Asset Forfeiture Defense | Civil and Criminal Asset Forfeiture Defense
What is asset forfeiture?
Asset forfeiture is a legal tool that prosecutors and law enforcement officials use to take and keep private property on the basis that such property is linked to criminal activity. Seizures are actions where a government activity gains possession of private property. Forfeiture is the legal process whereby that government divests ownership of such property outright. Under federal law seizures and forfeitures are authorized under multiple statutes including 21 USC 853 and 881 , 18 USC 924, 981, 982, 983, 984, and 985. In Texas, seizures and forfeitures are authorized under Articles 59.03, 59,04, and 59.05 of the Texas Code of Criminal Procedure.
What is a Seizure?
It is important to 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. In contrast, forfeiture describes an actual transfer of ownership between the prior owner and the government.
Asset forfeiture is big business for local, state, and federal agencies. In 2016, the Treasury Executive Office for Asset Forfeiture (TEOAF) fund took in over over $1.55 billion in forfeitures and recoveries. Local agencies like DPS and the Tarrant County District Attorneys Office take in millions each year in forfeitures. Both locally and nationwide, attorneys contest these seizures infrequently. On average, our firm has recovered or prevented the forfeiture of nearly six million dollars a year for our clients.
The numbers below do not include property worth over $1 million, a home, and numerous vehicles we recovered for our clients.
Proceeds and Facilitation Theories in Asset Forfeiture
Forfeiture is a judicial construct where the government pursues the outright taking of private property on the basis that it is linked to crime. There are two bases most commonly used to seize and forfeit property. First, the Government may try to establish that targeted property is ill-gotten gains (proceeds) of crime. In the alternative, it could allege that such property, like a vehicle, is used to aid (facilitate) a crime.
What happens if my property is seized?
The most important step that property owners (known as respondents and claimants) can take if the property is seized is to make a claim to that property quickly. In a State case, a claimant must file an answer before the Monday after the 20th days has passed since the seizure. If that claimant, or respondent as is the proper term in a state case, fails to meet the deadline then the State keeps the property by default. Similarly, in the federal system claimants have 35 days to make a claim after receiving notice of an administrative forfeiture. Even if they comply with this deadline, such claimants will have to make a second claim within 30 days of receiving notice of a judicial forfeiture. 18 USC 983(a)(4). Nearly 85% of property that is seized is forfeited to the Government via default. This illustrates the power that these deadlines hold and the utmost importance of timely filing a claim. Put simply, failing to make a timely claim is lethal to a citizen’s ownership of his or her property.
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.
What if no charges are filed?
There is absolutely no requirement that property seizures are accompanied by criminal charges of any kind. In other words, a government agency can pursue forfeiture even if no person is arrested or charges are never filed. For example, if an officer pulls a person over for speeding and finds money bundled in a manner that officer finds suspiciously similar to drug money, the officer can seize it and pursue forfeiture even if the driver never gets arrested or even if the officer has no direct evidence of any drug deal. See Tex.Crim.Pro. Art. 59.05. Similarly, a person who deposits money in increments below $10,000 could have their account frozen or seized via warrant on the basis that it is suspected to have been structured under 31 USC 5324. Many cases are made by indirect evidence such as drug dog sniffs or lack of identified income. This means that claimants typically are in a position that they must prove their money’s innocence.
What is the difference between criminal forfeiture and civil forfeiture?
Texas does not currently have a mechanism for criminal forfeitures. However, the Federal Government does under Fed.Crim.Pro. 32.2 and 18 USC 982 and 21 USC 853.
The differences between criminal and civil forfeiture are significant. First, civil cases actually name the property itself as a party to a lawsuit. In other words, these proceedings are in rem. It is common to see cases styled The State of Texas v. Currency or The United States v. Vehicle. This is significant because it establishes that a criminal prosecution is not the basis for the forfeiture. It is also important because the property typically can not be substituted for other property. Second, criminal forfeitures name actual defendants as the object of the forfeiture effort. In other words, jurisdiction is in personam rather than in rem. This means that an indictment must issue for a criminal forfeiture to be pursued. Also, criminal forfeitures can include money judgments and substitute property under Rule 32.2 and 21 USC 853(p). This is a massive tool for the Government because it authorizes Courts to take property that is not linked to a crime as a substitute for property that has been dissipated.
What was once a crime-fighting and law enforcement tool has since become a profit-making, personal account for some law enforcement officials. Instances of abuse in both the confiscation and spending of asset forfeiture proceeds have increased at alarming rates.” – Texas Senate Committee on Criminal Justice
What is Civil Asset Forfeiture?
