United States. Congress. House. Committee on the J.

Civil Asset Forfeiture Reform Act : hearing before the Committee on the Judiciary, House of Representatives, One Hundred Fourth Congress, second session, on H.R. 1916 ... July 22, 1996 online

. (page 15 of 37)
Online LibraryUnited States. Congress. House. Committee on the JCivil Asset Forfeiture Reform Act : hearing before the Committee on the Judiciary, House of Representatives, One Hundred Fourth Congress, second session, on H.R. 1916 ... July 22, 1996 → online text (page 15 of 37)
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illegal act.

" (2) With respect to a property interest acquired after
the act giving rise to the forfeiture took place, a person
is an innocent owner if he or she establishes, by a prepon-

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derance of the evidence, that he or she acquired the proper-
ty as a bona fide purchaser for value who at the time of the
purchase did not know and was reasonably without cause to
believe that the property was subject to forfeiture. A
purchaser is "reasonably without cause to believe that the
property was subject to forfeiture" if, in light of the
circumstances, the purchaser did all that reasonably could
be expected to ensure that he or she was not acquiring
property that was subject to forfeiture.

" (3) Notwithstanding any provision of this section, no
person may assert an ownership interest under this section
in contraband or other property that it is illegal to
possess. In addition, except as set forth in paragraph (2),
no person may assert an ownership interest under this
section -in the illegal proceeds of— a—cr-iminal act, irrespec-
tive of state property law.

"(c) For the purposes of this section -
" (1) an "owner" is a person with an ownership interest
in the specific property sought to be forfeited, including
but not limited to a lien, mortgage, recorded security
device or valid assignment of an ownership interest. An
owner does not include : A) a person with only a general
unsecured interest in, or claim against, the property or
estate of another person; (B) a bailee; (C) a nominee who
exercises no dominion or control over the property; or (D) a
beneficiary of a constructive trust; and

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"(2) a person who willfully blinds himself or herself
to a fact shall be considered to have had knowledge of that
fact .

" (d) If the court determines, in accordance with this
section, that an innocent owner had a partial interest in
property otherwise subject to forfeiture, or a joint tenancy
or tenancy by the entirety in such property, the court shall
enter an appropriate order (1) severing the property; (2)
transferring the property to the government with a provision
that the government compensate the innocent owner to the
extent of his or her ownership interest once a final order
of forfeiture has been entered and the property has been
reduced to liquid assets, or (3) permitting the innocent
owner to retain the property subject to a lien in favor of
the government to the extent of th«-Jorf eitable interest in
the property. To effectuate the purposes of this subsec-
tion, a joint tenancy or tenancy by the entireties shall be
converted to a tenancy in common by order of the court,
irrespective of state law.

" (e) If the person asserting a defense under subsec-
tions (b) (1) or (b) (2) is a financial institution, as
defined in section 20 of this title, there shall be a
presumption, governed by Rule 301 of the Federal Rules of
Evidence, that the institution acted "reasonably" if the
institution establishes that it followed rigorous and
regular internal procedures relating to the approval of any

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loan or the acquisition of any property interest in accor-
dance with the standards for due diligence in the lending
industry. The presumption shall not apply if the government
establishes that the financial institution had notice that
the property was subject to forfeiture before it acquired
any interest in the property. "

(b) STRIKING SUPERSEDED PROVISIONS. - (1) Section 981(a) of
title 18, United States Code, is amended by - -

(A) striking subsection (a) (2) and renumbering any subsec-
tions added by this Act accordingly; and

(B) striking "Except as provided in paragraph (2) , the" and
inserting "The".

(2) Sections 511(a)(4), (6) and (7) of the Controlled
Substances Act (21 U.S.C. § 881(a)(4), (6) and (7)) are amended
by striking "., except that" and all thaL»-follows, each time it
appears .

(3) Sections 2254(a)(2) and (3) of title 18, United States
Code, are amended by striking ", except that" and all that
follows, each time it appears.

(c) CONFORMING AMENDMENT. - The chapter analysis for chapter
46 of title 18, United States Code, is amended by inserting the
following at the appropriate place:

"983. Innocent owners."



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SEC. 124. STAY OF CIVIL FORFEITURE CASE

(a) DRUG FORFEITURES. - Section 511 (i) of the Controlled
Substances Act (21 U.S.C. § 881 (i)) is amended to read as fol-
lows :

" (i) (1) Upon the motion of the United States, the court
shall stay the civil forfeiture proceeding if it determines
that civil discovery or trial could adversely affect the
government's ability to conduct a related criminal investi-
gation or the prosecution of a related criminal case.

