Forfeiture is an ancient legal doctrine that authorizes the government to take private property that is illegally used or acquired without compensating the owner of the property. There are two categories of forfeiture – civil forfeiture and criminal forfeiture. In civil forfeiture, the government can take private property without charging anyone with a crime, and the burden of proof is on the property owner to prove that the property is not subject to forfeiture. In the last decade, the federal government has increasingly used civil forfeiture, and as a result, there have been numerous controversial seizures of private property.

In 1984, Congress passed the Comprehensive Crime Control Act, which directed forfeiture proceeds to be disbursed to law enforcement agencies who seized property for forfeiture. Immediately after the 1984 Act, federal forfeitures increased dramatically. For example, the value of property forfeited to the federal government increased from $27 million in 1985 to $644 million by 1991. By 1999, this figure increased to $957 million. The federal government uses these funds for a variety of law enforcement purposes.

At least 90 percent of the property that the federal government seeks to forfeit is pursued through civil forfeiture. Civil forfeiture provides far fewer protections to property owners than criminal forfeiture, which requires a criminal conviction of the property owner. The government enjoys a tremendous advantage in the timing and operation of civil forfeiture proceedings. For example:

+ After the government seizes property for forfeiture, there is no statutory deadline for sending notice of seizure and initiating the forfeiture process. By contrast, once the government sends notice of seizure, the property owner has only 20 days from the date of the first publication of the notice of seizure to file a claim for the property with the seizing agency.

+ After property is seized, the property owner must post a bond of the lesser of $5,000 or ten percent of the value of the property seized in order to contest the forfeiture. This bond requirement, referred to as the “cost bond,” does not entitle the property owner to the return of the property pending trial. Rather, the cost bond merely allows the claimant access to federal court to contest the forfeiture.

+ If the property owner files a claim and a cost bond with the seizing agency, the government has up to five years to file a complaint for forfeiture in federal district court.

+ Once the government files the complaint, however, the property owner has only 10 days after process has been executed to file a verified claim to contest the forfeiture.

+ In order to seize property for civil forfeiture, the government need have only probable cause that the property is subject to forfeiture. The government can use otherwise inadmissible hearsay to establish probable cause.

+ Once the government makes a threshold showing of probable cause, the burden shifts to the property owner to prove that the property is not subject to forfeiture by the higher standard of a preponderance of the evidence. If the property owner fails to rebut the government’s proof, a probable cause showing, standing alone, will support a judgment of forfeiture.

+ In addition, civil forfeiture is not a “punishment” that receives the protections of the Double Jeopardy Clause of the Fifth Amendment. Thus, the government can prosecute a person criminally, and subsequently seek civil forfeiture of that person’s property, and vice versa. Civil forfeiture can be pursued even if the property owner is acquitted in an earlier criminal prosecution.

As the report below illustrates, there have been numerous examples of abuse in civil forfeiture cases. The increasing use of civil forfeiture has drawn exceedingly sharp criticism by legal commentators and the federal judiciary.

Senate Judiciary Committee Chairman Orrin Hatch and Ranking Member Patrick Leahy introduced S. 1931 on November 16, 1999. S. 1931 contains common sense reforms that increase protections for property owners while respecting the interests of law enforcement. The following six core reforms can prevent abuses and ensure the availability of civil forfeiture as an effective law enforcement tool.

Burden of Proof : The first major reform in S. 1931 places the burden of proof in civil forfeiture cases on the government throughout the proceeding. The government will have to prove by a preponderance of the evidence that property is subject to forfeiture.

Cost Bond: Another major reform in S. 1931 is the elimination of the cost bond. Under current civil forfeiture law, a property owner must post a bond of the lesser of $5,000 or 10 percent of the value of the property seized for the privilege of contesting the forfeiture.

Reasonable Time Limits: Current civil forfeiture law gives the government too much time and property owners too little time to meet their respective deadlines in forfeiture proceedings. These unreasonable time limits have led to unfair delays. S. 1931 requires the government to pursue civil forfeitures within a reasonable time period.

Reimbursement of Attorneys Fees

Another reform in S. 1931 involves reimbursement of attorney fees. S. 1931 awards attorney fees and costs to property owners who prevail against the government in civil forfeiture cases. The costs of contesting a civil forfeiture can be enormous.

Hardship Cases

Another reform in S. 1931 addresses the situation in which the government’s possession of seized property pending trial causes hardship to the property owner. S. 1931 changes current law to allow, but not require, the court to release property pending trial if the court determines that such release will not endanger the property.

Innocent Owner Defense

The last major reform in S. 1931 provides a uniform innocent owner defense to all federal civil forfeitures affected by the bill.

I.      What is Forfeiture?

Forfeiture is an ancient legal doctrine that authorizes the government to take private property that is illegally used or acquired without compensating the owner of the property. There are two categories of forfeiture – civil forfeiture and criminal forfeiture. Major differences exist between the two.

In criminal forfeiture, the government proceeds in personam against a criminal defendant for a violation of criminal law. Criminal forfeiture is subsequent to, and a punishment for, a defendant’s conviction for a specific criminal act. For criminal forfeiture to occur, the government must prove that the defendant committed a crime beyond a reasonable doubt, and the defendant receives all the constitutional protections inherent in criminal trials.

