Source: https://www.vezinalaw.com/iii-application-of-civil-asset-forfeiture-under-the-drug-control.html
Timestamp: 2019-04-19 00:40:15+00:00

Document:
The Drug Control Act provides the statutory basis for forfeitures in civil cases. [FN55] Subject to certain exceptions, it provides *1621 for the forfeiture of all personal and real property that is in any way related to drug trafficking. [FN56] Therefore, in addition to providing a powerful deterrent against drug-traffickers, the Drug Control Act deters those persons who, while not directly involved in the drug trade, might otherwise allow their property to be used in advancing criminal activity.
Given the substantial advantages that are enjoyed by the government in civil forfeiture proceedings, it is not surprising that the civil avenue of forfeiture is often preferred over its criminal counterpart. [FN91] However, recent Supreme Court decisions have shattered the foundation and viability of civil forfeiture as a constitutional method of enforcing the law.
[FN53]. See infra note 87.
[FN54]. Unlike civil forfeiture proceedings, criminal forfeiture proceedings are actions in personam. See infra notes 87-88; see also Alexander v. United States, 113 S. Ct. 2766, 2775 n.4 (1993) ("Unlike Austin, this case involves in personam criminal forfeiture, not in rem civil forfeiture....").
(2) All raw materials, products, and equipment of any kind which are used, or intended for use, in manufacturing, compounding, processing, delivering, importing, or exporting any controlled substance in violation of this subchapter.
(C) no conveyance shall be forfeited under this paragraph to the extent of an interest of an owner, by reason of any act or omission established by that owner to have been committed or omitted without the knowledge, consent, or willful blindness of the owner.
(6) All moneys, negotiable instruments, securities, or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance in violation of this subchapter, 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 this subchapter, except that no property shall be forfeited under this paragraph, to the extent of the interest of an owner, by reason of any act or omission established by that owner to have been committed or omitted without the knowledge or consent of that owner.
(7) All real property, including any right, title, and interest (including any leasehold interest) in the whole of any lot or tract of land and any appurtenances or improvements, which is used, or intended to be used, in any manner or part, to commit, or to facilitate the commission of, a violation of this subchapter punishable by more than one year's imprisonment, except that no property shall be forfeited under this paragraph, to the extent of an interest of an owner, by reason of any act or omission established by that owner to have been committed or omitted without the knowledge or consent of that owner.
(9) All listed chemicals, all drug manufacturing equipment, all tableting machines, all encapsulating machines, and all gelatin capsules, which have been imported, exported, manufactured, possessed, distributed, or intended to be distributed, imported, or exported, in violation of a felony provision of this subchapter or subchapter II of this chapter.
(11) Any firearm ... used or intended to be used to facilitate the transportation, sale, receipt, possession, or concealment of property described in paragraph (1) or (2) and any proceeds traceable to such property.
21 U.S.C.A. s 881 (West 1981 & Supp. 1995).
[FN56]. Subsections (4)(A)-(C) of s 881 provide a safe harbor for persons whose property becomes forfeitable without fault of the owner. The exceptions contained within those subsections are collectively referred to as the "innocent owner" exception. See, e.g., United States v. 92 Buena Vista Ave., 113 S.Ct. at 1137.
[FN57]. See supra note 55; see also Helen Kemp, Presumed Guilty: When the War on Drugs Becomes a War on the Constitution, 14 Quinnipiac C. Sch. L. 273, 281 (1994).
[FN58]. See generally One 1958 Plymouth Sedan v. Pennsylvania, 380 U.S. 693, 699-700 (1965); United States v. McQuisten, 795 F.2d 858, 865 (9th Cir. 1986).
[FN59]. See Kemp, supra note 57, at 281.
[FN60]. See Kemp, supra note 57, at 281.
[FN61]. When proceeds have been commingled with other legally obtained funds, the government need not identify or limit the forfeiture to the portion of the funds that constitute illegal proceeds. Instead, the government can seek forfeiture of the entire fund. See 18 U.S.C. s 984(b)(1) (1981 & Supp. 1995); United States v. Certain Funds on Deposit in Account No. 01-0-71417, 769 F. Supp. 80 (E.D.N.Y. 1991).
