Civil Asset Forfeiture: Policing for Profit

by Eric Shierman

In case you missed it, police abuse of civil asset forfeiture (CAF) has been a growing issue this year on the local level across this country. If you have not noticed, perhaps it is because we don’t have much of a problem inOregon– at least not yet.

CAF allows the government to confiscate private property if it is declared linked to a crime. Historically this has primarily been a function of criminal courts, but criminal courts place the burden of proof on the state and provide legal counsel to those who cannot afford it. In most CAF cases the property owner is never indicted with a crime. It is a civil action that places the burden of proof on the property owner who must sue the government at his own expense to get his property back.

Despite its advantages, CAF was rarely used as a crime fighting tool until law enforcement agencies were given a piece of the action. CAF has been around for a long time, but it changed in a major way in 1984 when President Reagan signed into law The Comprehensive Crime Control Act. Seeking to become a tough on crime president in an election year, Reagan set into motion several ways in which the Department of Justice now intervenes into local police matters. A fairly obscure provision in that long, complex law redirected CAF funds from deposit into the general fund to directly finance the law enforcement agency that seized the assets.

Most states followed this federal innovation immediately. Oregon was not so fast. Our political culture’s preference for civil liberty delayed its adoption for five years until Neil Goldschmidt signed HB2282 into law.

One does not have to be an economist to know that incentives matter. Before these funds were redirected to grow law enforcement agencies’ budgets, CAF was rare. It did not take long for the frequency of CAF cases to compound exponentially. In the 1990s abuses of this newly popular tool kept internal affairs departments working overtime.

In November 2000,Oregon nearly nipped this problem in the bud by passing Ballot Measure 3, The Property Protection Act, with a 67% majority. As soon it passed however, one of our state’s biggest stakeholders in the use of CAF,LincolnCounty, filed suit. The Oregon Supreme Court upheld the law in October 2006 by overturning an Appeals Court decision in Lincoln Interagency Narcotics Team v. Kitzhaber.

While the law was in limbo,Oregon’s law enforcement community circled their wagons to lobby hard for a legislature sponsored measure that would overturn The Property Protection Act as a hedge against the possibility that the Oregon Supreme Court might fail to do so. There were so many anecdotes of past police abuses, and Measure 3 was so popular, that the most the Oregon Legislature was willing to do was pass a watered down version of the law in 2007’s SJR 18 which strategically sent the matter to the May 2008 primary election for low turnout voter approval as Measure 53 The Property Protection Amendment. After a recount, it squeaked by with a 50.03% yes vote.

In Solomonic fashion, Measure 53 split the baby over most aspects of the law, but included a very transparent electronic reporting feature available for immediate public view. By slightly reducing the pay out to police and exposing some sunlight on the process, even this watered down law has spared us many of the troubles that states like Texas and Arizona face where law enforcement officers’ salaries are actually directly augmented by asset seizure.

As Oregonians, we should be concerned less with what is happening in states without CAF restrictions, than with states that restrict it more than we do.  Oregon law cannot restrain federal law enforcement, which has expanded its CAF policies, providing another tool by which local law enforcement gets hooked on federal money. Under a program called “equitable sharing” local law enforcement jurisdictions that cooperate with the feds get to keep 80% of the money from federal cases, even in cases were state law would not allow the seizure.

The 80% payout has proven to be a bargain, making this a bonanza for all involved. State, county, and municipal police get to bypass their state’s law, and the Department of Justice pockets a 20% commission for merely processing the cases.

Payments under the equitable sharing program have increased 75% over the past decade for understandable reasons. Last year US attorneys pursued 11,000 non-criminal asset seizure cases resulting in the confiscation of $ 1.6 billion that got deposited into the US Treasury. How many law enforcement jobs do you think that stimulus saved or created?

What ought to give Oregonians pause is the frequency with which these cases have been exploding recently in California which restricts CAF far more than we do. The Department of Justice’s equitable sharing program has allowed California’s local law enforcement agencies to ignore California state law. In a time of budgetary constraints, it will not take long for this innovation to get emulated in our state.

If you are an innocent business owner you don’t want to be on the target end of one of these seizures. In New York recently, James Lieto was a customer of an armored car company that unknown to him was under a fraud investigation. When the government suddenly seized 19 million in assets from its vaults, it included Mr. Lieto’s $392,000. This is a nightmare scenario for a small business owner like Lieto. Put in an illiquid situation, he has to pay lawyers to litigate his money back. Without any evidence of his committing a crime, the government sits on Mr. Lieto’s money until he proves his innocence in the slow grind of civil courts.