By contrast, in civil forfeiture, the government takes legal action against property, as opposed to the owner of the property. In short, the government literally sues the property. Civil forfeiture is based on the ancient legal fiction that “the thing is primarily considered the offender.” See J.W. Goldsmith, Jr.-Grant Co. v. United States, 254 U.S. 505 (1921). The government is not required to prove that the property owner is guilty or blameworthy to forfeit property in civil forfeiture. “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.” Harmony v. United States, 43 U.S. (2 How.) 210 (1844).

The first Congress adopted maritime forfeiture laws subjecting ships and cargos involved in customs offenses to forfeiture,¹ despite the fact that civil forfeiture of private property by English authorities was extremely unpopular in Revolutionary America. These civil forfeiture laws, however, were limited to admiralty offenses and rarely used. In recent years, Congress has expanded civil forfeiture beyond admiralty cases to apply to a broad variety of conduct², but it has not changed the basic procedures for civil forfeiture. Instead, these modern statutes incorporate the same procedures created by early maritime forfeiture law, even though they address vastly different circumstances.

Growth in Federal Forfeitures

In 1984, Congress passed the Comprehensive Crime Control Act (the 1984 Act), which created the Department of Justice Asset Forfeiture Fund. Prior to 1984, forfeiture revenues were deposited in the general fund of the United States Treasury and used for general operating expenses. The 1984 Act directed forfeiture proceeds to be deposited in the Asset Forfeiture Fund and be disbursed to law enforcement agencies who seized property for forfeiture.

Immediately after the 1984 Act, federal civil and criminal forfeitures increased dramatically. For example, the value of property forfeited to the federal government increased from $27 million in 1985 to $644 million by 1991. By 1999, this figure increased to $957 million. (See chart.)³ The federal government uses these funds for a variety of law enforcement purposes, including providing funds to state and local law enforcement agencies under a program known as equitable sharing.

It is not surprising that the increase in federal forfeiture cases and the government’s use of civil forfeiture instead of criminal forfeiture has proven controversial in some instances. Some critics argue that the 1984 Act, which authorized law enforcement agencies to keep the proceeds from seized and forfeited assets, created a conflict of interest and has distorted law enforcement priorities. For example, former New York City Police Commission Patrick Murphy testified before Congress in 1992 that “the large monetary value of forfeitures . . . has created a great temptation for state and local police departments to target assets rather than criminal activity.” On the other hand, proponents of the 1984 Act argue that allowing law enforcement to keep forfeiture proceeds for official use creates a healthy incentive to use civil forfeiture.

Adoptive Forfeitures

An important aspect of the federal forfeiture program is adoptive forfeiture. Under adoptive forfeiture, state and local law enforcement seize property under State law and transfer it to a federal agency for forfeiture proceedings. If the forfeiture is successful under federal law, the federal government retains 20 percent of the forfeiture proceeds and returns 80 percent of the proceeds to the state or local agency that seized the property. Under adoptive forfeiture, state and local law enforcement can transfer seized property to the federal government for forfeiture even if federal officials had no involvement in the seizure and even if forfeiture is available under state law.

While many cite the adoptive forfeiture program as a model of federal and state law enforcement cooperation, others argue that adoptive forfeiture violates federalism principles because it allows state and local law enforcement to circumvent state civil forfeiture laws simply by transferring the seized property to the federal government. For example, in Missouri, the State Constitution requires forfeiture proceeds to be used for public education. See Missouri Constitution, Article IX, § 7. It has been widely reported how Missouri law enforcement officials transfer seized currency to the DEA under adoptive forfeiture to circumvent the State Constitution and use the forfeiture proceeds for law enforcement as opposed to public education.⁴ When asked why federal adoptive forfeiture was used instead of state forfeiture in Missouri, one state law enforcement official explained: “We don’t deal in state forfeitures at all, because law enforcement doesn’t derive any revenues from that.”⁵

This practice, and adoptive forfeiture generally, has not escaped the criticism of the federal judiciary. In $844,520 v. United States, 136 F.3d 581 (8th Cir. 1998), Judge Loken, in a concurring opinion, ruled that the DEA and the Missouri Highway Patrol “successfully conspired to violate the Missouri Constitution” by using adoptive forfeiture to keep forfeiture proceeds for law enforcement purposes. Judge Loken urged Congress to “investigate whether federal law enforcement agencies are using their extensive forfeiture powers to frustrate the fiscal policy of States such as Missouri.”

On the other hand, the adoptive forfeiture program has been successfully used in other States without controversy. In fact, many consider adoptive forfeiture a model program. Nevertheless, while the controversy in Missouri does not represent adoptive forfeiture as a whole, it does highlight concerns over certain aspects of the program, especially concerning federalism.

In any event, criticisms of civil forfeiture are fueled in part because civil forfeiture is used far more frequently than criminal forfeiture. At least 90 percent of the property that the federal government seeks to forfeit is pursued through civil forfeiture.⁶ In most cases, the government uses civil forfeiture instead of criminal forfeiture for valid reasons. For example, civil forfeiture is often the only option available to the government when no claim is filed to seized property. By contrast, the government’s use of civil forfeiture to pursue criminal justice objectives can be troubling when criminal forfeiture is available. A brief examination of federal civil forfeiture law illustrates why this is troubling and why there is far more potential for wrongful forfeitures and abuse in civil forfeiture than in criminal forfeiture.

