What You Need to Know About Criminal Forfeiture Law
Remember: With very short deadlines set by law, early representation is the only way to obtain successful results.
Forfeiture is a means whereby the government can seize and keep property that it claims was used to assist in a criminal endeavor or was purchased with ill-gotten gains. In this modern world, forfeiture has been expanded such that assets used in criminal enterprises can be seized, even if the owner of the property was not part of the criminal enterprise and was not aware of the fact that the property was used in a criminal enterprise. It is often used to deprive a defendant of the means to raise money to hire a good lawyer.
Forfeiture is used by both the Federal Government and State Governments.
Forfeiture can be made part of a criminal action where charges are brought against a defendant and forfeiture is sought of his or her property; or forfeiture may be brought separately, even against people neither involved nor aware of any criminal activities.
Since forfeiture is not necessarily part of the criminal charges against a defendant, a defendant cannot assume his or her attorney will represent him or her in forfeiture issues just because the attorney is representing the defendant on criminal matters. Separate arrangements need to be made. However, it is clearly best to use the same attorney (particularly if he is knowledgeable with both criminal and civil laws), but the greatest benefit is putting the prosecution in the difficult spot of having to completely disclose all the details of their criminal case or give up on the forfeiture altogether. Much use can be made by a skillful attorney in turning the forfeiture into a disadvantage for the prosecution.
Forfeiture law is where Criminal law and Civil law meet.
While the forfeiture of assets such as cars, boats, airplanes, bank accounts, cash and homes may be authorized by criminal law, the procedure to forfeit assets is normally civil in nature. Consequently, your attorney needs to be knowledgeable with both criminal and civil laws.
An attorney may well be able to help you if you contact one immediately. There are strict and very short time limits that must be adhered to, or you will lose your rights to get your property back. Vigorous and early representation not only can save some or all of your assets, but can also help out in your criminal case.
Forfeiture laws have become increasingly popular with state and federal law enforcement officials during the last 10 years. A subject once relegated to obscure passages in the musty recesses of lawbooks, and rarely invoked in practice, forfeiture has quickly become the darling of law enforcement. Since 1985, for example, the total value of federal asset seizures has increased over 1,500 percent–to over $2.4 billion,(1) including over $643 million for the Department of Justice in FY 1991 alone.(2) This bonanza for law enforcement officials, however, has become a Kafkaesque nightmare for some property owners, who have found themselves caught up in a world of bizarre legal doctrine, sometimes without the assets even to defend themselves.
Nor has the federal government shrunk from engaging in sweeping forfeiture prosecutions. The most popular rationale–confiscating property that “facilitates” criminal conduct–has been used successfully to seize entire bank accounts based upon the deposit therein of any alleged proceeds of criminal activity. Similarly, federal undercover agents and informants are schooled in the financial importance of arranging a drug sale on or near valuable real estate so that the entire tract may be seized under a claim that the real estate “facilitated” the alleged unlawful activity. As informants are often rewarded with a percentage of the value of the assets they deliver in this way, they become very creative and successful in their trade.
Broad forfeiture claims by state and federal officials might be better justified, and enjoy wider public support, if their sting were visited only upon the guilty, those who have intentionally committed crimes. But the oldest and most frequently used form of forfeiture–civil forfeiture– is not targeted at criminally culpable property owners. Instead, as discussed below, civil forfeiture laws apply indiscriminately to property, regardless of the innocence of the owner, and render it subject to forfeiture if it is used unlawfully by anyone. Thus, the family home is fair game for forfeiture if a son, relative, or friend were to use it unlawfully–say, by using the telephone to arrange a drug purchase. Moreover, a growing number of states, such as Texas, Florida, and New Jersey, apply their forfeiture laws to any criminal activity, meaning that property owners must police their property against all such activity, drug- related or not. With the broadened scope and use of forfeiture laws, property owners are increasingly being deputized to serve as agents of the state in preventing wide varieties of criminal conduct. And the price for failure is steep indeed–forfeiture of one’s property to the government.