There are many reasons not to carry too much cash on you, but the idea that you can have it seized by the police in a routine traffic stop should not be one of them. In 2008, federal Judge Joseph Bataillon ordered the return of $20,000 taken from a man during a traffic stop in Douglas County, NE. Judge Battaillon quoted from a recording of the seizure, in which a sheriff’s deputy complained about the man’s attitude and suggested “we take his money and, um, count it as a drug seizure.” Since 2002, this small county sheriff’s department has earned $11 million in equitable-sharing money that would not have been allowed under Nebraska state law.

Here is another anecdote of highway robbery by Nebraska’s Douglas County Sherriff Department. Bradford Nalou was driving from Detroit to Las Vegas with $38,480 cash for gambling. At a traffic stop, drug sniffing dogs were used to search his car. They did not find any, but the dogs barked at his cash, detecting methyl benzoate, a cocaine residue on some of his bills. Like many gamblers, Nalou desperately needed that cash. Despite no evidence of drug possession, he quickly settled for 70% reimbursement rather than lock up his money in years of litigation. Not a bad days work for Douglas County; 70% of $38,480 is more than enough to pay for dog food.

Read more about this Dukes-of-Hazard-like sheriff department here.

When it comes to property rights, we tend to focus on tax policy, but ignore the death by a thousand little cuts that zoning laws, environmental laws, and obscure issues like CAF confront us in our daily life. We ignore them until we are a victim. Let’s be proactive on this one. This is a local issue that is affected by federal law. In this election cycle, rather than throw a tax/budget question at a politician seeking your vote, where he has likely become well skilled in deflecting it with a fluff answer, why not hit him up with a detailed question about the DOJ’s equitable sharing program and civil asset forfeiture in general? It would gauge how informed he is on a broader array of issues, and it would provide a unique window into what limits he would place on the coercive power of the state.

Eric Shierman is a partner at Creative Destruction Investment Partners, writes for the Oregonian under the pen name “Portland Aristotle” on the MyOregon blog, and is the author of the forthcoming book: A Brief History of Political Cultural Change. His articles can be read at: http://connect.oregonlive.com/user/PortlandAristotle/posts.html

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  • Reper

    Ok the Nebraska case was very bad.  But in general, if police have the right to seize illegal drugs and illegal goods, why not the right right to seize illegal money and supplies that operated to get those illegal items?

    • Civil asset forfeiture is not needed to fight crime. Indeed it undermines it. People convicted of a crime have always had their proceeds confiscated. CAF allows the state to avoid the rigor of criminal law, placing the burden of proof on the property owner. 

      Besides the obviously inevitable opportunity for individual corruption, CAF money directly financing law enforcement agency budgets makes them stakeholders in crime itself, placing a disincentive to actually rooting out crime entirely. The ability of institutions to figure out how their bread is buttered and behave accordingly can be remarkable. 

    • Civil asset forfeiture is not needed to fight crime. Indeed it undermines it. People convicted of a crime have always had their proceeds confiscated. CAF allows the state to avoid the rigor of criminal law, placing the burden of proof on the property owner. 

      Besides the obviously inevitable opportunity for individual corruption, CAF money directly financing law enforcement agency budgets makes them stakeholders in crime itself, placing a disincentive to actually rooting out crime entirely. The ability of institutions to figure out how their bread is buttered and behave accordingly can be remarkable. 

    • Devin

      No problem with the seizure, but more of a problem with the incentives for going to far.  When you know your salary is paid by how much you can seize…. that’s not good.  Better to take the money away from the local police department, into a general state revenue/tax fund.  And change the laws so that police must bind those taken items to a specific charge that they are associated with (like drug money, should be bound to the charge based on drugs), and have the money/items returned if they cannot get a conviction.

    • HBguy

      Two examples of what I would consider abusive and that actually occurred when the police were aggressively pursuing the forfeitures.

      Property owner rents house and small acreage to tenant. Tenant starts a grow operation. Police raid and institute forfeiture proceeds on the home….It’s eventually dismissed but not before the owner spends a bunch of money on attorneys.

