The Plague of Civil Forfeiture (and One Way to Avoid It)

The Plague of Civil Forfeiture (and One Way to Avoid It)

By Mark Nestmann • March 3, 2020

Under the Alice in Wonderland-type process of civil forfeiture, cops can seize your property – anything you own – if they believe that it’s somehow connected to a crime… any crime. You don’t need to be convicted, accused, or even arrested to lose everything you own.

The Bible describes an early form of civil forfeiture in which an animal causing the death of a human would be put to death without compensating its owner. By A.D. 1000, this tradition had evolved in England and became a concept known as "deodand," which held that any personal property causing the death of a person would be forfeited to the Crown.

Forfeiture occurred regardless of whether the property owner was responsible for the fatality. But, unlike the biblical ox which was stoned to death, the Crown didn't destroy the medieval deodand. Instead, it used the property for its own purposes or sold it.

Deodand never became part of American law. However, the US inherited England’s “guilty property” tradition with the Constitution’s ratification. English law never considered deodand a punishment, and this legal fiction continues under modern federal and state civil forfeiture laws.

Because civil forfeiture is a civil and not a criminal procedure, you don’t need to be found guilty of any crime to lose your property. Instead, your property is presumed guilty and you can lose it if you can’t prove its innocence.

No Hidin’ from Biden

Revenues from civil forfeiture revenues were low until 1978, when Congress expanded the scheme by permitting its use to confiscate drug transaction proceeds. Then in 1984, a young Delaware senator named Joe Biden persuaded Congress to enact a tough anti-drug law with greatly enhanced civil forfeiture provisions. It also encouraged state, local, and federal agencies to keep most or all the property they confiscated.

In Biden’s anti-crime bill, Congress decided that the government was 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. This could now occur without a criminal conviction. The law also authorized payment to informants for information leading to a civil forfeiture.

Another innovation in the bill was the concept of “adoption” or “equitable sharing.” Local or state police seizing property could now turn it over to Uncle Sam for processing under federal law. Once the forfeiture was finalized, the state, local, or county agency initiating the seizure would receive up to 80% of the proceeds as kickback. This arrangement avoids the inconvenience of dealing with state laws which offer greater protection against civil forfeiture, or even worse, prohibit police kickbacks in such cases.

Thanks, Sleepy Joe.

But it was the 1986 anti-money laundering statute that opened the civil forfeiture floodgates. The act authorizes the civil forfeiture of all property representing the proceeds of, involved in, or facilitating a “specified unlawful activity” – nearly 400 federal crimes in all. Thus, it expands civil forfeiture’s scope from customs and narcotics violations to any suspected criminal offense involving money or property.

As a result, “policing for profit” has increasingly become an American tradition. In one case, the city of Philadelphia confiscated a man’s home after his son was arrested for selling $40 worth of illicit drugs in front of it. In another, sheriff's deputies in Campbell County, Tennessee tortured a criminal suspect until he signed a statement agreeing to turn over his assets to the county.

What Cops Like to Seize the Most

But what cops REALLY love seizing is cash. The very existence of cash is considered probable cause of a crime. After seizing your cash, in the vast majority of cases, law enforcement never bothers to arrest you, much less convict you, of a crime.

Here’s how it works if you take cash to an airport, bus terminal, or train station, or if you’re targeted in a highway stop.

Last August, Rebecca Brown arrived at the Pittsburgh airport carrying $82,373 in cash in her carry-on bag. Brown’s aging and forgetful father had asked her to open a joint savings account with the money, which represented his life savings. But she had an early flight the next day and decided to open the account when she arrived home. To make sure she wasn’t doing anything illegal, Brown confirmed online that it was legal to carry any amount of cash on a domestic flight.

When Brown arrived at her departure gate, an agent from the Drug Enforcement Administration questioned her about the cash, which had shown up on a security scan. The agent informed Brown the cash would be seized unless her father could verify where it came from. But in a phone call, the father couldn’t remember some the details.

“Your stories don't match," the agent told her. "We're seizing the cash." Subsequently, the DEA informed Brown it planned to forfeit the money. It didn’t charge Brown or her father with any crime.

