec. 973.076(3)
(requiring proof ``satisfying or convincing to a reasonable certainty
by the greater weight of the credible evidence'').
Under H.R. 1658, a property owner would still have the
burden of proving affirmative defenses, such as the ``innocent
owner'' defense, by a preponderance of the evidence. Also,
property can still be initially seized by the government based
on probable cause, and this standard is sufficient to effect
forfeiture in cases where a claim to the seized property is not
filed.
2. Appointment of Counsel
There is no Sixth Amendment right to appointed counsel for
indigents in civil forfeiture cases, since imprisonment is not
threatened.\55\ This is undoubtedly one of the primary reasons
why so many civil seizures are not challenged. As the cochairs
of the National Association of Criminal Defense Lawyers'
Forfeiture Abuse Task Force stated before this Committee in
1996: ``The reason they are so rarely challenged has nothing to
do with the owner's guilt, and everything to do with the
arduous path one must journey against a presumption of guilt,
often without the benefit of counsel, and perhaps without any
money left after the seizure with which to fight the battle.''
\56\ This Committee believes that civil forfeiture proceedings
are so punitive in nature that appointed counsel should be made
available for those who are indigent, or made indigent by a
seizure, in appropriate circumstances.
---------------------------------------------------------------------------
\55\ See United States v. $292,888.04 in U.S. Currency, 54 F.3d
564, 569 (9th Cir. 1995); United States v. 7108 West Grand Ave.,
Chicago, Illinois, 15 F.3d 632, 635 (7th Cir. 1994), cert. denied, 114
S. Ct. 2691 (1994).
\56\ 1996 Hearing at 289-90 (statement of E.E. (Bo) Edwards III,
David Smith, and Richard Troberman).
---------------------------------------------------------------------------
H.R. 1658 provides that a federal court may appoint counsel
to represent an individual filing a claim in a civil forfeiture
proceeding who is financially unable to obtain representation.
In determining whether to appoint counsel, the court shall take
into account the claimant's standing to contest the forfeiture
and whether the claim appears to be made in good faith or to be
frivolous. Compensation for appointed counsel will be
equivalent to that provided for court-appointed counsel in
federal felony cases. Currently, maximum compensation would not
exceed $3,500 per attorney for representation before a U.S.
district court and $2,500 per attorney for representation
before an appellate court. These maximums can be waived in
cases of ``extended or complex'' representation where ``excess
payment is necessary to provide fair compensation and the
payment is approved by the chief judge of the circuit.'' \57\
---------------------------------------------------------------------------
\57\ 18 U.S.C. Sec. 3006A(d).
---------------------------------------------------------------------------
3. Innocent Owner Defense
The impact of Bennis \58\ is limited by the fact that many
federal civil forfeiture provisions contain statutory innocent
owner defenses. For instance, real property used to commit or
to facilitate a federal drug crime is forfeitable unless the
violation was ``committed or omitted without the knowledge or
consent of [the] owner.'' \59\ Conveyances used in federal drug
crimes are not forfeitable ``by reason of any act or omission
established by that owner to have been committed or omitted
without the knowledge, consent, or willful blindness of the
owner.'' \60\ Property involved in certain money laundering
transactions shall not be forfeited ``by reason of any act or
omission established by that owner or lienholder to have been
committed without the knowledge of that owner or lienholder.''
\61\ Other federal civil forfeiture statutes contain no
innocent owner defenses. For instance, the statute providing
for forfeiture of any property, including money, used in an
illegal gambling business contains no such defense.\62\ Many
courts require that to qualify as an innocent owner, an owner
have done all that reasonably could be expected to prevent the
illegal use of the property.\63\
---------------------------------------------------------------------------
\58\ 516 U.S. at 442.
\59\ 21 U.S.C. Sec. 881(a)(7).
\60\ 21 U.S.C. Sec. 881(a)(4)(C).
\61\ 18 U.S.C. Sec. 981(a)(2).
\62\ 18 U.S.C. Sec. 1955(d).
\63\ See, e.g., United States v. One Parcel of Property Located at
755 Forest Road, Northford, Connecticut, 985 F.2d 70, 72 (2nd Cir.
1993); United States v. One Parcel of Real Estate at 1012 Germantown
Road, Palm Beach County, Fla., 963 F.2d 1496, 1506 (11th Cir. 1992).
---------------------------------------------------------------------------
Not only are these statutory innocent owner defenses
nonuniform, but the protections of the ones using the
``committed or omitted'' language have been seriously eroded by
a number of federal courts ruling that qualifying owners must
have had no knowledge of and provided no consent to the
prohibited use of the property.\64\ Such an interpretation
means that owners who try to end the illegal use by others of
their property cannot make use of the defense simply because
they knew about such use.
---------------------------------------------------------------------------
\64\ See, e.g., United States v. Lot 111-B, Tax Map Key 4-4-03-
71(4), 902 F.2d 1443, 1445 (9th Cir. 1990) (per curiam). See, contra,
United States v. 141st St. Corp. by Hersh, 911 F.2d 870, 877-78 (2nd
Cir. 1990), cert. denied, 111 S. Ct. 1017 (1991).
---------------------------------------------------------------------------
Believing that a meaningful innocent owner defense is
required by fundamental fairness, the Committee sets out an
innocent owner defense in H.R. 1658 designed to provide such a
defense for all federal civil forfeitures, to make that defense
uniform, and to ensure that it offers protection in all
appropriate cases.
The innocent owner defense in the bill provides that, with
respect to a property interest in existence at the time the
illegal conduct giving rise to the forfeiture took place, an
innocent owner is an owner who did not know of this conduct or,
upon learning of it, did all that reasonably could be expected
under the circumstances to terminate such use of the property.
One way in which an owner may show that he did all that
reasonably could be expected is to demonstrate that he, to the
extent permitted by law, (1) gave timely notice to an
appropriate law enforcement agency of information that led the
person to know the conduct would occur or has occurred, and (2)
in a timely fashion revoked or attempted to revoke permission
for those engaging in such conduct to use the property or took
reasonable actions in consultation with a law enforcement
agency to discourage or prevent the illegal use of the
property.