[FN62]. See Caplin & Drysdale, Chartered v. United States, 491 U.S. 617, 652 (1989) (Blackman, J., dissenting opinion).
[FN63]. See, e.g., 21 U.S.C.A. s 881(b)(1)-(4) (West 1981 & Supp. 1995).
[FN65]. The admiralty origins of civil forfeiture in the United States offer the only explanation for the use of admiralty rules in many areas of modern civil forfeiture law.
[FN66]. Supplemental Rules for Certain Admiralty and Maritime Claims, 28 U.S.C.A. Rule C (West 1982).
[FN68]. See United States v. James Daniel Good Real Property, 114 S. Ct. 492, 505 (1993) (holding that pre-seizure notice must be given prior to the seizure of real property).
[FN69]. The statute does not require preseizure notice. See generally 21 U.S.C.A. s 881 (West 1981 & Supp. 1995).
[FN70]. See 19 U.S.C.A. s 1607 (West 1980 & Supp. 1995); 21 U.S.C.A. s 881(d) (West 1980) (incorporating customs laws).
[FN71]. Id. If the property is worth less than $10,000, the government can give notice through publication. See 19 U.S.C.A. ss 1607, 1609 (West 1980). Eighty-three percent of federally-imposed forfeitures involve property which is worth less than $10,000 in value. 137 Cong. Rec. E3060 (daily ed. Sept. 17, 1991) (Rep. Jacobs). In such cases, the owner of the property must file a claim for relief from the seizure within three weeks plus twenty days from the notice, or face summary forfeiture. 19 U.S.C.A. ss 1607, 1609 (West 1980).
If the value of the property exceeds $10,000, the government must attempt to give actual notice to the owner and initiate formal judicial forfeiture proceedings. Id.
[FN72]. 21 U.S.C.A. ss 881(a), (d) (West 1980 & Supp. 1995); United States v. $8,850 in United States Currency, 461 U.S. 555, 564-69 (1983). The five-year period in which the forfeiture of seized property must be finalized is troublesome. Under this provision of the Drug Control Act, the government is entitled to deprive an owner of his property for up to five years and there is nothing that the owner can do to speed up the resolution of the matter.
Moreover, the government is not required to provide any compensation for the loss of use of the property should the seizure ultimately be determined to have been improper.
The five-year period would not be as troublesome if the requirement of probable cause for the initial seizure was subject to judicial supervision. As the Drug Control Act currently reads, however, it relies on government self-policing in this area.
[FN73]. See 19 U.S.C.A. s 1608 (West 1980) (discussing methods of contesting forfeiture available to claimants); see also 19 U.S.C.A. s 1623 (West 1980 & Supp. 1995) (bond requirements applicable to forfeiture proceedings). A claimant raising the "innocent owner" defense must file a "petition for remission or mitigation" within thirty days of the notice of seizure. In the petition, the claimant must establish a good faith interest in the property, lack of knowledge or reason to believe that the property was being utilized for illegal purposes, and lack of knowledge about the criminal record or reputation of the owner. Additionally, the claimant must show that he took reasonable steps to prevent the illegal use of the property. See 28 C.F.R. s 9.5(b); 21 C.F.R. ss 1316.78-.81. Notably, three quarters of such petitions are successful. See $8,850 in United States Currency, 461 U.S. at 558.
[FN74]. See 19 U.S.C.A. s 1609 (West 1980).
[FN75]. In order to prove probable cause, the government must demonstrate a belief that a substantial connection exists between the property to be forfeited and the criminal activity. United States v. $4,255,000.00, 762 F.2d 895, 904 (11th Cir. 1985), cert. denied, 474 U.S. 1056 (1986).
There is a split of authority as to when the government must have probable cause for a seizure and forfeiture. Some jurisdictions have held that it is sufficient for the government to show probable cause at the time of trial. See, e.g., United States v. Premises & Real Property at 4492 S. Livonia Rd., 889 F.2d 1258, 1268 (2d Cir. 1989). Other jurisdictions require that the government demonstrate probable cause at the time the forfeiture action is initiated. See, e.g., United States v. $191,910.00 in United States Currency, 16 F.3d 1051, 1065 (9th Cir. 1994). The latter is the better rule, inasmuch as it prevents the government from depriving persons of their property for the purpose of engaging in fishing expeditions.