If the DEA gets to keep the money, the security screener who first discovered it will probably get a commission. You can thank Sleepy Joe for this innovation, permitting the DEA to promise ticket agents, security screeners, and other employees at transit hubs a cut of the proceeds from forfeited cash they discover.

Another way the cops find cash is with drug-sniffing dogs. You’ve no doubt seen them at airports, bus terminals, train stations, or highway rest areas. What you may not know is the dogs are also used to justify the civil forfeiture of cash. Supposedly, the dog smells drug residues on the money, giving cops probable cause to seize it.

The problem is that at least 85% of cash is contaminated with drug residues. Even though dog sniffs are a bogus way to demonstrate probable cause, in 2013, the Supreme Court affirmed the practice. It declared that “evidence of a dog’s satisfactory performance in a certification or training program can itself provide sufficient reason to trust his alert.”

You could be excused for wondering how a legal procedure that is fundamentally a corruption of a biblical injunction persists in the 21st century. It does because the scheme brings in so much money to law enforcement, police agencies have become addicted to it. In some counties, 40% of police revenue comes from forfeiture. A 2017 report from the Justice Department Inspector General revealed that the DEA seized more than $4 billion in cash from people suspected of drug crimes over the previous decade.

Yet like Rebecca Brown, the vast majority of people who have assets seized from them are never charged with a crime. About 80% of cash the DEA seizes isn’t connected to any criminal charges. Indeed, a review of 1,600 DEA forfeitures in Los Angeles concluded that only one was connected to a criminal investigation. That’s not a problem, though, because a 1989 Supreme Court decision held that the government has a legitimate financial interest in maximizing forfeiture to raise revenue.

Civil Forfeiture on Steroids

But confiscating cash is only the beginning. Since most wealth is now held in electronic form, cops have started using electronic card readers to confiscate the cash balances on them, too. Their tool is called “ERAD” – Electronic Recovery and Access to Data. It works like the point-of-sale terminals used by retail stores and lets police guzzle down the value of any prepaid cards you’re carrying. According to a glowing tribute from the Department of Homeland Security, ERAD card readers are now in use in 48 states.

Investigators defend the use of ERAD readers as an essential tool to fight identity theft and drug trafficking. The problem is that these criminals aren’t the only ones who use pre-paid debit cards. A growing number of employers are using services like Visa Payroll, which allows them to pay workers through prepaid cards. In 2019, 12 million employees used “paycards” to receive their wages.

The Struggle for Reform

Most victims of civil forfeiture never bother trying to get it back, because the cost of contesting the seizure is so high. In the vast majority of cases, your property is presumed guilty until you prove it innocent, at your expense. Typically, attorneys defending civil forfeiture cases demand a retainer of thousands of dollars.

But there is some movement forward in the court system, and even more in some state legislatures. In 2019, the Supreme Court ruled that the Eighth Amendment prohibition against “excessive fines and fees” applies to the states in civil forfeiture cases and other civil, non-criminal proceedings. Just as important, since 2014, 32 states and the District of Columbia have enacted forfeiture reform laws.

But there’s much that remains to be done to end this odious practice once and for all. Federal cash seizures are out of control, as Rebecca Brown’s case illustrates. In 43 states, policing for profit is alive and well: cops can keep up to 100% of the property they confiscate through civil forfeiture. And even in states that have enacted forfeiture reform laws, police can still process civil forfeitures under federal law under the equitable sharing rules, unless state law bans the practice.

How can you prevent police “forfeiture squads” from confiscating your wealth? One of the strategies I learned as a young boy was to stay away from schoolyard bullies. As an adult, I keep my property away from government bullies by holding a large portion of it offshore, where it’s much more difficult for them to grab it. Until civil forfeiture is abolished, I can’t think of a better reason for following my example.

Protecting your assets (and yourself) against any threat - from the government, the IRS or a frivolous lawsuit - is something The Nestmann Group has helped more than 15,000 Americans do over the last 30 years.

Feel free to get in touch at service@nestmann.com or call +1 (602) 688-7552 to learn how we can help you.

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About The Author

Since 1990, Mark Nestmann has helped thousands of clients seeking wealth preservation and international tax planning solutions. He is the author of highly acclaimed Lifeboat Strategy and other books & reports dealing with these subjects.

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