Thus, a safe harbor is created for an owner who notifies
police and revokes or attempts to revoke (to the extent
permitted by law) permission to use the property by those who
are using it in the course of criminal activity. The owner's
obligations end right there--property owners should not have to
assume the responsibilities of police to stop crime. In the Red
Carpet Motel incident described earlier, the hotel owner could
have taken advantage of the bill's safe harbor by (as he did)
notifying police of drug sales taking place at the motel and
making a good faith attempt to evict the responsible motel
guests from their rooms. In the situation of an apartment
building where a tenant is selling illegal drugs, the owner
could take advantage of the safe harbor by notifying police and
making a good faith attempt to evict the tenants. The term
``good faith attempt'' is used because in many instances, an
owner may be constrained in revoking permission to use property
because of provisions of local, state or federal law (i.e.,
contract or landlord- tenant law). For instance, in many parts
of the country it is extremely difficult to evict a tenant
because of allegations of illegal drug sales without the tenant
having already been convicted of drug trafficking.\65\
---------------------------------------------------------------------------
\65\ In some areas of the country, it might be generally agreed to
be impossible to evict a tenant without a preexisting criminal
conviction--in such a case, the bill would not require an owner to go
through the futile motion of seeking eviction in order to enjoy the
protection of the safe harbor.
---------------------------------------------------------------------------
Finally, an owner is not required--in order to do ``all
that can reasonably be expected''--to take steps that he
reasonably believes would be likely to subject any person
(other than the wrongdoer) to physical danger.
With respect to a property interest acquired after the
conduct giving rise to the forfeiture has taken place, an
innocent owner is generally one who, at the time he acquired
the interest in the property, was a bona fide purchaser or
seller for value and reasonably without cause to believe that
the property was subject to forfeiture. This formulation is
required because much fraud could result were innocent donees
allowed to be considered innocent owners. As Justice Kennedy
noted in dissent in United States v. A Parcel of Land (92 Buena
Vista Ave.),\66\ criminals would then be allowed to shield
their property from forfeiture through transfers to relatives.
---------------------------------------------------------------------------
\66\ 113 S. Ct. 1126, 1146 (1993).
---------------------------------------------------------------------------
However, the bill makes exceptions to this formulation in
two instances to avoid unjust results. First, a person is
considered to be an innocent owner if he acquired an interest
in property through probate or inheritance, and was at the time
of acquisition reasonably without cause to believe that the
property was subject to forfeiture. The risk of a moral hazard
here is slight. It is hardly likely that many criminals will
commit suicide for the express purpose of foiling imminent
seizures by having their property devolved to their heirs. And
this policy has a sound basis. A person may have inherited
property from a relative without cause to believe that it had
been involved in some criminal activity. Years later, the
government might decide to institute forfeiture proceedings
against the property. Without the availability of an innocent
owner defense, the inheritor would be put in the position of
having to rebut the government's case that the property was
forfeitable, that it had been involved in criminal activity. To
do this, the inheritor would have to know what a dead person
had done with the property and what was in the mind of that
dead person. It is fundamentally unfair to put someone in this
position.\67\
---------------------------------------------------------------------------
\67\ The Committee has heard testimony from the executor of an
estate who was placed, along with the beneficiaries of a house, in the
position of having to fight a seizure based on ``an unnamed person in
prison [having] told an unnamed government agent that an unnamed vessel
was used by unnamed persons to offload cocaine at the home of the
decedent . . . on an unspecified date in December 1988.'' 1997 Hearing
at 38 (testimony of Susan Davis).
---------------------------------------------------------------------------
Second, if the property is real property, the owner is the
spouse or minor child of the person who committed the offense
giving rise to forfeiture, and the owner uses the property as a
primary residence, an otherwise valid innocent owner claim
shall not be denied because the owner acquired his interest in
it not through a purchase but through dissolution of marriage
or by operation of law (in the case of a spouse) or as an
inheritance upon the death of a parent (in the case of a minor
child). However, to be considered an innocent owner, the spouse
or minor child must have been reasonably without cause to
believe that the property was subject to forfeiture at the time
of the acquisition of his interest in the property.
4. Return of Property Upon Showing of Hardship
Even should a property owner prevail in a civil forfeiture
proceeding, irreparable damage may have been done to the
owner's interests. For instance, if property is used as a
business, its lack of availability for the time necessary to
win a victory in court could have forced its owner into
bankruptcy. If the property is a car, the owner might not have
been able to commute to work until it was won back. If the
property is a house, the owner may have been left temporarily
homeless (unless the government let the owner rent the house
back). In cases such as this, even when the government's case
is extremely weak, the owner must often settle with the
government and lose a certain amount of money in order to get
the property back as quickly as possible.
The case of Michael and Christine Sandsness is instructive:
Michael Sandsness and his wife, Christine, owned two
gardening supply stores called ``Rain & Shine'' in
Eugene and Portland, Oregon. Among the items sold were
metal halide grow lights, used for growing many indoor
plants. The grow lights also can be used to grow
marijuana, but it is not illegal to sell them. Because
some area marijuana gardens raided by [the Drug
Enforcement Administration] had the lights, the agency
began building a case to seize the gardening supply
businesses. [T]he DEA sent undercover agents to the
stores to try to get employees to give advice on
growing marijuana. Unsuccessful in those efforts, the
agents then engaged an employee in conversation, asking
advice on the amount of heat or noise generated by the
lights, making oblique comments suggesting that they
wanted to avoid detection and commenting about High
Times magazine. They never actually mentioned
marijuana. The employee then sold the agents grow
lights. DEA raided the two stores, seizing inventory
and bank accounts. Agents told the landlord of one of
the stores that if he did not evict Sandsness, the
government would seize his building. The landlord
reluctantly complied. While the forfeiture case was
pending, the business was destroyed. Mr. Sandsness was
forced to sell the remaining unseized inventory in
order to pay off creditors.\68\
---------------------------------------------------------------------------
\68\ Forfeiting Our Property Rights at 13.
Current law does allow for the release of property pending
final disposition of a case upon payment of a full bond.\69\
However, most property owners do not have the resources to make
use of this provision. Therefore, in order to alleviate
hardship, H.R. 1658 provides that a property owner is entitled
to release of seized property if a court determines that its
continued possession by the government pending the final
disposition of forfeiture proceedings will likely cause
substantial hardship to the owner and that this hardship
outweighs the risk that the property will be destroyed,
damaged, lost, concealed, or transferred it if is returned
during the pendency of the proceedings. The court may place
such conditions on release of the property as it finds are
appropriate to preserve the property's availability for
forfeiture.
---------------------------------------------------------------------------
\69\ See 19 U.S.C. Sec. 1614.
---------------------------------------------------------------------------
5. Compensation for Damage to Property while in the Government's
Possession
The federal government is exempted from liability under the
Federal Tort Claims Act for damage to property while detained
by law enforcement officers.\70\
---------------------------------------------------------------------------
\70\ 26 U.S.C. Sec. 2680(c).
---------------------------------------------------------------------------
Seized property awaiting forfeiture can be quickly damaged:
Seized conveyances devalue from aging, lack of care,
inadequate storage, and other factors while waiting
forfeiture. They often deteriorate--engines freeze,
batteries die, seals shrink and leak oil, boats sink,
salt air and water corrode metal surfaces, barnacles
accumulate on boat hulls, and windows crack from heat.
