How to Restore 'Innocent Until Proven Guilty'

Posted: Dec 19, 2014 12:01 AM

Many Americans have not heard of civil forfeiture, but this outrageous, and expanding, law enforcement tactic is becoming more difficult to ignore.

Civil forfeiture does not receive the condemnation it deserves because most people cannot believe that, in the United States, the government can take property from individuals without charging them with a crime. This is the type of behavior expected of the Venezuelan government, not of the United States, where individuals are supposed to be assumed innocent until proven guilty.

Instead of charging property owners and having to prove guilt “beyond a reasonable doubt,” in civil forfeiture cases, law enforcement charges the property itself—which does not enjoy the same legal protection as do individuals. All that is necessary for civil forfeiture is suspicion based on a “preponderance of evidence” that some property was connected with criminal activity. The burden of proof to prove property not guilty is on individuals, as it is assumed to be guilty.

The government developed civil forfeiture laws to combat drug dealers and money launderers, but this system is now used to target innocent individuals. The warped logic behind civil forfeiture abuses is that property—inanimate objects—took part in crimes. People can use property to commit crimes, but it makes no sense to argue that vehicles, homes, or piles of cash willingly undertook criminal actions.

Though property is being charged, civil forfeiture victimizes innocent individuals. Take, for example, the case of Roderick Daniels. Daniels was pulled over in 2007 in Tenaha, Texas for going 37 in a 35 mph zone. Officers discovered $8,500 in cash that Daniels planned to use to buy a car. Daniels was forced to forfeit his money when the officers threatened him with money-laundering charges.

This situation is similar to the experience of George Reby, who had $22,000 stolen from him last year in Tennessee after he was stopped for speeding. Officer Larry Bates asked Reby if he had any large sums of cash in his vehicle and, when Reby answered truthfully, Bates proceeded to take all the cash under forfeiture laws. This happened even though Reby had proof that he was using the money to buy a car, evidenced by his active bids on eBay. During an interview, when Bates was asked why he did not include this critical fact in his report, Bates responded, “I don’t know.” Carrying cash is apparently all the evidence of guilt he needed.

These cases are not isolated. The value of property seized under civil forfeiture laws, including cars, homes, boats, electronics, jewelry, and other property, increased nearly tenfold from $407 million nationwide in 2001 to $4.3 billion in 2012. Over that time period, police have seized $2.5 billion in cash alone from almost 62,000 people without warrants or indictments, according to a Washington Post investigation.

Some states and localities have taken positive steps toward combatting civil forfeiture abuse. This summer, Minnesota enacted a law requiring criminal conviction before property can be taken. Earlier this month, Washington, D.C. also passed a bill to overhaul its forfeiture laws. However, civil forfeiture is not just a state and local issue. The federal government creates perverse incentives that perpetuate civil forfeiture abuse.

When federal law enforcement agencies seize property under forfeiture laws, the proceeds are transferred to the Department of Justice's Asset Forfeiture Fund, where the funds can be directed to law enforcement activities.

The federal government’s role does not end here. Under the federal equitable sharing program, funds seized by local law enforcement can be transferred to the federal level to bypass state or local prohibitions against civil forfeiture, with Washington taking a 20 percent cut (which goes to DOJ's Fund). States and localities are powerless to do anything when the federal government awards forfeiture funds to local law enforcement, as federal law trumps state or local law.

There are practically no restrictions on how forfeiture funds can be used. As Columbia, Missouri, police chief Ken Burton said, “[Forfeiture funds are] kind of like pennies from heaven... It gets you a toy or something you need.” One problem: These “pennies from heaven” are forcibly taken from individuals who are often not guilty of a crime. “We just usually base it on something that would be nice to have, that we can’t get in the budget. We try not to use it for things we need to depend on,” Burton continued. If police departments truly need more funding, there are several more legitimate ways for them to increase their budgets, without stealing from innocent individuals.

One federal attempt to reform civil forfeiture is H.R. 5502, sponsored by Reps. Tony Cardenas, (D-CA), and Scott Garrett, (R-NJ), a companion bill to Senator Rand Paul's (R-KY) FAIR (Fifth Amendment Integrity Restoration) Act. The FAIR Act would increase the standard for civil forfeiture from “a preponderance of the evidence” to “clear and convincing evidence” and rewrite the civil forfeiture rules to take away the federal government’s ability to transfer seized property back to local police departments. Seized funds would go to the general fund, not the DOJ. These reforms would go a long way toward eliminating current perverse incentives.

As one of his last acts as Ways and Means Committee Chairman, Rep. Dave Camp (R-MI) worked with Rep. Sandy Levin (D-MI) to introduce the Taxpayer Protections Against Abusive Seizures Act. The Act would allow those whose property was seized by the IRS to request a court hearing within 14 days of seizure. The hearing would then happen within another 14 days. If no probable cause is found at the hearing to warrant seizure, the property must then be returned. Though this bill is a welcome step forward, the FAIR Act does a better job of eliminating the underlying incentives that fuel civil forfeiture seizures from law enforcement agencies.

As the focus of the bipartisan Camp-Levin bill shows, it is not just law enforcement agencies that are abusing civil forfeiture—the IRS is in on it too. Last month the New York Times exposed the story of Carole Hinders, from whom the IRS took $33,000. Similar to the cases of Daniels and Reby, Hinders was not charged with any crime. Still, the IRS assumed that since she made cash deposits of less than $10,000 at a time (the threshold which triggers a bank report to the government), she was laundering funds, and confiscated her money.

In addition to the legal and moral issue of ignoring the principle of innocent until proven guilty, there was another problem—Hinders owns a cash-only Mexican restaurant. This should have caused the IRS to at least perform some further investigation before taking money Hinders used to keep her small business open.

Hinders’s mistreatment is all too common. The IRS made 639 such seizures in 2012, a 460 percent increase from 2005. Only about 20 percent of these seizures led to a criminal case, meaning many innocent people had their lives and businesses ruined by civil forfeiture.

What is unusual about Hinders’s case is that that on Monday the government moved to drop its crusade against Hinders and to return the stolen funds. The Institute for Justice, a non-profit law firm that defends economic liberty, helped to clear Hinders’s name (though the IRS is still pushing for the right to refile the bogus case). For most individuals, it makes little sense to fight to have their stolen property returned. Since the cases are civil, not criminal, there is no government assistance to defend oneself (or one’s property). It is easier, and cheaper, to let the government get away with theft than to fight to have unjustly stolen property returned.

The Institute for Justice also had success helping Terry Dehko get his money back. Terry had $35,651.11 seized from his bank account by the IRS in January 2013. Dehko is an immigrant and owner of a grocery store, in Fraser, Michigan. He made frequent cash deposits at a local bank in order to prevent too much cash from accumulating in his store. Again, that alibi was not good enough for the IRS. The name of the case was United States of America vs. $35,651.11 in U.S. Currency, which highlights the absurdity of charging property with criminal actions. Dehko was never charged with a crime.

Civil forfeiture laws, though designed as legitimate law enforcement tools used to combat the international drug trade and terrorism funding networks, have mutated into a way for government to steal from innocent individuals. Yes—believe it or not, this is happening in the United States.