The Strange World of Asset Forfeitures
Asset Forfeitures, Equitable Sharing, and Special Interrogatories
by White Collar Crime Attorney Steve Jumes
Unlike the lottery, you can’t claim your property anonymously in asset forfeitures.
While most of us desire to be charitable and philanthropic, it has become an unfortunate reality that once a person amasses property they expect solicitations by individuals, organizations, or government entities. Stories of athletes who blow their fortunes because multiple family members and so-called friends begin harassing them or stories of lottery winners who squander their fortunes due to the same pressures are voluminous. In fact, our culture has become so sycophantic that Forbes actually advises lottery winners to “remain anonymous if your state rules permit it.”
Further, it should come as no surprise that the U.S. Government, and most states, are also susceptible to temptations to panhandle; however, in the case of the Government, begging is more like taking. No place is this more visible than in the fastest growing area in law enforcement, and jurisprudence… asset forfeiture.
The Strange World of Asset Forfeitures
In its simplest terms, asset forfeitures are judicial efforts by a government agency to seize, and ultimately keep, private property on the basis that the targeted property is somehow connected to illegal activity. This can be initiated in several ways. For instance, a police officer during a traffic stop may find cause to search a vehicle and find money that is suspiciously packaged or in close proximity to a scent associated with narcotics that allegedly only canines can detect. Or, as a different method, an agency investigating a crime may seek a seizure warrant from a state or federal judge requesting the right to freeze or seize a bank account because they hold proceeds of crime (wire and mail fraud, healthcare fraud, drug distribution, or virtually any other crime). Of course there are also ‘substitute assets’ theories where the government goes after clean property owned by a convicted criminal because the dirty money has already been transferred or dissipated. [See Steve Jumes’ Article on Fundamental Fairness in the Voice]
One may ask if asset forfeiture is common. The answer is a resounding yes. [Read more about asset forfeitures in Steve Jumes’ recent article on Suspicious Activity Reports.] The AFMLS (Department of Justice Asset Forfeiture and Money Laundering Section) Asset Forfeiture Fund (AFF) and the TEOAF (Treasury Executive Office for Asset Forfeiture) fund hold billions and hundreds of millions respectively. But don’t think this boon is limited to federal agencies, most states are in on the action. The City of Fort Worth police department received $29,432 in equitable sharing in Fiscal Year 2012. By comparison, the Dallas Police Department received $548,733 during that time period. Conversely, the Tarrant County District Attorney’s Office received $2,883,194 while the Dallas District Attorney’s Office received $20,051.
Equitable Sharing is a process where the federal government shares some of its forfeiture proceeds to compensate/reward local agencies for their assistance in federal investigations. It has been impacted somewhat by Eric Holder’s recent announcement that the federal government will no longer be adopting local seizures for federal forfeiture proceedings. However, don’t think this will curtail property seizures, local agencies will just handle those case themselves instead of asking for the federal government to adopt them. [The reason local agencies often chose adoption as opposed to local forfeiture proceedings is simple… profit. The federal government typically shares 80% of proceeds with local police departments while most district attorney’s offices share far less.] In fact, the Dallas District Attorney’s Office, in addition to the $20,051 equitable sharing proceeds it garnered, also received $1,300,000 through state forfeiture proceedings.
Civil Procedure and the Bar to Anonymity
When one’s property has been seized and targeted for forfeiture, the burden falls on property owners, also known as claimants or respondents, to actually inform the government entity (whether it’s the United States Attorney’s Office,IRS, FBI, ATF, DEA, U.S. Postal Inspector’s Service, or a city police department, a sheriff’s office, or a district attorney’s office) that they want their property back. This is necessary in both administrative and judicial forfeiture proceedings. [For a quick discussion regarding the various types of forfeitures see 10 Questions Asked About Forfeiture]
Federally, a claim must be made pursuant to 18 U.S.C. 983(a)(1)-(3) and Rule G, Supplemental Rules of Admiralty and Maritime Claims. If a claim is not timely made within about 30 days of receipt of notice of a civil complaint, the property automatically goes to the government by default. However, such a claim must be correctly filed or the Government will take additional discovery steps against owners.
Asset Forfeitures: Discovery, Complexity, and Expense
Asset forfeiture cases, if not quickly resolved, can become very expensive because they include massive discovery requirements which are typically handled by attorneys. For example, a claimant may want to depose a seizing officer or the government plaintiff may seek several years of bank statements, check stubs, and tax information. All of these requests as well as the review of such material is typically paid to private lawyers by the billable hour. Other discovery practices include requests for admission and answers to interrogatories. If this sounds intensive and expensive, then you get the point.
Requisites of a Claim
18 USC 983(a)(2)(C) mandate that a claim shall “(i) identify the specific property being claimed; (ii) state the claimant’s interest in such property; and (iii) be made under oath, subject to penalty of perjury. Echoing and expounding upon these requirements, Rule G (5) of the Federal Rules of Civil Procedure require that “a claim must: (A) identify the specific property claimed; (B) identify the claimant and state that claimant’s interest in the property’ (C) be signed by the claimant under penalty of perjury’ and (D) be served on the government attorney designated in the matter.
This means that a claimant cannot simply make a claim by showing a receipt similar to returning an item at Walmart. Instead, a person who claims property musty sign a statement under the penalty of perjury asserting how he or she owns the seized property and how it was legally acquired. Failure to do so can get the claim thrown out or force the claimant to answer further discovery.
Asset Forfeitures and Special Interrogatories
Rule G(6) gives the Government the right to serve discovery process to a claimant on the front end of a case forcing the claimant to state his or her “identity and relationship to the defendant property.”
For example, John Wiley Price, a county judge in Dallas, made a claim to a portion of $250,000 seized from his property. He simply stated the property was his and he wanted it back. The Government filed a special interrogatory in that case to force him to divulge which portion of it was his and how he acquired that money. This step is important because it may help the Government tie him to certain activities it alleges to be illegal.
But even for persons who aren’t themselves the target of a federal investigation, this is a very important consideration for claimants because they cannot be flippant when making a claim. Some people are wary of filing a public document describing what property they owe and explaining how they acquired it. For instance, a spouse who did not participate in a crime may assert an interest in her home on the basis of a community property interest. If combatting a proceeds theory, that spouse would have to explain how much he or she contributed to the value of that home and what the nature of his or her income is.
Just as important as a claimant’s privacy is the reality that deficient claims can cost claimants their standing in the lawsuit.
In Texas, prosecutors also have the right to force such disclosures under Article 59 of the Code of Criminal Procedure by making special exceptions to a judicial answer filed by claimants/respondents. Ultimately, certain aspects of privacy are foreclosed in asset forfeiture proceedings and the ability to navigate substantive and procedural rules is critical in this area.