On occasion, vandals steal or seriously damage
conveyances.\71\
---------------------------------------------------------------------------
\71\ U.S. Comptroller Gen., U.S. Gen. Accounting Office, Better
Care and Disposal of Seized Cars, Boats, and Planes Should Save Money
and Benefits Law Enforcement, at ii (GAO/PLRD-83-94, 1983).
It cannot be categorized as victory when a boat owner gets
back, for instance, a rusted and stripped hulk of a vessel. The
bill amends the Federal Tort Claims Act to allow for tort
claims against the United States government based on the
destruction, injury, or loss of goods, merchandise, or other
property while in the possession of any law enforcement officer
if the property had been seized for the purpose of forfeiture.
Of course, if seized property is successfully forfeited, no
claim would be allowed.
6. Elimination of Cost Bond
Under current law, a property owner wanting to contest a
seizure of property under a civil forfeiture statute must give
the court a bond of the lessor of $5,000 or ten percent of the
value of the property seized (but not less than $250).\72\
---------------------------------------------------------------------------
\72\ See 19 U.S.C. Sec. 1608.
---------------------------------------------------------------------------
The bond is unconstitutional in cases involving indigents,
because it would deprive such claimants of hearings simply
because of their inability to pay.\73\ Even in cases not
involving indigents, the bond should not be required. It ``is
simply an additional financial burden on the claimant and an
added deterrent to contesting the forfeiture.'' \74\ H.R. 1658
eliminates the requirement.
---------------------------------------------------------------------------
\73\ See Wiren v. Eide, 542 F.2d 757, 763 (9th Cir. 1976).
\74\ Letter from David Smith to Kathleen Clark, Senate Judiciary
Committee, at 5 (Aug. 19, 1992).
---------------------------------------------------------------------------
7. Adequate Time to Contest Forfeiture
Currently, a property owner has 20 days (from the date of
the first publication of the notice of seizure) to file a claim
with the seizing agency challenging the government's
administrative forfeiture of property.\75\ To challenge a
judicial forfeiture, the property owner has an exceedingly
short 10 days (after process has been executed): \76\
---------------------------------------------------------------------------
\75\ 19 U.S.C. Sec. 1608.
\76\ Fed. R. Civ. P. C(6)(Supplemental Rules for Certain Admiralty
and Maritime Claims)(This is the date when a U.S. court takes
possession of the property through ``arrest'' by a federal marshal. It
is not the date when it is initially seized by a law enforcement
officer).
Even assuming that notice is published the next day
after process is executed, the reader of the notice
will have a mere nine days to file a timely claim. Most
local rules require that notice be published for three
successive weeks, on the assumption that interested
parties will not necessarily see the first published
notice. But by the time the second notice is published,
more than ten days will have elapsed from the date
process is executed. Thus anyone who misses the first
published notice will be unable to comply with the
exceedingly short time limitation for filing a claim. .
. .\77\
---------------------------------------------------------------------------
\77\ David Smith, Prosecution and Defense of Forfeiture Cases,
Sec. 9.03[1], at 9-45 (1998).
Even though these time limits sometimes are ignored in the
interests of justice, failure to file a timely claim often
results in judgment in favor of the government.\78\
---------------------------------------------------------------------------
\78\ See, e.g., United States v. Beechcraft Queen Airplane, 789
F.2d 627, 630 (8th Cir. 1986).
---------------------------------------------------------------------------
The bill provides a property owner 30 days to file a claim
following both administrative and judicial forfeiture actions.
8. Interest
Under current law, even if a property owner prevails in a
forfeiture action, he may receive no interest for the time
period in which he lost use of his property.\79\ In cases where
money or other negotiable instruments were seized, or money is
awarded a property owner, this is manifestly unfair.
---------------------------------------------------------------------------
\79\ The courts are divided on whether the government must pay
interest to a successful claimant. Compare United States v. $515,060.42
in U.S. Currency, 152 F.3d 491, 504-06 (6th Cir. 1998)(awarding
interest) with United States v. $7,990 in U.S. Currency, 170 F.3d 843
(8th Cir. 1999)(sovereign immunity bars awarding of interest).
---------------------------------------------------------------------------
H.R. 1658 provides that upon entry of judgment for the
owner in a forfeiture proceeding, the United States shall be
liable for post-judgment interest on any money judgement. The
United States shall generally not be liable for pre-judgment
interest. However, in cases involving currency, proceeds of an
interlocutory sale, or other negotiable instruments, the
government must disgorge any funds representing interest
actually paid to the United States that resulted from the
investment of the property or an imputed amount that would have
been earned had it been invested.
Hearings
While no hearings were held in the 106th Congress, the
Committee held one day of hearings on civil asset forfeiture
reform legislation on June 11, 1997. Testimony was received
from Billy Munnerlyn, E.E. (Bo) Edwards III, F. Lee Bailey,
Susan Davis, Gerald B. Lefcourt, Stefan D. Cassella, Deputy
Chief, Asset Forfeiture and Money Laundering Section, Criminal
Division, U.S. Department of Justice, Jan P. Blanton, Director,
Executive Office for Asset Forfeiture, Department of the
Treasury, Bobby Moody, Chief of Police, Marietta, Georgia, and
1st Vice President, International Association of Chiefs of
Police, and David Smith. Additional material was submitted by
Nadine Strossen, President, American Civil Liberties
Organization, and Roger Pilon, Director, Center for
Constitutional Studies, CATO Institute.
Committee Consideration
On June 15, 1999, the Committee met in open session and
ordered reported favorably the bill H.R. 1658 without amendment
by a recorded vote of 27-3, a quorum being present.
Vote of the Committee
Vote on final passage: Adopted 27 to 3.
AYES NAYS
Mr. Sensenbrenner Mr. Bryant
Mr. Gekas Mr. Hutchinson
Mr. Coble Mr. Weiner
Mr. Smith (TX)
Mr. Gallegly
Mr. Canady
Mr. Goodlatte
Mr. Chabot
Mr. Barr
Mr. Jenkins
Mr. Cannon
Mr. Rogan
Mr. Graham
Mr. Scarborough
Mr. Conyers
Mr. Frank
Mr. Berman
Mr. Nadler
Mr. Scott
Mr. Watt
Ms. Lofgren
Ms. Jackson Lee
Mr. Delahunt
Mr. Wexler
Mr. Rothman
Ms. Baldwin
Mr. Hyde
Committee Oversight Findings
In compliance with clause 3(c)(1) of Rule XIII of the Rules
of the House of Representatives, the Committee reports that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of Rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
Committee on Government Reform Findings
No findings or recommendations of the Committee on
Government Reform were received as referred to in clause
3(c)(4) of Rule XIII of the Rules of the House of
Representatives.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of House Rule XIII is inapplicable because
this legislation does not provide new budgetary authority or
increased tax expenditures.
