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 24 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 24 of 37)
Font size
QR-code for this ebook


is shot anyway, so I don't think there's a problem.



256

Mr. Hyde. All right. Cxood. Then the committee will stand in re-
cess until 2 p.m.

Thank you.

[Whereupon, at 11:45 a.m., the subcommittee recessed, to recon-
vene at 2 p.m.]

Mr. Hyde. The Chair is advised that at least one other Member
is en route and we have a quorum from this morning so the com-
mittee will come to order.

Our final panel consists of Terrance G. Reed, chairperson of the
RICO Forfeiture and Civil Remedies Committee of the Section on
Criminal Justice of the American Bar Association. He will be fol-
lowed by Mark Kappelhoff, legislative counsel for the American
Civil Liberties Union; and E.E. (Bo) Edwards, from whom we heard
earlier, will testify on behalf of the National Association of Crimi-
nal Defense Lawyers.

We will commence with Mr. Reed. Thank you for your patience
in waiting. I really appreciate it. I know time is something we all
treasure, and unfortunately in this process it gets abused some-
times.

STATEMENT OF TERRANCE G. REED, CHAIRPERSON, RICO,
FORFEITURE, AND CIVIL REMEDIES COMMITTEE, SECTION
OF CRIMINAL JUSTICE, ON BEHALF OF THE AMERICAN BAR
ASSOCIATION

Mr. Reed. Thank you, Mr. Chairman. I am here on behalf of the
American Bar Association and it is with great pleasure, too.

I am here today to tell this committee that the American Bar As-
sociation supports the chairman's bill, H.R. 1916. We have pre-
viously provided a statement to the committee, a written state-
ment, and I will not go over that material again, but will summa-
rize the ABA's position of support.

H.R. 1916 is a very important bill because it for the first time
aims at protecting innocent property owners through the creation
of fair judicial procedures. The ABA stands solidly in support of
this worthy objective.

The ABA has been involved since 1983 in promoting various
types of forfeiture reforms, and in February of this year the ABA
officially endorsed a statement of principles which was enacted by
the house of delegates to urge Cong^ress to engage in a series of re-
forms of the forfeiture laws. The bill H.R. 1916 fits closely within
the objectives of the ABA's statement of principles.

I would like to focus briefly on what may be the most important
contribution of the act to the civil forfeiture law, and that is section
4, the section which deals with the standard of proof by which pri-
vate property becomes confiscated and forfeited to the U.S. Govern-
ment.

Currently, as the Chair is aware and as was discussed this morn-
ing, the standard of proof on the Government is hardly a standard
at all. That is the probable cause standard. That has been defined
as sufficient evidence and not to be more than a prime facie case.
So here under the probable cause standard the Government can
civilly forfeit property of private citizens for a far lesser showing
than is necessary to convict someone of a crime and on a lesser



257

showing than is necessary to hold an individual civilly liable in
such an action in torts. This is an unfair standard of proof.

The standard of proof that the Government is put to the probable
cause standard, is that standard which is sufficient to justify a
search. It is also that standard which is sufficient to justify an in-
dictment, which is simply an allegation is not particularly proof of
a crime.

Now it is true that the search of a home is not nearly as intru-
sive as the loss of a home, but that same standard is used for both
in the civil forfeiture laws. If the Government can establish
through hearsay that a private property owner, the home of a prop-
erty owner has been in any tangential way associated with crimi-
nal activity, they lose the home, notwithstanding the fact that they
are not accused of a crime themselves.

Similarly, the probable cause standard is considered sufficient in
the Constitution to justify an indictment which is a mere allega-
tion, and every day throughout this country juries are told that an
indictment is not evidence of anything. It is not sufficient on its
own to justify a conviction or for that matter is not even evidence
of a crime. Yet this is the standard by which the Federal Govern-
ment is held and it is, frankly, far too inadequate a standard.

The probable cause standard is in many ways the root problem
in the civil forfeiture laws, a standard so low as to be a siren for
the abuse of the civil forfeiture laws. It allows the Federal Govern-
ment to seize and confiscate homes on the standard of proof nec-
essary solely to justify searches. And as this committee is probably
aware, that standard has been reduced somewhat over time.

