Foreword

Imagine being pulled over and a law enforcement officer decides to take your car, cash or other personal property.  The officer claims that he has probable cause to believe not necessarily that you are guilty of any illegal conduct but that your property was used to facilitate illegal activity.  Perhaps the officer thinks you are carrying a larger-than-normal amount of cash or that your travel pattern is “suspicious.”

Once your property is taken, the government will—perhaps—send you a notice letting you know that the burden is on you to try to get your property back.  If you do not respond within the right time frame and in the proper manner, law enforcement automatically gets to keep your seized property.  But even if you do try to win back your property in court, you will have to wait several months, if not more than a year, to get a hearing.  At that hearing, you will find yourself in a legal maze where the government holds most of the advantages, and you carry most of the burdens.

Welcome to the down-is-up and white-is-black world of civil forfeiture.

Civil forfeiture laws represent one of the most serious assaults on private property rights in the nation today.  Civil forfeiture is the power of law enforcement to seize and keep property suspected of involvement in criminal activity.  Under this power, it is not necessary for the government to demonstrate that a property owner is guilty of criminal misconduct.  Indeed, civil forfeiture can take place even when criminal charges are never filed against a property owner.

But perhaps the most troubling aspect of modern civil forfeiture laws is the profit incentive at their core.  The overriding goal for law enforcement officials—both prosecutors and police—should be fair and impartial administration of justice.  However, civil forfeiture laws at the federal level and in 42 states dangerously shift law enforcement priorities instead toward the pursuit of property and profit.

How?  As this study demonstrates, the government often holds most of the advantages in prosecuting civil forfeitures cases, and law enforcement agencies are usually entitled to keep at least some of the money and property confiscated from individuals, thus giving them a direct financial stake in the outcome of forfeiture efforts.  Such statutory schemes pervert law enforcement’s responsibility to enforce the law fairly and spell disaster for property owners caught up in forfeiture proceedings.

And this is not just theory.  In Part I of this report, criminal justice researchers Marian R. Williams and Jefferson E. Holcomb of Appalachian State University and Tomislav V. Kovandzic of the University of Texas at Dallas provide the most thorough national analysis yet of whether law enforcement agencies respond to incentives by increasing the use of forfeiture when they can keep a higher percentage of forfeiture revenue for their own use and do so more easily.  Unfortunately for property owners across the country, the analysis finds that they do just that.

How Did We Get Here?  A Brief History of Civil Forfeiture

Under laws at both the federal and state levels, governments can forfeit property either criminally or civilly.  Criminal forfeiture is tied to the criminal conviction of an individual, where the government needs to show that an offender is guilty beyond a reasonable doubt and the accused is afforded all the rights under the Constitution.  In other words, with criminal forfeiture, the government must actually demonstrate in court that the property owner obtained his property illegally.

But civil forfeiture is a legal fiction that enables law enforcement to take legal action against inanimate objects for participation in alleged criminal activity, regardless of whether the property owner is guilty or innocent—or even whether the owner is charged with a crime.  Civil forfeiture actions are in rem proceedings, which means literally “against a thing”—the property itself is charged with a crime.  That is why civil forfeiture proceedings have bizarre titles, such as United States v. $10,500 in U.S. Currency or People v. Certain Real and Personal Property.  And because they are civil proceedings, most of the constitutional protections afforded criminal defendants do not apply to property owners in civil forfeiture cases.

Of course, objects such as cash, property, cars or boats sued for participation in criminal activity do not act or think.  The doctrine of in rem forfeiture arose from Medieval ideas, rooted in the ancient law of “deodand.”[1]  Kings, for instance, could seize an instrument that caused the death of another in order to finance the deceased’s funeral mass.[2]  The idea arose from a superstitious belief that objects acted independently to cause death.[3]

While the concept of deodand gives rise to the “guilty property” legal fiction, American forfeiture law did not arise strictly from this concept but rather from the British Navigation Acts of the mid-17th century.[4]  The Acts were passed during England’s vast expansion as a maritime power.  The Acts required imports and exports from England to be carried on British ships.  If the Acts were violated, the ships or the cargo on board could be seized and forfeited to the crown regardless of the guilt or innocence of the owner.

