by Noreen Marcus
Carole Hinders built a better taco that drew diners to Mrs. Lady’s Food in Spirit Lake, Iowa, for 37 years. Then, one day in 2013, right after breakfast with the grandkids, two men showed up at her home, flashed badges, and told Hinders the IRS had emptied her bank account, taking nearly $33,000 in revenue from her cash-only restaurant business.
“I was in shock,” Hinders, now 72 and retired, said recently. She had committed no crime.
During the frightening chaos that followed, Hinders called Senator Chuck Grassley (R-Iowa).
“He said, ‘It must be some kind of scam. The IRS would never do that. They don’t spring on you that way.’”
“I said, ‘Yeah, they did.’”
The official reason: Hinders routinely made cash deposits of less than $10,000, triggering concern that she was evading a tax reporting rule.
“They thought I was either a drug dealer or a money launderer,” Hinders said. “Could I launder my own money? How does that work?”
Many in law enforcement defend the process that Hinders endured: civil asset forfeiture (“CAF”), when the government seizes property allegedly related to a crime.
Unless you live in one of the dozen states that ended CAF in favor of post-conviction, or criminal, asset forfeiture, the government can confiscate your money, vehicle, important documents, and sometimes your home on little more than a whim.
It’s nearly impossible to reclaim what was taken if you can’t afford a lawyer. Generally, you must prove a negative: Your property had nothing to do with crime.
Justice Reform Target
Not surprisingly, from Spirit Lake to Philadelphia to Albuquerque, New Mexico, civil asset forfeiture is a prime target of the justice reform movement.
“It’s a grave injustice that occurs every day in this country,” said Wesley Hottot, senior attorney with the nonprofit Institute for Justice (“IJ”). “Police and prosecutors take people’s property, and they do so as a matter of course to fund their operations.”
Since the mid-1990s, the IJ has led a national effort to beat back CAF through carefully vetted, statement-making cases. “There are too many people to represent. We hear sad stories every week,” Hottot said. “We just look for the greatest injustices.”
The IJ chose Hinders and filed a lawsuit that convinced the IRS to return her money, though the agency used a technicality to avoid paying the interest and attorney fees she should have received. Hinders is disappointed that her “fabulous” pro bono lawyers weren’t compensated.
Fortunately, the IJ also handled the appeal of an Indiana man named Tyson Timbs, because on Feb. 20, 2019, Hottot and his colleagues won Timbs’ case in the U.S. Supreme Court. Justice Ruth Bader Ginsburg wrote for a unanimous panel that the states must honor the Eighth Amendment prohibition against “excessive” fines.
“For good reason, the protection against excessive fines has been a constant shield throughout Anglo-American history: Exorbitant tolls undermine other constitutional liberties,” Ginsburg wrote in an opinion that cited the Magna Carta of 1215.
Fines “may be employed ‘in a measure out of accord with the penal goals of retribution and deterrence,’ for ‘fines are a source of revenue,’ while other forms of punishment ‘cost a State money,’” Ginsburg noted, quoting a 1991 opinion of the late conservative Justice Antonin Scalia.
In Timbs’ case, the “fine” was a $42,000 Land Rover he had bought with proceeds of his late father’s life insurance. Timbs drove it somewhere to sell heroin for $225—money intended to score opioids—and the buyer, an undercover cop, arrested him.
“It was a first-time offense,” Hottot said. “We’re not talking Pablo Escobar’s Cessna, but a drug addict’s attempt to get more drugs.”
No matter; police took Timbs’ Land Rover, which was worth more than four times the $10,000 maximum fine he might have paid. Before his case reached the U.S. Supreme Court, the trial judge and an appellate court agreed his punishment dwarfed his crime. The Indiana Supreme Court reversed them, prompting the showdown in D.C.
Ginsburg’s opinion strongly suggests the SUV forfeiture in Timbs’ case was excessive, but Indiana courts will have the final say. Since the high court didn’t spell out a test for determining how much is too much, more litigation over this open question is a given. But importantly in the ongoing struggle against abuse use of CAF, what the U.S. Supreme Court clarified for the first time is that the states are subject to the Eighth Amendment’s prohibition of excessive fines.
Also certain, Hottot said, is the IJ’s unflagging support of Timbs, now a free man who drives a borrowed car to work. He served a year of home detention and five years of probation.
“We believe it’s real world reasonable to stop fighting, but they [Indiana officials] believe it’s important to establish what the standard of excessiveness is,” Hottot said. “We will stand shoulder to shoulder with Tyson to win the next phase of the case.”
