Civil forfeiture: recent Supreme Court cases.

On February 12, 1996, the Attorney General of the United States issued a directive that urged all federal prosecutors and agents of the Federal Bureau of Investigation (FBI), Drug Enforcement Administration (DEA), and Immigration and Naturalization Service (INS) to reinvigorate their efforts in using asset forfeiture as a law enforcement tool. The Attorney General sought this additional commitment because asset forfeiture has proven to be one of the most effective methods available in the continuing battle against major drug traffickers, organized crime figures, and their criminal organizations. As the Attorney General pointed out in the directive, the failure to attack the economic infrastructure of criminals and their organizations seriously limits the effect that any prosecution of these criminals would have on improving the safety and welfare of the American public.(1)

A decline in the use of asset forfeiture by federal law enforcement over the past 2 years prompted this reinvigoration effort. Although a number of factors contributed to this decline, the loss of asset forfeiture's effectiveness in addressing serious crime and criminals is not one of them.

The forfeiture of property stifles the goals of those who, motivated by greed, engage in criminal activity. Forfeiture takes the profit out of crime, deprives the criminal of the money essential to finance future criminal conduct, and works to dismantle the financial underpinnings of the criminal organization.

This article discusses two recent Supreme Court cases affecting the use of civil forfeiture. The first case addresses one of the major reasons for the downward spiral in the use of assest forfeiture - the concern over double jeopardy. The second case addresses another issue that has contributed to the decline - the perception that civil forfeiture is unfair.

Double Jeopardy

One major reason for the decline in asset forfeiture has been the concern that its use may bar subsequent criminal prosecution. Civil forfeiture, unlike its criminal counterpart, involves procedures that allow pretrial seizure of assets, requires a relatively low burden of proof on the part of the government, and is not contingent on an owner's conviction. These factors lead to the basis for the concern - whether the combination of criminal prosecution and civil forfeiture may be successive punishment for the same crime, in violation of the Double Jeopardy Clause of the fifth amendment.

In the past 2 years, a significant number of opinions issued by the courts focused on this dilemma.(2) Two lower court rulings, in particular, led to the Supreme Court decision regarding double jeopardy discussed in this article. An adverse decision by the Court could have freed hundreds of drug dealers across the United States, required the return of millions of dollars of ill-gotten gain,(3) and prevented the future use of one of the most important law enforcement tools available to attack the organizational infrastructure of criminal cartels.

Lower Court Holdings

In September 1994, the U.S. Court of Appeals for the Ninth Circuit reversed a forfeiture order against various properties valued at approximately $1 million that had been seized from convicted methamphetamine dealers.(4) The court found that the civil forfeiture of drug proceeds and property used in money laundering,(5) which followed the dealers' convictions on drug trafficking and money laundering charges, constituted "punishment" under the Double Jeopardy Clause of the fifth amendment.(6)

The court based its finding in large measure on two recent Supreme Court decisions, one involving double jeopardy and the other involving the Excessive Fines Clause of the eighth amendment.(7) Both of these cases involved findings by the Court that certain government civil sanctions, despite the "civil" label, could constitute punishment under the Constitution and, therefore, require greater protections. The Ninth Circuit panel reasoned that because the civil forfeiture action was the second punishment imposed for the same offense, the Double Jeopardy Clause required them to reverse the forfeiture order and return the property.(8)

In the other case, decided by the U.S. Court of Appeals for the Sixth Circuit, the government and Guy Ursery had agreed to settle a forfeiture action filed against his residence after the Michigan State Police discovered marijuana and marijuana-growing paraphernalia at the residence.(9) After the property, which had been used to facilitate the unlawful distribution of a controlled substance, was forfeited under federal drug laws,(10) Ursery was convicted of manufacturing marijuana and sentenced to 5 years' imprisonment. The appellate court reversed Ursery's conviction,(11) concluding that the Double Jeopardy Clause of the fifth amendment protects against multiple punishments and prohibits the government from punishing twice for the same offense.(12)

Supreme Court Finds Civil Forfeiture Is Remedial, Not Punitive

In United States v. Ursery,(13) a decision filed on June 24, 1996, the U.S. Supreme Court resolved the concern over double jeopardy in favor of law enforcement. The Court consolidated the two lower court cases for purposes of its opinion and, in an 8-to-1 ruling, demonstrated a strong consensus regarding the role of civil forfeiture in law enforcement.

