The text of H.R. 540 is now posted on the www.congress.gov website, and it is a bit better than last session’s bill. Once again it is named “The FAIR Act” – full title “Fifth Amendment Integrity Restoration Act of 2015.” I am happy to see that it includes a few more reforms. It still doesn’t go far enough, but it is a good start. Bills go through numerous revisions and amendments while they are pending, and if the public keeps asking for more reforms we may get them.
I wrote a blog about the 2014 FAIR Act last November – The FAIR Act forfeiture reform bill is better, but doesn’t go far enough either. This bill includes verbatim the provisions from the 2014 bill and adds a few additional reforms: (1) improves the provision granting a right to court appointed counsel for indigent claimants whose primary residence is seized by removing the requirement tha they request
Features that are new to the 2015 bill:
1. Improves the provision granting a right to court appointed counsel for indigent claimants whose primary residence is seized by removing the requirement tha they request
Previously the indigent claimant had to request the appointment of counsel; because few knew they had that right, few requested it. The bill removed “at the request of the person.” If this bill passes, 18 U.S.C. § 983(b)(1)(A) will read:
If a person with standing to contest the forfeiture of property in a judicial civil forfeiture proceeding under a civil forfeiture statute is financially unable to obtain representation by counsel, and the property subject to forfeiture is real property that is being used by the person as a primary residence, the court
, at the request of the person, shall insure that the person is represented by an attorney for the Legal Services Corporation with respect to the claim.
This is a very significant change and a long overdue one. Courts have used the excuse of claimants not asking for counsel to not bother appointing counsel at all. See my previous blog What we really need in a forfeiture reform bill – Part 1, subsection A. The most important part about giving the judges an affirmative duty to appoint counsel in such situations is that if the court fails and the claimant goes to trial and loses, they may be able to assert denial of their right to court appointed counsel to invalidate the judgment.
This provision doesn’t go far enough however. As I explained in What we really need in a forfeiture reform bill — Part 1, courts have created loopholes in that provision. In one case I had, the judge denied the request for appointment of counsel saying my client didn’t qualify because she was not currently staying in her home. With her car seized too, and her bank accounts drained, she could not afford to live there alone and was living temporarily with her adult daughter, taking care of her newborn granddaughter while the parents worked. She is a senior citizen, not collecting enough Social Security to live on much less pay for litigation. With very little English, she is not capable of representing herself. Does she deserve to have her family home taken from her without counsel? If she had just a little more money and a car, she could stay in her home and qualify for court appointed counsel.
There are other situations where the potential loss is serious and the client’s chances of prevailing pro se are slim. Court appointed counsel should be made available to those cases as well, as I point out in subsection B of What we really need in a forfeiture reform bill — Part 1.
Also currently the courts have the authority to appoint civil forfeiture counsel for indigents who are charged with a crime related to the forfeiture case, if they have a court appointed criminal lawyer. But the judges have discretion to deny such appointments. It seems unfair on the one hand to appoint counsel for persons charged with crimes but not appoint counsel for innocent people, but on the other hand, persons charged with crimes can waive important Fifth Amendment privileges when defending property pro se. I think this provision should be strengthened, so there is at least a presumption that the court appointment will cover related forfeiture cases as well.
2. Changes the statute regarding forfeiture cases arising from the alleged “structuring” of transactions to avoid the cash transaction reporting requirements
This relatively narrow category of forfeiture cases is based on a money laundering statute, which requires persons making cash transactions exceeding $10,000 to file a Cash Transaction Report (“CTR”) to the IRS. Most people know that if they take $10,000 in cash down to their bank to deposit it the bank will make them file a report. So, naturally, they break the deposits down into smaller deposits and make them over a period of days, or make them at different branches of the bank. That way they don’t have to file the report — right? Wrong – that way, they are committing the federal felony of “structuring” transactions to avoid filing the CTR.
As structuring law evolved — in the government’s favor — the regulations and case law allow the government to look at several days of transactions to find a pattern of structuring — making a series of $9,000 deposits periodically over time, for example.
Also, the fact that the person did not know it was illegal to structure transactions to avoid the reporting requirement was not a defense to forfeiture, courts held, because the forfeiture statute did not use the word “knowingly.” In criminal cases, in order to convict someone of structuring the government had to prove they knew about the law banning structuring — because “knowingly” was inserted in the criminal statute.
Abuse of this statute has been in the news lately because the news media has publicized cases where the government seized the daily cash deposits of small proprietors, whose businesses brought in slightly less than $10,000 every day. The person wasn’t depositing the cash in amounts less than $10,000 to avoid the CTR reporting requirement, but because they needed to get the daily income into the bank.
This bill helps the small business person described in the above paragraph by requiring the could to hold a probable cause hearing within 14 days of seizure. That is a very good idea. And why shouldn’t such probable cause hearings be available in all forfeiture cases, at least when the claimants requests? All too often a car is seized and held for years pending trial – all the while the car deteriorates and the owner is without transportation.
3. Improves the proportionality defense by codifying additional factors available under some case law
The proportionality defense is a defense created by the Supreme Court, based on the Eighth Amendment’s Excessive Fines clause. Because this is a constitutional defense, language in those Supreme Court decisions and lower court opinions interpreting them trump what is said in the statute.
CAFRA codified the proportionality defense, but defined it very vaguely: “the court shall compare the forfeiture to the gravity of the offense giving rise to the forfeiture.” Courts in some jurisdictions interpreted that to mean that if the value of the property forfeited is less than the maximum fine for the offense it is not disproportionate. (This reasoning misses the point — the Excessive Fines clause is constitutional, the maximum fine is statutory. Statutes don’t limit the Constitution.)