[FN76]. On many occasions, the government relied exclusively on questionable circumstantial evidence, such as drug courier profiles, positive reactions by sniffing dogs, and tips from "confidential" informants. See, e.g., United States v. $319,820 in United States Currency, 620 F. Supp. 1474, 1478 (N.D. Ga. 1985) (origin of flight and claimant's behavior sufficient to support probable cause). Finding the reliance on such evidence to be extremely troublesome, courts have begun to impose a higher evidentiary burden on the government. See, e.g., United States v. $31,990 in United States Currency, 982 F.2d 851 (2d Cir. 1993) (disallowing exclusive reliance on drug courier profile); Jones v. United States Drug Enforcement Admin., 819 F. Supp. 698 (M.D. Tenn. 1993) (positive reaction by sniffing dog with respect to currency held to be of little probative value).
[FN77]. See United States v. One Assortment of 89 Firearms, 465 U.S. 354, 362-66 (1984); United States v. Sandini, 816 F.2d 869, 872-73 (3d Cir. 1987). In fact, in eighty percent of successful civil forfeiture actions conducted by the government in 1990, no criminal charges had been filed. See 137 Cong. Rec. E3059 (daily ed. Sept. 17, 1991) (statement of Rep. Jacobs).
[FN78]. See 21 U.S.C.A. ss 881(a)(4), (6), (7) (West 1980).
[FN79]. See, e.g., United States v. 1982 Sanger 24' Spectra Boat, 738 F.2d 1043, 1046 (9th Cir. 1984) (possessory interest sufficient to confer standing). Cf. Mercado v. United States Customs Serv., 873 F.2d 641, 645 (2d Cir. 1989) (unexplained possession is not enough to confer standing).
It should be noted, however, that a large number of forfeitures go unchallenged because a claimant's admission of ownership in the property at issue may be used against that claimant in a subsequent criminal action. See United States v. Scrivner, 1995 WL 398932 (9th Cir. July 6, 1995) (allowing the introduction of affidavit filed by defendant in civil forfeiture case in which he was a claimant in subsequent criminal proceeding). Although claimants have a Fifth Amendment privilege against self-incrimination, that privilege merely allows them to stay out of the civil forfeiture proceedings altogether or seek a postponement of such proceedings until the conclusion of any pending or imminent criminal action. See London v. Patterson, 463 F.2d 95, 98 (9th Cir. 1972), cert. denied, 93 S. Ct. 1531 (1973).
[FN80]. An interesting issue is whether, and under what circumstances, the innocent owner exception applies to intermediate transferees of the property. In 92 Buena Vista Ave., the Supreme Court considered whether an "innocent" donee of real estate that had been purchased with drug proceeds could defeat the government's right to forfeiture. 113 S. Ct. at 1130. The Court concluded that the innocent owner exception includes intermediate bona fide purchasers for value and donees. Id. at 1131-35.
While the Supreme Court's holding alleviates the harshness of the relation-back doctrine, it goes too far. In many drug-trafficking cases, drug dealers parcel out most of the property that has been purchased with drug proceeds among their relatives and friends, who, with good legal representation, are often able to demonstrate, or at least create sufficient doubt as to, their lack of knowledge with respect to the underlying drug activity. Thus, by allowing "innocent" donees to retain property that has been purchased with drug proceeds and subsequently transferred to them by drug dealers, the Supreme Court allows drug dealers to set up sham transfers of property to third parties in order to insulate their ill-gotten gains from forfeiture, while retaining the ability to derive benefits from the property.
This was precisely the situation presented in 92 Buena Vista. There, a drug dealer's girlfriend had bought a house with drug proceeds that had been given to her by her boyfriend. Id. at 1130. Notwithstanding the fact that she had a long and close relationship with the drug dealer, the Supreme Court allowed her to retain the house after she claimed that she did not know about the illegal nature of the proceeds. Id. at 1131-35. 92 Buena Vista, therefore, set up a tremendous loophole for the insulation of drug proceeds.
Extending the innocent owner protection to intermediate bona fide purchasers for value, on the other hand, presents a much smaller risk of sham transactions, inasmuch as the third party must lay out money to consummate the transaction.