Federal Civil Forfeiture Law

The general procedure for federal civil forfeiture is established by 19 U.S.C. §1602-1619. Under these procedures, the government enjoys a tremendous advantage in the timing and operation of forfeiture proceedings. For example:

+ After the government seizes property for forfeiture, there is no statutory deadline for sending notice of seizure and initiating the forfeiture process. By contrast, once the government sends notice of seizure, the property owner has only 20 days from the date of the first publication of the notice of seizure to file a claim for the property with the seizing agency.

+ After property is seized, the property owner must post a bond of the lesser of $5,000 or ten percent of the value of the property seized in order to contest the forfeiture. This bond requirement, referred to as the “cost bond,” does not entitle the property owner to the return of the property pending trial. Rather, the cost bond merely allows the claimant access to federal court to contest the forfeiture.

+ If the property owner files a claim and a cost bond with the seizing agency, the government has up to five years to file a complaint for forfeiture in federal district court.⁷

+ Once the government files the complaint, however, the property owner has only 10 days after process has been executed to file a verified claim to contest the forfeiture. The property owner must file an answer to the complaint within 20 days after filing the claim.

+ In order to seize property for civil forfeiture, the government need have only probable cause that the property is subject to forfeiture.⁸ The government can use otherwise inadmissible hearsay to establish probable cause.

+ Once the government makes a threshold showing of probable cause, the burden shifts to the property owner to prove that the property is not subject to forfeiture by the higher standard of a preponderance of the evidence. If the property owner fails to rebut the government’s proof, a probable cause showing, standing alone, will support a judgment of forfeiture.

+ In addition, civil forfeiture is not a “punishment” that receives the protections of the Double Jeopardy Clause of the Fifth Amendment. See United States v. Ursery, 518 U.S. 267 (1996). Thus, the government can prosecute a person criminally, and subsequently seek civil forfeiture of that person’s property, and vice versa. Civil forfeiture can be pursued even if the property owner is acquitted in an earlier criminal prosecution.⁹

Rationale for the Current Civil Forfeiture Procedures

The reasons for these unusual procedures reflect the context of admiralty forfeitures in the 19th century. In early forfeiture cases, ships importing cargo from Europe and Asia entered American ports. Often, the owners of the ship or cargo and the evidence as to whether forfeiture was justified resided in a foreign country. Rather than send American customs officials to Europe or Asia to search for evidence or seek a remedy in a foreign court, which was impractical in the 1800s, Congress enacted these forfeiture procedures. See Oliver Wendell Holmes, Jr., The Common Law, 1-38 (1881). In this unique context, these procedures, such as requiring the property owner to bear the burden of proof, made sense. However, the rationale for 19th century admiralty procedures does not extend to modern civil forfeitures in which the owners of the property and the evidence in the case are located in the United States. As one leading proponent of civil forfeiture reform has noted, these “original ancient judicial procedures for forfeitures govern this whole new federal [civil forfeiture] apparatus, often to the detriment of individual constitutional rights . . .” See Henry J. Hyde, Forfeiting Our Property Rights, 26 (Cato Inst. 1995).

Not surprisingly, the use of civil forfeiture -- with its relaxed procedural requirements -- instead of criminal forfeiture has generated significant controversy among the federal courts. As one circuit court noted:

We are particularly wary of civil forfeiture statutes, for they impose “quasi-criminal” penalties without affording property owners all of the procedural protections afforded criminal defendants. The relative ease of obtaining forfeitures may tempt the government to seek criminal law enforcement objectives through these nominally ‘civil’ proceedings. United States v. $191,910, 16 F.3d 1051 (9th Cir. 1994).

Supreme Court Justice Clarence Thomas expressed similar concerns in a concurring opinion in United States v. James Daniel Good Real Property, 510 U.S. 43 (1993), in which he noted his “distrust of the government’s aggressive use of broad civil forfeiture statutes” and the consequences of such use on private property rights. Justice Thomas further stated:

And like the majority, I am disturbed by the breadth of new civil forfeiture statutes such as 21 U.S.C § 881(a)(7), which subjects to forfeiture all real property that is used, or intended to be used, in the commission, or even the facilitation, of a federal drug offense . . . A strong argument can be made, however, that § 881(a)(7) is so broad that it differs not only in degree, but in kind, from its historical antecedents. Indeed, it is unclear whether the central theory behind in rem [civil] forfeiture, the fiction ‘that the thing is primarily considered the offender, can fully justify the immense scope of § 881(a)(7). Under this provision, large tracts of land [and any improvements thereon] which have no connection with crime other than being the location where a drug transaction occurred, are subject to forfeiture . . . Given that current practice under § 881(a)(7) appears to be far removed from the legal fiction upon which the civil forfeiture doctrine is based, it may be necessary – in an appropriate case – to reevaluate our generally deferential approach to legislative judgments in this area of civil forfeiture.

II.      The Need for Reform

Justice Thomas’ concern about “the government’s aggressive use of broad civil forfeiture statutes” and the consequences of such use on private property rights is well-placed. In some instances, the use of civil forfeiture has led to abusive and ill-considered seizures of private property. However, the defects in current law that allow these ill-considered civil forfeiture actions can be effectively remedied in federal legislation. The following cases illustrate the need for reform of federal civil forfeiture law.