In reversing both lower court decisions, the Supreme Court ruled that the government could use, in combination, the criminal law to prosecute someone and the civil forfeiture laws to confiscate that person's property, even where both actions were based upon the same underlying criminal offense. The Court held these "in rem civil forfeitures are neither 'punishment' nor criminal for purposes of the Double Jeopardy Clause."(14) In its analysis, the Court reviewed "a long line of cases [in which the] Court has considered the application of the Double Jeopardy Clause to civil forfeitures, consistently concluding that the Clause does not apply to such actions because they do not impose punishment."(15) The Court concluded that for over 50 years, in rem forfeiture has been found to be a remedial sanction, distinct and different from other potentially punitive in personam civil penalties, and does not constitute a punishment under the Double Jeopardy Clause.(16)

In 1984, the Supreme Court established a two-stage analysis to determine whether a forfeiture was punishment under the Double Jeopardy Clause or was remedial in nature and not subject to the multiple punishment prong of the clause. This analysis focused on whether Congress intended to establish a civil remedial sanction and whether, despite such intent, the civil forfeiture was so punitive in purpose or effect that its application constituted punishment.(17) Because nothing in its decisions had replaced this traditional understanding,(18) the Court used this same two-staged analysis and concluded that the civil forfeiture actions in question were remedial.

In the first stage of its analysis, the Court found "there was little doubt" that the laws involved in the forfeiture actions in question were intended by Congress to be civil actions, distinct from criminal sanctions in personam.(19) The Court supported this finding with the fact that Congress incorporated the in rem procedures of the customs laws, which target the property rather than the owner and include procedures for administrative forfeiture actions.(20)

The finding that Congress intended the civil forfeitures in these cases to be in rem actions established a presumption that they do not implicate double jeopardy. The Court noted that when Congress has intended a forfeiture action to be civil and, therefore, remedial, only the "clearest proof" that it is "so punitive either in purpose or effect" will overcome the presumption that double jeopardy does not apply.(21)

In the second stage, the Court found little evidence that the forfeitures under these statutes were so punitive, in form or effect, to render them punishment. The Court stated that the most significant factor in reaching this conclusion was that such civil forfeitures serve important nonpunitive goals. The important goals of civil forfeiture include encouraging property owners to take greater care in managing their property, ensuring that owners will not permit their property to be used for illegal purposes, and ensuring that "persons do not profit from their illegal acts."(22)

Forfeiture of Jointly Owned Property Upheld

Another reason for the decline in the use of asset forfeiture is the troubling perception that civil forfeiture can be unfair. This perception is based, in part, on the fact that a civil forfeiture of property can be obtained against an owner who was not involved in or aware of the criminal activity in which the property was involved.

In Bennis v. Michigan,(23) the Supreme Court examined such a forfeiture action under the light of constitutional scrutiny and upheld the confiscation. In Bennis, the Court found that a state forfeiture law that permitted forfeiture of property from an owner who was unaware of its illegal use by another in lawful possession of the property did not offend the constitutional rights of that owner.

Detroit police had arrested John Bennis after observing him engaged in a sexual act with a prostitute in his car, which was jointly owned by Bennis and his wife. After Bennis was convicted of gross indecency, the state had the car declared a public nuisance and abated (forfeited) under state law.(24)

The Circuit Court of Wayne County rejected the wife's challenge to the forfeiture on the grounds that she was innocent of any wrongdoing and that she had no knowledge her husband would use the vehicle to violate the law. Subsequently, on appeal, the Michigan Supreme Court upheld the forfeiture, finding that the state law did not provide for an innocent owner defense, and therefore, the state did not need to prove the owner knew or agreed that the car would be used illegally.(25)

The U.S. Supreme Court reviewed the case in order to determine whether Michigan's forfeiture of the vehicle deprived the wife of her interest in the car without due process in violation of the 14th amendment, or if it amounted to a taking of her interest for public use without compensation in violation of the fifth amendment, as incorporated by the 14th amendment. The Court affirmed the decision of the Michigan Supreme Court and upheld the forfeiture.

"Innocent Owner" Defense

Citing a long and unbroken line of cases holding that an owner's interest in property may be forfeited by reason of the property's use, even though the owner was unaware of that use, the Court concluded that the issue is "too firmly fixed in the punitive and remedial jurisprudence of the country to be now displaced."(26) The Court relied on the rationale of earlier decisions to find that even though Mrs. Bennis did not know her car would be used illegally, its forfeiture by the state did not offend the Due Process Clause of the 14th amendment.(27) The holdings of the earlier cases cited by the Court have generally been based on the concept that in a civil forfeiture it is the property itself that is being held accountable for its illegal use and thus the "innocence" of the owner is not relevant.

In its decision, the Supreme Court noted that the innocence of an owner has almost uniformly been rejected as a defense to forfeiture.(28) Additionally, the Court has consistently upheld the forfeiture of property from owners "without guilt" because such laws furthered "the punitive and deterrent purposes" of the legislature in enacting laws that "may have the desirable effect of inducing them (owners) to exercise greater care in transferring possession of their property."(29) The Court answered the fifth amendment "taking" question raised by Bennis by finding that the government may not be required to compensate an owner for property that has been acquired through a civil forfeiture action.