Moreover, by any measure, forfeiture laws provide the government with unique litigation advantages, benefits not enjoyed by other litigants in any other area of law. They generally permit the government to seize property first, for example, and then place the burden upon the owners to come forward to prove they are entitled to have their property returned. This power of immediate possession, usually through summary government action, provides the government with tangible bargaining advantages at the outset of any title dispute between the government and a property owner. If, as the adage goes, possession is nine-tenths of the law, the government can secure this advantage before it has any obligation to prove anything.
Under federal law the government can seize property based solely upon probable cause to believe that the property was used unlawfully. This probable cause standard for seizure allows the government to dispossess property owners based only upon hearsay or innuendo–“evidence” of insufficient reliability to be admissible in a court of law. The probable cause standard relieves the government of the burden of proving anyone’s criminal guilt to obtain a forfeiture judgment over his property.
Perhaps the greatest advantage the forfeiture laws provide for law enforcement officials lies, paradoxically, in the fact that their legal justification simply defies logic. When asked to justify the extraordinary powers granted to them by such laws, law enforcement officials find themselves invoking peculiar legal fictions that date back to feudal times or earlier, wherein inanimate objects are given life and then forfeited to the government for “their” criminal misconduct. Forfeiture’s justification hinges entirely upon “old, forgotten, far-off things and battles long ago.”(6) As a result, appeals to reason may be unavailing as quirks of legal history are often successful modernday talismans capable of ending rational debate.
As forfeitures become increasingly popular with law enforcement officials, efforts have begun to expand government forfeiture powers beyond those justified solely by reference to historical fictions. In Arizona, for example, the attorney general’s office has unabashedly proclaimed that the mission of Arizona’s forfeiture laws is “‘social engineering’ accomplished through government intercession in commercial activity harmful to the economy as a whole.”(7) When such a broad official charter for forfeiture is combined with the unique litigation advantages that forfeiture law already offers to law enforcement, a powerful engine of government power is unleashed.
Since 1970 Congress has steadily increased the types of criminal offenses for which criminal forfeiture is a sanction. Unlike civil forfeiture, criminal forfeiture is justified as a criminal punishment; it is imposed in a criminal in personam proceeding directed against an individual for his alleged misconduct, not in an in rem proceeding directed against an inanimate object through legal fiction. Accordingly, a defendant in a criminal forfeiture prosecution is entitled to all the procedural protections associated with the criminal process.(29) Moreover, criminal forfeiture law is not premised on a taint theory but on a punitive theory whereby forfeiture serves the important penal interests associated with the criminal process.(30) As the U.S. Court of Appeals for the Fifth Circuit observed in upholding a substantial criminal forfeiture, “property forfeited under RICO need not be ‘guilty’.”(31) Rather, the scope of criminal forfeiture is measured by the penal objectives intended by the legislature. With RICO, for example, courts have readily applied RICO’s broad forfeiture language to forfeit legitimately acquired assets to further the purgative goals that Congress designed for RICO forfeitures–to eliminate the economic influence of racketeers over legitimate businesses.(32)
Thus, in many respects, criminal forfeiture is broader in scope than civil forfeiture, as law enforcement can reach “untainted” assets–that is, assets that were legitimately acquired or lawfully used. Some courts have entertained Eighth Amendment challenges–challenges invoking the amendment’s protections against excessive fines and disproportionate punishments–to such broad criminal forfeitures.(33) And some have observed that Eighth Amendment concerns are most acute when the government seeks to forfeit such untainted assets under a purgative rationale such as that found in RICO.(34) The unstated premise of such constitutional analysis is that criminal forfeiture has a punitive intent and purpose, one that is subject to the restrictions of the Eighth Amendment. By contrast, several federal opinions have concluded that Eighth Amendment proportionality protections simply do not apply to civil forfeitures in that they are civil, not criminal and theoretically are not punitive.(35)
Expanding the Reach of Forfeiture Laws
During the last two decades, both federal and state forfeiture law has expanded by leaps and bounds. Unfortunately, the impulse to expand the type and amount of property subject to forfeiture has not been matched by legislative concern for the rights of innocent property owners who are the collateral casualties of the forfeiture campaign.
