Asset Protection

More Civil Forfeiture Follies

Regular readers know that we consistently critique civil forfeiture, a legal procedure under which property, rather than an individual, is accused of a crime.

We’ve called it the “beast that won’t die” and compared the practice to elementary school bullies stealing a child’s lunchbox. We’ve also warned that cash is especially vulnerable to this despicable legal process.

It’s an ancient procedure, with roots in English medieval laws, and ultimately, the Bible. (Although, the supposedly biblical origin of civil forfeiture is actually a corruption of the instructions from God in Exodus 21:28.)

In civil forfeiture cases, police don’t need to convict you of a crime or even accuse you of one in order to snatch your property. They merely need to allege that your property is somehow involved in or facilitating a crime. Indeed, about 90% of the time, the owners of forfeited property are never prosecuted for any crime.

What’s more, thanks to a 1984 law championed by then Senator Joe Biden, state, local, and federal agencies get to keep most or all of the property they confiscate. That’s led to a practice critics call “policing for profit,” in which police agencies become addicted to civil forfeitures. In some jurisdictions, 40% of police revenue comes from forfeiture.

To understand how civil forfeiture works, consider the case of US Private Vaults (USPV) in Beverly Hills, California. On March 22, 2021, agents from the FBI and DEA raided USPV and seized the contents of every safe deposit box in the facility – 1,400 in all. Assets with a total value approaching $100 million, including cash, precious metals, numismatic coins, and jewelry were confiscated.

The target of the raid were the owners of the vault, who have since pleaded guilty of money laundering – not the boxholders. But the assistant US Attorney in charge of the operation stated:

The majority of the boxholders are criminals … If a deposit boxholder identifies himself or herself, the Government will commence a criminal investigation into the holder, including but not limited to determining whether he or she came by the contents in his or her safe deposit box(es) legally.

In other words, boxholders were guilty until proven innocent. And the government immediately launched forfeiture proceedings against the seized items without charging the owners with any crime.

Victims of the confiscation promptly challenged it in a class-action lawsuit against the FBI. They alleged that the FBI lied to the federal magistrate who issued the search warrant about their intentions to seize the contents of all the boxes in the vault. Indeed, agents carried a warrant giving them only the authority to seize property belonging to USPV, not assets belonging to its customers.

While the FBI tried to suppress the evidence, lawyers for boxholders whose assets had been seized quickly discovered that the affidavit submitted to support the search and seizure warrant didn’t authorize seizing the contents of individual boxes. Agents were merely authorized to “inventory” the property of boxholders.

Even so, in September, a federal judge threw out the lawsuit, ruling that the seizures were a legitimate example of “specifically established and well-delineated exceptions” to the constitutional prohibition against warrantless searches.

Civil forfeiture laws are inherently one-sided. And courts have placed very few limits on the practice. One of the few successful challenges to the practice came in 2019, when the Supreme Court unanimously held that the Eighth Amendment prohibition against “excessive fines and fees” applies in state civil forfeiture cases.

But last month, the Department of Justice made one of the most audacious proposals for amendments to federal civil forfeiture laws we’ve heard of since then-Senator Biden proposed that police agencies be permitted to keep the assets they confiscate. In testimony before the Senate Banking Committee, the head of the interagency task force coordinating sanctions against Russia suggested that Congress should amend these laws to permit that money confiscated from Russian “kleptocrats” be awarded to Ukraine.

Since 2000, states and the federal government have raked in an astonishing $68.8 billion through civil forfeiture. Numerous states failed to properly report civil forfeiture revenues, so this total significantly undercounts the loot taken through the practice.

Obviously, this isn’t enough to satisfy Uncle Sam. The feds now want to take seized loot and give it to other countries!

We hope that no one reading this missive ever becomes a victim of civil forfeiture. But if you do, any assets you have in the United States are vulnerable. With the civil forfeiture racket booming, we can’t think of a better reason for going offshore.

On another note, many clients first get to know us by accessing some of our well-researched courses and reports on important topics that affect you.

Like How to Go Offshore in 2022, for example. It tells the story of John and Kathy, a couple we helped from the heartland of America. You’ll learn how we helped them go offshore and protect their nestegg from ambulance chasers, government fiat and the decline of the US Dollar… and access a whole new world of opportunities not available in the US. Simply click the button below to register for this free program.

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