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Charged with Nothing, Convicted of Nothing--Losing Everything

Posted By David Graves || 23-Sep-2013

The dangerous reality of civil forfeiture

At Sullivan Brill, we have noticed a disturbing and escalating trend: more and more individuals, not accused of any crime, are finding their cars, bank accounts, homes even "approximately 81,454 cans of baby formula" seized by the government with little or no due process. At Sullivan Brill we represent clients victimized by the government's decision to engage in criminal or civil asset forfeiture. The attorneys at Sullivan Brill handling criminal and civil asset forfeiture are uniquely positioned, as they are experienced in federal court in both criminal defense and both sides of civil litigation. At Sullivan Brill, an ever growing number of clients are turning to us help them negotiate the ominous and complex ordeal that is criminal or civil asset forfeiture. If you, or someone you know, have had your property seized as a result of civil or criminal asset forfeiture, do not delay, as is explained below there are deadlines that must be met; call us as soon as possible at 212-566-1000 and let our experienced attorneys help you content with this serious matter.

If an individual were given a ticket for smoking a cigarette in a post office, a crime under 29 C.F.R. 231.1(6), and was facing only a modest fine of $50, the government would still be required to prove every element of the offense beyond a reasonable doubt before that person would be required to pay the $50. In cases of civil forfeiture on the other hand, where the stakes are significantly higher, the government can effectively invoke the penalty, seizure of a person's assets, with little or no burden of proof. While originally it may have been intended as a compliment to the use of criminal forfeiture in the fight against drug cartels and organized crime, civil forfeiture has become a multi-billion dollar enterprise by which law enforcement agencies can supplement their budgets by wielding the idiosyncrasies of the civil forfeiture statutes like a bludgeon. Whether it be the intimidating and formidable U.S. Attorney's office initiating a formal complaint in federal court, or a local law enforcement officer standing by the side of the road offering the draconian choice of signing over cash or a car or facing the threat of criminal charges, otherwise law abiding citizens are being deprived of their assets with little or no idea as to how to fight for the return of their property.

Specifically, 18 U.S.C. § 981, permits the government to seize "any property, real or personal, involved in a transaction or attempted transaction in violation" of any of a long list of offenses, most significantly money laundering. Section 881 allows the government to seize "[a]ll moneys, negotiable instruments, securities, or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance . . ., all proceeds traceable to such an exchange, and all moneys, negotiable instruments, and securities used or intended to be used to facilitate any violation" of the drug laws.

Immediately it should be apparent that there is considerable room for interpretation. What is property or money "involved" in an offense? How does a court define money "intended to be used to facilitate any violation" of the drug laws? Furthermore, what is the government's burden to prove that the property is actually connected to the underlying crime or violation?

Consider the following:

Bob lists his car on Craigslist for $18,000. Bill contacts him and agrees to buy the car, but claims he needs to make two cash payments of $9,000 a week apart because he doesn't have the entire amount at the time. Bob, on receiving the money, makes two deposits and properly reports the money to sales and income tax agencies. A month later, $18,000 is seized from Bob's bank account with the explanation that Bill's funds are from drug sales and further Bob was assisting in money laundering those proceeds.

Mr. and Mrs. Smith's son, John, is living back at home after college, waiting to start law-school. During the summer, anticipating the rigors of law-school John has a friend come over and, in his room, trades the friend a bag of marijuana for 10 Adderall and twenty dollars. The following week John's college room visits and ask John to sell him 3 of his Adderall for an upcoming project he has due that week. John agrees. Later that year the government serves notice on the Smith's that it is seizing and auctioning their home as property involved with an illegal Adderall drug conspiracy.

Joan owns a restaurant in a predominantly Hispanic section of town. Each morning she deposits the previous night's cash receipts into her business account. Sometimes she uses the branch near her restaurant, sometimes the one near home and sometimes the one near her daughter's school. The nature of her business is such that her gross receipts are routinely between five and eight thousand dollars. Her bank account is seized, and she receives a complaint that the funds are subject to forfeiture because Hispanics are routinely involved in the drug trade and that individuals who make cash deposits in amounts under $10,000 at multiple locations are often structuring the transactions to avoid the reporting requirements.

In each of these hypothetical cases, no criminal charges are filed and, in fact, the seized property is not involved with, or proceeds of, a criminal activity. Yet each of these seizures is "legal" and the people involved face the loss of their assets unless they take swift and appropriate action. Because of the complicated procedural requirements and confusing statutory history connected with civil forfeiture, the deck is already stacked against those attempting to fight such action.

Although it is hard to believe, in 2000, Congress, in response to a perceived inequity, passed the Civil Asset Forfeiture Reform Act ("CAFRA") in order to increase the burden on the government in such matters. Prior to the passage of CAFRA, the government was only required to show probable cause that the property seized was connected to some underlying criminal conduct. Once the government showed probably cause, the burden shifted to the claimant, the owner of the property, to show by a preponderance of the evidence that the property was not connected with the illegal activity.