Committee Cost Estimate
In compliance with clause 3(d)(2) of Rule XIII of the Rules
of the House of Representatives, the Committee believes that
the bill will have no cost for the current fiscal year, and
that the cost incurred in carrying out H.R.1658 would be $52
million for the next five fiscal years.
The Congressional Budget Office did not have an independent
cost estimate prepared by the time of filing of this report.
However, CBO did prepare a cost estimate in 1997 of H.R. 1965,
another bill reforming federal forfeiture laws. While the two
bills have significant differences, H.R. 1965 did contain
versions of the eight fundamental reforms of civil forfeiture
laws contained in H.R. 1658. The CBO estimated that over the
period 1998-2002, implementation of H.R. 1965 would cost $52
million and that any changes to direct spending and
governmental receipts would be less than $500,000 a year.\80\
---------------------------------------------------------------------------
\80\ H.R. Rep. No. 105-358, pt. 1, at 38-41 (1997).
---------------------------------------------------------------------------
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of Rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in Article I, section 8 of the Constitution.
Section-by-Section Analysis and Discussion
Section 1. Short title.
Section 1 contains the Short Title of the bill.
Section 2. Creation of general rules relating to civil forfeiture
proceedings.
Section 2 creates new subsections (j) and (k) of section
981 of title 18 of the United States Code (and redesignates
subsection (j) as subsection (l)) that contain revised
procedures which are to govern all administrative and judicial
civil forfeiture actions brought pursuant to federal law
(except as specified in subsection (j)(8)). To the extent these
procedures are inconsistent with any preexisting federal law,
these procedures apply and supercede preexisting law.
Subparagraph (A) of paragraph (1) of subsection (j)
provides that in any nonjudicial civil forfeiture proceeding
under a civil forfeiture statute, with respect to which the
agency conducting a seizure of property must give written
notice to interested parties, such notice shall be given as
soon as practicable and in no case more than 60 days after the
later of the date of the seizure or the date the identity of
the interested party is first known or discovered by the
agency, except that the court may extend the period for filing
a notice for good cause shown.
Subparagraph (B) of paragraph (1) provides that a person
entitled to written notice in such proceeding to whom written
notice is not given may on motion void the forfeiture with
respect to that person's interest in the property, unless the
agency show either good cause for the failure to give notice to
that person or that the person otherwise had actual notice of
the seizure.
Subparagraph (C) of paragraph (1) provides that if the
government does not provide notice of a seizure of property in
accordance with subparagraph (A), it shall return the property
and may not take any further action to effect the forfeiture of
such property. If the government has made a mistake or
administrative error in providing notice, a court may consider
good cause to have been shown pursuant to subparagraph (A). In
such case, the government may take further action to effect the
forfeiture.
Subparagraph (A) of paragraph (2) provides that any person
claiming property seized in a nonjudicial forfeiture proceeding
may file a claim with the appropriate official after the
seizure.
Subparagraph (B) of paragraph (2) provides that a claim
under subparagraph (A) may not be filed later than 30 days
after either the date of final publication of notice of seizure
or, in the case of a person entitled to written notice, the
date that notice was received.
Subparagraph (C) of paragraph (2) provides that the claim
shall state the claimant's interest in the property.
Subparagraph (D) of paragraph (2) provides that not later
than 90 days after a claim has been filed, the Attorney General
shall file a complaint for forfeiture in the appropriate court
or return the property, except that a court in the district in
which the complaint will be filed may extend the period for
filing a complaint for good cause shown or upon agreement of
the parties.
Subparagraph (E) of paragraph (2) provides that if the
government does not file a complaint for forfeiture of property
in accordance with subparagraph (D), it shall return the
property and may not take any further action to effect the
forfeiture of such property.
Subparagraph (F) of paragraph (2) provides that any person
may bring a claim under subparagraph (A) without posting bond
with respect to the property which is the subject of the claim.
Subparagraph (A) of paragraph (3) provides that in any case
where the government files in the appropriate United States
district court a complaint for forfeiture of property, any
person claiming an interest in the seized property may file a
claim asserting such person's interest in the property within
30 days of service of the government's complaint or, where
applicable, within 30 days of alternative publication notice.
Subparagraph (B) of paragraph (3) provides that a person
asserting an interest in seized property in accordance with
subparagraph (A) shall file an answer to the government's
complaint for forfeiture within 20 days of the filing of the
claim.
Subparagraph (A) of paragraph (4) provides that if the
person filing a claim is financially unable to obtain
representation by counsel, the court may appoint counsel to
represent that person with respect to the claim.
Subparagraph (B) of paragraph (4) provides that in
determining whether to appoint counsel to represent the person
filing the claim, the court shall take into account such
factors as the claimant's standing to contest the forfeiture
and whether the claim appears to be made in good faith or to be
frivolous.
Subparagraph (C) of paragraph (4) provides that the court
shall set the compensation for that representation, which shall
be equivalent to that provided for court-appointed
representation under section 3006A of title 18 of the United
States Code (for federal criminal defendants), and to pay such
cost there are authorized to be appropriated such sums as are
necessary as an addition to the funds otherwise appropriated
for the appointment of counsel under that section.
Paragraph (5) provides that in all suits or actions brought
under any civil forfeiture statute for the civil forfeiture of
any property, the burden of proof is on the United States
government to establish, by clear and convincing evidence, that
the property is subject to forfeiture.
Subparagraph (A) of paragraph (6) provides that an innocent
owner's interest in property shall not be forfeited under any
civil forfeiture statute.
Subparagraph (B) of paragraph (6) provides that with
respect to a property interest in existence at the time the
illegal conduct giving rise to forfeiture took place, the term
``innocent owner'' means an owner who either did not know of
the conduct giving rise to the forfeiture or, upon learning of
the conduct giving rise to the forfeiture, did all that
reasonably could be expected under the circumstances to
terminate such use of the property. To meet the requirements of
the last clause of the preceding sentence, the property owner
is not required to take every conceivable action which could be
considered reasonable, but only to take actions which are in
total a reasonable response to the conduct giving rise to the
forfeiture. In determining what is a reasonable response, the
economic situation of the property owner (and his business, if
applicable) should be taken into account.
Subparagraph (C) of paragraph (6) provides that with
respect to a property interest acquired after the conduct
giving rise to the forfeiture has taken place, the term
``innocent owner'' means a person who, at the time that person
acquired the interest in the property, was reasonably without
cause to believe that the property was subject to forfeiture
and was either a bona fide purchaser or seller for value
(including a purchaser or seller of goods or services for
value) or a person who acquired an interest in property through
probate or inheritance.