"(2) Upon the motion of a claimant, the court shall
stay the civil forfeiture proceeding with respect to that
claimant if it determines that the claimant is the subject
of a related criminal investigation or case, that the claim-
ant has standing to assert a claim in the civil forfeiture
proceeding, and that continuation -Qf_t.he forfeiture proceed-
ing may infringe upon the claimant's right against self-
incrimination in the related investigation or case.

"(3) With respect to the impact of civil discovery
described in paragraphs (1) and (2) , the court may determine
that a stay is unnecessary if a protective order limiting
discovery would protect the interest of one party without
unfairly limiting the ability of the opposing party to
pursue the civil case. In no case, however, shall the court
impose a protective order as an alternative to a stay if the
effect of such protective order would be to allow one party



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to pursue discovery while the other party was substantially
unable to do so.

"(4) For the purposes of this subsection, " •< related
criminal case" and "a related criminal investigation" mean
an actual prosecution or investigation in progress at the
time the request for the stay is made. In determining
whether a criminal case or investigation is "related" to a
civil forfeiture proceeding, the court shall consider the
degree of similarity between the parties, witnesses, facts
and circumstances involved in the two proceedings without
requiring an identity with respect to any one or more fac-
tors .

" (5) Any presentation to the court under this subsec-
tion that involves an on-going criminal investigation shall
be made by the government ex parte and under seal .

" (6) Whenever a civil forfeiture proceeding is stayed
pursuant to this subsection, the court shall enter any order
necessary to preserve the value of the property or to pro-
tect the rights of lienholders or other persons with an
interest in the property while the stay is in effect.

" (7) A determination by the court that the claimant has
standing to request a stay pursuant to paragraph (2) shall
apply only to the provisions of this subsection and shall
not preclude the government from objecting to the claimant's
standing at the time of trial in accordance with Section
987(d) of title 18.

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"(8) A stay imposed pursuant to this subsection shall
be for a period determined by the court, but for no more
than 180 days unless the court determines, at the end of
such time period, that there are compelling reasons why the
stay should be continued. An order renewing a stay shall be
reviewed by the court every 90 days unless the parties agree
that such review is unnecessary."

(b) IN GENERAL. - Section 981(g) of title 18, United States
Code, is amended to read as follows:

" (g) (1) Upon the motion of the United States, the court
shall stay the civil forfeiture proceeding if it determines
that civil discovery or trial could adversely affect the
government's ability to conduct a related criminal investi-
gation or the prosecution of a related criminal case.

" {2> Upon the motion of a claimant, the court shall
stay the civil forfeiture proceeding with respect to that
claimant if it determines that the claimant is the subject
of a related criminal investigation or case, that the claim-
ant has standing to assert a claim in the civil forfeiture
proceeding, and that continuation of the forfeiture proceed-
ing may infringe upon the claimant's right against self-
incrimination in the related investigation or case.

" (3) With respect to the impact of civil discovery
described in paragraphs (1) and (2) , the court may determine
that a stay is unnecessary if a protective order limiting
discovery would protect the interest of one party without

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unfairly limiting the ability of the opposing party to
pursue the civil case. In no case, however, shall the court
impose a protective order as an alternative to a stay if the
effect of such protective order would be to allow one party
to pursue discovery while the other party was substantially
unable to do so.

" (4) For the purposes of this subsection, "a related
criminal case" and "a related criminal investigation" mean
an actual prosecution or investigation in progress at the
time the request for the stay is made. In determining
whether a criminal case or investigation is "related" to a
civil forfeiture proceeding, the court shall consider the
degree of similarity between the parties, witnesses, facts
and circumstances involved in the two proceedings without
requiring an identity with respect— fc©-^ny one or more fac-
tors .

" (5) Any presentation to the court under this subsec-
tion that involves an on-going criminal investigation shall
be made by the government ex parte and under seal .

" (6) Whenever a civil forfeiture proceeding is stayed
pursuant to this subsection, the court shall enter any order
necessary to preserve the value of the property or to pro-
tect the rights of lienholders or other persons with an
interest in the property while the stay is in effect.

" (7) A determination by the court that the claimant has
standing to request a stay pursuant to paragraph (2) shall

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apply only to the provisions of this subsection ..nd shall
not preclude the government from objecting to the claimant's
standing at the time of trial in accordance with Section
987(d) of this title.

