Civil Foreiture InThe United States

© 2003 Peter J. Loughlin, J.D., LL.M. 

 “When an ox gores a man or woman to death, the ox must be stoned, and its flesh shall not be eaten. The owner of the ox, however, shall go unpunished.” Exodus,  21:28).

So starts the early history of forfeiture as found and practiced under Mosaic Law. This particular reference speaks more of the concept and principle of civil forfeiture law which has become a major tool of federal and state prosecutors in the United States. The system of criminal forfeiture is similarly a useful tool for prosecutors, but far less popular and expedient than civil forfeiture. As such, we will first address the development of civil forfeiture before concluding with criminal forfeiture laws. 

Civil Forfeiture

It is ironic that America has become the unchallenged word leader when it comes to civil forfeiture proceedings.  Our forefathers seemed to be particularly averse to this form of punishment.  In fact, John Hancock’s schooner, Liberty, was the subject of a civil forfeiture action for “its” failure to pay customs duties.  Mr. Hancock’s counsel was none other than John Adams, who later became the countries third president.[1]

Notwithstanding this aversion, early America was heavily reliant on the collection of customs duties and derived 70 to 80% of its revenue from such sources.[2]    This reliance on customs revenue made good use of civil forfeiture concepts as a means of enforcing and collecting revenue, as there was no individual income tax in the U.S. until the passage of the 16^th Amendment in the early part of the twentieth century.  For example, in the Palmyra[3]   “ . . .the Supreme court upheld the seizure of a Spanish ship even though there was an acquittal of piracy charges that had caused the initial seizure . . .noting that civil forfeiture was in rem and thus unrelated to the guilt of the ownership or personal acts of the parties.”[4]   Another good example of in rem forfeiture in early America is United States v. Brig Malek Adhel.[5]    Oddly enough, the Constitution originally forbade criminal forfeiture in cases of treason and federal felonies.[6]   However, in Admiralty and revenue collection civil forfeiture was a good legal device.

According to Brant Hadaway,[7] After the 16^th Amendment, and the governments newly found revenue source developed, civil forfeiture fell out of popular use, but made a brief resurgence during the prohibition era.  (See United States v. One Ford Coupe Automobile).[8]   Briefly, in that case civil forfeiture was aimed at the conveyance involved in an untaxed liquor violation.

Occasional aberrations aside, civil forfeiture did not make its resurgence until 1970 with the Comprehensive Drug Abuse Prevention and Control Act of 1970.[9]   This Act empowered the government use civil forfeiture against property used or acquired in

violation of federal drug laws.  

It was not long, however, until the government realized what a revenue generating machine forfeiture could be, but by 1984 amendments were made to the 1970 Act in the form of the Comprehensive Crime Control Act of 1984.[10]   This now extended the governments reach well beyond the typical property associated with crime to include real property.  The taking of real property by the government was, perhaps, when civil forfeiture began to peak in this country, but as with all precipitous climbs, there must come an anti-climax.

Remember, technically speaking, civil forfeiture is not punishment because it is directed not in personam, but rather by a legal fiction making the property or “thing” guilty, hence the Latin term, in rem.  But the Supreme Court has come to recognize that such forfeiture can be tantamount to punishment.  For example, in Austin v. United States,[11] the court  reversed the  Eighth Circuit Court of Appeal an held that a forfeiture under § 881(a)(4) and (a)(7) is a monetary punishment and as such is subject to the Eighth Amendment limitation on excessive fines. (See also United States v. Bajakajian ).[12]   This did not mean that civil in rem forfeitures could no longer be commenced, but rather that the forfeiture should not be disproportionate to the offence. (See also, Bennis v. Michigan).[13]  

Another particular heinous legal theory to develop out of forfeiture case law is the Relation Back Doctrine.  This theory first took root in United States v. Stowell,[14]   and operates on the premise that forfeiture of the property vests with the government at the moment the unlawful act is committed, that is, it “relates-back” to the offense.  Strict adherence to such a doctrine could be devastating to bona fide purchasers for value (BFP), however, in both statutory and case law provisions have been recognized for an “innocent owner’s defense”.  The problem is that there was no single innocent owner defense and there was virtually no defense for owners who did not meet the legal definition of a BFP.

This changed with the Supreme Court decision in United States v. Parcel of Rumson.[15]  Here the court for the first time recognized an innocent owners right to a defense notwithstanding that she acquired the property (her home), as a gift from her concubine purchased from the traceable proceeds of illegal drug trafficking.