We find courts authorizing the search of individuals and of
homes based on profiles, drug courier profiles, which we heard so
much about this morning. That balancing test which is done by
courts is a little more understandable when the consequences of fit-
ting a drug courier profile are that you are stopped for a discussion
as to whether there is sufficient evidence to go further to detain
someone. Here that standard has been held sufficient, satisfying
the drug courier profile to justify losing a home. When someone
spends 20 or 30 years paying off a mortgage on a house, which is
something that is part of the American dream, it should not evapo-
rate with a mere satisfaction in the eyes of a law enforcement offi-
cial that that person's demeanor fits a drug courier profile.

The other aspect of why the probable cause standard is an invita-
tion to abuse is it allows civil forfeiture of property without use of
admissible evidence. Forfeiture can be justified solely based on
hearsay, meaning that civil forfeitures are implemented outside of
the adversary process, which is what our civil system of justice and
criminal system of justice is based upon, where the party making
the claim bears the burden of proof In that respect, the bill H.R.
1916 will work a significant improvement on the current system of
civil forfeiture.

There are other provisions of the act which I will not address at
this time given the shortness of time, but in summary, the Amer-
ican Bar Association stands solidly behind the bill and would urge
that this committee take swift and prompt action on it.

Mr. Hyde. Thank you very much, Mr. Reed.

[The prepared statement of Mr. Reed follows:]



258

Prepared Statement of Terrance G. Reed, Chairperson, RICO, Forfeiture
AND Civil Remedies Committee, Section of Criminal Justice, on Behalf of
THE American Bar Association

Mr. Chairman and Members of the Committee, the American Bar Association
("ABA") is pleased to appear before vou to express our views on H.R. 1916, the
"Civil Asset Forfeiture Reform Act" (the "Act"). My name is Terrance G. Reed, and
I have been designated by ABA president Roberta Cooper Ramo to represent the
ABA.

I am an attorney in private practice with the law firm of Reed & Hostage, P.C.
in Washington, D.C., and I currently serve tis the Chair of the RICO, Forfeitures,
and Civil Remedies (Committee of the ABA's Criminal Justice Section. I have served
as the ABA's Advisor to the National Conference of Conrmiissioners on Uniform
State Laws ("NCCUSL") from 1990 to 1994, and provided the ABA's input on
NCCUSL's successful effort to enact a Uniform Forfeiture Act for the states in 1994.
My experience includes representation of property owners, crime victims, and crimi-
nm defendants in civil and criminal forfeiture litigation.

Although the ABA has been an advocate of forfeiture law reform for more than
a decade, in February 1996 the ABA endorsed a Statement of Principles calling for
specific statutory revisions, including several which are contained in H.R. 1916. A
copy of this Statement of Principles is attached as Exhibit A. The ABA's adoption
of forfeiture reform principles reflects the fact that a consensus has emereed within
the legal profession that civil forfeiture laws, while important and useful law en-
forcement tools, also place considerable power in the hands of the government to
take private property, and that measured laws are the best mechanism to insure
that tnese powers are not abused.

As the Supreme Court has repeatedly admonished, "broad forfeiture provisions
cany the potential for government abuse and 'can be devastating when used un-
justly.'" Libretti v. United States, 116 S. Ct. 356, 365 (1995) (quoting Caplin &
Drysdale v. United States, 491 U.S. 617, 634 (1989)). In summary, the ABA sup-
ports the need for civil forfeiture reforms, and it has already endorsed some of the
reforms which are codified in H.R. 1916.

1. THE ABA endorses THE CURRENT NEED FOR CIVIL FORFEITURE REFORM

In February 1996, the ABA approved a Statement of Principles governing forfeit-
ure laws which endorses the use of the forfeiture laws, especially to confiscate the
profits of crime, but also urges a number of procedural reforms, some of which are
contained in H.K. 1916, whicn will make civil forfeitures more fair and just. In some
respects, the ABA's Statement of Principles is broader than H.R. 1916, as it ad-
dresses the need for other civil forfeiture reforms, as well as reforms of the federal
criminal forfeiture laws. Nonetheless, the direction and thrust of the ABA's forfeit-
ure policies are fully consistent with the type of procedural reforms outlined in H.R.
1916, and both represent an effort to balance the utility and benefits of civil forfeit-
ure against the harms and potential abuses which may occur under current federal
law.