" (8) An order imposing a stay pursuant to this subsec-
tion shall expire in 180 days unless the court determines,
at the end of such time period, that there are compelling
reasons why the stay should be continued. An order renewing
a stay shall be reviewed by the court every 90 days unless
the parties agree that such review is unnecessary."
(c) GUIDELINES. - Within 180 days after the effective date
of this section, the Attorney General and the Secretary of the
Treasury, respectively, shall promulgate guidelines governing the
preservation of the value of property subject to forfeiture in a
case that ha& been stayed pursuant to Saction 511 (i) of the
Controlled Substances Act (21 U.S.C. § 881 (i)) or Section 981(g)
of title 18, United States Code. The guidelines shall take into
account the interests of both the government and the claimant in
avoiding the depreciation, destruction or dissipation of the
property pending conclusion of the forfeiture proceeding.
SEC. 125. APPLICATION OF FORFEITURE PROCEDURES

(a) IN GENERAL. - Chapter 46 of title 18, United States
Code is amended by adding the following section:
"988. Application of Forfeiture Procedures.

"(a) Civil Forfeitures. Whenever a statute in this
title provides for the civil forfeiture of property without

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specifying the procedures governing a judicial forfeiture
action, the provisions of this chapter relating to civil
forfeitures shall apply.

" (b) Criminal Forfeitures. Whenever a statute in this
title provides for the criminal forfeiture of property
without specifying the procedures governing such forfei-
tures, the provisions of this chapter relating to criminal
forfeitures shall apply."

(b) CONFORMING AMENDMENT. - The chapter analysis for
Chapter 46, of title 18, United States Code, is amended by adding
the following:

"988. Application of Forfeiture Procedures."

Subtitle C - Seizures and Investigations
SEC. 131. SEIZURE WARRANT REQUIREMENT.

(a) IN GENERAL. - Section 981(b) of-title 18, United States
Code, is amended to read as follows -

" (b) (1) Any property subject to forfeiture to the United
States under this section may be seized by the Attorney General.
In addition, in the case of property involved in a violation
investigated by the Secretary of the Treasury or the United
States Postal Service, the property may also be seized by the
Secretary of the Treasury or the Postal Service, respectively.

" (2) Seizures pursuant to this section shall be made pursu-
ant to a warrant obtained in thfe same manner as provided for a
search warrant under the Federal Rules of Criminal Procedure,
except that a seizure may be made without a warrant if it is made

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pursuant to a lawful ai rest or search, or if there is probable
cause to believe that the property is subject to forfeiture and
an exception to the Fourth Amendment warrant requirement would
apply.

"(3) Notwithstanding the provisions of Rule 41(a), Federal
Rules of Criminal Procedure, a seizure warrant may be issued
pursuant to this subsection by a judicial officer in any district
in which a forfeiture action against the property may be filed
under section 1355(b) of title 28, United States Code, and
executed in any district in which the property is found. Any
motion for the return of property seized under this section shall
be filed in the district in which the seizure warrant was issued.

"(4) In the event of a seizure pursuant to paragraph (2) of
this subsection, proceedings under subsection (d) of this section
or an applicable criminal forfeiture s tatu te shall be instituted
as soon as practicable, taking into account the status of any-
criminal investigation to which the seizure may be related.

" (5) If any person is arrested or charged in a foreign
country in connection with an offense that would give rise to the
forfeiture of property in the United States under this section or
under the Controlled Substances Act, the Attorney General may
apply to any federal judge or magistrate judge for an ex parte
order restraining the property subject to forfeiture for not more
than 30 days, except that the time may be extended for good cause
shown. The application for the restraining order shall set forth
the nature and circumstances of the foreign charges and the basis

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for belief that the person arrested or charged his property in
the United States that would be subject to forfeiture, and shall
contain a statement that the restraining order is needed to
preserve the availability of property for such time as is neces-
sary to receive evidence from the foreign country or elsewhere in
support of probable cause for the seizure of the property under
this subsection.

" (6) Any owner of property seized pursuant to this section
may obtain release of the property pending resolution of the
forfeiture action upon payment of a substitute res in an amount
equal to the appraised value of the property, unless the seized
property -

(A) is contraband,

(B) is evidence of a violation of the law,

(C) by r-eason of design or other ahara.cteristic, is particu-
larly suited for use in illegal activities, or

(D) is likely to be used to commit additional criminal acts
if returned to the owner.