As you can see, the civil forfeiture laws and its use developed rapidly from the 1970s.  By and large this developed to become an invaluable prosecutorial tool and, a source of revenue for the government.  In some cases, civil forfeiture (and criminal forfeiture) has been viewed as a form of wealth distribution.  The Attorney General’s Office of Arizona “. . . unabashedly proclaimed that the mission of Arizona’s forfeiture law is social engineering . . .”.[16]    The government’s success of civil forfeiture began to grow but would eventually succumb to public cries for reform which would ultimately come with the Civil Asset Forfeiture Reform Act of 2000.[17]    CAFRA was passed by Congress and signed by President Clinton on April 25, 2000 and became effective, August 23, 2000.

The Act made significant changes to federal civil forfeiture, but as a compromise Act, prosecutors and owners each made some gains as well as losses.   For example, prior to the enactment of CAFRA the government could seize an owner’s home or business without permitting a showing of hardship. This is now addressed in 18 U.S.C. § 983(f) which provides for the release of a claimants possessory property provided the property is not cash, contraband, evidence or likely to be used in a crime.

Another, and probably the most important new benefit for owners, is the shifting of the burden of proof.  Prior to the enactment of CAFRA owners had little protection against federal civil asset forfeiture.  The Government had a preliminary burden to establish, by mere probable cause, that the property should be forfeited, at which point the real burden shifted to the owner.  CAFRA has corrected this and now imposes upon the government the burden of proving, by a preponderance of evidence, that the property should be forfeited.

Other important benefits are the uniform codification of the innocent owner defense, the implementation of specific limitation periods, collection of damages, and, for the government, the legislative reversal of Degen v. United States which effectively restored the fugitive disentitlement doctrine for civil forfeiture cases.[18]

Criminal Forfeiture 

Criminal forfeiture, unlike its oft-maligned sibling, took root in 1970 with amendments to the Racketeer Influenced and Corrupt Organization Act (RICO).[19]   Criminal forfeiture is justified as a form of criminal punishment and is imposed in personam – against a convicted person.  In fact, we see in United States v. Saccoccia,[20] that criminal forfeiture is “part of the punishment” and not a separate substantive charge.

Criminal forfeiture is directed at persons and, as such, the defendant is entitled to certain procedural safeguards often absent in civil proceedings.  For example, before commencing a criminal forfeiture action, there need be a conviction of the defendant founded on a “beyond a reasonable doubt” standard.  Contrast this, if you will, with the new CAFRA standard of a “preponderance of evidence”, and it’s easy to see why civil forfeiture is seen as circumventing the due process rights of owners.  For this reason, prosecutors may sometimes waive the criminal charges and proceed with the less cumbersome civil path to riches.

Notwithstanding, criminal forfeiture can in a real sense be more far reaching than civil forfeiture in that there is no need for the property to be guilty to be forfeitable. Thus the “taint” of the object of forfeiture is irrelevant. This is so because the forfeiture is viewed as a punishment for the convicted defendant rather than for his things (see U.S. v. Cauble).[21]

Criminal forfeiture is also subject to many of the doctrinal forces and limitations as civil forfeiture, for instance the relation-back doctrine and the fugitive disentitlement doctrine.

With fugitive disentitlement, a criminal who does not appear to defend against the criminal charges will not have standing to defend against the forfeiture proceedings in abstentia.  This gives prosecutors a powerful weapon against defendants who flee the country and refuse to appear and/or cannot be extradited.

One striking similarity between the two forms of forfeiture is the ability of the government to seize control of the property prior to a conviction.  In the case of civil forfeiture this is generally easily facilitated even under the new CAFRA requirements assuming the government can at least show by preponderance of evidence that the property should be seized.  Criminal pretrial seizure of assets (“freeze orders”) is a bit different, but nonetheless effective.  Here the government, as authorized under RICO and Drug Kingpin Statutes, may seek an injunction to seize property which might be at risk, for example, if the defendant might conceal or dissipate it.[22]

Forfeiture law is well established in the United States and is likely to remain a sound strategy of both state and federal prosecutors and law enforcement.  The recent changes in the law, particularly in the area of civil forfeiture and the reforms of CAFRA, may be indicative of a more restrictive court and legislative attitudes.  No one wishes to bind the hands of law enforcement in fighting rampant drug trafficking and money laundering, particularly in the wake of terrorist attacks and the far reaching Patriot Act, however, a balance must be struck that will serve to interdict and punish criminals while preserving our cherished rights of privacy and due process.

About The Author:  Peter J. Loughlin is a lawyer with Goldman & Loughlin, PLLC and a former principle member of JurisConsults Group, a consulting firm specializing in International Taxation and Banking Compliance issues.  Member: State Bar of California, Federal Bar Association, International Bar Association, Royal Society of Fellows and the American Academy of Financial Management. Professor Loughlin is a current board member of the Global Board of Academic Advisors and Professors and published author of sevral books and numerous legal, taxation and trade related articles. 

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