The 2015 bill modifies the statutory proportionality defense by listing factors the court should consider:
In making this determination, the court shall consider such factors as– (A) the seriousness of the offense; (B) the extent of the nexus of the property to the offense; (C) the range of sentences available for the offense giving rise to forfeiture; (D) the fair market value of the property; and (E) the hardship to the property owner and dependents.
Once again that is a start but it does not go far enough. I would like the bill to require the court weigh the seriousness of the property owner’s involvement in the offense, not just the seriousness of the offense itself — as the Ninth Circuit held a few years ago. Quite often in civil forfeiture cases the offense is committed by someone other than the owner — why should the seriousness of someone else’s offense be the measure?
Also I would like to see a specific provision added saying the mere fact that the value of the property is less than the maximum fine for the offense is not the measure of whether the forfeiture is disproportionate. During the Drug War, Congress went crazy stacking on staggering fines to the punishments heaped on drug defendants. Many of the maximum statutory fines would be constitutionally excessive in individual cases.
4. Adds a requirement that agencies report amounts of funds forfeited civilly versus criminally
The Department of Justice and the Department of Treasury already have a number of statutory requirements for reporting statistics about the sources and amounts of forfeiture revenue each fiscal year.
A new provision in the 2015 bill requires them to report which funds were obtained from criminal forfeiture and which from civil forfeitures, apparently meaning the total dollar amounts. That is a very good point, but I would like to see a more.
Criminal forfeiture is as abusive as civil forfeiture as I explained in a blog or two. I would like to know what percentage of the property forfeited criminally actually belonged to a criminal defendant, as opposed to a third party not charged with a crime.
Another important detail with civil forfeiture cases — I’d like to see the percentages of civil forfeiture cases in which the claimants were not charged with any crime, and the total dollar amounts of such cases.
Features in the 2015 bill that were in the 2014 bill:
1. Raises the government’s burden of proof to “clear and convincing”
Like the Civil Asset Forfeiture Reform Act of 2014 (H.R. 5212), the FAIR Act raises the burden of proof on the government from preponderance of the evidence to clear and convincing evidence. See my comments about that in my previous blog about H.R. 5212.
In facilitation cases, the clear and convincing evidence standard would also apply to the government’s burden of proving a substantial connection between the property and the offense.
Like H.R. 5212, the FAIR Act puts the burden of proving the owner’s knowledge or consent to the illegal use on the government. The FAIR Act goes a little farther, requiring the government to prove by clear and convincing evidence that the property owner: “(i) intentionally used the property in connection with the offense; or (ii) knowingly consented or was willfully blind to the use of the property by another in connection with the offense.”
2. It amends the Innocent Owner defense
Even with the government having to show the owner was not innocent — in most cases — the innocent owner defense would still still exist for owners who learn of the illegal use of the property.
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.
This isn’t bad. It actually makes sense that owners who learns of crimes being committed with their property have the burden of proof on this issue.
3. Abolishes Equitable Sharing with state and local law enforcement agencies, and requires proceeds of forfeitures, after payment of law enforcement expenses, be transferred to the general fund instead of being retained by federal law enforcement.
The FAIR Act of 2015 would abolish transfers to state and local police under the “Equitable Sharing” program, which currently allows state and local police to seize property under federal law (even if they couldn’t under their state’s own law, or even if it defied state law) and turn it over to the feds in exchange for up to 80% of the proceeds of the federal forfeiture case. (The Federal Adoption program — which Attorney General Holder recently limited by policy order — is a subset of the Equitable Sharing program).
It also bars the federal agencies from retaining forfeited property for official use (such as keeping that high end sports car for agency use).
The bill does not prohibit payments to foreign countries which participate directly or indirectly in the case leading to forfeiture of property.
Even more dramatic is this bill’s requirement that the proceeds of all criminal forfeiture cases after payment of all expenses of investigation, etc., would be turned over to the Treasury general fund — and not retained by the federal agency’s forfeiture fund.
Interestingly, with some of the statutes it amends, the 2015 bill strikes “civilly” in certain phrases, such as this one: “Whenever property is civilly or criminally forfeited under this subchapter the Attorney General may…” This is odd and confusing, because it will ban the transfers to state and local police in criminal forfeiture cases, but not civil forfeiture cases — but the other provisions for civil forfeiture cases have been striken. I’m not sure what this means.
Taking the forfeiture proceeds away from the police would probably put an end to civil forfeitures, because the police would likely stop seizing property if they didn’t get to keep the proceeds. For that reason this provision will probably be too much of a political hot potato for Congress to pass. That’s what we were told when we were trying to get CAFRA introduced.
Abolishing the Equitable Sharing program may be possible, especially after all the media attention the Holder policy change received. But if the proceeds of forfeiture are directed away from law enforcement coffers and into the general Treasury fund, the police lobbies will scream bloody murder and that provision will either be deleted from the bill or the entire bill will likely be doomed. It is certainly a worthy goal, but police have so much power now that it will take much stronger forces than we currently have supporting forfeiture reform to wrestle the loot away from them.
4. Effective immediately on passage
The FAIR act would be applicable to any civil forfeiture case pending on or after the date of enactment, and any amounts received from forfeiture after the date of enactment. So if this takes effect, all Equitable Sharing payments to state and local police and all payments to participating federal agencies would immediately cease.