A property owner is considered to have acquired an interest
in property through probate or inheritance at the time of the
death of the previous property owner, not at the time of final,
permanent, distribution of the property.
The use of the term inheritance recognizes that property
interests often pass at the death of previous owners outside of
formal probate proceedings. For instance, property interests
are routinely inherited in community property states (such as
California and Texas) without a testamentary device. Likewise,
standard property law in many states recognizes transfers of
interests through mechanisms such as remainder interests, and
``tenancy-in-entireties'' (which cause property interests in
the whole res to pass virtually automatically upon the death of
one ``tenant''/owner to the surviving ``tenant''/owner). This
is often true of partnership property, including family
business partnerships. In short, the use of the term recognizes
that non-probate assets might be acquired by truly innocent
owners through all manner of standard, legitimate state and
commercial law mechanisms, for fundamental tax and estate
planning reasons. For example, assets commonly inherited but
not subject to probate administration in many states include
the following: joint bank accounts with right of survivorship,
property held in joint tenancy, property subject to a community
property agreement (in community property states), property
held in an inter vivos (living) trust, life insurance (unless
all beneficiaries are dead or proceeds are payable to the
estate), and assets governed by dispositive provisions in an
insurance policy, employment contract, bond, mortgage,
promissory note, deposit agreement, pension plan, conveyance,
or other non-testamentary written instrument effective as a
contract, gift, conveyance or trust.
Subparagraph (D) of paragraph (6) provides that where the
property subject to forfeiture is real property, and the
claimant uses the property as the claimant's primary residence
(i.e., homestead) and is the spouse or minor child of the
person who committed the offense giving rise to the forfeiture,
an otherwise valid innocent owner claim shall not be denied on
the ground that the claimant acquired the interest in the
property not through a purchase but through dissolution of
marriage or by operation of law (in the case of a spouse) or as
an inheritance upon the death of a parent (in the case of a
minor child \81\). The claimant must establish that at the time
of the acquisition of the property interest, the claimant was
reasonably without cause to believe that the property was
subject to forfeiture.
---------------------------------------------------------------------------
\81\ The time of acquisition of a minor child's interest is at the
time of the parent's death.
---------------------------------------------------------------------------
This provision recognizes that one spouse might acquire an
innocent, legitimate ownership interest in a residence through
formal ``dissolution'' of marriage (divorce)--without any
reasonable cause to believe that the property is tainted by the
other spouse's conduct. Some states recognize separate property
interests between spouses after a certain period of separation,
even without formal marriage ``dissolution'' proceedings. An
annulment, too, may not be regarded as a ``dissolution'' of
marriage, per se, but rather, an official pronouncement that no
legitimate marriage ever existed between the ``spouses.'' A
community property agreement between spouses, in community
property states like California and Texas, is another common
example of how one spouse could innocently acquire an interest
in his or her primary residence by operation of (state) law,
other than dissolution of marriage. Such standard agreements
exist during the life of a marriage, after marriage, and
indeed, serve as a non-probate asset after death of a spouse.
The provision for acquisition by an innocent spouse ``by
operation of law'', as well as ``dissolution of marriage'', is
intended to cover all of the similarly innocent situations
regarding spousal acquisition of a primary residence under
various, legitimate operations of state and commercial laws.
Paragraph (7) provides that (for purposes of paragraph (6))
one way in which a person may show that he did all that
reasonably could be expected would be to demonstrate that he,
to the extent permitted by law, gave timely notice to an
appropriate law enforcement agency of information that led him
to know the conduct giving rise to a forfeiture would occur or
has occurred while in a timely fashion revoking or attempting
to revoke permission for those engaging in such conduct to use
the property or taking reasonable actions in consultation with
a law enforcement agency to discourage or prevent the illegal
use of the property. To meet the requirements of the last
clause of the preceding sentence, the person is not required to
take every conceivable action which could be considered
reasonable, but only to take actions which are in total a
reasonable response to the conduct giving rise to the
forfeiture. In determining what is a reasonable response, the
economic situation of the property owner (and his business, if
applicable) should be taken into account. Paragraph (7) also
provides that in order to do all that could reasonably be
expected (for purposes of paragraph (6)), a person is not
required to take steps that the person reasonably believes
would be likely to subject any person (other than the person
whose conduct gave rise to the forfeiture) to physical danger.
Paragraph (8) provides definitions of terms for purposes of
subsection (j). The term ``civil forfeiture statute'' means any
provision of federal law (other than the Tariff Act of 1930 or
the Internal Revenue Code of 1986) providing for the forfeiture
of property other than as a sentence imposed upon conviction of
a criminal offense. The term ``owner'' means a person with an
ownership interest in the specific property sought to be
forfeited, including a leasehold, lien, mortgage, recorded
security device, or valid assignment of an ownership interest;
it does not include a person with only a general unsecured
interest in (or claim against) the property or estate of
another, a bailee (unless the bailor is identified and the
bailee shows a colorable legitimate interest in the property
seized), or a nominee who exercises no dominion or control over
the property.
Paragraph (1) of subsection (k) provides that a claimant
under subsection (j) is entitled to immediate release of seized
property if the court determines that (1) the claimant has a
possessory interest in the property, (2) the continued
possession by the United States government pending the final
disposition of forfeiture proceedings will cause substantial
hardship to the claimant (such as preventing the functioning of
a business, preventing an individual from working, or leaving
an individual homeless), and (3) the claimant's likely hardship
from the continued possession by the United States government
of the seized property outweighs the risk that the property
will be destroyed, damaged, lost, concealed, or transferred if
it is returned to the claimant during the pendency of the
proceeding.
Paragraph (2) provides that a claimant seeking release of
property under subsection (k) must request possession of the
property from the appropriate official, and the request must
set forth the basis on which the requirements of paragraph (1)
are met.
Paragraph (3) provides that if within 10 days after the
date of the request the property has not been released, the
claimant may file a motion or complaint in any district court
that would have jurisdiction of forfeiture proceedings relating
to the property setting forth the basis on which the
requirements of paragraph (1) are met and the steps the
claimant has taken to secure release of the property from the
appropriate official.
Paragraph (4) provides that if a motion or complaint is
filed under paragraph (3), the district court shall order that
the property be returned to the claimant, pending completion of
proceedings by the United States government to obtain
forfeiture of the property, if the claimant shows that the
requirements of paragraph (1) have been met. The court may
place such conditions on release of the property as it finds
are appropriate to preserve the availability of the property or
its equivalent for forfeiture.
Paragraph (5) provides that the district court shall render
a decision on a motion or complaint filed under paragraph (3)
no later than 30 days after the date of the filing, unless such
30 day limitation is extended by consent of the parties or by
the court for good cause shown.
Section 3. Conforming amendment to the Controlled Substances Act.