Most government efforts to seize and keep property are done using civil forfeiture. This means that either a state or federal prosecuting authority files a lawsuit naming targeted property as the defendant. In essence, the property itself is the party accused of wrongdoing then it can be subject to asset civil forfeiture.
What is an Example of Civil Asset Forfeiture?
If the State of Texas believes that a bank account is linked to crime (such as drug money or fraud proceeds), it will likely file a Notice of Intended Forfeiture under Art. 59.02, 59.03, and 59.04 of the Texas Code of Criminal Procedure to start the civil forfeiture process. It is quite possible that such lawsuit would be styled State of Texas v. $30,000 in Currency or State of Texas v. Bank Account Ending in xxx-xxx-1111.
Don’t think that the federal government isn’t interested in forfeiture as well. Federally, civil forfeitures are authorized under 18 USC 981, 983, 21 USC 881, and Rule G of the Supplemental Rules for Certain Admiralty and Maritime Claims. Just as in state cases, the property itself is named as a defendant in rem.
What are the Rules in Civil Forfeitures?
Civil asset forfeiture allows the use of civil rules of pleading and practice that are extremely powerful for government prosecutors. First, they ensure that criminal charges never have to accompany civil forfeiture cases. This means that property may be forfeited even if charges are never brought. Second, unlike criminal cases, a claimant’s right against self-incrimination under the 5th Amendment of the U.S. Constitution can be used against him or her in a civil case.
Civil Asset Forfeiture without Criminal Prosecution
Also keep in mind that while criminal charges may never be brought if a person’s property is pursued under a state or federal forfeiture action, the specter of criminal exposure still survives. It is important for forfeiture attorneys to ensure that their legal representation never unnecessarily exposes a client to criminal prosecution. Further, while charges are often never brought, there are circumstances where prosecutors seek to both criminally prosecute a property owner and pursue civil forfeiture of that property simultaneously. This is known as parallel proceedings. Since invocations of the right to remain silent under the 5th amendment are quite damaging in civil forfeiture cases it may make sense to stay civil proceedings during the pendency of a criminal prosecution.
What is criminal asset forfeiture?
While the State of Texas does not currently authorize criminal forfeitures, the federal system does under 18 USC 982, Fed.Crim.Pro. Rule 32.2, and 21 USC 853.
What is administrative forfeiture?
In the federal system an agency, such as the IRS or the FBI, may try to forfeit property without going to court. This is authorized under 18 USC 983 (a)(1). However, if a claimant comes forward and makes a claim to that property then the agency must refer the case to a United States Attorney’s Office to pursue judicial forfeiture. If the USAO takes the case then it has an additional 90 days to file a judicial complaint in federal court. 18 USC 983(a)(3). Put simply, administrative forfeitures are done without judicial intervention but can only be accomplished if no persons or companies claim seized property. If a claim is made then the matter must be resolved judicially. During Fiscal Year 2013 the Office of the Inspector General reported a net position of $1,855,800,000. Further, in Fiscal Year 2013 nearly $311,000,000 was “equitably shared” with state agencies as a result of their cooperation with the Department of Justice in a myriad of forfeiture prosecutions.
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. 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.
Where does forfeited property go?
The Department of Justice retains a large portion of forfeited property and manages those assets in its Asset Forfeiture Fund (AFF). Further, the U.S. Treasury has its own fund. AFF is tracked and managed through the Department of Justice’s Asset Forfeiture and Money Laundering Section (AFMLS) whereas the Treasury fund is overseen by the Treasury Executive Office of Asset Forfeiture (TEOAF). Also, Treasury reported that FY 2013 was the highest revenue year since the inception of the TEOAF fund with income of over $1.7 billion from forfeitures and recoveries.” Comparatively, the Tarrant County D.A.’s Office received more than $2.8 million in equitable sharing contributions. Dallas County forfeited more than $1.3 million dollars through its own program. DPS received more than $3.9 million in equitable sharing. This money is supposed to be used to fund legitimate expenses such as equipment for law enforcement agencies. However, there have been serious allegations concerning the abuse and misuse of forfeiture funds.
A generation ago in America, asset forfeiture was limited to wresting ill-gotten gains from violent criminals. Today, it has a distinctive ‘Alice in Wonderland’ flavor, victimizing innocent citizens who’ve done nothing wrong. Justice Don Willet, Texas Supreme Court
Are there any defenses in forfeiture cases?