      38 year old guy buys 1/8 ounce of cocaine from a dealer who was working for Beaverton PD. Beaverton PD arrests him. Asks how he got to the dealers home. He says he drove, so they seize his car and start forfeiture. His attorney “buys” the car back from the city of Beaverton. Now the defendant is already going to get a conviction, fines, fees, costs, probation, jail. But it was clear that the Beaverton PD was only doing this to raise money for themselves, and not as punishment.

      You may agree with one or both of these procedures, Don’t know. But, you can see where it can lead. Innocent people having to fight the government, and the government lawyers, for their wrongfully seized property, and police departments finding “innovative” ways to impose extra judicial penalties on people they think are guilty, and raise money at the same time. With very little ability of the defendants to do anything about it.

  • Reper

    Ok the Nebraska case was very bad.  But in general, if police have the right to seize illegal drugs and illegal goods, why not the right right to seize illegal money and supplies that operated to get those illegal items?

  • Bob Clark

    Great article.  I do remember back to the 1980s into the early 90s a Multnomah County detective who ran drug raids and confiscated a whole lot of fun toys, like a corvette.  He got his drug enforcement unit into a weekly TV cop show.  I think it was a Detective Bonner or something like this.

    Somewhat related.  Free markets really depend on the separation of government and private business.  But in Portland, Oregon and other places there is this belief in “public private partnerships.”  Unfortunately, these partnerships can really make a bad bet really bad as the government becomes compromised and can not be relied to clean up early something going bad.  Too keep a bad bet going, for instance, the government starts squeezing its taxpaying citizens to make up for risky venture losses.  Look at Bama’s public private partnership with Solyndra.  Taxpayers get the shaft, and Bama’s administration tries to rush even more of these high risk ventures.

    • 3H

      ” Free markets really depend on the separation of government and private business.

      In which case there never has been a free market, and there never will be one.

      • the real valley person

        I was going to say the same thing. If you can find a private business that does not use: employees educated by the public, roads or ports built by the public, an internet not initially developed by the public, is not protected by public police and fire, does not use public water, and does not dump its waste in public sewers, I’d like to hear about it.

        Markets are and have always been only partly free. Business and government are joined at the hip.  

        • guessed

          In 1872 the Arabs invented the condom, using a goat’s lower intestine.  In 1873 the British somewhat refined the idea by taking the intestine out of the goat first.   
          Never mind the moniker business perused here by what’s left of US.   

          • the real valley person

            I’m sure that makes sense to someone. But I’m not that someone.

          • 3H

            *shrugs*  I’ve warned him of the consequences of gathering his own mushrooms.

        • Devin

          Yes and the private business and his employees paid the taxes that educated the public, and build the roads and ports, and pays the salary of the police and fire, and the pipes for the waters and sewers.  But lets go farther than that, those trucks used to lay that asphalt or the cement for the roads, those were built by business’s.  The clothing worn by those government employees, also made by business.  The gas in those trucks used to build those roads, also refined by businesses.  But this is all fine, there is no problem with any of this, as it exists in the free market of independent goods and services.
           
          There is absolutely no problem with having any kind of public services provided funded by tax payer dollars.  In that case the government and the business both interact as they should, evenly and fairly.  The problem is when government is deciding that this company is a “good company” (usually decided by whichever one has more political influence), and deserves special benefits that his competitors don’t get.  That is when we lose the free market.
           
          Its like providing water and sewer from the public tax dollars, but deciding this person deserves it but not that person, it is wrong.

          • the real valley person

            So its a chicken-egg question. Most modern private businesses I’m familiar with would not and could not exist absent government services. Would the government exist without the private businesses? Yes indeed. People had governments long before there was any sort of free market, from Babylon to the Mayans. Even stone age tribal societies with no cash economy at all have a government structure. 

            Government, and by that I mean the public, has more interest in the functioning of the economy than mere tax collection. We have an interest in having a low unemployment rate, clean and reliable energy, a relatively stable stock market, banks that don’t just close their doors one day, and a lot else. If we (our government) had not intervened in the GM and Chrysler market failure, we would have had 2 million additional unemployed people to have to send checks and food stamps to. Instead we now have profitable companies hiring more workers. Did we violate the free market? Yes. So what?

            Government favors this or that industry or business in order to facilitate social objectives. You are right that this results in a less than fully free market. But we aren’t here to serve the market. The market is here to serve us. 