⁺United States v. $14,665

In United States v. $14,665, 33 F. Supp. 2d 47 (D. Mass. 1998), airport officials at Boston’s Logan airport informed the Massachusetts state police that a passenger, Manuel Espinola, was carrying a large amount of currency in a briefcase. The police questioned Espinola about the $14,665 in his briefcase. Espinola, a 23-year-old man who purchased the plane ticket in his own name, told the police that he and his brother earned the money selling personal care products for a company called Equinox International. When the police asked Espinola what the money was going to be used for, he stated that he was planning to move to Las Vegas and intended to use the cash as a down payment to purchase a home. Espinola told police that he did not deposit the currency in a bank because he was afraid that it might be attached due to a prior credit problem. Espinola also gave the police a pager number of a co-worker who he said could verify his employment and his plans in Las Vegas.

Based on this evidence, the police officer seized the money and presented it to a narcotics-trained dog, which detected drug particles on the currency.¹⁰ Espinola, who had no criminal record, was not arrested. The State police then transferred the money to the DEA for forfeiture under 21 U.S.C. § 881(a)(6).¹¹

Prior to the forfeiture trial, in an attempt to get his money back, Espinola submitted documents that supported his explanation of the currency, including receipts for personal care products from Equinox International and copies of a settlement check from a personal injury claim. By contrast, the government offered no additional evidence that the currency was related to drugs.

The court granted summary judgment to Espinola, and in its order, harshly criticized the forfeiture action. Among other factors, the court found that Espinola gave a credible reason for carrying the cash, that he purchased the ticket in his own name, and that he was truthful with the police. The court reasoned that Espinola’s explanation of the source of the currency and his travel plans were plausible and largely confirmed.

By contrast, the government offered no additional evidence after the seizure. The court noted that the government “went no further to follow through on the material Espinola had provided” and that “it does not appear that the government tried particularly hard.” Nearly two years after the police seized his money without sufficient evidence that it was related to narcotics, the court ordered the currency returned Espinola.

In entering judgement for Espinola, the court made the following instructive comments:

Even in the byzantine world of forfeiture law, this case is an example of overreaching. The government’s showing of probable cause is completely inadequate, based on a troubling mix of baseless generalizations, leaps of logic or worse, blatant ethnic stereotyping . . . Our nation’s [civil] forfeiture system is drawing increasing and exceedingly sharp criticism from scholars and commentators. Where the government seeks to forfeit a person’s money under such tenuous circumstances as these, I am obliged to add my voice to this growing chorus of dissent.

⁺United States v. One Parcel of Real Estate

In United States v. One Parcel of Real Estate, 852 F. Supp. 1013 (S. D. Fla. 1994), the United States filed a civil forfeiture action against a 4,346 acre ranch in Glades County, Florida. The government claimed that the property was subject to forfeiture because one parcel of the property was allegedly intended to be used as a landing site for an airplane importing cocaine.¹² The plane never landed on the defendant property but instead crashed and burned on adjacent property one quarter of a mile away. No drugs were recovered in the plane’s wreckage. The United States filed the forfeiture action 31 months after the failed landing which allegedly rendered the property subject to forfeiture.

At trial, the owners of the ranch denied that the property was intended to be used as a landing site and claimed that they had no knowledge of the alleged acts that were the basis for the forfeiture. In presenting its case, the government did not offer any physical evidence from the crash. (The government described such evidence as “missing.”) In addition, the government did not call any live witnesses to testify about the property. Instead, the government called local law enforcement officers who testified that two criminals told them that the defendant property was intended to be the landing site for the plane.¹³ Law enforcement officials did not physically inspect the defendant property until seven years after the crash.

The court found that the statements by the two criminals about the defendant property, which were presented to the court through law enforcement officers, were inconclusive, contradictory, vague, and “simply not credible.” The court reasoned that the government’s failure to call these witnesses to testify directly raised doubts about the value of the testimony.

Moreover, the government conceded at trial that the three owners of the ranch had no knowledge of the alleged use of the property for criminal activity. Nevertheless, the government sought to impute such knowledge to the owners through the spouse of one owner. The court ruled that none of the government’s evidence -- even if true -- connected the spouse to any criminal activity.

In summary, in this forfeiture case: (1) the government sought to forfeit a 4,346 acre ranch even though it conceded that the property owners had no knowledge of the alleged criminal use of the property; (2) the plane in question never landed on the defendant property; (3) it was unclear whether the defendant property was intended as the landing site; (4) the government lost the physical evidence from the crash years before the trial; (5) the government did not call any live witnesses to testify about the property, but instead offered the hearsay testimony of criminals; (6) the court found that this hearsay testimony was inconclusive, contradictory, and not credible; (7) the government did not physically inspect the defendant property until seven years after the crash; and (8) the government waited 31 months after the crash to file the forfeiture action.