Using the British statutes as a model, the first U.S. Congress passed forfeiture statutes to aid in the collection of customs duties, which provided 80 to 90 percent of the finances for the federal government during that time.[5]  Civil forfeiture was introduced in American law through these early customs statutes.  The forfeiture power was upheld in early Supreme Court cases.[6]

The most important aspect of these early forfeiture cases, however, is the very limited justification provided for the application of civil forfeiture even to innocent property owners.  The Supreme Court held that civil forfeiture was closely tied to the practical necessities of enforcing admiralty, piracy and customs laws.  In rem forfeiture permitted courts to obtain jurisdiction over property when it was virtually impossible to seek justice against property owners guilty of violating maritime law because, for example, they were overseas.

Therefore, with civil forfeiture, the government could ensure that customs and other laws were enforced even if the owner of the ship or the cargo was outside the court’s jurisdiction.  Justice Story wrote that the “vessel which commits the aggression is treated as the offender, as the guilty instrument or thing to which the forfeiture attaches, without any reference whatsoever to the character or conduct of the owner.”[7]  However, Story justified such forfeitures “from the necessity of the case, as the only adequate means of suppressing the offence or wrong, or insuring an indemnity to the injured party.”[8]

Although the Supreme Court had permitted the government to expand the forfeiture power during the Civil War, throughout most of the 20th century, civil forfeiture remained a relative backwater in American law with one exception:  It was used extensively during Prohibition against automobiles and other vehicles transporting illegal liquor.

Modern civil forfeiture use then exploded during the early 1980s as government at all levels stepped up the war on drugs, and Congress and the states created new incentives for the use and arguably the abuse of civil forfeiture.  For most of American history, the proceeds from forfeitures went not to the law enforcement agencies responsible for the seizures but to the government’s general fund.  However, in 1984, Congress amended portions of the Comprehensive Drug Abuse and Prevention Act of 1970 to create the Assets Forfeiture Fund, into which the Attorney General was to deposit all net forfeiture proceeds for use by the Department of Justice and other federal law enforcement agencies.[9]

Subsequent amendments dramatically expanded what law enforcement could do with these funds, including allowing their use for expenses such as purchasing vehicles and overtime pay.[10]  In short, after the 1984 amendments, federal agencies were able to retain and spend forfeiture proceeds—subject only to very loose restrictions—giving them a direct financial stake in generating forfeiture funds.  With these changes, the modern era of policing and prosecuting for profit had begun.

Meanwhile, many states followed the federal government’s profit-making example by amending their civil forfeiture laws to give law enforcement agencies a direct share of forfeited proceeds.  Law enforcement agencies in 42 states receive some or all of the civil forfeiture proceeds they seize.

In 2000, Congress passed the Civil Asset Forfeiture Reform Act (CAFRA), amending various provisions of federal forfeiture law.[11]  CAFRA offered a number of modest reforms, but it did not change how forfeiture proceeds are distributed or otherwise ameliorate the profit incentive law enforcement agencies have in civil forfeiture.[12]

No longer is civil forfeiture tied to the practical difficulties of obtaining personal jurisdiction over an individual.  Released from its historical limitation as a necessary means of enforcing admiralty and customs laws, the forfeiture power has instead become a commonly used weapon in the government’s crime-fighting arsenal.  And Congress and the states have expanded its application even beyond alleged drug violations to include a plethora of crimes at the federal and state levels.  Today, there are more than 400 federal forfeiture statutes relating to a number of federal crimes, and all states have statutory provisions for some form of asset forfeiture.

