Summary of the Problem:  The Civil Asset Forfeiture Reform Act of 2000 (CAFRA) delivered several meaningful and overdue reforms — for example, it placed the burden of proof on the government, by a preponderance of the evidence, in all civil forfeiture cases covered by the Act.  It also abolished the cost bond, the tariff claimants had to pay before they could proceed legally for return of their own property. Unfortunately, many of the law’s important reforms have been undermined by statutory loopholes or judicial decisions.

            Several states have enacted similar or broader reforms, including provisions to require criminal conviction prior to any forfeiture. Federal law has frustrated some of these reforms.  Under the federal equitable sharing law, if state police want to circumvent state forfeiture laws — for example, because the state law allocates forfeited assets to the state’s education fund — they simply turn the forfeiture over to federal law enforcement authorities. Federal authorities keep 20% and return roughly 80% to the state police.  We believe that federal legislation or regulation to halt this circumvention of state law and fiscal policy would garner strong bipartisan support.  This issue also possesses a “states’ rights” component, allowing states to enact their own reforms without federal interference.  

Proposed Solutions:

            Executive:  An executive order or agency regulation is an available, though not preferred, remedy for use of equitable sharing to circumvent state law.

            Legislative Changes:  Congress should pass comprehensive legislation to curb abuses of federal and state forfeiture powers and fulfill the original intent of the bipartisan Civil Asset Forfeiture Reform Act and related state reforms.

1.             Amend the federal equitable sharing law, under which state police circumvent state forfeiture laws by turning over the forfeiture to federal law enforcement authorities in exchange for a percentage of the proceeds. 

Ø  Amend 21 U.S.C. § 881(e)

2.             Clarify CAFRA’s fee shifting provision, which has been undermined by Second Circuit case law, to fully enforce the government’s obligation to pay attorney fees to prevailing claimants.

Ø  Amend 28 U.S.C. § 2465(b)(1)

3.             Close loopholes, created by judicial decisions, in the statutory right to sue the government (i.e., waiver of sovereign immunity) for negligent or intentional damages to or loss of seized property in its custody.

Ø  Amend 28 U.S.C. § 2680(c)

4.             Explicitly waive sovereign immunity where the government forfeits property without proper notice to the owner or destroys, sells or loses property without having forfeited it.

Ø  Amend Rule 41(g) of the Federal Rules of Civil Procedure

            Legislative Appropriations (Solutions w/ Funding Requests):  Congress could prohibit or restrict the use of Justice Department funds to forfeit property under the equitable sharing law. 

Jurisdiction:

    Executive Branch: Department of Justice

    Legislative Branch: House and Senate Judiciary Committees; House and Senate Appropriations Committees

Background:

            Legislative Branch:  In 2000, Congress unanimously enacted the Civil Asset Forfeiture Reform Act (CAFRA), the only major reform of our Nation’s civil forfeiture laws in over 200 years.  The CAFRA had strong bipartisan support, reflecting the public’s concern that our property rights were in danger from overzealous enforcement of unduly harsh forfeiture laws. See U.S. v. James Good Real Property, 510 U.S. 43, 114 S. Ct. 492, 505 (1993) (“Individual freedom finds tangible expression in property rights”).

            In 1988, Congress passed an amendment requiring that federal transfers of forfeited assets to a state be allocated according to the state’s asset distribution formula. However, the amendment was repealed in 1989 before it took effect (Public Law 101-189, §1215(a)).

            Judicial Branch:  Judicial decisions have undermined the rights of prevailing parties to obtain attorney fees and damages from the government.  See, e.g., United States v. Khan, 497 F.3d 204 (2d Cir. 2007); Foster v. United States, 522 F.3d 1071 (9^th Cir. 2008); Adeleke v. United States, 355 F.3d 144, 154 (2d Cir. 2004); Diaz v. United States, 517 F.3d 608 (2d Cir. 2008).