Court Says There's No Remedy For Person Whose Vehicle Was Subjected To Civil Forfeiture After An Illegal Search

from the 4th-Amendment-meets-local-statutes-and-no-one-wins-but-the-government dept

A bizarre case comes out of the Texas court system -- landing squarely in the middle of a legal Bermuda Triangle where illegal searches meet civil asset forfeiture… and everything is still somehow perfectly legal. (via FourthAmendment.com)

The facts of the case: police officers arrested Miguel Herrera and seized his 2004 Lincoln Navigator. An inventory search of the vehicle uncovered drugs and the state moved to seize the vehicle itself as "contraband" using civil (rather than criminal -- this is important) asset forfeiture. Herrera argued that the stop itself was illegal and anything resulting from it -- the drugs and the civil seizure of the vehicle -- should be suppressed.

The Supreme Court of Texas examines the facts of the case, along with the applicable statutes, and -- after discarding a US Supreme Court decision that would have found in Herrera's favor -- decides there's nothing he can do to challenge the seizure. He can't even move to suppress the evidence uncovered following the illegal stop -- the same search that led to the state seizing his vehicle under civil forfeiture statutes.

The presiding judges spend several pages (including two concurrences) discussing the aspects [PDF] of this case in detail, but cannot bring themselves to exclude the evidence obtained from the illegal search, much less return Herrera's vehicle to him.

First, the court decides that the deterrent effect of suppressing the evidence is outweighed by the cost to society.

In this case… the exclusion of admittedly relevant evidence imposes a substantial social cost. Here, the vehicle and the evidence found within it are indisputably relevant—if the state shows by a preponderance of the evidence that the vehicle was “used or intended to be used in the commission of” a felony under the Controlled Substances Act, then it is “contraband.” If it qualifies as contraband under Chapter 59, then it “is subject to seizure and forfeiture.”

[...]

Additionally, applying the exclusionary rule here ostensibly results in returning a vehicle “used or intended to be used” in the commission of drug crimes to its owner. See CODE CRIM. PROC. art. 59.01(2)(B)(i). Applying the rule to Chapter 59, therefore, would likely have the undesirable effect of politely handing such vehicles—or computers, money, weapons, or whatever else—back to those who might put them to criminal use.

The court moves on to dismiss the Supreme Court's 1965 decision (One 1958 Plymouth Sedan v. Pennsylvania), suggesting not only that things have changed too much over the past 50 years to consider it relevant, but also -- unbelievably -- that the seizure of a person's assets via civil forfeiture is not a form of punishment.

[T]he legal and jurisprudential landscapes have changed significantly since Plymouth Sedan was decided in 1965, weakening some of the opinion’s underpinnings. For one thing, Plymouth Sedan was decided at “a time when [the Supreme Court’s] exclusionary-rule cases were not nearly so discriminating in their approach to the doctrine,” yet more recently the Court has “abandoned the old, ‘reflexive’ application of the doctrine, and imposed a more rigorous weighing of its costs and deterrence benefits.” Thus, the Court’s more recent jurisprudence, and its now well-established cost-benefit analysis, controls our analysis. And, as discussed, the “deterrences against [illegal searches] are substantial—incomparably greater than the factors deterring warrantless entries when Mapp [and Plymouth Sedan] [were] decided.”

Finally, in Plymouth Sedan, the forfeiture proceeding’s “object, like a criminal proceeding, [was] to penalize for the commission of an offense against the law.” See 380 U.S. at 700. Chapter 59 forfeitures, on the other hand, are expressly civil and non-punitive; indeed, “[i]t is the intention of the legislature that asset forfeiture is remedial in nature and not a form of punishment.”

It's hard to see how civil asset forfeiture isn't a form of punishment. Without having to prove an asset was illegally obtained or used in criminal activity, the state can simply take cars, money, houses, etc. away from citizens simply by providing a limited amount of evidence suggesting these might have been related to criminal activity. And if the state is wrong, it's still a long, uphill battle for anyone seeking to have their property returned. This is even admitted by the court in the same paragraph.

While this provision certainly relates to criminal activity, it does not require any proof that a person committed a crime—it only requires that the state prove by a preponderance of the evidence that the property is contraband.

The court then concludes that neither the Fourth Amendment nor the state's civil forfeiture statutes provide a remedy for Herrera -- at least not one the court is willing to grant.

Even if the state is not statutorily empowered to unlawfully seize contraband, (and it is not), what is the remedy for failure to comply with article 59.03(b)? Herrera argued in his motion to suppress—and argues now—that the remedy is exclusion. Yet what is the source of this exclusionary remedy? As discussed above, it is not the Fourth Amendment. The constitutional rule applies only when its deterrence benefits outweigh its heavy social costs, and that is not the case here. Nor does Chapter 59 provide for exclusion. To start, article 59.03(b) deals with seizure of the property to be forfeited; it does not concern itself with other evidence that might be used to prove property is subject to forfeiture. Thus, we reject Herrera’s argument that evidence found during the seizure should be excluded under article 59.03(b).