Hence, while the ABA has not formally endorsed every provision of H.R. 1916, it
has supported the call for reform, and has urged Congress to consider remedial leg-
islation in several of the areas covered by H.R. 1916, which will be further ad-
dressed below. Especially where, as here, many of the Act's important reforms are
long overdue, this Committee should not allow the potential oi comprehensive re-
form to delay the implementation of reforms which enjoy a broad consensus of sup-
port.

As the Committee is aware, federal and state law enforcement officials have in-
creasingly turned to civil forfeitures as a means of combating crime. Under federal
forfeiture law, however, the government need not establish that the owner of the
property is a criminal. Rather, the government can civilly forfeit personal property
by merely showing probable cause to believe that the property was used unlawfully
by anyone. Because of this low threshold of mere "prooable cause," the government
can civilly forfeit private property through use of inadmissible hearsay and with evi-
dence that would otherwise only justify an allegation of criminality, not proof of
criminality. Indeed, it is estimated that approximately 80% of all property owners
who lose property to civil forfeitures have not been charged with a crime. Fishman,
The Agenda Before Congress. 39 N.Y.L.S. L. Rev. 121, 129 (1994).

The attractiveness oi civil forfeitures to law enforcement officials is understand-
able because current federal law relieves the government of the traditional stringent
burdens imposed to secure a criminal forfeiture in a criminal trial. Thus, almost by
definition, tne civil forfeiture laws permit the government to forfeit the property of
owners who are not criminals.



259

Indeed, the Supreme Court recently emphasized this fact in the case of Bennis
V. Michigan, 116 S. Ct. 994 (1996), in which the Court held that the Due Process
Clause does not prohibit the forfeiture of the property of wholly innocent persons.
In so holding, the Supreme Court has highlighted the essential role that Congress
must now play in reforming the civil forfeiture laws so as to mitigate the harms
they cause innocent citizens. When innocent citizens are the authorized subject of
government confiscatory practices, Congress can fairly ask what public policy is
being served by such an unjust result. More to the point, when such an unjust re-
sult is possible. Congress is appropriately concerned with insuring that the proce-
dures and standards which govern the imposition of civil forfeitures are geared to-
ward preventing, rather than facilitating, such an undesirable outcome. The legisla-
tive history of H.R. 1916 indicates that this is one of its objectives, and the ABA
is fully in accord with this objective.

The federal civil forfeiture laws date back to the early days of our country, when
civil forfeiture was a tool used against piracy and customs violations, and the proce-
dures used to implement civil forfeitures were both limited and harsh. The decision
of Congress in 1978 to extend these antiquated and narrowly tai^eted laws to the
modem arsenal of federal law enforcement undoubtedly strengthened the hand of
the government, but Congress has not yet attempted to reconcile the broad modern
day role of civil forfeiture with its historically limited focus and scant procedural
protections for property owners. As a result, some federal courts have voiced concern
over the "government's increasing and virtually unchecked use of the civil forfeiture
statutes and the disregard for due process that is buried in those statutes." United
States V. All Assets of Statewide Auto Parts. Inc., 971 F.2d 896, 905 (2nd Cir. 1992).

The provisions of H.R. 1916 ofTer an important first step toward restoring a bal-
anced use of the civil forfeiture laws. In particular. Congress should abandon the
probable cause standard for justifying civil forfeitures, a standard which links fed-
eral law to the inquisitorial systems of the distant past, in favor of bringing civil
forfeitures into the light of the adversary system of justice, where the government
can prevail only with proof, not mere allegations.

The implementation of fair civil forfeiture procedures will not only restore the nec-
essary balance between the government and property owners essential to obtain just
results, it will also help restore public confidence that the civil forfeiture laws can
and will be fairly deployed to fight crime, and not merely to further fiscal interests.
Public skepticism about government motives for civil forfeitures has a long history
in this country, dating as far back as the celebrated defense of John Hancock's
schooner Liberty against British forfeiture claims by Boston attorney John Adams.
Especially where, under the federal forfeiture system, the Justice and Treasury De-

fiartments are the fiscal beneficiaries of civil forfeitures, the public perception of a
air forfeiture process remains important today. Indeed, the Supreme Court has
noted the government's financial stake in the outcome of civil forfeiture proceedings
as a reason for providing due process to property owners. United States v. James
Daniel Good Real Property, 114 S. Ct. 492, 502 (1993), and Congress should follow
suit. The ABA recommends that Congress act now to enact such an Act.