Rooted in War on Drugs
Early on, asset forfeiture was a big gun in the nation’s war on drugs. A May 1971 congressional report that showed widespread heroin addiction among U.S. troops in Vietnam alarmed the public and raised a clamor for action.
The next month, President Richard Nixon declared drug abuse “public enemy number one” and created a special office to deal with prevention. That was the one and only time more federal resources were mobilized for drug addiction treatment than for control and punishment, according to a report by PBS’s Frontline.
In 1972, the Nixon administration launched the Office of Drug Abuse Law Enforcement. Joint federal and local task forces would battle the drug scourge at street-level America.
Over decades, the war on drugs evolved into institutionalized strategies to target the giant Colombian and Mexican cartels and their U.S. tentacles. Breathless headlines announced record drug busts by the feds.
A certain cachet attached to cartel chiefs like Escobar, with his Robin Hood image, private airport—a place to land that Cessna—and herd of exotic animals. “Cocaine cowboys” catered casual drug use by the American leisure class.
In 1978, Congress changed the law to allow federal agents to seize money and “other things of value furnished … by any person in exchange for a controlled substance [and] all proceeds traceable to such an exchange.” That was the origin of asset forfeiture, followed by the states writing their own versions.
a Political Football
Then, in 1984, a federal program called “equitable sharing” started spreading the wealth of drug-asset money between federal and local agencies. Since they were already working together on task forces, this was the next logical step.
A Justice Department review of the program found that during fiscal years 2000-2016, more than $6 billion went to state and local law enforcement, representing up to 80 percent of the proceeds from seized property.
Despite the popularity all that largesse inspired, the initiative became a political football. During the Obama administration, Attorney General Eric Holder cut back the equitable-sharing program; President Trump’s Attorney General Jeff Sessions revived it in 2017.
Equitable sharing is not universally admired, even by people who lean conservative. One of them is Arthur Rizer, director of criminal justice and civil liberties at R Street, a nonprofit that promotes “free markets and limited, effective government.”
“My libertarian friends fight equitable sharing because they see it as an abuse of power issue,” Rizer said. “It’s a run around the states, especially states like North Carolina, where they don’t do asset forfeiture anymore, but they still do it through this other provision. And being a states’ rights guy, we really see that as an affront to our principles.”
That said, Rizer isn’t a fan of civil asset forfeiture at the state level, either. “It’s just not fair, it’s not justice, it’s not equitable,” he said.
Rizer has a panoramic perspective based on his background—police officer, major crimes federal prosecutor, and now, policy influencer.
As a cop in the early 2000s, Rizer learned cash was the gold standard for a successful search. When he served a warrant and found drugs or other contraband, “my supervisor would say, ‘Forget about that, we’re looking for the money.’”
Cash is fungible. It can get lost in the inventory but can’t easily be separated out and returned. So much for the mission to defeat drug traffickers, Rizer found out the hard way.
He studied law and joined the Justice Department as a prosecutor. During the George W. Bush and Barack Obama eras, while Rizer pursued “high-level cartel people” and their property, he said, “there was an aura of weightiness about this on the federal level.”
“The states have always seen it as a money-maker,” he added, calling CAF “a powerful tool” that should be treated respectfully.
“I’m not a hippie, I don’t feel bad for these people,” Rizer said. “What I’m concerned about is the rule of law and the appearance of procedural justice. It’s who we are and how we identify, and if we lose that because cops want espresso machines, that’s really contrary to the spirit of the Constitution and the rule of law.”
These days, the war on terrorism is more likely than drugs to produce sensational CAF results. On June 29, 2017, a federal jury in Manhattan determined that 650 Fifth Avenue was part of a scheme to bypass sanctions against Iran through money laundering.
The 36-story office tower was worth at least $500 million. Additional real estate and funds made the verdict the largest CAF win to date, the U.S. Attorney for the Southern District of New York announced in a press release.
The war on terrorism rationale, combined with police departments’ access to military-grade hardware and their ability to keep all or most of what they seize, have helped turn much of U.S. law enforcement into quasi-military forces.
“Police departments across the country have unquestionably become excessively militarized,” Kara Dansky, a lawyer for the ACLU’s Center for Justice, wrote in a 2014 opinion piece for The New York Times.
She discussed findings of a year-long ACLU probe into the causes and effects. Dansky said the trend has advanced “with almost no oversight.” The key finding was that “of the more than 800 paramilitary raids that we studied, almost 80 percent were for ordinary law enforcement purposes like serving search warrants on people’s homes. Only 7 percent were for genuine emergencies, such as a barricade or hostage situation.”