CAFRA, the controlling law today, set out to increase the standard required of the government. Now the seizing agency must show by a preponderance of the evidence that the property was substantially connected to specific illegal activity. In addition, the burden shifting to the person whose assets were seized was eliminated. Offsetting this "protection," however, is an often overlooked reality: this preponderance of the evidence requirement is the standard to be met at trial not a requirement to seizure the funds. Prior to CAFRA there was a circuit split where some circuits required probable cause at the time of the seizure, while others measured it at the time of the hearing. Now, although preponderance of the evidence is clearly a greater burden and the burden no longer shifts to the claimant, this standard applies only at trial.1

At the time the government initiates the seizure and files a complaint, a much lesser standard applies. The standard is set out in the Supplemental Admiralty and Maritime Claims Rule G and requires merely that the complaint "state sufficiently detailed facts to support a reasonable belief that the government will be able to meet its burden of proof at trial." This is a considerably lower bar. Making the situation worse for a claimant is a clause in CAFRA which states "[n]o complaint may be dismissed on the ground that the Government did not have adequate evidence at the time the complaint was filed to establish the forfeitability of the property." This is critically important when considering the procedural requirements to challenge a civil forfeiture.

It is understandable how suddenly having a substantial asset seized might cause even the most resilient individual to become shocked and immobilized. Unfortunately, time is not an ally when the government has instituted civil forfeiture proceedings. First, it should be noted that in civil forfeiture the property itself is the defendant in rem. This leads to somewhat amusing case-names, such as United States v. 594,464 Pounds of Salmon, United States v. One Rolex 18k Gold Watch with light brown crocodile style wrist band, and United States v. One Partially Assembled Drag Racer. It also highlights the fact that the owner of the property must establish standing to defend the civil suit. That is done through the filing of a verified claim. The "alleged" owner will be notified of the date by which he must file the claim, and the date must be at least 35 days after the notice is sent. Given that most individuals receiving this kind of notice do not have legal representation at the time, and that this area of the law is beyond the ken of most general practitioners, 35 days is a very short time indeed.

The verified claim does not need to be lengthy or complex, but there are specific requirements that if not met can be grounds for a successful government motion strike both the claim and any subsequent answer. Rule G specifies that the claim must identify the specific property claimed, identify the claimant and state his interest in the property, be signed by the claimant under penalty of perjury, and be served on the government. However, complying with these requirements only shows statutory standing. Some courts are unwavering in their requirement that a claimant also show Article III standing-- that is, requiring the claimant demonstrate a sufficient interest in the property to create a "case or controversy" in the constitutional sense. In the Second Circuit, this requirement has been specifically defined: "a complainant must demonstrate (1) a concrete, particularized, and actual or imminent injury, (2) a causal connection between the injury and the conduct complained of, and (3) a likelihood that the injury will be redressed by a favorable decision of the court." Filing a timely and precisely compliant verified claim is the critical first step in attempting to reclaim seized property.

Once the verified claim is filed, a claimant has just 21 days to file either an answer or a motion to dismiss. In this regard, a claimant faces a difficult decision. A motion to dismiss might bring about a quicker resolution, and not only provide for a swifter return of the asset, but also mitigate legal fees. On the other hand, given the liberal rules on amending a complaint and the extremely low burden on the government (reasonable belief that it will be able to meet its burden at trial), a motion to dismiss has a lower chance of success. Answering the complaint begins a longer process and means a greater legal expense, however, prevailing on summary judgment may be likely particular if asserting one of the affirmative defenses written into the CAFRA statute: the innocent owner defense.

The innocent owner defense states:

An innocent owner's interest in property shall not be forfeited under any civil forfeiture statute. The claimant shall have the burden of proving that the claimant is an innocent owner by a preponderance of the evidence.

(2)(A) With respect to a property interest in existence at the time the illegal conduct giving rise to forfeiture took place, the term "innocent owner" means an owner who--

(i) did not know of the conduct giving rise to forfeiture; or

(ii) upon learning of the conduct giving rise to the forfeiture, did all that reasonably could be expected under the circumstances to terminate such use of the property.

Successfully mounting such a defense can be done either through a motion for summary judgment or at trial. In either case, it is clear that claimant's legal costs will become significant.

The ugly implications of this are apparent. An amount of money, albeit significant to an individual, under a certain threshold will cause a claimant to fear a pyrrhic victory in which the returned funds will likely be exceeded by legal fees. With larger amounts of money at stake, a claimant may feel helpless and be compelled to accept a settlement offer with the cynical view that getting some of his money back is better than losing it all, or spending it all on legal representation. Further, in some cases a claimant may not have the will or ability to do without his property for the length of time litigation might take. Government attorneys are paid a salary regardless of the length or outcome of the case, and therefore may employ a delaying strategy in order to weaken the resolve of those individuals.

However, the law, though complex and perhaps initially exploited by some in the government's position, does offer some redress. There is a provision in the law, 28 U.S.C. § 2465, that states if a "claimant substantially prevails, the United States shall be liable for-- reasonable attorney fees and other litigation costs reasonably incurred by the claimant[.]" What this means is that with the proper representation that achieves a substantial victory at trial, an individual may not only have their property returned, but their legal costs reimbursed as well.

As this originally well intended law has become a cottage industry for law enforcement to augment their shrinking budgets, it is obvious that CAFRA must be changed to provide greater due process in cases of civil forfeiture. Until such time, however, an individual confronting the loss of his legitimate assets must take swift and aggressive action and use all the resources of a reasoned judicial system to mitigate what could be a catastrophic loss. At Sullivan Brill we are committed to using our distinctive blend of skills and expertise to stand up for those people who have been charged with nothing and are potentially facing the loss of everything.

1 The Ninth Circuit remains the lone circuit requiring probably cause at the time of seizure.