Not surprisingly, the court ruled against the government at trial and ordered the ranch returned to its owners. The court found that “the basis for forfeiture was weak from the beginning” and criticized the government for the 31-month delay in filing the case. The court, noting that “very little investigation of the case took place,” chastised the government for its lack of effort. After considering the evidence at trial, the court stated that “it is questionable whether this forfeiture action ever really had a valid basis . . . such proof at the time of trial was unconvincing and, while not the fault of the government counsel, lacking in credibility.” Nearly six years after the forfeiture suit was filed, the court ordered the ranch returned to its owners.¹⁴

⁺Jones v. United States

In Jones v. United States, 819 F. Supp. 698 (M.D. Tenn. 1993), airline officials at the Nashville airport informed the local police that a passenger, Willie Jones, appeared nervous when he payed for a round-trip airline ticket to Houston in cash. Jones, who purchased the ticket in his own name and had a ticketed reservation, offered to write a check for the ticket to alleviate any concerns caused by the cash payment. Despite this offer, airline officials called the airport police after Jones purchased the ticket, and three officers followed Jones through airline security and into the airport concourse. The officers approached Jones and asked for and received permission to examine his ticket and driver’s license and to search his carry-on bag. Nothing unusual was discovered in the search.

The officers then frisked Jones and detected a pouch on his left side which contained $9,000 in cash. After discovering the currency, the officers told Jones that they were detaining the money and asked him to accompany them to their office. In response to questioning, Jones told the officers that he was going to Houston to buy stock from area nurseries for his landscaping business. After performing a criminal record search, the police found that Jones did not have a criminal record.

The officers then conducted a test of the currency using a narcotics-trained dog, which detected traces of drugs on the currency.¹⁵ Based on the foregoing evidence, the officers seized the money, which they later transferred to the DEA for forfeiture under 21 U.S.C. 881§ (a)(6). The officers told Jones that he would have to contact their office and hire an attorney to file a claim for the currency. When Jones asked if he was going to be arrested, the officers replied that there were no grounds on which to arrest him.

At trial, the court ruled that the government did not have probable cause for the forfeiture and ordered the government to return the $9,000 to Jones. The court found that the police officers’ statements concerning the frisk were “not credible” and held that the frisk was an unconstitutional search. The court ruled that the police illegally seized the currency without probable cause. According to the court, the forfeiture originated “in bad faith with wild allegations based on the hope that something [would] turn up to justify [the] suit” and that the police “possessed nothing more than mere suspicion at the time of the seizure, and used the forfeiture suit to discover more information.”

More than two years after the police seized Jones’ money without any credible evidence that it was related to narcotics or criminal activity generally, the court ordered the currency returned. At the end of its order, the court made the following relevant observation about federal civil forfeiture law:

The court also observes that the [forfeiture] statutory scheme as well as its administrative implementation provide substantial opportunity for abuse and potentiality for corruption. Drug Interdiction Unit (DIU) 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, law enforcement has a direct financial interest in the enforcement of these laws . . . 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.

⁺United States v. $506,231

In United States v. $506,231, 125 F.3d 442 (7th Cir. 1997), the Chicago police obtained a warrant to search a pizzeria for stolen goods based on information provided by a drug addict who was arrested for burglary. During the search of the restaurant, authorities did not find any stolen goods, but instead discovered $506,231 in currency. The owners of the restaurant and the money subsequently filed a motion for the return of the money in state court, which had jurisdiction over the money. The Assistant State’s Attorney informed the state court that the State would not seek forfeiture of the money, but that the federal government had already instituted a forfeiture action. The state court then granted the motion to return the money to its owner and ordered the Chicago police “not to transfer the property to any other persons or the United States.” (Emphasis added.)

Despite the state court’s order, the United States, alleging the currency was connected to narcotics, filed a complaint for forfeiture under 21 U.S.C. § 881(a)(6). The U.S. district court ordered the money transferred to the federal government upon delivery of the money to the property owner. Subsequently, the district court granted summary judgment in favor of the government and ordered the forfeiture of the $506,231.

On appeal, the Seventh Circuit dismissed the forfeiture action and scolded the government for its conduct. The Seventh Circuit found that the district court did not have proper jurisdiction to forfeit the currency because the state court had control over the currency and exercised jurisdiction “to the exclusion of the federal court.” The Seventh Circuit reasoned that the “federal authorities ‘muscled in’ on state court proceedings in an attempt to improperly and prematurely get their hands on money. This kind of strong-arming is hardly permitted, not by common law, federal statutory authority or by our case law.”

In addition, the Seventh Circuit ruled that even if the district court had properly exercised jurisdiction, the government failed to establish probable cause for the forfeiture. In short, the court found that the evidence “does not come close to showing any connection between the money and narcotics”; that “there is no evidence that drug trafficking was going on at the pizzeria”; that “nothing ties this money to any narcotics activities that the government knew about or charged, or to any crime that was occurring when the government attempted to seize the property”; and that the record “is utterly devoid of facts” to support forfeiture. Four years after the money was seized, the court ordered the currency returned and made the following instructive comment:

[W]e believe the government’s conduct in [civil] forfeiture cases leaves much to be desired. We are certainly not the first court to be ‘enormously troubled by the government’s increasing and virtually unchecked use of the civil forfeiture statutes and the disregard for the due process that is buried in those statutes.’¹⁶