[FN81]. 21 U.S.C.A. s 881(d) provides that customs laws govern the procedure in drug forfeiture cases. The customs laws hold that the burden of proof lies upon the claimant. 19 U.S.C.A. s 1615 (West 1980); see also United States v. Four Parcels of Real Property, 893 F.2d 1245, 1251 (11th Cir. 1990) (claimant submitted affirmative proof that property was purchased with legitimate funds). Thus, in effect, once the government shows probable cause for the forfeiture, a presumption of forfeitability arises, which is rebuttable only by a preponderance of the evidence.
[FN82]. See, e.g., United States v. 1964 Beechcraft Baron Aircraft, 691 F.2d 725, 728 (5th Cir. 1982) (allowing government to use hearsay), cert. denied, 461 U.S. 914 (1983).
[FN83]. United States v. One 1968 Piper Navaho Twin Engine Aircraft, 594 F.2d 1040 (5th Cir. 1979).
[I]n forfeiture actions, if a court finds it reasonable to infer from the objective evidence that the claimant had or must have had actual knowledge of the drug transaction, then the claimant cannot meet his or her burden of proof in opposing summary judgment simply by asserting innocence. In other words, although courts have maintained that an innocent ownership defense turns on a claimant's actual, and not constructive, knowledge of the illicit activity which gave rise to the forfeiture action, if the evidence supports a "reasonable inference" of actual knowledge and the claimant fails to come forward with anything more than a naked protestation that he or she really didn't know of the illicit activity, the claimant's defense of innocent ownership fails.
[FN85]. At the discretion of the Attorney General, civilly or criminally forfeited property may be "retain[ed] ... for official use or ... transfer [ed] ... to any Federal agency or to any State or local law enforcement agency which participated directly in the seizure or forfeiture of the property." 21 U.S.C.A. s 881(e)(1)(A) (West Supp. 1995).
[FN86]. There are justifications for the advantages enjoyed by the government in civil forfeiture cases. Given the underground and cash nature of the illegal drug industry, it is extremely difficult for the government to trace, except in limited circumstances, the tainted nature of each piece of property that is involved in a drug case. By contrast, claimants are in a better position to produce exculpating evidence, if such evidence exists, such as the source of the funds confiscated or utilized to purchase the property at issue.
The court, in imposing sentence on such person, shall order, in addition to any other sentence imposed pursuant to this subchapter or subchapter II of this chapter, that the person forfeit to the United States all property described in this subsection. In lieu of a fine otherwise authorized by this part, a defendant who derives profits or other proceeds from an offense may be fined not more than twice the gross profits or other proceeds.
Id. Additionally, 21 U.S.C.A. s 848 (West 1981) allows the forfeiture of the property of individuals who engage in a "continuing criminal enterprise." Id. The only advantage that criminal forfeiture proceedings provide over their civil counterpart is that, for purposes of the former, courts have jurisdiction over all properties owned by a defendant. See Fed. R. Crim. P. 18. By contrast, civil forfeiture proceedings only confer upon the presiding court jurisdiction over assets that are located or brought within the territorial jurisdiction of the court. See 28 U.S.C.A. ss 1395(b), (c) (West 1993). But see 21 U.S.C.A. s 881(j) (authorizing civil forfeiture in the district where the defendant is found and where the criminal prosecution is brought if the defendant is the owner of the property at issue).
(ii) the need to preserve the availability of the property through the entry of the requested order outweighs the hardship on any party against whom the order is to be entered.
Id. s 853(e)(1)(B)(i)-(ii). Except when an indictment is filed, restraining orders are only good for 90 days, unless an extension is sought for good cause. Id. s 853(e)(1)(B)(ii). Furthermore, in criminal forfeiture proceedings, the property owner must receive notice and be afforded a hearing prior to seizure. Id. s 853(e)(1)(B). Thus, unlike in civil proceedings, individuals who are suspected of crimes have time to move or conceal assets.
[FN90]. See id. ss 853(d), 853a (West 1981 & Supp. 1995).
[FN91]. Congress intended to provide the government with both methods of forfeiture. See Joint House-Senate Explanation of Senate Amendment, Title III - Forfeiture of Proceeds of Illegal Drug Transactions, S. Rep. No. 959, 95th Cong., 2d Sess. 7 (1978), reprinted in 1978 U.S.C.C.A.N. 9518, 9522.

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