Moreover, while article 59.03 appears to limit officer conduct as to seizure of property subject to forfeiture, it does not provide a remedy—much less exclusion—for a violation of that apparent limitation. Articles 59.03(a) and (b) provide for how property subject to forfeiture may be seized. Article 59.03(c) requires the peace officer who seized the property to provide the attorney representing the state with a sworn statement including, among other things, “a list of the officer’s reasons for the seizure.” In the forfeiture proceeding, that attorney must then “attach to the notice [of seizure and intended forfeiture] the peace officer’s sworn statement.” See CODE CRIM. PROC. art. 59.04(b). Yet, despite providing fairly detailed notice requirements such as these, Chapter 59 never mentions excluding or suppressing property subject to forfeiture, even if such property is unlawfully seized…

By finding no remedy workable or worthwhile in the face of societal cost, the Texas Supreme Court has given law enforcement another way to salvage evidence obtained by illegal searches: simply seize the "container" (house, car, boat, etc.) the evidence was discovered in.

As defense attorney John Wesley Hall notes in his post on the case, this decision will also encourage more questionable asset forfeitures because the court here has declared it's unwilling to entertain notions of deterrence when dealing with "non-punitive" civil seizures.

I disagree with the lack of deterrence because the seizure for forfeiture is immediate, before booking, and it’s part and parcel of the police arsenal to punish the defendant before trial; that along with a high bail. Besides, the police help finance their drug enforcement operations with forfeitures, even when there’s no prosecution. It’s contingent fee law enforcement.

It's a state Supreme Court decision, so it's precedential. That's the bad news. The (potentially) good news is that it touched on an issue previously handled by the US Supreme Court, so it could be pushed up the judicial ladder back in the direction the ignored decision emanated from. Of course, this Supreme Court has been very inconsistent on Fourth Amendment issues and seems particularly willing to punt on issues it would rather not address directly.

Filed Under: 4th amendment, civil forfeiture, illegal search, miguel herrera, remedies, texas

IRS Also More Than Willing To Steal Money Under The Pretense Of Crime Fighting

from the because-involuntary-taxes-aren't-thieving-enough dept

The Department of Justice and its underlings (the FBI and nearyl every law enforcement agency in the nation) have turned the ideal of asset forfeiture (defund drug dealers; return money to the defrauded, etc.) into a free-roaming, many-tentacled opportunistic beast, one that "liberates" any amount of "suspicious" cash from tourists, legitimate business owners or anyone else who just happens to have "too much" cash in their possession.

The IRS is in on this as well. The agency doesn't need to prove anyone is guilty of anything before seizing assets. It just needs to feel that things aren't quite right.

For almost 40 years, Carole Hinders has dished out Mexican specialties at her modest cash-only restaurant. For just as long, she deposited the earnings at a small bank branch a block away — until last year, when two tax agents knocked on her door and informed her that they had seized her checking account, almost $33,000.

The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime. Instead, the money was seized solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report.

The person whose money has been seized isn't necessarily guilty of anything. Hinders hasn't been arrested, nor does there appear to be any sort of ongoing investigation. The IRS hasn't hit Hinders with tax liens for unpaid taxes or subjected her to an audit. All it did was look at records for her deposits and decide that because none of them surpassed the $10,000 mark (which triggers automatic reporting), everything in the account must be somehow illegal.

Here's the brain-bleeding explanation of IRS's civil forfeiture program.

Civil forfeiture is an in rem proceeding against the property itself, not the owner of property. Civil forfeiture is a process that is separated from, and not dependent on, a criminal prosecution. Civil forfeiture can proceed administratively or judicially.

Hinders never needs to be charged. In fact, she never needs to be heard from again. The IRS can seize and hold this money indefinitely and decide whether or not the $33,000 is "guilty" without any input from Hinders. To opportunistic agents, any sub-$10,000 deposit is "evidence" that the depositer is deliberately avoiding reporting requirements, rather doing so for any number of more mundane, less criminal reasons.

Take this IRS seizure from last year, for example.

Since he bought it in 1978, Terry Dehko has owned Schott’s Supermarket in Fraser, Michigan. His daughter, Sandy, began working at the store when she was 12 and now helps her father run it. The IRS has not argued before a court of law that Terry and Sandy have committed a crime, but that has not stopped it from seizing their entire bank account, worth over $35,000. The IRS claims that Terry and Sandy violated federal anti-money laundering laws by making regular deposits of cash in amounts less than $10,000.

But the IRS has offered no evidence that money laundering has occurred. In fact, it has done nothing more than seize Dehko's money. The explanation for Dehko's deposit patterns make perfect sense, but perfect sense won't fund further IRS activity.