III.      Federal Forfeiture Reform

While the abuses described above are not typical forfeiture actions, these and other cases demonstrate the tremendous government power authorized under current law and prove the need for civil forfeiture reform. The problems with civil forfeiture have much more to do with procedural flaws in federal law than with the character or competency of law enforcement officials. The United States has the most professional, capable, and dedicated law enforcement officers in the world. Federal, state and local law enforcement officers do an outstanding job fighting crime under the most difficult circumstances. Nothing in this report should be construed as a criticism of law enforcement. As one federal court recently stated about federal civil forfeiture:

One can hold law enforcement personnel in high regard and still be uneasy with the enormous potential for abuse inherent in allowing executive officers to hold huge sums of money and other valuable property for long periods of time and to pass this property back and forth among themselves for their mutual benefit without any judicial supervision. United States v. $639,470, 919 F. Supp. 1405 (C.D. Cal. 1996.)

The Need for Legislation

In recent years, the Justice Department has implemented administrative reforms to reduce abusive forfeiture actions. For example, in response to legal challenges, federal agencies waive the cost bond requirement for indigent claimants. In addition, in response to a 1993 Supreme Court decision, the Justice Department does not seize real property for civil forfeiture without a judicial order. While these changes are beneficial and have been implemented in good faith, administrative reform alone cannot adequately reform federal law. Congressional legislation is needed to reform the archaic admiralty procedures that currently govern federal civil forfeitures.

The defects in federal civil forfeiture law can be effectively remedied in legislation that preserves civil forfeiture as a law enforcement tool. To further these goals, Senate Judiciary Committee Chairman Orrin Hatch and Ranking Member Patrick Leahy introduced S. 1931 on November 16, 1999. S. 1931 contains common sense reforms that increase protections for property owners while respecting the interests of law enforcement. The following six core reforms can prevent abuses and ensure the availability of civil forfeiture as an effective law enforcement tool.

Burden of Proof

The first major reform in S. 1931 places the burden of proof in civil forfeiture cases on the government throughout the proceeding. Under current law, the government is required only to make an initial showing of probable cause that the property is subject to forfeiture, and the government can use otherwise inadmissible hearsay to make that showing. After the government makes this modest showing, the burden shifts to the property owner to prove that the property is not subject to forfeiture by the higher standard of a preponderance of the evidence.

The fact that the property owner bears the burden of proving the property is not subject to forfeiture has been extensively criticized by the federal judiciary and numerous legal commentators. As one federal court of appeals noted, placing the burden of proof on the property owner is a “constitutional anomaly.” United States v. $49,576, 116 F.3d 425 (9th Cir. 1997). The court in $49,576 even questioned whether requiring a property owner to bear the burden of proof in a civil forfeiture action is constitutional. As Judge Kozinski noted in the majority opinion in $49,576:

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.

Other courts have been equally critical of the burden of proof in civil forfeiture. As one federal judge reasoned, “[t]he current allocation of burdens and standards of proof requires that the claimant prove a negative, that the property was not used in or to facilitate illegal activity, while the government must prove almost nothing.” United States v. $12,390, 956 F.2d 801, 811 (8th Cir. 1992) (Beam, J., dissenting in part.) Seealso United States v. $191,910, 16 F.3d 1051, 1069 (9th Cir. 1994) (the burden of proof in civil forfeitures “involves a serious risk that an innocent person will be deprived of his property.”)

In short, placing the burden of proof on the property owner is inconsistent with America’s traditional system of justice. As the cases described earlier illustrate, current civil forfeiture procedures create an incentive to seize property in ill-advised circumstances. Under S. 1931, the government has the burden throughout civil forfeiture actions to prove by the preponderance of the evidence that the property is subject to forfeiture.

Cost Bond

Another major reform in S. 1931 is the elimination of the cost bond. Under current civil forfeiture law, a property owner must post a bond of the lesser of $5,000 or 10 percent of the value of the property seized in order to contest a seizure of property. See19 U.S.C. § 1608. If he loses, the property claimant must pay the costs and expenses of the forfeiture proceeding, which are deducted from the cost bond. The remainder of the bond, if any, is returned to the losing claimant.

Significantly, posting the cost bond merely allows the property owner to contest the forfeiture. It does not entitle the property owner to the return of the property pending trial. As described in more detail below, the government usually keeps the property until the forfeiture trial is complete, which can take years.

The cost bond requirement is objectionable in several respects. First and foremost, it is fundamentally unfair to require a person to post a bond for the privilege of contesting the seizure of his or her property. For example, what if the government required persons who were criminally indicted to post a bond in order to contest the indictment? Such a requirement would be unconstitutional under the Sixth Amendment. Requiring property owners to post a bond in order to contest the seizure of their property raises similar concerns.¹⁷ The framers of our Constitution would be disturbed to know that the federal government, after seizing private property without judicial authorization, required the property owner to post a bond in order to contest the seizure.

Moreover, as a practical matter, the cost bond unfairly discourages property owners from contesting the seizure of property, especially less valuable property. In short, the cost bond is a legal aberration. No other federal law or procedure requires a person to file a bond in order to litigate a claim against the federal government.