The Court, in reaching its conclusion, noted that civil forfeiture imposes an economic penalty on illegal use that is neither unconstitutional nor unfair. The Court balanced the increased responsibility for property owners against the need to deter criminal cot. duct and decided in favor of law enforcement. In this regard, civil forfeiture is no different that other laws based on important public interest precepts.

Civil forfeiture of property serves both remedial and deterrent purposes that are distinct from any punishment that may result from criminal prosecution of the owner. Such forfeitures help prevent future illegal use and impose an economic disincentive, rendering the behavior unprofitable.

Conclusion

The decision by the Court in Ursery permits federal and state law enforcement to resume the seizure and forfeiture of property under the civil procedures without fear that such action will bar subsequent prosecution of the owner. It also provides a clear signal that the Supreme Court recognizes and supports the strong "nonpunitive goals" of civil forfeiture that serve law enforcement in combating crime.

The significance of Bennis, however, lies more in the rationale employed by the Court than in the outcome.(30) It was a precursor to the Court's analysis in Ursery and returned the historical perspective of in rem forfeiture actions that seemed to have been changed in Austin v. United States.(31)

The Bennis decision should not be seen, however, as an unqualified justification for forfeiture where the owner is known to be innocent of any wrongdoing. In Bennis, an associate justice in a concurring opinion warned that "[i]mproperly used, forfeiture could become more like a roulette wheel employed to raise revenue from innocent but hapless owners whose property is unforeseeably misused, or a tool wielded to punish those who associate with criminals, than a component of a system of justice." He noted that the Constitution assigns to states and federal agencies that use the forfeiture tool the primary responsibility for avoiding that unwanted result.(32) Failure to use this authority consistent with its purpose could result in legislative disapproval.

The seizure of property from one who is truly innocent does not serve the goals of civil forfeiture, i.e., taking the profit out of crime and acting as a deterrent to future criminal activity. In fact, Congress has provided an innocent owner exception to most federal civil forfeiture laws that would, under similar facts, have allowed Bennis to recover her interest in the car by showing her lack of knowledge of the intended illegal use of the vehicle by her wayward husband, and her lack of consent to that usage.(33)

As a result of these Supreme Court decisions, law enforcement is constitutionally permitted to use civil forfeiture, undeterred by double jeopardy concerns, to seek out and confiscate the ill-gotten gains of criminals and to dismantle their criminal organizations. Both federal and state law enforcement agencies working together will be able to use civil forfeiture to effectively take the profit out of crime and deter future criminal conduct motivated by greed.

Endnotes

1 Memorandum from Janet Reno, Attorney General, Louis J. Freer, Director, FBI, and Thomas Constantine, Administrator, DEA, to all U.S. Attorneys, and others, dated Feb. 12, 1996.

2 See, e.g., United States v. Tilley, 18 F.3d 295 (5th Cir.) cert. denied, 115 S.Ct. 573 (1974) (forfeiture of drug proceeds does not constitute punishment); United States v. Baird, 63 F.3d 1213 (3d Cir. 1995) (administrative forfeiture does not implicate the Double Jeopardy Clause).

3 United States v. $405,089.23 in U.S. Currency, 56 F.3d 41 (9th Cir. 1995) (dissent from order rejecting reheating en banc).

4 See United States v. $405,089.23 in U.S. Currency, 33 F.3d 1210 (9th Cir. 1994).

5 See 21 U.S.C. [section] 881 (a)(6) (forfeiture of property constituting or traceable to drug proceeds) and 18 U.S.C. [section]981 (a)(1)(A) (property involved in money laundering).

6 "Nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb. U.S. Constitution, Amend. V.

7 See United States v. Halper, 490 U.S. 435 (1989) (civil free imposed for filing false medical claims following criminal prosecution on charges stemming from the same false claims could violate the Double Jeopardy Clause as a second punishment); Austin v. United States, 509 U.S. 602 (1993) (civil forfeiture of real and personal property under federal drug laws constitutes punishment for purposes of the eighth amendment and may violate the Excessive Fines Clause).

8 The Ninth Circuit denied a request by the Department of Justice (DOJ) for a reheating en banc. In an unusual step, seven of the circuit judges filed a written dissent to the denial of the reheating, disagreeing with the analysis and judgment of the other judges, stating that any departure from Supreme Court precedent upholding the remedial purpose served by civil forfeiture should be undertaken by the Supreme Court and not by the circuit court. See United States v. $405,089.23 In U.S. Currency, 56 F.3d 41 (9th Cir. 1995).

