Project Report:
Ending Civil Forfeiture and Protecting Private Property
Purpose
- Investigates causes tending to destroy or impair the free-market system.

Summary

Civil forfeiture is one of the greatest threats to private property rights in the nation today. It allows police and prosecutors to take property from individuals upon the mere allegation that a crime has been committed. In many states and at the federal level, law enforcement agencies get to keep the items and assets they take, incentivizing them to pursue property to bolster their budgets. Moreover, navigating the forfeiture process is difficult, meaning that many innocent owners are never able to reclaim their property and that law enforcement faces little accountability when it exercises this power. The use of civil forfeiture continues to grow and the Institute for Justice is deploying all of the tools in our strategic public interest arsenal to end this blatant abuse of private property rights.

Description

In October, the Institute for Justice secured a victory on behalf on an innocent property owner in California. Our client, Tony Jalali, fled Iran in 1978 to escape tyranny. Today, he owns a well-maintained office building in Anaheim, CA, that he leases to a half dozen tenants, including a dental practice and an insurance company. During 2011 and 2012, he rented a suite in the building to a medical marijuana dispensary, a business that is perfectly legal in California. Under state law, civil forfeiture can only be used to take a home or business if the property owner is convicted of a felony. Tony was never accused of any crime, but local officials and the federal government tried to pull an end run around state law by filing a federal lawsuit against Tony to take his building for “facilitating” his tenants’ sale of marijuana. Tellingly, the government wasn’t interested in pursuing the tenants who actually operated the dispensaries, or the patients who purchased from them—it just wanted Tony’s building so it could sell the property and pocket the proceeds. But, in October, Tony prevailed when the government agreed to dismiss his case with prejudice, which means the government gives up any right to file the case again in the future and threaten Tony’s property.

We are building on our success with a case in Michigan. There, we represent Terry Dehko and his daughter Sandy, who own Schott’s Market, located just outside Detroit. Like many grocery store owners, the Dehkos have a common-sense policy of not letting too much cash accumulate in their store. Because their insurance policy covers them for theft or other loss of cash up to $10,000, they regularly make bank deposits below that amount. Federal law requires banks to report cash transactions above $10,000, and it is illegal to “structure” transactions—break them up into smaller deposits—for the purpose of avoiding this requirement. The Dehkos have a legitimate reason for how they deposit their money, and the IRS even gave them a clean bill of financial health. But last year, the federal government secretly cleaned out the Dehkos’ entire checking account for allegedly violating federal “structuring” law, even though Terry and Sandy were never charged with any crime. Soon after IJ stepped in on their behalf, the federal government backed down and returned the money. But our fight to vindicate the Dehkos’ constitutional rights continues.

IJ filed an amicus brief in a case before the U.S. Supreme Court concerning what procedural safeguards the Constitution requires before the government can freeze a defendant’s assets as forfeitable, prior to obtaining a conviction. The case involves a couple who were indicted by a grand jury for stealing prescription medical devices. Prior to the trial, the government obtained an order freezing $500,000 of the couple’s assets. Because they had planned to use this money for their defense, the 11th U.S. Circuit Court of Appeals ruled that the couple must be granted a pre-trial hearing on the order freezing their assets, but only to determine whether the seized funds are traceable to the alleged criminal wrongdoing. Our brief asks the Court to recognize that the Constitution grants defendants far more expansive property rights protections than were recognized by the 11th Circuit. We argue that, regardless of the property’s use, defendants must be granted a pre-trial hearing to challenge forfeitures. We additionally urge the Justices to rule that individuals must be given an opportunity to challenge the basis of the forfeiture, not just the connection between the property and the underlying crime. The Supreme Court heard oral arguments in October, and a positive decision would be an important step forward in the fight against civil forfeiture.

Outside the courtroom, we are leveraging our path-breaking civil forfeiture research to generate momentum for reform nationwide. For instance, in Georgia, our civil forfeiture reports and outreach efforts brought the issue to the attention of an investigative reporter at the Atlanta Journal-Constitution. In a series of articles, she reported on the extent of local forfeiture use, the lack of safeguards for property owners, and the lax oversight of forfeiture funds. Among other outrages, she exposed a district attorney who has used forfeiture funds to buy tickets to sporting events and gala balls, display cases for basketball merchandise, security doors for his home, and other things with little relation to prosecuting criminals. The revelations prompted Governor Nathan Deal and other officials to call for reform of the state’s oversight of forfeiture funds.

IJ also has secured media placements in prominent outlets like Forbes, The Washington Times, Detroit News, The Washington Post, Detroit Free Press, Huffington Post, Orange County Register, Milwaukee Journal-Sentinel, and The Economist. Moreover, The New Yorker ran a feature on civil forfeiture in August (located at http://www.newyorker.com/reporting/2013/08/12/130812fa_fact_stillman) that drew extensively on IJ’s arguments, attorneys, and research, and brought this issue to an entirely new audience.

In Washington, D.C., IJ Attorney Darpana Sheth testified before the City Council Committee on the Judiciary and Public Safety in July on a proposed bill that would provide District residents with substantially stronger property rights protections, including a provision that would shift the burden of proof to the government in forfeiture proceedings. She also brought together a diverse coalition of allies ranging from the ACLU to the Public Defender Service to testify in support of the bill. Since the hearing, Darpana has participated in a working group convened by Committee Chairman Tommy Wells to reform civil forfeiture in the District.

Meanwhile, on Capitol Hill, IJ hosted a briefing on federal civil forfeiture reform for the U.S. House of Representatives in July. In addition to IJ Senior Attorney Scott Bullock and leading forfeiture expert David Smith, the briefing featured former IJ client Russ Caswell, who put a human face on this issue by describing his three-year nightmare to save his motel from civil forfeiture.

Purpose

Properly functioning free-market systems depend on robust legal protections for private property. Civil forfeiture, however, gives law enforcement broad and, in many cases, virtually unchecked power at the state and federal levels to take property from individuals without due process. This incentivizes police and prosecutors to shift priorities from the fair and impartial administration of justice to the pursuit of property and profit, undermining the protections for private property under the Constitution, and ultimately the free-market system.

Scope

Civil forfeiture is a national problem as federal law and many state laws provide few, if any, protections for property owners. For instance 38 states require property owners to establish their own innocence to get their property back, putting them in the difficult, and often impossible, position of having to prove what they did not know. Our work in court and the court of public opinion at the federal level and in targeted states will secure private property rights and undermine the ability of law enforcement to police for profit rather than justice.

Amount Approved
$10,000.00 on 6/10/2013 (Check sent: 7/1/2013)


  Related Organizations
Institute for Justice  


Policing for Profit

Attachments
Policing for Profit

Address
901 N Glebe Rd #900
Arlington, VA 22203


Phone
(703) 682-9320 ext 233
(703) 682-9321 (fax)

Contacts


Beth Stevens
Institute for Justice

Posted 3/5/2013 11:21 AM
Updated   12/5/2015 11:13 AM



 
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