          • Devin

            Even when no modern government system existed, they still had a market.  The market exists everywhere, and government will never remove it entirely, all it can do is diminish its effectiveness.  Even the most ancient tribal societies with no cash economy, still had a free market system based on barter.  That barter system, eventually started using gold as a means of exchange, and the cash economy was born.  Even in the USSR where capitalism was practically completely outlawed, the black market barter system was exceptionally strong.
             
            Yes the economy isn’t the only public interest, but it is probably the most important.  For a low unemployment rate occurs when the economy is doing well, reliable energy (and potentially clean depending on how you define that and if government does do it job in enforcing private property rights), stock market does well when the economy does well, banks also do well when the economy does well.  Most governmental functions are vastly improved by a good economy. 
             
            I strongly disagree with the GM and Chrysler statement though, I don’t think we should have given them any tax money at all.  These are two companies that were badly mismanaged, and spent more they were receiving for their product (somewhat do to the UAW).  Instead what we should have done is had GM and Chrysler go through bankruptcy instead of any tax money being spent on them.  I am not saying liquidate and sell everything off, but just a standard chapter 11 reorganization bankruptcy.  The public tax money we spent ended up not helping these companies at all, and they eventually had to file chapter 11 bankruptcy anyway (we just let them hang on for longer before going bankrupt and tipped the scales so the UAW union got some of the new company that the previous bond holders should have gotten).  We are still holding $47 billion of GM stock last I checked.  (http://abcnews.go.com/Business/general-motors-fire-misleading-bailout-ad/story?id=10513568)
             
            “A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned – this is the sum of good government.”   – Thomas Jefferson

          • the real valley person

            I think sea shells and beads way preceded gold.

            The economy is clearly not the most important public interest. Safety beats it by a wide margin. Physical safety pretty much trumps everything but basic physiology. See Maslov.

            I’m not surprised you would have let GM and Chrysler disappear from the American economy. I would have too but for the 2 million jobs dependent on those companies existence. but they did go through bankruptcy. the difference is that with government support the bankruptcy was not fatal, whereas without it there would have been no American car manufacturers left, because even Ford was dependent on GM suppliers. Liquidation is what would have happened.

            The public tax money we spent, most of which has been payed back by the way, kept the American auto industry alive. We are selling off our stock, but can’t just dump the whole pile on the market at once unless we would like a bath.

            “Shall not take from the mouth of labor the bread it has earned?” Coming from a slave owner, that is pretty rich you have to admit. It illustrates man’s ability to think and expound abstractly while living in an entirely different reality.

          • Devin

            I never said that I supported liquidation, in fact I think that would have been a very bad idea.  A standard chapter 11 bankruptcy with no public funds used could have saved all those jobs and not manipulated the market to give the UAW ownership.
             
            As to Jefferson and slavery, Jefferson was not a very big fan of slavery, he called it an “abominable crime,” a “moral depravity,” a “hideous blot,” and a “fatal stain” that deformed “what nature had bestowed on us of her fairest gifts.”  The first draft of the declaration of independence written by him, had a section in there actually attacking King George for forcing people into slavery and for not letting the colonies (which would become the US), abolish slavery using local laws (the king vetoed several of them).  He was the person who signed the federal act ending the slave trade from other countries.  He also proposed banning slavery in all the non-state territories.  He advocated a plan of gradual emancipation where all blacks born after a given date could no longer be slaves.  It is true that he grew up in a family that owned slaves and they were transferred to him, and he didn’t let them all go.  At one point I think he even fell in love with one of the slaves and had children with her.
             

          • valley person

            The consensus view at the time was that chapter 11 would have resulted in liquidation of both companies, leading to the potential loss of Ford as well.  So it doesn’t matter whether you “supported” liquidation or not. What matters was what would have happened, and what risk should be assumed at a time when we were already losing 500,000 private sector jobs a month.

            Jefferson was a rhetorical opponent of slavery who owned 75 slaves and did not free them even in his will. And yes, he raped at least one of his slaves and fathered children he had nothing to do with. Typical of slave owners of the day.

            So you have rhetoric and you have reality. In slavery and in economics, people say one thing and do or support another. 

  • Anonymous

    There should be no seizure.  Government and cops have proven beyond a shadow of a doubt they are unable to control themselves and apply the laws to themselves in this arena.  They’ve merely legalized their own theft and called it another name.  Even the good “law-abiding” citizens who condone the actions have proven themselves unable to restrain their taking–they aid and abet the theft.

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