The substitute res must be in the form of a traveler's check,
money order, cashier's check or irrevocable letter of credit made
payable to the seizing agency. If such substitute res is provid-
ed, the court or in the case of administrative forfeiture, the
seizing agency, shall have jurisdiction to proceed with the
forfeiture of the substitute res in lieu of the property. If, at
the conclusion of the forfeiture proceeding, the property is
declared forfeited, the owner shall surrender the property and

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recover the substitute res, unless the Attorney General or the j

seizing agency elects to retain the substitute res in lieu of the i

property. " j

(b) DRUG FORFEITURES. - Section 511(b) of the Controlled .j

Substances Act (21 U.S.C. § 881(b)) is amended to read as fol- ^

lows : i

" (b) Any property subject to forfeiture to the United States ;
under this section may be seized by the Attorney General in the

manner set forth in Section 981(b) of title 18, United States j

Code . " j

"(c) CONFORMING AMENDMENT. - Section 518(d) of the Con- .

trolled Substances Act (21 U.S.C. § 888(d)) is repealed." ,
SEC. 132. CIVIL INVESTIGATIVE DEMANDS.

(a) IN GENERAL. - Chapter 46 of title 18, United States |
Code, is amended by adding at the end tli£_f ollowing new section:

"985. Civil Investigative Demands. '

" (a) For the purpose of conducting an investigation in j

contemplation of any civil forfeiture proceeding, the

Attorney General may -

" (A) administer oaths and affirmations;

1

" (B) take evidence; and ]
" (C) by subpoena, summon witnesses and require the

production of any books, papers, correspondence, memoranda, i

or other records which the Attorney General deems relevant ,
or material to the inquiry. Such subpoena may require the

attendance of witnesses and the production of any such i

32



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records from any place in th .^ United States at any place in
the United States designated by the Attorney General.

" (b) Except as provided in this section, the procedures
and limitations that apply to civil investigative demands in
subsections (g) , (h) , and (j) of section 1968 of title 18,
United States Code, shall apply with respect to civil
investigative demands issued under this subsection. Process
required by such subsections of section 1968 to be served
upon "the custodian" shall be served on the Attorney Gener-
al. Failure to comply with an order of the court to enforce
such demand shall be punishable as civil or criminal con-
tempt .

" (c) In the case of a civil investigative demand for
which the return date is less than 5 days after the date of
service, no person shall be found in-ucontempt for failure to
comply by the return date if such person files a petition
under subsection (b) not later than 5 days after the date of
service .

" (d) A civil investigative demand may be issued pursu-
ant to this section in furtherance of an investigation
directed toward the forfeiture of an asset at any time up to
the filing of a civil forfeiture complaint with respect to
that asset, except that no demand relating to a given asset
may be served upon any person who files a claim to that
asset pursuant to title 19, United States Code, § 1608 once
such claim is filed. Once a given asset is made the subject

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of a civil forfeiture complaint, all further discovery
regarding the forfeiture of that asset shall proceed in
accordance with the Federal Rules of Civil Procedure.
Investigation relating to the forfeiture of assets not
subject to a claim or to a forfeiture complaint may proceed
pursuant to this section at any time.

"(e) In this section, "Attorney General" means any
attorney for the government employed by the Department of
Justice as defined by Rule 54(c) of the Federal Rules of
Criminal Procedure, and shall not include an attorney, agent
or other employee of any agency of the Department . "

(b) CONFORMING AMENDMENT. - The chapter analysis for chapter
46 of title 18, United States Code is amended by adding the
following at the appropriate place:

"985. Civil investigative HpmanHg "

(c) OBSTRUCTION OF CIVIL INVESTIGATIVE DEMAND. - Section
1505 of title 18, United States Code, is amended by inserting
"section 985 of this title or". before "the Anti-trust Civil
Process Act" .

(d) RIGHT TO FINANCIAL PRIVACY ACT AMENDMENT .- -Section
1120(b) (1) (A) of the Right to Financial Privacy Act (12 U.S.C.

§ 3420(b) (1) (A)) is amended by inserting "or civil investigative
demand" after "a grand jury subpoena".