Section 3 repeals section 518 of the Controlled Substances
Act (21 U.S.C. Sec. 888). Section 518 provides for expedited
forfeiture procedures in the cases of seized conveyances.
Section 4. Compensation for damage to seized property.
Subsection (a) of section 4 amends the Federal Tort Claims
Act, which currently does not allow a claim for damages to be
brought against the United States in respect of the assessment
or collection of any tax or customs duty, or the detention of
any goods or merchandise by any officer of customs or excise or
any other law enforcement officer (see 28 U.S.C. Sec.
2680(c)). The subsection provides that claims can be brought
that are based on the destruction, injury, or loss of goods,
merchandise, or other property, while in the possession of any
officer of customs or excise or any other law enforcement
officer, if the property was seized for the purpose of
forfeiture but the interest of the claimant is not forfeited.
Subsection (b) of section 4 provides that with respect to a
claim that cannot be settled under the Tort Claims Act, the
Attorney General may settle, for not more than $50,000 in any
case, a claim for damage to, or loss of, privately owned
property caused by an investigative or law enforcement officer
who is employed by the Department of Justice and acting within
the scope of his or her employment. However, the Attorney
General may not pay a claim that is presented more than 1 year
after it occurs or is presented by an officer or employee of
the United States government and arose within the scope of
employment.
Section 5. Prejudgment and postjudgment interest.
Section 5 amends section 2465 of title 28 of the United
States Code to provide that upon entry of judgment for the
claimant in any proceeding to condemn or forfeit property
seized or arrested under any Act of Congress, the United States
shall be liable for post-judgment interest as set forth in
section 1961 of title 28 of the United States Code. The United
States shall not be liable for prejudgment interest, except
that in cases involving currency, other negotiable instruments,
or the proceeds of an interlocutory sale, the United States
shall disgorge to the claimant any funds representing interest
actually paid to the United States from the date of seizure or
arrest of the property that resulted from the investment of the
property in an interest- bearing account or instrument, and for
any period during which no interest is actually paid, an
imputed amount of interest that such currency, instruments, or
proceeds would have earned at the rate described in section
1961. The United States shall not be required to disgorge the
value of any intangible benefits nor make any other payments to
the claimant not specifically authorized by this subsection.
Section 6. Applicability.
Section 6 provides that unless otherwise specified in this
Act, the amendments made by this Act apply with respect to
claims, suits, and action filed on or after the date of the
enactment of this Act. However, the standard for the required
burden of proof shall apply in cases pending on the date of the
enactment of this Act and the amendment made by section 5 shall
apply to any judgment entered after the date of enactment of
this Act.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):
SECTION 981 OF TITLE 18, UNITED STATES CODE
Sec. 981. Civil forfeiture
(a) * * *
* * * * * * *
(j)(1)(A) In any nonjudicial civil forfeiture proceeding
under a civil forfeiture statute, with respect to which the
agency conducting a seizure of property must give written
notice to interested parties, such notice shall be given as
soon as practicable and in no case more than 60 days after the
later of the date of the seizure or the date the identity of
the interested party is first known or discovered by the
agency, except that the court may extend the period for filing
a notice for good cause shown.
(B) A person entitled to written notice in such proceeding
to whom written notice is not given may on motion void the
forfeiture with respect to that person's interest in the
property, unless the agency shows--
(i) good cause for the failure to give notice to
that person; or
(ii) that the person otherwise had actual notice of
the seizure.
(C) If the government does not provide notice of a seizure
of property in accordance with subparagraph (A), it shall
return the property and may not take any further action to
effect the forfeiture of such property.
(2)(A) Any person claiming property seized in a nonjudicial
forfeiture proceeding may file a claim with the appropriate
official after the seizure.
(B) A claim under subparagraph (A) may not be filed later
than 30 days after--
(i) the date of final publication of notice of
seizure; or
(ii) in the case of a person entitled to written
notice, the date that notice is received.
(C) The claim shall state the claimant's interest in the
property.
(D) Not later than 90 days after a claim has been filed,
the Attorney General shall file a complaint for forfeiture in
the appropriate court or return the property, except that a
court in the district in which the complaint will be filed may
extend the period for filing a complaint for good cause shown
or upon agreement of the parties.
(E) If the government does not file a complaint for
forfeiture of property in accordance with subparagraph (D), it
shall return the property and may not take any further action
to effect the forfeiture of such property.
(F) Any person may bring a claim under subparagraph (A)
without posting bond with respect to the property which is the
subject of the claim.
(3)(A) In any case where the Government files in the
appropriate United States district court a complaint for
forfeiture of property, any person claiming an interest in the
seized property may file a claim asserting such person's
interest in the property within 30 days of service of the
Government's complaint or, where applicable, within 30 days of
alternative publication notice.
(B) A person asserting an interest in seized property in
accordance with subparagraph (A) shall file an answer to the
Government's complaint for forfeiture within 20 days of the
filing of the claim.
(4)(A) If the person filing a claim is financially unable
to obtain representation by counsel, the court may appoint
counsel to represent that person with respect to the claim.
(B) In determining whether to appoint counsel to represent
the person filing the claim, the court shall take into account
such factors as--
(i) the claimant's standing to contest the
forfeiture; and
(ii) whether the claim appears to be made in good
faith or to be frivolous.
(C) The court shall set the compensation for that
representation, which shall be equivalent to that provided for
court-appointed representation under section 3006A of this
title, and to pay such cost there are authorized to be
appropriated such sums as are necessary as an addition to the
funds otherwise appropriated for the appointment of counsel
under such section.
(5) In all suits or actions brought under any civil
forfeiture statute for the civil forfeiture of any property,
the burden of proof is on the United States Government to
establish, by clear and convincing evidence, that the property
is subject to forfeiture.
(6)(A) An innocent owner's interest in property shall not
be forfeited under any civil forfeiture statute.
(B) With respect to a property interest in existence at the
time the illegal conduct giving rise to forfeiture took place,
the term ``innocent owner'' means an owner who--
(i) did not know of the conduct giving rise to
forfeiture; or
(ii) upon learning of the conduct giving rise to
the forfeiture, did all that reasonably could be
expected under the circumstances to terminate such use
of the property.
(C) With respect to a property interest acquired after the
conduct giving rise to the forfeiture has taken place, the term
``innocent owner'' means a person who, at the time that person
acquired the interest in the property, was--
(i)(I) a bona fide purchaser or seller for value
(including a purchaser or seller of goods or services
for value); or
(II) a person who acquired an interest in property
through probate or inheritance; and
(ii) at the time of the purchase or acquisition
reasonably without cause to believe that the property
was subject to forfeiture.
