Can the government take all of a family’s money based on suspicion that one family member committed a crime? That is exactly what happened to the Slatic family, when the San Diego County District Attorney seized over $100,000 from personal bank accounts belonging to James Slatic, his wife Annette, and their two teenage daughters, Lily and Penny, without charging anyone with a crime.
Using civil forfeiture, the District Attorney seized nearly every penny from the Slatic family following a January 2016 raid on Med-West Distribution—the legal medical marijuana business owned by James. Police accused Med-West of operating a “clandestine” drug lab, even though the business complied with state medical marijuana laws, operated publicly for two years, and paid its taxes. The police took everything from Med-West, including $324,000, and shut the business down. Then, a few days later, the District Attorney went after James’ family, seizing nearly every penny in their personal bank accounts.
The seizure of the Slatic family’s money had nothing to do with crime fighting; it has everything to do with policing for profit. For more than 15 months following the raid, the District Attorney brought no criminal charges against the Slatics or anyone associated with Med-West. Instead, the District Attorney left the Slatics’ money in legal limbo, refusing even to begin legal proceedings in which the Slatics could prove their innocence.
By teaming up with the Institute for Justice, the Slatics were able to fight back and win. In May 2017, a San Diego judge ordered the district attorney to return all of the family’s money with interest.
Petition for Writ of Mandate
Motion for Return of Property
Petition for Writ of Mandate to California Supreme Court
Demurrer to Petititoners
Reply in Support of Demurrer
James Slatic is a consummate entrepreneur who has started more than ten businesses. He has also been active in the medical marijuana normalization movement at the state and federal levels. Combining these passions, James started two businesses in the medical marijuana industry—one for packaging and supplies, and the other for refining concentrated medical marijuana into usable oils for common products like vaporizer (or “vape”) pens.
James worked on behalf of the ballot initiative legalizing recreational marijuana in Colorado, and is currently working on behalf of similar initiatives in California and Nevada. Last year, James was instrumental in the passage of California’s Medical Cannabis Regulation and Safety Act, which its sponsor says was designed to remove all legal uncertainty from businesses that supply and support medical marijuana. 1
Annette Slatic works as a radiology technician for the local Veterans Administration Hospital. Lily is a sophomore at San Jose State University and her sister Penny is in high school. While supportive of James’ business endeavors, Annette, Lily, and Penny never had any involvement with James’ medical marijuana businesses.
The Raid of Med-West Distribution
On the morning of January 28, 2016, a group of nearly 30 armed officers from a joint federal and San Diego County drug task force burst into Med-West Distribution—a legal marijuana business operating under California’s medical marijuana laws. Without prior warning, the task force took nearly everything, including $324,000, all of the company’s products, records, and computers.
Federal prosecutors quickly declined to prosecute Med-West. They had little choice because of the recent Rohrabacher–Farr Amendment to the federal budget, which prohibits federal agencies from using federal funds to prosecute people who comply with their state’s medical marijuana laws. In fact, the United States Court of Appeals for the Ninth Circuit recently reversed several medical marijuana convictions from California based on the restrictions of Rohrabacher–Farr. 2
The San Diego County District Attorney, too, has declined to prosecute Med-West. But that has not stopped the DA from seizing all of the businesses money and, shockingly, from seizing nearly every penny belonging to the Slatic family. Now, James worries about how he is going to support his family day-to-day, and Lily and Penny not only worry about how they are going to pay for their college education, but how they are going to afford basic expenses while they are away from home.
The Slatics’ situation illustrates the abusive power of civil forfeiture at its worst. The District Attorney cleared out the family’s bank accounts nine months ago, yet in that time no one has been charged with a crime (let alone convicted), no civil forfeiture case has been filed against the family’s money, and no apparent progress has been made in the investigation of Med-West.
The Government’s Profit Motive
This case is not about crime fighting; it is about policing for profit.
Although no one has been charged with a crime, the District Attorney has taken over $400,000 from a lawful business and its owner’s family. How is this possible?
Civil forfeiture—where the government can take and sell your property without ever charging you with a crime, let alone convicting you of one—is one of the greatest threats to property rights in the nation. To make matters worse, such forfeitures often fund law enforcement officials’ salaries and budgets, giving them a direct financial incentive to abuse this power.
California recently made modest reforms to its civil forfeiture laws, but these reforms did not go far enough. In September, California Senate Bill 443 (SB 443) was signed by Governor Brown and becomes law in January 2017. 3 The legislation was designed to close a federal loophole used by state law enforcement officials to seize the assets of suspects, even if those suspects are not charged with a crime. Going forward, police and prosecutors can only receive a share of the proceeds from the federal government on forfeited cars, real estate, boats and cash valued at under $40,000 if the property owner is first convicted in federal court. SB 443 also improves state forfeiture law, as all cash seizures under $40,000 would require a criminal conviction; previously, the threshold was $25,000.