9 United States v. Ursery, 59 F.3d 568 (6th Cir. 1995).

10 21 U.S.C. [section] 881 (a)(7) (forfeiture of real property used to commit a drug felony).

11 The district court denied Ursery's claim that the criminal conviction and sentence was a second punishment for the same drug offense in violation of double jeopardy.

12 See Witte v. United States, 115 S.Ct. 2199 (1995); United States v. Dixon, 509 U.S. 688 (1993).

13 United States v. Ursery, 116 S.Ct. 2134 (1996).

14 Id. at 2149.

15 Id. at 2140.

16 Id. at 2142. See, e.g., Various Items of Personal Property v. United States, 282 U.S. 577 (1931) (civil forfeiture is an action in rem against the property and no part of the punishment for the criminal offense that involves a prosecution in personam against the person).

17 See United States v. One Assortment of 89 Firearms, 465 U.S. 354 (1984).

18 "In sum, nothing in Halper, Kurth Ranch, or Austin, purported to replace our traditional understanding that civil forfeiture does not constitute punishment of the purpose of the Double Jeopardy Clause." Id at 2146- 2147.

19 Id. at 2147. The laws under examination were 21 U.S.C. [sections]881 (a)(6) and (a)(7) and 18 U.S.C. [section]981(a)(1)(A).

20 "Congress specifically structured these forfeitures to be impersonal by targeting the property itself." Id. at 2147. The Court noted other mechanisms indicating Congress' intent that such actions be civil, including the shifting burden of proof in a civil forfeiture action once the government has shown probable cause that the property is forfeitable. Id. at 2147.

21 Id. n. 3, at 2148.

22 Id. at 2148. Secondarily relevant to its conclusion were the following: Civil in rem forfeiture has not historically been regarded as punishment; there is no requirement that the government show scienter in order to prove the property is forfeitable; these forfeitures act as a deterrent to future criminal conduct, which serves civil as well as criminal goals; the fact that a forfeiture statute has some connection to a criminal violation does not show that a proceeding is criminal. Id. at 2149.

23 116 S.Ct. 994 (1996).

24 Michigan Comp. Laws Ann., [sections]600.3801, 600.3805, 600.3810(2).

25 Michigan law provides that "proof of knowledge of the existence of the nuisance on the part of the defendants or any of them, is not required." Mich. Comp. Laws Ann. [section]600.3815(2).

26 Bennis v. Michigan, at 1000 (citing J. W. Goldsmith Jr. Grant Co. v. United States, 254 U.S. 505 at 511).

27 See The Palmyra, 12 Wheat 1 (1827) (forfeiture of a ship used as privateer without the conviction of the owner); Van Oster v. Kansas, 272 U.S. 465, 47 S.Ct. 133 (1926) (upholding the forfeiture of a car from an owner who had entrusted the vehicle to another who then used it to transport liquor in contravention of Kansas law); Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 94 S.Ct. 2080 (1974) (upholding the forfeiture of a lessor's interest in a yacht used by the lessee to transport one marijuana cigarette in contravention of the laws of Puerto Rico).

28 Bennis v. Michigan, at 998 (citing Calero-Toledo Pearson Yacht Leasing Co., at 683); 686 and 687688.

29 Calero-Toledo v. Pearson Yacht Leasing Co., at 686, 688.

30 The rationale used by the Court in Bennis, however, undermines the foundational basis for the constitutional "innocent owner" defense that began appearing in federal appellate court decisions shortly after Calero-Toledo v. Pearson Yacht Leasing Co. was decided. See, e.g., United States v. One 1973 Buick Riviera Automobile, 560 F.2d 897, 900-01 (8th Cir. 1977)("...the Court may have left open the possibility of an innocent owner raising a due process claim based on his innocence in certain narrow factual situations").

31 See Austin v. United States, at 616 ("In none of these cases did the Court apply the guilty-property fiction to justify forfeiture where the owner had done all that reasonably could be expected to prevent the unlawful use of his property.").

32 Justice Thomas, in his concurring opinion in Bennis, observed that it was not always clear what property could be forfeited under various forfeiture statutes. As a result, the limits of the law should be applied strictly, adhering to historical standards for determining whether specific property is "used" illegally.

33 See, e.g., 21 U.S.C. [section]881(a)(4)(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."). One notable exception is the authority to forfeit property that has been used in an interstate gambling business. See 18 U.S.C. [section]1955(d), but it is the official policy of the FBI not to seize property for forfeiture from innocent owners.

Special Agent William R. Schroeder, J.D. is chief of the Legal Forfeiture Unit, Office of General Counsel, at FBI Headquarters.