Reaching Beyond the “Profits of Crime”
The political drive to apply forfeiture laws to an ever expanding array of criminal conduct is often accompanied by jingoistic appeals to “take the profit out of crime.” If the forfeiture laws reached only the profits of crime, they would cause a fraction of the mischief they now cause, as the only significant issue would be one of defining “profits of crime.” Today, however, forfeiture laws reach far beyond such profits. Those who defend them on the ground that their purpose is to “take the profit out of crime” simply ignore their true breadth.
On the civil side, for example, property subject to forfeiture includes that which “facilitates” unlawful conduct.(36) The use of even a small part of a piece of realty can render an entire tract forfeitable.(37) Under such a “facilitation” forfeiture claim, the government was recently able to seize all of the assets in a bank account on the theory that the legitimate funds in the account provided a “cover” for the deposit of forfeitable funds and thus rendered all of the money in the account subject to forfeiture.(38)
Similarly, the scope of criminal forfeiture is substantially broader than the “profits of crime.” Under federal criminal statutes such as RICO, a convicted defendant must forfeit any property interest, however legitimately acquired or used, if that interest affords the defendant a source of influence over an alleged RICO “enterprise”–a broad term that can encompass any legitimate business entity. Originally meant to enable law enforcement officials to purge the financial influence of organized crime in legitimate businesses, such “enterprise” forfeitures have since been used to impose drastic forfeitures upon any defendant convicted of a RICO violation having a connection to a legitimate business. In United States v. Porcelli, for example, a RICO defendant convicted of failing to pay New York sales taxes due from his gas station franchise was ordered to forfeit not only an amount equal to the delinquent tax obligation but also his 29 separate corporations through which he owned and operated the chain of gas stations.(39)
Broad Criminal Pretrial Freeze Orders
Congress augmented the broad scope of criminal forfeitures under RICO and the Drug Kingpin Statute(40) with authorization to seek pretrial restraining orders–sometimes known as asset freeze orders–to prevent a defendant from using, transferring, or dissipating his assets prior to trial. The apparent need for pretrial seizure orders stems from the different procedures in civil and criminal forfeiture cases. A civil forfeiture case begins with the seizure (arrest) of the offending piece of property; the “punishment” of criminal forfeiture, on the other hand, cannot be imposed until after a defendant is convicted. In criminal forfeiture cases, therefore, the government cannot seize property prior to conviction as it has no title or punitive interest in a defendant’s assets prior to conviction. The occasional need for freeze orders during the period prior to verdict in order to preserve the status quo is apparent, especially with perishable assets. Although the use of pretrial restraining orders may be reasonable in certain circumstances, their impact can be devastating, especially when coupled with the relation-back doctrine.
Pretrial freeze orders in criminal cases can deny a presumptively innocent defendant the use of his assets to pay necessary living expenses or even the costs of defending against the government’s prosecution. The relation-back doctrine compounds the defendant’s problems by sending a warning signal to all who have previously dealt with him and to those who must deal with him in the future, that they deal at their peril. When a forfeiture claim is included in an indictment, the defendant may become a commercial leper: those who have previously dealt with the defendant cannot be sure that the defendant can perform existing contractual obligations or honor future commitments, and the cloud of a government title-claim will hover over past and future transactions.
Oddly enough, even the severe English common law would not have tolerated this harsh result. Under that law, the relation-back doctrine was limited to land; it did not affect a criminal defendant’s chattels. As Blackstone observed:
Therefore, a traitor or felon may bona fide sale any of his chattels, real or personal, for the sustenance of himself and his family between the fact and conviction; for personal property is of so fluctuating a nature, that it passes through many hands in a short time; and no buyer could be safe, if he were liable to return the goods which he had fairly bought, provided any of the prior vendors had committed a treason or felony.(41)
Thus, the English common law’s refusal to apply the relation-back doctrine to personal property was a practical, if humanitarian, concession to the interim needs of the accused to support his dependents while awaiting trial, as well as a tacit recognition of the obvious unfairness of applying the relation-back doctrine to third parties who deal with an accused during this time frame. In the stampede to expand the reach of forfeiture law, however, Congress in 1984 extended the relation-back doctrine to criminal forfeitures.
