Lawsuits Challenge Federal Agencies’ Refusal to Disclose Forfeiture Records

Institute for Justice · December 8, 2016

Arlington, Va.—Today, the Institute for Justice (IJ) sued two federal agencies—the Internal Revenue Service and U.S. Customs and Border Protection—for flouting the federal Freedom of Information Act and hindering access to information about the federal government’s forfeiture activity.

As part of IJ’s nationwide initiative to end civil forfeiture, in March 2015 IJ filed Freedom of Information Act requests for public records from two government forfeiture databases, an IRS database called the Asset Forfeiture Tracking and Retrieval System, or AFTRAK, and a CBP-maintained database called the Seized Asset and Case Tracking System, or SEACATS, which holds data on Treasury Department forfeitures. More than a year and a half later, neither agency has turned over any records. The IRS refused to release the database unless IJ paid more than $750,000 in fees. The CBP denied IJ’s request outright.

“The lack of transparency surrounding forfeiture is deeply troubling, especially considering the vast power law enforcement has to take property from people without so much as charging them with a crime,” said IJ Director of Strategic Research Lisa Knepper. “The public ought to know how forfeiture is being used.”

The agencies’ refusals to release forfeiture records stands in stark contrast to the Department of Justice, which provided IJ a copy of its forfeiture database, after redacting sensitive information, just three months after receiving a public records request—and without charge. IJ then drew extensively on the DOJ data for the second edition of its Policing for Profit report, released last year.

The agencies’ refusals also violate the federal Freedom of Information Act.

In the IRS’s case, federal law waives fees for requests that “contribute significantly to public understanding” of government activities and that are “not primarily in the commercial interest of the requester.” IJ is a non-commercial entity—a fact of which the IRS is well aware, given that it granted IJ 501(c)3 tax-exempt charity status. The IRS nonetheless refused to waive the fees.  IJ’s lawsuit demands waiver of the fees and immediate production of the records.

In CBP’s case, the agency denied IJ’s request as “overbroad.” In subsequently denying an administrative appeal, the agency claimed that the entire SEACATS database was exempt as a law-enforcement “technique and procedure.” But, as IJ’s lawsuit against CBP explains, information such as the value of seized property and the date it was seized is not a technique or a procedure. And, as the DOJ demonstrated in quickly releasing its forfeiture database, sensitive information can easily be redacted.

Transparency is critical in holding government agencies—such as the IRS—accountable. Previously, the IRS provided IJ limited information about its forfeiture practices regarding civil and criminal “structuring,” and the information brought to light serious problems. So-called structuring laws are designed to target criminals concealing their illegal activity by evading bank-reporting requirements. But the data revealed that the IRS had been aggressively applying these laws to seize cash from individuals and businesses accused of nothing more than making frequent under-$10,000 transactions. A front-page article in the New York Times that relied on this data spurred the IRS to change its policy to limit structuring seizures to instances in which the seized funds were derived from illegal activity.

Darpana Sheth, attorney and director of IJ’s nationwide initiative to end forfeiture abuse, commented, “These federal agencies’ flagrant violation of federal disclosure laws shows why Congress must act to reform federal forfeiture laws.”

The lack of transparency and accountability in how federal agencies use the controversial legal tool of forfeiture has drawn congressional ire. Congress has held multiple hearings in both Houses on forfeiture abuse and the need to reform federal laws. Leaders of the House and Senate Judiciary Committees introduced the DUE PROCESS Act, a reform measure that would in part require the head of each federal agency to submit to the Attorney General information necessary to establish and maintain a publicly available database of all federal forfeiture activity.

Both lawsuits were filed in the U.S. District Court for the District of Columbia.  Andrew Prins and Matt Glover from Latham & Watkins LLP represent IJ in the suit against the IRS. Daniel Muino and Michelle Yang from Morrison & Foerster, LLP represent IJ in the suit against CBP.