Forfeiture Use Explodes

One consequence of the changes in forfeiture laws is the dramatic increase of forfeiture activity that took place in their wake.  As discussed in Part I, in 1986, the second year after the creation of the Department of Justice Assets Forfeiture Fund, the Fund took in $93.7 million in proceeds from forfeited assets.  By 2008, the Fund for the first time in history topped $1 billion in net assets, i.e., forfeiture proceeds free-and-clear of debt obligations and now available for use by law enforcement.  Data on civil forfeitures under state law are shockingly sparse, but the researchers point to evidence indicating that use of state forfeiture is extensive and growing.

Such growth in the amount of forfeiture is the result of governmental officials responding to incentives.  All people work to better their position.  Just as private citizens are motivated by self-interest, so too does it motivate government officials.[13]  While many individuals within a government organization may share a principled commitment to carrying out the mission of the agency, government officials, operating in what they perceive as their own self-interest, will also attempt to maximize the size and budget of their agency.  Larger budgets will benefit everyone within an agency through higher salaries, greater job security, better equipment and increased power and prestige.  Such incentives can affect even the most well-intentioned law enforcement officers.

The difference between self-interest in the public and private spheres is that the private citizen must persuade to achieve his ends, while the government official can employ force.  It is therefore a constant threat that those in positions of power will use that force to serve their own self-interest at the expense of the broader populace.  This concern reaches its zenith when government officials stand to aggrandize themselves by seizing individuals’ private property for their own benefit.

Evading State Law

Even in those states where the profit incentive is prohibited or limited, law enforcement officials circumvent state law and work with federal agents to “share” in forfeiture proceeds.  The 1984 amendments allow state and local law enforcement agencies to transfer assets they seize to federal law enforcement agencies.  Federal law enforcement officials can take possession of this property and initiate federal forfeiture actions as long as the “conduct giving rise to the seizure is in violation of federal law and where federal law provides for forfeiture.”  When property is forfeited under these arrangements, agencies at the federal, state and local levels all share in the bounty—with state and local officials receiving as much as 80 percent back.

This so-called “equitable sharing” thus provides a way for state and local law enforcement agencies to circumvent unfavorable state forfeiture procedures.  As Williams, Holcomb and Kovandzic conclude, when state law makes forfeiture more difficult and limits how much forfeiture revenue law enforcement may keep, state and local law enforcement officials will participate more in equitable sharing with the federal government.  Thus, state and local law enforcement officials defy the will of their citizens in order to profit along with their federal counterparts.

Dependence on Forfeiture Funds

It should also not be surprising that, given the structures and incentives of civil forfeiture law, a substantial number of law enforcement agencies are now dependent on civil forfeiture proceeds and view civil forfeiture as a necessary source of income.  Williams, Holcomb and Kovandzic point to a survey of nearly 800 law enforcement executives, in which nearly 40 percent of police agencies reported that civil forfeiture proceeds were a necessary budget supplement.  And they note that this dependency is also present at the federal level, where the Department of Justice in the past has urged its lawyers to increase their civil forfeiture efforts so as to meet the Department’s annual budget targets.

The Institute for Justice collected data on forfeiture proceeds and budget data from a random sample of 52 law enforcement agencies in Texas.  We found that forfeiture proceeds represent an average of more than 14 percent of law enforcement budgets—a sizable share of an agency’s budget.  Indeed, we found that many law enforcement agencies were counting on this revenue by including it in their budget estimates.

One consequence of giving law enforcement a pecuniary interest in forfeiture proceeds is that it can cause them to over-enforce crimes that carry the possibility of forfeiture to the neglect of other law enforcement objectives.  This makes basic economic sense; as the return to enforcing certain crimes increases, one would expect law enforcement agencies to devote a higher percentage of their resources to those aims.[14]  And, again, this is not simply theory.  Earlier research found that in states where agencies get to keep the lion’s share of forfeiture proceeds, drug arrests—which often have the potential of a related civil forfeiture—constitute a significantly higher percentage of all arrests.[15]

Stacking the Deck Against Property Owners

One of the reasons why law enforcement prefers civil forfeiture to criminal forfeiture is because the procedure stacks the deck against property owners.  As detailed in this report, in civil proceedings, for instance, the government usually only needs to prove the property’s connection to alleged criminal activity by a mere “preponderance of evidence” standard—or sometimes under an even lower standard—not proof “beyond a reasonable doubt” as in criminal cases.