The mere return of a forfeiture claim in a criminal indictment, therefore, can disable a defendant. For business associates or partners of the defendant, the consequences can be equally disastrous. Even though not accused, their assets can be restrained,(42) and their prior transactions invalidated as a result of the relation-back doctrine. Moreover, typical criminal forfeiture statutes bar affected third-party property owners from intervening in the criminal case or filing suit to resolve their situation prior to the completion of the criminal prosecution.(43)
In 1989, in an opinion that dismayed much of the legal community, the Supreme Court sustained the pretrial use of criminal forfeiture laws to prevent a presumptively innocent defendant from paying for his defense counsel.(44) The Supreme Court’s fee forfeiture opinions are remarkable not only for their result but for the reasoning employed by the majority to reach that result.
As noted earlier, criminal forfeiture was introduced into federal law in 1970 as a RICO sanction.(45) By 1989 Congress had enacted criminal forfeiture as a sanction for a number of other criminal offenses,(46) including all drug offenses.(47) But despite this expansion in its application, the purpose of criminal forfeiture remained constant–to punish criminals for their conduct.(48) In 1989, however, the Supreme Court’s fee forfeiture opinions supplemented the penal purposes that had led to the introduction of criminal forfeiture in 1970 by adding as objectives revenue raising for the Department of Justice and restitution for crime victims.(49)
This remarkable expansion in the objectives of criminal forfeiture cannot be traced to any congressional act or to any practice of the department. The new “restitutionary” objective, for example, was never authorized under RICO’s forfeiture provisions; nor has it ever been implemented in practice by the department. Simply stated, the Department of Justice does not use the forfeiture laws to provide restitution to victims of criminal conduct,(50) however worthy that objective might be. As a statutory matter, the U.S. Court of Appeals for the Second Circuit had previously stated it plainly: “Forfeiture under RICO is a punitive, not a restitutive, measure.”(51) Moreover, in its original statute, Congress had expressly provided a civil restitutive remedy for RICO victims in the form of a claim for treble damages against defendants.(52) That arrangement contained no provision for government financial involvement in meeting the legitimate restitution needs of victims.(53) Although Congress in 1984 authorized the Department of Justice to amend its regulations to enable victims to seek restitution from forfeited assets through the administrative petition-for-remission process, the department has never promulgated any such regulatory changes. In fact, the department has stead fastly, and successfully, fought against claims by crime victims to participate in forfeitures awarded in criminal forfeiture cases. Thus, this newly discovered “restitutionary” purpose for criminal forfeiture was merely a deus ex machina that the Supreme Court created to bolster its conclusion regarding attorney fee forfeiture in cases that were, after all, drug cases in the first place, and hence problematic as victim restitution cases.
Similarly, the Supreme Court’s recognition of a government “pecuniary interest” in maximizing criminal forfeiture to use forfeiture proceeds for law enforcement purposes has no basis in the legislative history of criminal forfeiture. The creation of an Asset Forfeiture Fund in 1984 was a congressional reaction to the chronic mismanagement of seized assets by government agencies, which had led to a situation in which “the sale of forfeited property realizes less than the expenses incurred by the government in storing, maintaining, and selling the property, [and] the net loss must be carried by the agency’s budget.”(54)
The Asset Forfeiture Fund was created to ensure better management of seized assets and to reduce the financial burden of this management on the seizing agency. Thus, the fund was intended as a means toward efficiently facilitating the ends of forfeiture, not as an end in itself. According to the majority opinion in Caplin & Drysdale, however, the government appears to have a legitimate financial interest in maximizing forfeiture solely for revenue raising purposes–a goal not traditionally associated with our criminal justice system, and one that raises serious questions about whether perverse law enforcement incentives are being created.