Their insurance policy, aimed at small businesses like their grocery store, protects them from theft, but only up to $10,000. Since any dollar over 10,000 left in the store is liable to uninsurable theft, Terry and Sandy make sure their revenues are deposited in their bank account before accumulating above $10,000.

Anyone nailed by an IRS seizure can fight for the return of their money, but there's nothing resembling due process here. Those choosing to do so would have to file a lawsuit intervening in the IRS's forfeiture case. In other words, the situation must be forced. Simply showing up and defending money from accusations of wrongdoing isn't enough. In fact, it isn't even a possibility, at least not in this case. Prosecutors for the Dehko case offered the them a "deal:" an implicit admission of guilt via a plea bargain (presumably on behalf of the guilty money) and the return of 20% of the seized funds.

There are more stories like this. A dairy had $70,000 seized by the IRS after a string of deposits following the sale of farm equipment raised bank eyebrows. Again, prosecutors offered a pennies-on-the-dollar settlement to the couple whose assets were taken. A 27-year-old vending business, heavily reliant on cash flow, had nearly $450,000 seized. Again, "structuring" of deposits was the excuse used to justify the government's theft of earned income. The IRS civil forfeiture system is every bit as crooked as the one being abused by law enforcement agencies. Perverted incentives have demolished restraint and fairness and turned it into an extremely efficient way to stockpile cash.

According to the Institute for Justice, the Department of Justice’s Asset Forfeiture Fund held $93.7 million of seized assets in 1986. In 2008, that fund was greater than $1 billion…

Fortunately for the Dehkos, they won their battle against the government and had the seized funds returned. The IRS was ordered to produce proof of wrongdoing or release the funds. It chose the latter and was additionally held responsible for $71,500 in attorneys' fees. Dropping the case also allowed the IRS to walk away from the debacle without further legal examination of its civil asset seizure policies. So, while the Dehkos obtained a win, the IRS ultimately learned nothing from the experience. The fact that the average forfeiture battle racks up over $20,000 in legal fees means that more often than not, the IRS will get to keep nearly everything it seizes.

Filed Under: cash, civil forfeiture, government, in rem, irs, stealing

As The Feds Seize Domains, More Attention Paid To How Law Enforcement Regularly Abuses Asset Seizures

from the this-is-not-due-process dept

Given our serious concerns over the legality of Homeland Security's domain name seizures, one thing we keep hearing from supporters of the effort is that asset seizures are "nothing new" and happen all of the time. We've already discussed how that's not exactly true -- and how pre-trial seizures are supposed to be focused on situations where evidence might get destroyed. But it's even worse than that. It appears that law enforcement has a long, and rather dubious, history of greatly abusing the ability to seize property for their own benefit.

Ryan Radia pointed us to a detailed report from earlier this year, written by the Institute for Justice, about how the civil asset forfeiture process is regularly abused by police (pdf). And along those lines, Radley Balko has a disturbing story out of Indiana concerning massive abuses of the asset forfeiture process. Basically, law enforcement in Indiana had been abusing the forfeiture rules for their own benefit. As Balko noted in an earlier article, the "forfeiture racket" is basically a "license to steal", as law enforcement can find all sorts of reasons to seize private assets -- even without trying their owners for any crime -- and then profiting off the sale of those items.

In Indiana, the law had been changed so that, officially, any proceeds from forfeiture would go to the state's public schools, rather than directly to law enforcement. However, as Balko reports, Indiana prosecutors have found loopholes, which they regularly exploit to get around the rules:

One popular way Indiana prosecutors have avoided contributing to the school fund is to contract out civil forfeiture cases to private attorneys, who get to keep a quarter to a third of what they win in court. If there are incentive problems with letting police departments and district attorneys' offices keep forfeiture proceeds, those problems are magnified several times by allowing private attorneys to get paid directly from the forfeiture cases they bring on behalf of local governments. Forfeiture experts I've spoken with say the practice almost certainly violates the Constitution's Due Process Clause, since the people making decisions about these cases get a direct financial benefit from those decisions.

Note that, in some ways, this mimics what Homeland Security did with the domain name seizures. As we noted, Homeland Security actually contracted out to a private company to handle the domain name seizures. It's not clear, however, if they directly benefit from each seizure but this does seem like a serious question.

Another loophole in the law allows prosecutors to deduct from forfeiture proceeds the law enforcement costs associated with obtaining them. County prosecutors and police departments exploit this provision by wildly exaggerating the costs of their investigations or interpreting the law in ridiculously broad ways. The Star reported, for example, that officials in Marion County "have a broader--and more lucrative--interpretation of law enforcement costs. They argue that the phrase simply means the cost of enforcing the law in Marion County, and thereby justify holding on to every dollar of the nearly $1.6 million the county received from state forfeiture cases in 2009."

I'm curious if those supporting the whole forfeiture concept as being "perfectly normal" care to comment on these sorts of things...

Filed Under: civil forfeiture, due process, seizures