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: