Holder on Federal Adoptions

Are Federal Asset Forfeitures a thing of the past?

Are Federal Asset Forfeitures a thing of the past? A closer look at Eric Holder’s announcement.

Attorney General Eric Holder recently announced changes to federal asset forfeiture procedures.  Specifically, the Attorney General’s order prohibits many types of federal adoptions. Many news outlets reported this as a significant change and a relaxation of the federal support of asset forfeitures. As you will discover in this article, Holder’s announcement will affect less than 3% of all federal adoptions.

Let’s start with the basics.

What is Federal Adoption?

Federal adoption happens when property is seized by local or state law enforcement agencies pursuant to a state law and then requests a federal agency take the seized property and forfeit it under federal law.

What is a Seizure?

It is important to first recognize to recognize the differences between seizures and forfeitures. A seizure is an act of confiscation. That is, seizures have to do with the possession of property. For example, if a police officer takes a suitcase full of cash or obtains a warrant to confiscate a bank account and then proceeds to that bank and has the account converted to a cashier’s check, all that has happened so far is that a government entity has obtained possession of (seized) the property.

What is Asset Forfeiture?

While seizure has to do with possession, forfeiture describes an actual transfer of ownership between the prior owner and the government. It makes sense to think of resident leasing an apartment. That resident has possession of the apartment but does not own it. Such is the case where property is seized but not yet forfeited.

Standard of Proof in Asset Forfeiture Cases

Seizures require either a warrant or qualify for a warrant exception (e.g., a search incident to arrest). Both of these can be accomplished upon a mere showing of probable cause. However, forfeitures require a higher standard of proof and some sort of legal finding. That is, the government (federal or state) may only forfeit property if it shown by a preponderance of the evidence that property is connected to crime. For further discussion on what types of connection between property and crime may support a forfeiture, read more about asset forfeitures here.

Back to Federal Adoptions

Federal adoption happens when property is seized by local or state law enforcement agencies pursuant to a state law and then requests a federal agency take the seized property and forfeit it under federal law. In essence, the state seizes the property and the federal government handles the forfeiture.

There are many examples of federal adoption. Perhaps the most classic example lies in the “road kill.” That is, if a local police officer pulls a citizen over and becomes suspicious that the driver is using or transporting drugs. The officer may request to search the car or bring a canine out to sniff the car or may look to see if the driver has warrants allowing for an arrest. If any of these circumstances provide enough cause to search the car, the officer will do just that. If the officer searches and finds money bundled in a certain way or in an amount that is suspiciously large then she may seize it believing there is probable cause that the money is connected to a crime. Ironically, the driver does not have to be arrested and there does not need to be a criminal investigation for the officer to seize the property.

At that point, the property is in the possession of the police and they had to decide what to do next. In the pre-memo era, they had 3 options. 1) They can give it back. 2) They can initiate state forfeiture proceedings. Or 3) They could request a state adoption of forfeiture proceedings.

Motivation for Federal Adoption

It would make sense to ask why a police agency would prefer to send the property for federal adoption instead of state forfeiture proceedings. Simple, exhaustion of fewer resources and, more importantly, equitable sharing. The DOJ used to share 80% of forfeited proceeds with law enforcement whereas many state attorney’s offices shared about 50%. Thus, it was in their best interests to send it federal.

However, adoption has received growing criticism because very few of the seizures actually led to criminal investigation or even appeared to have much federal significance at all. Because of this, Attorney General Holder put a stop to it. Or did he?

Is this the end of federal asset forfeitures?

No. As the Department of Justice stated in a press release issued immediately after the Holder memo, “Asset forfeiture remains a critical law enforcement tool when used appropriately.” In fact, only three percent of federal forfeitures came from federal adoption over the last six years.

There is some reason to challenge that statement because a great majority of seized assets are forfeited by default meaning that owners did not come forward to claim it. These would be considered adoptions and constitute a great portion of forfeited property. Nonetheless, there are certainly plenty of seizures and forfeitures by the federal government that are not the result of adoptions.

Non-adoptive Forfeitures

The U.S. government has increasingly included forfeiture in many of its investigations. For example, if a person commits a federal firearms licensing violation, or a federal drug distribution act, or a bank robbery, or a wire fraud, or a healthcare fraud, or a myriad of other federal offenses, you can be sure that the government will consider whether it can seize and forfeit property that is proceeds of such a crime, an instrumentality of that crime, or if the case of money laundering, that is involved in the crime.

Basically, forfeiture is one of the fastest growing areas in all jurisprudential realms and is certainly the fastest growing federal law enforcement technique. In the end, the federal government, while not pursuing adoption, is completely free to pursue good old fashioned federal adoption… and does so liberally. One can see the hundreds of millions in the Treasury Executive Office of Asset Forfeiture (TEOAF) fund and the over 1.5 billion in the DOJ Asset Forfeiture & Money Laundering Section Asset Forfeiture Fund (AFMLS AFF).

Attorney General Holder’s Order on Federal Adoptions Carves Out Substantial Exceptions

Holder’s order also carves out several exceptions:

  1. It does not affect joint task force cases. For example in Tarrant County, most seizures are a result if a joint task force between the Tarrant County District Attorney’s Office and the Drug Enforcement Administration.  In 2014, Fort Worth Star Telegram reported $2.9 million was shared with the TCDA/DEA task force as a result of local seizures.
  2. Seizures by state and local authorities that are a result of joint investigations.
  3. Seizures by state and local authorities that are coordinated with federal authorities as part of a federal investigation
  4. Seizures pursuant to federal seizure warrants taking custody of assets seized by the state government.

All 4 of these examples result in the federal government receiving pecuniary benefit on the basis of local law enforcement actions and involve equitable sharing. While these exceptions do not entirely swallow the rule, they certainly muzzle the Attorney General’s pronouncement that he articulated in the memo.

About the Author

Steve Jumes

Steve Jumes is former Assistant United States Attorney and he is also a Board Certified Criminal Law Specialist. Steve handles federal and state criminal matters in addition to being one of the nation's foremost asset forfeiture attorneys. A former prosecutor at both the state and federal level, Steve Jumes is admitted to the Northern, Eastern, and Western Federal Districts in Texas. Steve Jumes has tried over 100 cases to juries in the state and federal system.Steve Jumes focuses primarily on white collar crimes. He is experienced in high-profile money laundering, wire fraud, health care fraud, and tax matters.