Yes, by far the most common defense asserted is innocent ownership. That is, property that is acquired by someone with no knowledge of its connection to a crime has the right to make a claim and regain possession of his or her property in both the federal and Texas state systems. The innocent owner defense is authorized under federal statute 18 USC 983(d). It is also authorized in Texas under Tex.Crim.Pro. Art. 59.03(c)(1) and (2) innocent owners also may mount a defense to forfeiture efforts.
It is important to understand, however, that in both the state and federal system, only certain claimants qualify as innocent owners. In other words, nominees, otherwise known as straw buyers do not qualify. Unsecured creditors do not qualify. And persons who have some knowledge of the facts underlying the forfeiture (the alleged crime) also do not qualify. The other tactic that is useful in defending forfeiture cases is to demonstrate an asset’s legitimacy. In other words, show proof that the property is not linked to crime and thus, not subject to forfeiture. This type of defense requires legal expertise, financial expertise, and supporting documentation.
Who can claim seized property?
Under Texas law, any person (including businesses) that either possess, hold title, or otherwise have an interest in property may make a claim. Legally, there are concepts pertaining to equitable and statutory ownership of property. Further, since each state has slightly different laws regarding property ownership, this question can become quite complex. It is important to understand however, that there is one type of interest that it not recognized. That is, unsecured interests. In the federal system, a claimant must have standing to make a claim. Under this analysis the central question becomes whether a person’s ownership interest falls “within the zone of interests to be protected or regulated by the statute.” $500,000 in U.S. Currency, 591 F.3d at 404; U.S. v. 2004 Ferrari 360 Modano, 902 F.Supp.2d 944. In simplest terms, owners with standing are generally the same types of owners who qualify to assert an innocent ownership claim. That is, possessors, title owners, and secured creditors.
Tarrant County law enforcement agencies reported seizing approximately $14.09 million over the last decade (2003-2013). The same audits indicated that Tarrant County retained approximately $4.35 million in forfeiture proceeds in the 2013 fiscal year alone
What is the difference between seizure and forfeiture?
These terms are often used interchangeably but there is a significant distinction between them. A seizure is an act by a government agent to take possession of property. Also included in this term are efforts to encumber title such as placing a lis pendens on real property. Basically, seizure is a restraint or detention of property. While possession may be said to be 9/10 of the law it is not everything. The fact that a government entity has possession of property does not make it the actual owner of that property. That is where forfeiture comes to play. Forfeiture is the process and status whereby property goes from being owned by a private entity or person to be owned outright by a government agency. Put simply, seizing is about possession and forfeiture is about ownership.
What crimes support forfeiture?
In Texas, any property that is used in the commission of any first or second degree felony or any felony theft, or felony under the Securities Act, or any drug felony may be forfeited. This means that cars, computers, boats, weapons, homes that make it easier to commit any fraud or theft costing more than $1,500 or any aggravated assault or crime causing serious injury, or any drug crime involving any detectable amount of narcotic such as cocaine, methamphetamine, or heroin may be forfeited. Further, any property that is proceeds of these offenses may be forfeited. That means that any homes, jewelry, art, cars, or other property that is acquired from the fruits of any of these crimes is subject to seizure and forfeiture in Texas.
The federal system is just as expansive. Under 21 USC 853 and 881 as well as 18 USC 981, 982, 983, 1341, 1343, 1967, 1957, 1961, any property used to facilitate (in the commission) or that is proceeds of these underlying offenses, may be seized and forfeited. Typical federal offenses supporting forfeiture are wire fraud, mail fraud, bankruptcy fraud, conspiracy, possession with intent to distribute, Medicaid fraud, structuring, and customs violations can support forfeiture.
Varghese Summersett PLLC is available for a free consultation. Call our experienced Asset Forfeiture Attorney at 817-203-2220 to defend your property against government seizure anywhere in the United States.
Difference Between Forfeiture Types
Many forfeitures are actually administrative in nature and never make it to the courts. Put simply, administrative forfeitures occur where the police agency itself, such as the IRS, CBP, FBI, or DEA, bring the action. Judicial forfeitures, however, are brought by a prosecuting agency such as a state district attorney’s office or the United States Attorney. An interesting fact about forfeitures is that a large majority go uncontested because people are reluctant to claim assets or simply because they don’t know how to go about doing so. Administrative forfeitures occur at the agency level and not within the courts. In other words, these forfeitures are initially processed by the agency that seized the assets. See 18 USC § 983.
Note, the State of Texas does not have administrative forfeiture and thus either a district attorney’s office or the State Attorney General’s Office can bring a forfeiture action.