Some argue that the cost bond requirement is necessary to reduce frivolous claims. This argument ignores the procedures and rules applicable in all civil cases to combat the filing of frivolous claims, including sanctions against parties that may be imposed by a court under Rule 11 of the Federal Rules of Civil Procedure. After all, the problem of frivolous claims is not unique to civil forfeiture actions. In any event, to address this concern, S. 1931 requires that a person who challenges a seizure must file his claim to the property under oath, subject to penalty of perjury.

Eliminating the cost bond will produce, at most, minor inconveniences because persons who might file frivolous claims are subject to Rule 11 sanctions and will be deterred by the substantial legal fees and costs incurred in contesting a civil forfeiture. After all, who is willing to hire an attorney and pay other expenses to litigate a frivolous claim, especially when subject to penalty of perjury and other sanctions? This is especially true if the person who files a frivolous claim is involved in criminal activity. Once a claim is filed, the government can file a complaint, depose the claimant, and issue subpoenas. What criminal would be willing to reveal himself and his activities to the government in this fashion to pursue a frivolous claim?

In addition, the rules of standing will deter frivolous claims from being litigated, especially from third parties. For example, a person seeking to contest the civil forfeiture of property must “first demonstrate an interest in the seized item sufficient to satisfy the court of its standing to contest the forfeiture.” See United States v. $364,969, 661 F.2d 319 (5th Cir. 1981). In other words, a random person cannot simply file a claim to seized property and contest the forfeiture in court. To show standing, courts require claimants to prove an ownership interest in the property, which is an interest that will defeat most frivolous claimants.

Reasonable Time Limits

As described earlier, current civil forfeiture law gives the government too much time and property owners too little time to meet their respective deadlines in forfeiture proceedings. These unreasonable time limits have led to unfair delays. For example, in United States v. $1,646,000, Case No. C 97-20326 (N.D. Cal. 1998), the government seized the property at issue in October 1992. The property owner, CAF Technology, Inc., promptly applied for the remission and return of the currency with the Customs Service. Two and one-half years later, the Customs Service denied this request. In April 1997, nearly five years after the property was seized, the government filed a complaint for forfeiture.

The court ruled that the government’s delay caused a constitutional violation that required dismissal of the forfeiture action. At the hearing, when questioned about the reasons for the delay, the Customs attorney stated that he “must have been doing other things at the time.” The court found that this was an inadequate explanation and granted summary judgment to the property owner in October 1998 – six years after the property was seized.18

S. 1931 makes important reforms to the time limits in federal civil asset forfeiture law. First, S. 1931 requires the government to send notice of the seizure to interested parties within 60 days of the date of seizure. In order to accommodate the interests of law enforcement, S. 1931 authorizes courts to extend the period for sending notice of seizure based on a written ex parte certification of the seizing agency.

Second, S. 1931 limits the amount of time the government has to file a complaint for forfeiture after a claim has been filed to the property. Under current law, with one exception, the government has five years to file a complaint for forfeiture after the property owner files a claim. To prevent unreasonable delays like those described above, S. 1931 requires the government to file a complaint for forfeiture within 90 days after a claim has been filed, or return the property pending the filing of the complaint. Again, the bill accommodates law enforcement concerns by authorizing the court to extend the 90-day time period for filing the complaint for good cause.

Third, S. 1931 extends the time that a property owner can file a claim to seized property from 20 days after the first publication of notice of seizure to 30 days after the last publication of notice. S. 1931 also extends the time to file a verified claim to 30 days after the date of service of the complaint or, as applicable, 30 days after the date of final publication of the complaint.

Reimbursement of Attorneys Fees

Another reform in S. 1931 involves reimbursement of attorney fees. S. 1931 awards attorney fees and costs to property owners who prevail against the government in civil forfeiture cases. The costs of contesting a civil forfeiture can be enormous. The award of attorney fees and costs to property owners who prevail against the government in civil forfeiture cases is justified because, unlike criminal forfeiture, the property owner is not charged with a crime. Instead, the government proceeds in rem against the property. Given that the government does not sue or indict the property owner, it is unfair for the property owner to have to incur attorney fees and costs when the government does not prevail. The award of attorney fees is also justified because the government need only prove its case against the property by a preponderance of the evidence under S. 1931. By contrast, the government must prove beyond a reasonable doubt that property is subject to criminal forfeiture. If the government opts to pursue civil forfeiture instead of criminal forfeiture, it should be obligated to pay the attorney fees and costs of the property owner when the property owner prevails.

Hardship Cases

Another reform in S. 1931 addresses the situation in which the government’s possession of seized property pending trial causes hardship to the property owner. Under current law, the government normally maintains possession of seized property pending trial even if it causes hardship to the property owner. A common example of such hardship is where the government seizes an automobile, and the seizure prevents the automobile’s owner or members of his family from getting to and from work pending trial. As discussed above, there can be a lengthy delay between the seizure of property and the conclusion of the forfeiture trial.

S. 1931 changes current law to allow, but not require, the court to release property pending trial if the court determines that the hardship to the property owner of continued possession of the property by the government outweighs the risk that the property will be damaged or lost. In addition, if the court determines that release of the property pending trial is appropriate, S. 1931 authorizes the court to enter any order necessary to ensure the property is preserved pending trial, such as fixing a bond or requiring insurance. Finally, to ensure that the interests of law enforcement are not impaired, this provision does not allow the release of certain categories of property that are particularly suited for use in illegal activities. This common sense reform allows the court to release property only in appropriate cases.