II. H.R. 1916 CONTAINS SEVERAL PROVISIONS ENDORSED IN PRINCIPLE BY THE ABA

The Civil Asset Reform Act is a short act, and it does not purport to address every
civil forfeiture issue which has been a source of public or judicial concern. The ini-
tial section of the Act identifies its title, the final section indicates its prospective
application, and the balance of the Act consists of only seven other sections. Of these
seven sections, all but one section deal with procedural issues affecting the process
of imposing a civil forfeiture, and all of these sections constitute efforts to make the
civil forfeiture process more fair to property owners. Hence, broadly speaking, the
Act is fully consistent with present ABA policy in that their mutual focus has been
on improving the procedural fairness with which civil forfeiture claims are adju-
dicatea.

The sole substantive provision of the Act is section 8 which simply clarifies the
intent of Congress that the innocent owner exemption ^ of 21 U.S.C. 881(a) be con-



1 While section 8 addresses what is commonly known as the "innocent owner" exemption or
defense to civil forfeitures, in reality the exemption does not protect those "innocent of crime"
in the sense that the government has failed to prove the prop>erty owner's guilt of a crime. As
courts have noted, "Defenses to a [civil] forfeiture action are . . . limited, and stand in stark
contrast to those available to a criminal defendant." United States v. One 1985 Mercedes, 917
F.2d 415, 419 (9th Cir. 1990). The innocent owner exemption merely protects from civil forfeit-
ure those property owners who can sustain their burden of proving that they lacked knowledge

Continued



260

strued broadly to exempt property owners from civil forfeiture who either lack
knowledge of the criminal misuse of their property or withhold consent to its unlaw-
ful use. Some courts have construed the existing civil forfeiture statutory language
in that fashion, see. e.g.. United States v. One 1973 Rolls Royce. 43 F.3d 794, 816
(3d Cir. 1994); United States v. 141st St. Corp by Hersh. 911 F.2d 870, 878 (2d Cir.
1990), although some courts have required property owners to prove that they
lacked both knowledge of the offending use and refused consent. See United States
v. Lot 111-B. 902 F.2d 1443, 1445 (9th Cir. 1990).

Section 8 of the Act would end any remaining judicial confusion on the matter,
and would direct courts to exempt from forfeiture the property of those who did not
consent to its unlawful use. This result might be justified on the grounds of promot-
ing uniformity in statutory construction alone, but it also serves the dual purpose
of affording broader protection of property owners from civil forfeiture. The ABA's
Statement of Principles has endorsed more uniform statutory language covering in-
nocent owner defenses, although the ABA has not adopted any particular policy on
the proper construction of the existing language of 21 U.S.C. §881.^

The remaining sections of the Act address procedural fairness issues. The most
important section. Section 4, would squarely place the burden of proof on the gov-
ernment to justify a civil forfeiture by clear and convincing evidence. This proposal
would be a substantial change from the status quo, as the government currently can
obtain a civil forfeiture judgment by means of only establishing probable cause to
believe that the property was connected with a crime — an evidentiary standard tra-
ditionally sufficient only to justify accusations, not a judgment, and one which can
be established through wholly inadmissible evidence. See. e.g. United States v. One
1986 Chevrolet Van, 927 F.2d 38, 42 (1st Cir. 1991); United States v. One 1987 Mer-
cedes 560 SEL. 919 F.2d 327, 331 (5th Cir. 1990).

The ABA has endorsed placing the burden of proof upon the government, and has
supported the preponderance of the evidence standard. See United States v. $12,390.
956 F.2d 801, 807 (8th Cir. 1992) (Beam, J., dissenting) (contending that current
probable cause standard for civil forfeitures violates due process). The Act's adoption
of the higher "clear and convincing" burden of proof is not unprecedented, however,
as this standard has been endorsed by the New York legislature, and the Florida
Supreme Court has interoreted Florida's constitution as mandating no less a burden
of proof See N.Y. Civ. Prac. L & R. 1311(3) (McKinney Supp. 1994); Department of
Law Enforcement v. Real Property. 588 So.2d 957, 967 (Fl. 1991).