(D) Where the property subject to forfeiture is real
property, and the claimant uses the property as the claimant's
primary residence and is the spouse or minor child of the
person who committed the offense giving rise to the forfeiture,
an otherwise valid innocent owner claim shall not be denied on
the ground that the claimant acquired the interest in the
property--
(i) in the case of a spouse, through dissolution of
marriage or by operation of law, or
(ii) in the case of a minor child, as an
inheritance upon the death of a parent, and not through
a purchase. However, the claimant must establish, in
accordance with subparagraph (C), that at the time of
the acquisition of the property interest, the claimant
was reasonably without cause to believe that the
property was subject to forfeiture.
(7) For the purposes of paragraph (6)--
(A) ways in which a person may show that such
person did all that reasonably can be expected may
include demonstrating that such person, to the extent
permitted by law--
(i) gave timely notice to an appropriate
law enforcement agency of information that led
the person to know the conduct giving rise to a
forfeiture would occur or has occurred; and
(ii) in a timely fashion revoked or
attempted to revoke permission for those
engaging in such conduct to use the property or
took reasonable actions in consultation with a
law enforcement agency to discourage or prevent
the illegal use of the property; and
(B) in order to do all that can reasonably be
expected, a person is not required to take steps that
the person reasonably believes would be likely to
subject any person (other than the person whose conduct
gave rise to the forfeiture) to physical danger.
(8) As used in this subsection:
(1) The term ``civil forfeiture statute'' means any
provision of Federal law (other than the Tariff Act of
1930 or the Internal Revenue Code of 1986) providing
for the forfeiture of property other than as a sentence
imposed upon conviction of a criminal offense.
(2) The term ``owner'' means a person with an
ownership interest in the specific property sought to
be forfeited, including a leasehold, lien, mortgage,
recorded security device, or valid assignment of an
ownership interest. Such term does not include--
(i) a person with only a general unsecured
interest in, or claim against, the property or
estate of another;
(ii) a bailee unless the bailor is
identified and the bailee shows a colorable
legitimate interest in the property seized; or
(iii) a nominee who exercises no dominion
or control over the property.
(k)(1) A claimant under subsection (j) is entitled to
immediate release of seized property if--
(A) the claimant has a possessory interest in the
property;
(B) the continued possession by the United States
Government pending the final disposition of forfeiture
proceedings will cause substantial hardship to the
claimant, such as preventing the functioning of a
business, preventing an individual from working, or
leaving an individual homeless; and
(C) the claimant's likely hardship from the
continued possession by the United States Government of
the seized property outweighs the risk that the
property will be destroyed, damaged, lost, concealed,
or transferred if it is returned to the claimant during
the pendency of the proceeding.
(2) A claimant seeking release of property under this
subsection must request possession of the property from the
appropriate official, and the request must set forth the basis
on which the requirements of paragraph (1) are met.
(3) If within 10 days after the date of the request the
property has not been released, the claimant may file a motion
or complaint in any district court that would have jurisdiction
of forfeiture proceedings relating to the property setting
forth--
(A) the basis on which the requirements of
paragraph (1) are met; and
(B) the steps the claimant has taken to secure
release of the property from the appropriate official.
(4) If a motion or complaint is filed under paragraph (3),
the district court shall order that the property be returned to
the claimant, pending completion of proceedings by the United
States Government to obtain forfeiture of the property, if the
claimant shows that the requirements of paragraph (1) have been
met. The court may place such conditions on release of the
property as it finds are appropriate to preserve the
availability of the property or its equivalent for forfeiture.
(5) The district court shall render a decision on a motion
or complaint filed under paragraph (3) no later than 30 days
after the date of the filing, unless such 30-day limitation is
extended by consent of the parties or by the court for good
cause shown.
[(j)] (l) For purposes of this section--
(1) the term ``Attorney General'' means the
Attorney General or his delegate; and
(2) the term ``Secretary of the Treasury'' means
the Secretary of the Treasury or his delegate.
SECTION 518 OF THE CONTROLLED SUBSTANCES ACT
[expedited procedures for seized conveyances
[Sec. 518. (a)(1) The owner of a conveyance may petition
the Attorney General for an expedited decision with respect to
the conveyance, if the conveyance is seized for a drug-related
offense and the owner has filed the requisite claim and cost
bond in the manner provided in section 608 of the Tariff Act of
1930. The Attorney General shall make a determination on a
petition under this section expeditiously, including a
determination of any rights or defenses available to the
petitioner. If the Attorney General does not grant or deny a
petition under this section within 20 days after the date on
which the petition is filed, the conveyance shall be returned
to the owner pending further forfeiture proceedings.
[(2) With respect to a petition under this section, the
Attorney General may--
[(A) deny the petition and retain possession of the
conveyance;
[(B) grant the petition, move to dismiss the
forfeiture action, if filed, and promptly release the
conveyance to the owner; or
[(C) advise the petitioner that there is not
adequate information available to determine the
petition and promptly release the conveyance to the
owner.
[(3) Release of a conveyance under subsection (a)(1) or
(a)(2)(C) does not affect any forfeiture action with respect to
the conveyance.
[(4) The Attorney General shall prescribe regulations to
carry out this section.
[(b) At the time of seizure, the officer making the seizure
shall furnish to any person in possession of the conveyance a
written notice specifying the procedures under this section. At
the earliest practicable opportunity after determining
ownership of the seized conveyance, the head of the department
or agency that seizes the conveyance shall furnish a written
notice to the owner and other interested parties (including
lienholders) of the legal and factual basis of the seizure.
[(c) Not later than 60 days after a claim and cost bond
have been filed under section 608 of the Tariff Act of 1930
regarding a conveyance seized for a drug-related offense, the
Attorney General shall file a complaint for forfeiture in the
appropriate district court, except that the court may extend
the period for filing for good cause shown or on agreement of
the parties. If the Attorney General does not file a complaint
as specified in the preceding sentence, the court shall order
the return of the conveyance to the owner and the forfeiture
may not take place.
[(d) Any owner of a conveyance seized for a drug-related
offense may obtain release of the conveyance by providing
security in the form of a bond to the Attorney General in an
amount equal to the value of the conveyance unless the Attorney
General determines the conveyance should be retained (1) as
contraband, (2) as evidence of a violation of law, or (3)
because, by reason of design or other characteristic, the
conveyance is particularly suited for use in illegal
activities.]
----------
TITLE 28, UNITED STATES CODE
* * * * * * *
PART VI--PARTICULAR PROCEEDINGS
* * * * * * *
CHAPTER 163--FINES, PENALTIES AND FORFEITURES
* * * * * * *
Sec. 2465. Return of property to claimant; certificate of reasonable
cause; liability for wrongful seizure
(a) Upon the entry of judgment for the claimant in any
proceeding to condemn or forfeit property seized under any Act
of Congress, such property shall be returned forthwith to the
claimant or his agent; but if it appears that there was
reasonable cause for the seizure, the court shall cause a
proper certificate thereof to be entered and the claimant shall
not, in such case, be entitled to costs, nor shall the person
who made the seizure, nor the prosecutor, be liable to suit or
judgment on account of such suit or prosecution.