Because it is the property itself that is the target of the lawsuit, the owner of the property need not be convicted of or even charged with any criminal activity for the government to forfeit the property.  Indeed, one study found that approximately 80 percent of persons whose property was seized by the federal government for forfeiture were never even charged with a crime.[16]

Moreover, in most states, if property is used illegally without the owner’s knowledge or consent, the burden is placed on the property owner to establish her innocence in court, not the government to prove otherwise.  In other words, a property owner is guilty until proven innocent.

In reality, few property owners, especially low-income individuals, can meet the burdens of civil forfeiture proceedings and often do not challenge seizures of their property.  This is especially true when government seizes property the value of which would be greatly exceeded by the time, attorney fees and other expenses necessary to fight the forfeiture.  As a result, many property owners do not and cannot challenge forfeitures, and the government obtains the property by default.

Limited Public Oversight and Accountability

Incredibly, given the ability of law enforcement through civil forfeiture to raise off-budget funds, often without limitation, many states do not even require law enforcement agencies to report how much money has been raised and on what items the money has been spent.  As of 2003, only 29 states required this basic level of public oversight—and only 19 of those states responded to freedom of information requests with reliable information.  And those states that did respond often provided very limited data.

Recommendations for Reform

In Part II of this report, I summarize the civil forfeiture laws of all 50 states and the federal government and provide all available data for each state.  I also grade each state on its forfeiture laws and behavior using objective criteria that measure how easy and profitable state law makes forfeiture and how often state and local law enforcement appear to evade state law through equitable sharing.  The results are not encouraging:  Only three states earned a B or higher.

Given the undermining of property rights that civil forfeiture law inevitably entails, the abuses that have been documented in this report and elsewhere, and the research findings set forth here, what should be done?  Here are some key recommendations:

Ideally, civil forfeiture should be abolished, at least outside of its narrow historical use in enforcing admiralty and customs laws.  Governments should have to tie forfeiture to criminal convictions of specific individuals.

Short of abolishing civil forfeiture entirely, governments at the very least should:

• End the direct profit incentive under civil forfeiture laws.  Civil forfeiture revenue should be placed into a neutral fund, such as one for education or drug treatment, or, most desirably, in the general revenue fund of the county or state government.

• Impose a high standard of proof on law enforcement in civil forfeiture proceedings, requiring that it prove its forfeiture case at least by clear and convincing evidence.

• Provide a meaningful defense for innocent owners by removing the burden on property owners to prove their innocence and instead placing the burden of proof on the government.

• Require all agencies to track and report civil forfeiture revenue and distributions and make that information readily available to the public.

• Respect federalism principles by abolishing equitable sharing arrangements with the federal government.  If a state has decided to end the practice of policing for profit, officials in that state should not be allowed to do an end-run around those procedures by teaming up with the federal government to forfeit property.

Conclusion

Private property is one of this nation’s most cherished principles, but it is a principle under assault by modern civil forfeiture law.  The changes to civil forfeiture that gave law enforcement agencies a percentage of forfeiture proceeds while also giving them the upper hand in forfeiture proceedings have created a powerful incentive:  seize, forfeit and profit.  But this pecuniary interest and the other advantages granted the government under civil forfeiture laws have distorted law enforcement priorities, altered officer and prosecutor behavior and led to a number of police and prosecutorial abuses.  This study will hopefully lead the way toward curbing these abuses and protecting one of our most important rights.

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