Section 3 would change the current 10 day period provided by the Supplemental
Admiralty Rules for property owners to make a forfeiture relief claim to a 30 day
period. This small reform will have a broad practical impact, as the current ten day
period in which to file claims (or suffer their loss) is a totally inadequate period for
claimants to investigate their alternatives, obtain counsel, and file a claim against
the federal government. Here again, the Act attempts to improve the procedures
available to aggrieved property owners so as to improve the likelihood that forfeit-
ure issues willbe resolved on their merits rather than on the basis of technicalities.
The ABA has specifically urged Congress to extend the current time period for filing
civil forfeiture claims, although it has not endorsed any specific longer time period.

The Act contains three other sections addressing proceaural fairness issues. Sec-
tion 2 amends the Federal Tort Claims Act to m£uce clear that the federal govern-
ment is financially responsible for property damages caused by the negligent han-
dling of seized property by government ofTicials. Section 5(b) provides that indigent
property owners can obtain the services of court-appointed counsel to defend their
seized property, at rates provided for indigent criminal defense counsel under the
Criminal Justice Act (18 U.S.C. 3600) and taxes the cost of providing this legal rep-
resentation against the Justice Department's Asset Forfeiture Fund. Finally, Section
6 of the Act would provide federal courts with the discretion to release property



of, or failed to consent to, the criminal use of their property, regardless of whether the owner
is herself guilty of any criminal conduct.

* Section 8(b) of the Act is an apparent attempt to codify and extend the "willful blindness"
language of the current 21 U.S.C. 88 l(aX4XC), but then confuses matters somewhat by simulta-
neously defining "consent" as including the failure to take reasonable steps to prevent the pro-
scribed use. The net result of combining these distinct limitations on the "knowledge" defense
and the "consent" defense in section 8(b) is to risk a judicial interpretation that a claimant must
prove both a lack of willful blindness (to establish the knowledge defense) and due diligence (to
establish the consent defense) in order to qualify for any innocent owner exemption. Hence, sec-
tion 8(b) could easily be used to undermine section 8(a)'s declaration that either knowledge or
lack of consent justify civil forfeiture relief This risk can be avoided by simply separating out
section 8(b)'8 two definitions, and make clear that the willful blindness definition applies only
to the lack of knowledge exemption, and the due diligence requirement applies only to the lack
of consent exemption.



261

seized for civil forfeiture proceedings prior to trial in order to prevent a substantial
hardship to the claimant. The ABA does not currently have a formal policy address-
ing these types of procedural changes.

CONCLUSION

The ABA fully supports the need for civil forfeiture reforms, and recommends that
Congress take action to make the existing civil forfeiture laws more fair and equi-
table to property owners. The Civil Asset Forfeiture Reform Act, H.R. 1916, is al-
most exclusively aimed at the area of current civil forfeiture law most in need of
reform — improving the procedures by which innocent property owners are given a
chance to protect their property from government confiscation. The Act's general
preference for giving American property owners a fair chance to vindicate their
property from government confiscation is consistent with existing ABA policy, and,
accordingly, the ABA supports enactment of the Act.



EXHIBIT A

American Bar Association Criminal Justice Section Report to the House of

Delegates

recommendation

RESOLVED, That the American Bar Association urges that federal asset forfeit-
ure laws be amended to comply with the attached "Statement of Principles on the
Revision of the Federal Asset Forfeiture Laws," dated November 11, 1995.

statement of principles on the revision of the federal asset forfeiture

LAWS

(November 11, 1995)

1. Uniformity and simplicity. The statutory procedures regarding administrative,
civil and criminal forfeiture are mutually inconsistent and unnecessarily complex.
In revising these statutes. Congress should simplify the procedures and make tnem
as uniform as possible.

2. Terms used to describe what is forfeitable. Likewise, the statutoTy language de-
scribing what property is subject to forfeiture should be amended to avoid use of
confusing and inconsistent terms such as "proceeds," "gross receipts" and "gross pro-
ceeds" in favor of uniform, well-defined terms.

3. Innocent owner defense. Congress should enact a uniform innocent owner de-
fense applicable to all civil and criminal forfeitures.

4. Forfeiture as a law enforcement tool. The seizure and forfeiture of the proceeds
and instrumentalities of criminal acts is an important and appropriate tool of fed-
eral law enforcement. Congress should encourage the continued use of both civil and
criminal forfeiture not only to deter and diminish the capacity of the criminal to
commit future criminal acts, but to provide a means of restoring criminal proceeds



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 24 of 37)