(e) FAIR CREDIT REPORTING ACT AMENDMENT . - Paragraph (1) of
section 604 of the Fair Credit Reporting Act (15 U.S.C. § 1681b)



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is amended by stri.:ing "or" and inserting ", or a civil investi-
gative demand" after "grand jury".
SEC. 133. ACCESS TO RECORDS IN BANK SECRECY JURISDICTIONS

Section 986 of title 18, United States Code, is amended by
adding the following new siibsection:

"Access to records located abroad

" (d) In any civil forfeiture case, or in any ancillary
proceeding in any criminal forfeiture case governed by
Section 1963(1) of this title or Section 413 (n) of the
Controlled Substances Act (21 U.S.C. § 853 (n) ) , where -

" (1) financial records located in a foreign coun-
try may be material (A) to any claim or to the ability
of the government to respond to such claim, or (B) in a
civil forfeiture case, to the government's ability to
establish the forfeitability -©€— the property; and

" (2) it is within the capacity of the claimant to
waive his or her rights under such secrecy laws, or to
obtain the records him- or herself, so that the records
can be made available,
the refusal of the claimant to provide the records in
response to a discovery request or take the action necessary
otherwise to make the records available shall result in the
dismissal of the claim with prejudice. This subsection
shall not affect the claimant's rights to refuse production
on the basis of any privilege guaranteed by the Constitution
or federal laws of the United States . "

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SEC. 134. ACCESS TO OTHER RECORDS.

Section 6103(i)(l) of the Internal Revenue Code (26 U.S.C.
§ 6103 (i)(l)) is amended -

(1) in subparagraph (A) (i) by inserting "or related
civil forfeiture" after "enforcement of a specifically
designated Federal criminal statute"; and

(2) in subparagraph (B) (iii) by inserting "or civil
forfeiture investigation or proceeding" after "Federal
criminal investigation or proceeding" .

SEC. 135. CXJRRENCY FORFEITURES.

Section 511 of the Controlled Substances Act (21 U.S.C. 881) !

I,

is amended by inserting the following new subsection: j,

"Currency Forfeitures

I
" (m) At the trial of an action brought pursuant to

subsection (a) (6) , if the government establishes by a

preponderance of the evidence that the property subject to

forfeiture -

"(1) is currency or other monetary instruments that
were found in close proximity to a measurable quantity of
any controlled substance; or

"(2) is currency in excess of $10,000 that was being
transported at an airport or other port of entry, on an
interstate highway, or on the coastal waters of the United
States, and the person in possession of the currency dis-
claims knowledge or ownership of the property, or offers an

DRAFT - August 23, 1996 36



155



explanation for his or her possession of the currency thrt

is false,
there shall be a presumption, governed by Rule 301 of the Federal
Rules of Evidence, that the currency is the proceeds of a viola-
tion of the Controlled Substances Act. As provided in Rule 301
of the Federal Rules of Evidence, the burden of proof shall at
all times be on the United States to establish that the property
is subject to forfeiture."

TITLE II - CRIMINAL FORFEITURES
SEC. 201. STANDARD OF PROOF FOR CRIMINAL FORFEITURE.

(a) IN GENERAL. - Section 982 of title 18, United States
Code, is amended by adding at the end the following new subsec-
tion:

"(c) In any forfeiture action under this section, the
party bearing the burden of proof sha ll be required to prove
the matter at issue by a preponderance of the evidence."

(b) RICO FORFEITURES. - Section 1963 of title 18, United

I States Code, is amended by adding at the end the following new
subsection:

" (o) In any forfeiture action under this section, the
party bearing the burden of proof shall be required to prove
the matter at issue by a preponderance of the evidence."

(c) DRUG FORFEITURES. - Section 413 of the Controlled
Substances Act (21 U.S.C. 853) is amended by adding the following
new subsection:

DRAFT - August 23, 1996 37



156



" (r) In any forfeiture action under this section, the
party bearing the burden of proof shall be required to prove
the matter at issue by a preponderance of the evidence."
SEC. 202. NON- ABATEMENT OF FORFEITURE WHEN DEFENDANT DIES PENDING
APPEAL.

(a) RICO FORFEITURE. - Section 1963 of title 18, United
States Code, is amended by adding at the end thereof the follow-
ing new subsection:

" (p) An order of forfeiture under this section shall not
abate by reason of the death thereafter of any or all of the
defendants or petitioners or potential petitioners."



Online LibraryUnited States. Congress. House. Committee on the JCivil Asset Forfeiture Reform Act : hearing before the Committee on the Judiciary, House of Representatives, One Hundred Fourth Congress, second session, on H.R. 1916 ... July 22, 1996 → online text (page 15 of 37)