As for administrative forfeitures, the policing agency will begin by providing the potential owners of the property a notice of seizure and intended forfeiture. If no one has claimed the assets in question and the forfeiture has not been challenged the agency may administratively forfeit the asset. As a result, the forfeiture matter never even makes it to the courts and a declaration of forfeiture is entered in favor of the government. It is important to know that there are limits on what can be forfeited administratively and houses and real property may not be forfeited in this manner. Also, under 18 USC 983 assets valued at more than $500,000 may not be administratively forfeited.
It is important to remember that once the strict claim deadlines have been missed, there is little that can be done to recover your assets. Federal appellate courts have consistently refused to visit the merits of administrative forfeitures and will only review whether the police agency sent notice timely. If they have, that’s all the appellate court cares about and it will back up the forfeiture. That is why it is important to seek legal help and file a claim immediately once a forfeiture notice is received. If the owner does file a claim, there are two ways the government can proceed: civil or criminal forfeiture.
If you file a claim at the administrative level, then the government may choose to proceed with a civil forfeiture action. For a myriad of reasons, civil forfeiture is easier for the government to pursue than criminal forfeiture. One of the reasons is that there is no requirement for a criminal charge or conviction for an asset to be forfeited by civil forfeiture. In addition, the action is pursued against the asset itself and not an individual. Thus the property acts as the defendant. This makes it easier for the government to forfeit property because the burden of proof in a civil forfeiture action is “preponderance of the evidence” which is lower standard than a criminal action, which requires proof “beyond a reasonable doubt.”
Because civil asset forfeiture has a lower standard of proof than a criminal action, it is much easier to forfeit money without definitively proving it was obtained from criminal activity. In fact, to get seized assets returned, the owner, and not the government, is usually required to prove that the assets are not connected to criminal activity.
Civil forfeiture is not punitive in nature because it is not done as punishment but rather to correct the harm caused by the crime. Of course, this is legal fiction because property owners certainly feel a punitive sting if they lose money via forfeiture. In most cases, the government must prove that the property itself, the property is the proceeds of involved with or facilitates illegal activity. As with any forfeiture proceeding, it is absolutely necessary to file a claim for the assets and answer the forfeiture complaint within the prescribed time period, otherwise you are at risk for losing your property. See 59.02-59.06 of the Texas Code of Criminal Procedure and 18 U.S.C. 983.
This means that if the property was previously sought in an administrative proceeding that an owner must make two claims, not just one. Put another way, the administrative claim does not count as a judicial claim.
One important defense is available in Texas and under federal law with respect to civil forfeitures. That is, innocent owners are afforded a defense.
While civil forfeitures enjoy a lower standard of proof than necessary for a criminal conviction, there are some significant advantages afforded the government under a criminal forfeiture. Specifically, the government can collect money judgments and forfeit substitute assets criminally.
Criminal Asset Forfeiture
Criminal forfeiture actions are unique in that they are pursued as part of the criminal case against an individual or group of people. For criminal forfeiture actions a conviction is required. In a sense, this makes it more difficult for the government to pursue criminal forfeiture actions, which is why civil forfeiture actions are more readily pursued by the government. Criminal forfeitures are intended to be punitive in nature as opposed to civil forfeitures and a defendant’s property can be forfeited as part of the defendant’s sentence. Also since the defendant is an individual as opposed to property in a civil case, the defendant can be ordered to pay a money judgment or forfeit substitute assets that were not part of the crime, if the assets related to the crime are no longer present. See 21 USC § 853.
If the government is seeking criminal forfeiture and the case proceeds to trial, the trial will occur in two phases. The first phase will be proving the defendant is guilty of the crimes alleged beyond a reasonable doubt. If the government obtains a guilty verdict, then the next phase occurs which is where the government must prove the connection between the property and the defendant’s criminal conduct. Once again forfeiture requires the “preponderance” standard of proof so in the second phase the government must only prove the connection between the property and the crime based upon this lower standard.
If the government meets its burden of proof, then the court will grant a preliminary order of forfeiture for the government. The forfeiture is only finalized once an ancillary hearing takes place to address any interest third parties may have in the property. Once any third party claims are heard, the government will enter a final order of forfeiture, which gives the government title to the defendant’s property.
Criminal forfeiture proceedings are provided for under Rule 32.2 of the Federal Rules of Criminal Procedure.
As is the case with administrative forfeitures, Texas does not provide for criminal forfeitures but it does have a substitute assets provision under Article 59.
Attorney General Jeff Sessions calls for more Federal Asset Forfeitures