Stories abound about the innocent victims of those SWAT raids, as well as casualties of less spectacular police actions. Conservative Justice Clarence Thomas described “egregious and well-chronicled abuses” in a statement he issued in 2017, when the Supreme Court declined to hear the case of Leonard v. Texas:
“According to one nationally publicized report, for example, police in the town of Tenaha, Texas, regularly seized the property of out-of-town drivers passing through and collaborated with the district attorney to coerce them into signing waivers of their property rights,” Thomas wrote.
“In one case, local officials threatened to file unsubstantiated felony charges against a Latino driver and his girlfriend and to place their children in foster care unless they signed a waiver. In another, they seized a black plant worker’s car and all his property (including cash he planned to use for dental work), jailed him for a night, forced him to sign away his property, and then released him on the side of the road without a phone or money. He was forced to walk to a Wal-Mart, where he borrowed a stranger’s phone to call his mother, who had to rent a car to pick him up,” Thomas wrote in an unusually empathetic passage.
The Money Carrot
At the same time, purchases with CAF money can be so outlandish they draw media attention.
Ammo.com, a gun-rights website, published a list of previously reported expenditures by police and government lawyers, including: $9,547 worth of Gatorade by the Pittsburgh Police Bureau; casino trips by the Jim Wells County (Texas) Task Force; and a $90,000 Dodge Viper to use in an anti-drug program under the direction of the Camden County (Georgia) Sheriff’s Office.
The system-wide problem is that money from CAF, along with burgeoning fines and fees, gets baked into governmentbudgets that sustain regular police and court operations. As government agencies scratch around for funding, they come to see these income streams as indispensable.
One of the briefs that supported Timbs in the U.S. Supreme Court shows the lay of the land on this issue. “As of 2017, 10 million people owed more than $50 billion in criminal fines, fees, and forfeitures alone,” according to the brief filed by R Street and the ACLU, among others.
“Perhaps because they are politically easier to impose than generally applicable taxes, state and local governments nationwide increasingly depend heavily on fines and fees as a source of general revenue,” the brief states.
“Among the 100 cities in the United States that generated the highest proportion of municipal revenue from fines and fees in 2012, between 7.2% and 30.4% of total municipal revenue was derived from fine and fee collection.”
“Over-policing to fill the revenue pipeline” is the result, said Nila Bala, an attorney with R Street who contributed to the brief. When police focus on meeting financial goals, there’s a negative impact on public safety, she said.
“The violent crime clearance rate is lower in localities where law enforcement is dedicating time to basically collecting fines,” Bala noted.
The counter argument is that without revenue from fines, fees and forfeitures, law enforcement would suffer.
Jarrod Bruder, executive director of the South Carolina Sheriff’s Association, defends CAF as he lobbies his state legislature. He argues that the money carrot motivates officers to track down drug dealers. The corollary is no carrot means no stick.
“What is the incentive to go out and make a special effort?” Bruder asked rhetorically, according to Greenvilleonline.com. “What is the incentive for interdiction?”
When an ill-gotten asset is all that’s left of a crime, liquidating it seems reasonable. That’s the position of Derek Cohen, whose Texas Public Policy Foundation is working with state legislators to tweak existing CAF rules for fairness.
“Sometimes you’re not going to have a person to convict, he’s dead or absconded,” said Cohen, a Ph.D. who runs the foundation’s Center for Effective Justice and Right on Crime. “In those cases, it’s not appropriate to hold the property for god knows how long.”
Though he presents himself as a moderate on the CAF issue, Cohen doesn’t expect Texas legislators to jump on his proposals. “The people most affected by this rarely come out and testify in support of reforms, and people who would stand to lose do tend to show up in droves,” he said. “It’s a difficult uphill climb.”
Poor And Minorities Hit Hardest
Experts agree and studies show that fines, fees, and forfeitures burden the poor and minorities disproportionately. A system that was set up to separate crime bosses from their livelihood and toys has devolved into one in which relatively small sums are extracted from the people who can least afford to lose them.
For example, a look at five years of asset seizures in Chicago revealed that 11,000 were for sums less than $1,000, and almost 1,500 were for amounts under $100, The Washington Post reported in 2017. Also in 2017, the median cash value of property seized in Utah was less than $1,100, according to the Utah Commission on Criminal and Juvenile Justice. Both examples found their way into a pro-Timbs U.S. Supreme Court brief.
The numbers are meaningful, but defense lawyers who deal with fines every day would rather talk about their impact on lives. Before she went to work for R Street, Nila Bala was an assistant public defender in Washington, D.C., and Baltimore, Maryland.
