“A man’s home may be his castle, but that does not keep the government from taking it.”
– U.S. v. Hendler
Historical Context of Civil Forfeiture
More than two centuries ago, when the United States first became a country, customs duties on goods entering through the nation’s ports were a primary source of revenue.
Naturally, shipowners didn’t want to pay the duties. But if they didn’t pay, customs officials could confiscate their ship and all its cargo.
Expansion of Civil Forfeiture Laws
Until the mid-1980s, revenues from such “civil forfeitures” were low. Nearly all civil forfeitures resulted from seizures of vehicles and boats used to smuggle illegal drugs or other contraband across US borders.
That changed in 1984, when Congress enacted a tough anti-drug law with greatly enhanced civil forfeiture provisions. The law permitted state, local, and federal agencies to keep most or even all of the property they confiscate, or sell it to generate revenue.
Congress also decreed that the government is entitled not only to the proceeds of a drug trafficking offense but also to all property derived from, connected to, or facilitating drug-related offenses.
Broadening the Scope: The 1986 Act
Two years later, in 1986, Congress enacted a strict anti-money-laundering law. The act authorized civil forfeiture of all property representing the proceeds of, involved in, or facilitating “specified unlawful activity.”
The 1986 act, in effect, expands the scope of civil forfeiture from customs and narcotics violations to violations of virtually any criminal or regulatory infraction. Violations of nearly 400 federal laws and tens of thousands of state or local laws are now considered “specified unlawful activity.”
The Legal Theory Behind Civil Forfeiture
The legal theory behind civil forfeiture is that property—not its owner—is guilty of a crime.
And, if the government alleges that your property somehow was involved in or facilitated a crime, you can lose it.
Because civil forfeiture is a civil procedure, none of the protections that would apply to a criminal proceeding are in place.
Your property is presumed guilty.
If you can’t prove that it’s “innocent,” you can lose it.
If you don’t have $20,000 or so to hire an attorney who specializes in civil forfeiture cases, you’re unlikely to ever get it back.
Financial Incentives and Consequences
The results of these legal incentives to seize property were predictable.
In 2010, the Department of Justice’s “Asset Forfeiture Fund” generated more than $2.5 billion in “net forfeiture revenues.” And that figure doesn’t include billions more in civil forfeitures by state and local police authorities.
Case Study: James Lieto
Consider the plight of James Lieto. He hired an armored car service to transport money for his check-cashing company.
The problem is that the FBI raided the armored car service and seized $19 million, including $392,000 belonging to Mr. Lieto, from vaults owned by its parent company.
Basically, his money was in the wrong place at the wrong time. And he’s still trying to get it back.
International Perspective and Legal Support
The plague of civil forfeiture is one of the main reasons we’ve long recommended that our clients keep a generous portion of their wealth outside the US. [You can find more information on why have an offshore bank account here.]
Most countries won’t honor American civil forfeiture awards unless there’s an accompanying criminal proceeding. Yet, in the vast majority of civil forfeitures, the property owner is never accused of any crime. The civil forfeiture suffered by James Lieto simply wouldn’t be enforced in virtually any other country.
Fortunately, if you’re a victim of civil forfeiture or an attorney representing a victim, help is available. The non-profit organization Forfeiture Endangers American Rights (FEAR) has some outstanding resources for forfeiture victims and their attorneys.
You can find more asset protection strategies for Americans here.
Need Help?
Over the past 40+ years, we’ve helped thousands of clients build a better wealth protection plan. A good number of them have involved buying and selling foreign real estate.
To see if our planning is right for you, please book in a free no-obligation call with one of our Associates. You can do that here.