Innocent Owner Defense

The last major reform in S. 1931 provides a uniform innocent owner defense to all federal civil forfeitures affected by the bill. Some federal civil forfeiture statutes, especially more recent statutes, provide an innocent owner defense. For example, 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.” See18 U.S.C. § 981(a)(2). Other federal civil forfeiture statutes, however, do not have an innocent owner defense. For example, the statute authorizing civil forfeiture of any property used in an illegal gambling business does not have an innocent owner defense. See18 U.S.C. § 1955(d).

Fairness requires a uniform innocent owner defense to civil forfeiture. It makes little sense to have an innocent owner defense to some federal civil forfeitures and not others. S. 1931 provides a uniform innocent owner defense to protect the property rights of law-abiding citizens and to prevent the unjust forfeiture of property.

What S. 1931 Does Not Do

While the above provides a summary of S. 1931, it is important to note what the bill does not address. S. 1931 reforms the antiquated procedures used in federal civil forfeiture actions. It does not, however, narrow the substantive scope of civil forfeiture laws, nor does it reduce the number of offenses to which civil forfeiture applies. In addition, S. 1931 does not apply to certain customs cases involving the importation of foreign goods at the border due to the unique context of these cases. Finally, S. 1931 does not change the level of proof needed for law enforcement to seize property for forfeiture.

Other Civil Forfeiture Reform Efforts

S. 1931 is not the only recent effort to reform and improve civil forfeiture law. On June 15, 1999, the U.S. House Judiciary Committee passed H.R. 1658 by a vote of 27-3. Sponsored by Reps. Henry Hyde and John Conyers, Chairman and Ranking Member of the Judiciary Committee, H.R. 1658 overwhelmingly passed the House of Representatives by a vote of 375-48 on June 24, 1999.

H.R. 1658 differs in scope and approach from S. 1931, and there are major differences between the two bills. For example, H.R. 1658 requires the government to prove property is subject to forfeiture by clear and convincing evidence, while S. 1931 requires only proof by a preponderance of the evidence. Unlike S. 1931, H.R. 1658 authorizes the appointment of counsel for all indigents in civil forfeiture actions, and it contains a broader innocent owner defense. In addition, H.R. 1658 would bar the government from forfeiting property if it inadvertently sent notice of seizure to the wrong address; S. 1931 does not contain such a provision. Nevertheless, both bills seek the same objectives and have many similarities. These similarities include placing the burden of proof on the government, imposing reasonable time limits in forfeiture cases, and eliminating the cost bond.

In recent years, several States have enacted major reforms to state civil forfeiture law, the most prominent being California. In 1993, California changed its civil forfeiture law to require the government to prove beyond a reasonable doubt that property is subject to forfeiture. (The only exception to this involves currency seizures in excess $25,000. In these cases, the State must prove the currency is subject to forfeiture by clear and convincing evidence.) SeeCalifornia Heath & Safety Code §§ 11469-11495. Also, Missouri reformed its civil forfeiture law in 1993 to require a criminal conviction as a prerequisite to civil forfeiture. SeeMo. Ann. Stat. § 513.617. These reforms of state law go far beyond S. 1931 and show how relatively little protection federal law provides property owners.

Support for Forfeiture Reform

In recent years, a broad coalition of organizations has supported reform civil forfeiture reform. Conservative, liberal, and centrist public policy and nonprofit groups alike have called for reform. The business organizations that support civil forfeiture reform include the Chamber of Commerce, the American Bankers Association, the Corporate Counsels Association, the National Association of Homebuilders, the National Association of Realtors, the Small Business Survival Committee, the American Hotel & Motel Association.

The legal and law enforcement organizations that support forfeiture reform include the American Bar Association, the Institute for Justice, the National Association of Criminal Defense Lawyers, and the American Civil Liberties Union, and the Law Enforcement Alliance of America.

Other organizations that support forfeiture reform include Defenders of Property Rights, the CATO Institute, Americans for Tax Reform, the National Rifle Association, the American Conservative Union, Eagle Forum, the Seniors Coalition, the Free Congress Foundation, and Frontiers of Freedom.

In addition, an impressive array of former Justice Department officials has endorsed S. 1931. These officials include former Solicitor General Robert Bork, and former Attorney Generals William Barr, Edwin Meese, Griffin Bell, Benjamin Civiletti, and Nicholas Katzenbach.

Most would agree that legislative civil forfeiture reform is overdue. Even the Department of Justice has recognized the need for reform by supporting a forfeiture reform bill pending in the Senate. While this particular bill has many critics, it demonstrates law enforcement support for civil forfeiture reform.

Conclusion

As Justice Story once wrote: “The sacred rights of property are to be guarded at every point. I call them sacred, because, if they are unprotected, all other rights become worthless or visionary.” SeeJoseph Story, The Value and Importance of Legal Studies, 1829. Despite the considerable appeal of civil forfeiture, it is clear that the 19th Century admiralty procedures that govern modern domestic civil forfeitures do not provide sufficient protection for private property. S. 1931 will remedy the defects in federal law and increase protections for “the sacred rights of property.” Moreover, it will do so in a way that preserves civil forfeiture as an effective law enforcement tool.