(b) Interest.--
(1) Post-judgment.--Upon entry of judgment for the
claimant in any proceeding to condemn or forfeit
property seized or arrested under any Act of Congress,
the United States shall be liable for post-judgment
interest as set forth in section 1961 of this title.
(2) Pre-judgment.--The United States shall not be
liable for prejudgment interest, except that in cases
involving currency, other negotiable instruments, or
the proceeds of an interlocutory sale, the United
States shall disgorge to the claimant any funds
representing--
(A) interest actually paid to the United
States from the date of seizure or arrest of
the property that resulted from the investment
of the property in an interest-bearing account
or instrument; and
(B) for any period during which no interest
is actually paid, an imputed amount of interest
that such currency, instruments, or proceeds
would have earned at the rate described in
section 1961.
(3) Limitation on other payments.--The United
States shall not be required to disgorge the value of
any intangible benefits nor make any other payments to
the claimant not specifically authorized by this
subsection.
* * * * * * *
CHAPTER 171--TORT CLAIMS PROCEDURE
* * * * * * *
Sec. 2680. Exceptions
The provisions of this chapter and section 1346(b) of this
title shall not apply to--
(a) * * *
* * * * * * *
(c) Any claim arising in respect of the assessment or
collection of any tax or customs duty, or the detention of any
goods or merchandise by any officer of customs or excise or any
other [law-enforcement] law enforcement officer, except that
the provisions of this chapter and section 1346(b) of this
title do apply to any claim based on the destruction, injury,
or loss of goods, merchandise, or other property, while in the
possession of any officer of customs or excise or any other law
enforcement officer, if the property was seized for the purpose
of forfeiture but the interest of the claimant is not
forfeited.
* * * * * * *
Dissenting Views
While we support the general concept of reforming our asset
forfeiture laws and believe it is important to ensure that
innocent citizens do not have their property taken away by an
over-zealous government, we oppose this particular legislation
as it tilts the balance too far in favor of the alleged
criminal.
During the 105th Congress, this Committee overwhelmingly
approved compromise legislation accomplishing the desired end
of reforming our asset forfeiture laws so that individuals are
not deprived of their rights, but doing so in a way that
ensures that drug dealers, money launderers and organized crime
syndicates are not able to exploit loopholes in the system.
Unfortunately, the House did not have the opportunity to debate
that bill and we find ourselves here today in a situation where
that balanced approach has been discarded.
While our specific concerns regarding H.R. 1658 vary, we
agree that in six fundamental ways, the bill denies law
enforcement the tools they need to make sure that criminals are
not able to enjoy the proceeds of their illegal activity.
Burden of Proof
Current law requires that the government only have probable
cause to seize property, but requires citizens to prove by a
preponderance of the evidence that the property or proceeds
were not used in illegal activity. H.R. 1658 shifts the burden
of proof to the government and requires that the government
prove by clear and convincing evidence that the property was
used in an illegal manner. While we support shifting the burden
of proof to the government, the clear and convincing standard
is too high. The standard of proof in these cases should be the
same as in all civil cases--that of preponderance of the
evidence.
Appointment of Counsel
H.R. 1658 allows the court to appoint counsel for ``any
person claiming an interest in the seized property'' who is
``financially unable to obtain representation.'' The only
factors that the court must consider in determining this are
(1) the claimant's standing to contest the forfeiture and (2)
whether the claim appears to be made in good faith.
The Department of Justice undertakes 30,000 seizures a
year, most of them in drug and alien smuggling cases. H.R. 1658
authorizes the appointment of free counsel in all of those
cases for anyone who asserts an interest in the seized
property. The potential for abuse is great and there are no
safeguards in the bill to prevent it. It is also important to
note that those who successfully challenge civil forfeiture
decisions already are able to recover attorneys fees under the
Equal Access to Justice Act.
Innocent Owner Defense
H.R. 1658 provides that certain individuals are de facto
innocent owners, including those who receive property through
probate. In these cases, the property would forever be
protected against forfeiture.
We fully support the notion of protecting innocent owners
who legitimately may not be aware that someone else has used
the property illegally. But we do not think that the wives,
family members and friends of criminals should be able to claim
that they are ``innocent'' owners of the proceeds of crimes. In
particular, the ``probate'' provision of H.R. 1658 allows a
drug dealer to amass a large fortune in drug proceeds and pass
it on to his girlfriend, wife or children should he be killed
in a shoot-out with police or rival narcotraffickers.
Return of Property for Hardship
H.R. 1658 allows a claimant to recover his property pending
trial if he can show that the forfeiture will cause substantial
hardship, such as preventing the functioning of a business,
preventing an individual from working or leaving an individual
homeless. The only burden that must be met to allow the
transfer is a determination that the hardship outweighs any
risk that the property will be destroyed, damaged, lost,
concealed or transferred. The bill does not even ask judges to
consider the likelihood of whether the property will be
maintained and used in the continued commission of crime. No
provisions are included to ensure that the government can
recover the property once a judicial determination is made that
the property is subject to forfeiture. Certain instruments of
alleged illegal activity are not appropriate to be returned
while the forfeiture is pending, but the bill makes no
distinction between legitimate business assets and contraband,
currency and other property that is likely to be used to commit
additional crime if returned.
Notification to Claimant
H.R. 1658 requires that actual notice be given to a
potential claimant within 60 days or the forfeiture action is
nullified and may never be activated against that property
again. The bill includes no exceptions for administrative
errors, such as a misaddressed letter to a jail or prison.
So, under the bill, if the government arrests a drug
dealer, puts him in jail, and sends him notice of the
forfeiture of his drug proceeds, but misdirects the notice to
the wrong jail, the Attorney General would have to return the
money to the prisoner. Morever, based on case law, prisoners
would have eleven years in which to raise such claims. The
proper remedy for such administrative errors is to give the
prisoner proper notice and allow him the normal period of time
in which to file a claim contesting the forfeiture.
Effective Date
H.R. 1658 applies its new standard of proof (that of clear
and convincing evidence) to cases pending at the time of the
bill's enactment. This provision has the potential for reeking
havoc on on-going cases and cases on appeal. We believe that
any change in the standard of proof should apply prospectively.
For these and other reasons, we opposed H.R. 1658 when it
was considered by the Committee. We urge the Committee and
Members of the full House to consider these issues as the bill
moves through the legislative process.
Asa Hutchinson.
Ed Bryant.
Anthony Weiver.