Unfortunately, the state law reforms accomplish little for the Slatics. In fact, Annette may be one of the last Californians ever targeted with civil forfeiture without a criminal conviction for an amount less than $40,000. This is because the District Attorney took $34,000 from Annette before the new $40,000 threshold became effective. The reforms do nothing for James, from whom the District Attorney took $55,000. And for their daughters—Penny and Lily, who each lost around $5,000—the reforms only confirm that there should have been a criminal conviction before the District Attorney upturned their lives.
For James and Annette, the government must trace the money to a crime by clear and convincing evidence, while no criminal conviction is required. For Penny and Lily, the government is supposed to convict someone of a crime and prove a connection to the crime beyond a reasonable doubt. However, for all of the Slatics, the government must connect their money to a crime in order to take it. And James’ business was not criminal, and certainly is not guilty of the crime the District Attorney alleges—the illegal manufacture of a controlled substance.
Medical Marijuana is Legal in California
Some people like marijuana, some people do not. That has been made clear across the country in votes on marijuana reform over the last several years. But no matter what your opinion of marijuana policy, California has some of the nation’s most liberal marijuana laws. The Golden State was the first to allow medical marijuana in 1996, and is now poised to vote on legalizing recreational marijuana in November. In this climate, hundreds of legitimate marijuana businesses have sprung up.
For example, the most recent reform, the Medical Cannabis Regulation and Safety Act (MCRSA), established a state regulatory and licensing structure, and included legalization of for-profit medical marijuana businesses. It also established the Bureau of Medical Marijuana Regulation, which will oversee the regulatory and licensing process beginning this year.
Ultimately, these reforms mean that medical marijuana is unquestionably legal in California, whether the District Attorney likes it or not. James Slatic operated his business in accordance with the law for two years. He operated publically and paid all of his taxes. Now the District Attorney is attempting to ruin James and his family even though he followed the law.
Getting the Slatics’ Money Back
While civil forfeiture can be complicated, the Slatics’ legal argument is simple: James committed no crime; therefore, the government cannot connect the Slatics’ money to a crime. All of the family’s money must be returned under the California Constitution and the U.S. Constitution.
IJ is filing a motion for the return of property on behalf of the Slatics, challenging the government’s abuse of civil forfeiture and demanding that the family’s money be promptly returned. IJ’s motion for return of property makes clear that the District Attorney must return the seized money to the Slatics for two reasons.
First, the warrants for the Slatics’ bank account are not supported by probable cause. To seize a person’s bank account, Article One, Section 13 of the California Constitution and the Fourth Amendment of the United States Constitution require the government to have a reasonable ground for belief that the property is connected to a crime. 4 The police affidavit in support of the warrants to seize the Slatics’ accounts, however, illustrates that the District Attorney has no case. The affidavit is simply the account of a detective’s experiences with drug traffickers practices and his knowledge of the illicit trafficking of controlled substances generally; it does not address specific activity related to or conducted by Mr. Slatic or his business. This type of “mere suspicion” never gives rise to probable cause to seize a person’s bank account. 5
Second, the Slatics’ accounts are not connected to any crime and so they are not forfeitable. California civil forfeiture laws require the government to “trace” forfeitable property to an actual crime, meaning that the property must be offered in exchange for drugs or represent the proceeds of such an exchange. 6 But the government cannot meet that burden. The Slatic family has independent and legal sources for all of their money, and the accounts are not “guilty” simply because James operated a legal medical marijuana business.
Because the warrants are not supported by probable cause, and because the Slatics’ money is not traceable to a crime, there is no justification for the government to continue to keep the Slatics’ money. Under California law, the money must be returned.
Unfortunately, the Slatics’ situation is not unique. Last year, a report by the Institute for Justice found that between 2000 and 2013, the U.S. Justice Department reimbursed local and state agencies in California more than $696 million in forfeiture proceeds, or nearly $50 million a year on average. Half of all properties forfeited under this “equitable sharing” program were valued at less than $8,920. Additionally, California agencies on average received $23 million in forfeiture proceeds under state law. 7
IJ’s motion for return of property is filed on behalf of the Slatic family—James Slatic, Annette Slatic (who is representing the interest of her minor daughter, Penny Cohen), and Lily Cohen—the legal owners of the seized funds. Their opponents are the San Diego County District Attorney Bonnie Dumanis, who seized the Slatics’ money in February 2016, but who has not filed a civil forfeiture action, leaving the family in legal limbo.
The Legal Team
The Slatics’ legal team is led by IJ Attorneys Wesley Hottot and Allison Daniel. They will be assisted by local counsel Victor Torres.
The Institute for Justice: A History of Protecting Private Property
The Institute for Justice is the national law firm for liberty and the nation’s leading advocate for property rights. IJ has fought civil forfeiture on behalf of the owners of the Motel Caswell in Massachusetts, the owners of Schott’s Market in Michigan, the owner of a truck seized in Texas, the owner of a restaurant in Iowa, convenience-store owners on Long Island and in North Carolina, and a college student in Kentucky. In 2015, IJ updated its landmark report on civil forfeiture, Policing for Profit, and exposed the IRS’s abuse of structuring laws in Seize First, Question Later: The IRS and Civil Forfeiture. For more information on IJ’s initiative to end civil forfeiture, visit endforfeiture.com.
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