“For me, it always starts with the individual who has been affected, and I can’t shake the stories I heard as a PD. They were so egregious, they’ll stay with me forever,” she said. When Bala saw a client doing well and complying with every probation rule except for paying an unaffordable fee—and getting jailed for it—“you see the havoc that creates in their life. That can’t be overstated.”
Forfeiture as Punishment
Sharon Cole, who was Bala’s supervisor in Baltimore and has had a 30-year career with the public defender’s office, struck the same note.
“I think it’s very common for Baltimore city clients to end up with fines that they can’t pay, and it starts a cycle where these fines prevent them from moving forward,” she said.
Judges are supposed to take the defendant’s ability to pay into account and consider alternatives like community service, but they don’t always do that, Cole said. “I think the tone in Baltimore is that forfeiture is used as a punishment.”
She has seen police confiscate items like Social Security cards and driver’s licenses, in that way limiting a person’s ability to get work or even defend the court case. “And sometimes it’s not even easy to get the papers or documents back from the police.”
“By taking things away like money, cars, documents, things of value to people’s daily lives, that can negatively impact our communities because it affects people’s quality of life and it causes more anger and resentment toward the police, in particular,” Cole said. “When the community doesn’t trust the police, it makes the community less safe.”
After a white policeman killed an unarmed black youth named Michael Brown in Ferguson, Missouri, and his hometown exploded into protests in 2014, America came to learn how an entire population can view police and courts as a conspiracy to exploit them.
A Justice Department investigation blew the lid off a fee-and-warrant system in Ferguson that was so pervasive, virtually everyone in that mostly African-American city experienced it personally.
Ferguson had about 21,000 residents in 2013. Yet that year, judges issued 32,975 arrest warrants for unpaid fees and other nonviolent offenses, some for stuff as minor as not enrolling in the right trash service, according to an article in the Harvard Law Review.
“Ferguson’s law enforcement practices are shaped by the City’s focus on revenue rather than by public safety needs,” the Justice Department’s Civil Rights Division concluded in its 2015 report. “This emphasis on revenue has compromised the institutional character of Ferguson’s police department, contributing to a pattern of unconstitutional policing, and has also shaped its municipal court, leading to procedures that raise due process concerns and inflict unnecessary harm on members of the Ferguson community.”
Ferguson forced a reckoning with what Institute for Justice attorney Wesley Hottot calls the “dirty little secret”: that fines and forfeitures are a tax on the poor and people of color.
“Ferguson was clearly not an outlier,” said Joanna Weiss, co-director of the Fines and Fees Justice Center. “It shined a light on how the legitimacy of the criminal justice system was damaged in a way that was invisible until then to a lot of people.”
“If I get hit with a $300 fine, I’m annoyed, but I can pay it and walk away,” Weiss said. “But for many people who are in poverty and even people who are of lesser means, this is devastating. It had been invisible to people in power because it wasn’t their experience or the experience of anyone they knew.”
Now that Ferguson has lifted the curtain, many powerful people and the policy-shapers who advise them are talking about fines, fees, and forfeiture.
Sociologist Alexes Harris of the University of Washington said she hopes a broader conversation about crime and punishment won’t be drowned out.
“We should be thinking about what we are doing to people who make contact with the justice system, what we want and think should happen to them, and how we can create circumstances in which people are able to be accountable, but then move forward and be successful with their lives,” she said.
CAF Paid Police Salaries
The legal battle against CAF isn’t all about lawsuits for people like Timbs and Hinders that challenge outrageous acts one by one. The litigation assault takes many forms.
In Philadelphia, the Institute for Justice teamed with David Rudovsky, an attorney in private practice, to overturn a system that regularly took the proceeds of forfeited homes and used them to pay law enforcement employees.
The IJ website invites readers to “meet Jackie,” a woman whose grandson was caught with a small amount of marijuana. Hauled to court a dozen times, she finally agreed to forfeit half the sales price of her home.
The IJ discovered that over a decade, Philadelphia officials seized 1,100 homes and realized $64 million, almost half of which was reinvested in salaries for prosecutors and police.
In 2014, Rudovsky and the IJ filed a class action in federal court on behalf of all Philadelphia residents who were victimized by the process. A settlement tentatively approved in September 2018 creates a $3 million fund to compensate them. The agreement will force the city to stop using CAF money for salaries or any other law enforcement purposes except community-based drug prevention and treatment programs.
“It’s really one of the first comprehensive, major settlements of one of these cases, attacking a whole system from different angles,” Rudovsky said. He expects the deal to win final approval later this year and to be fully supported by a new district attorney.
In his opinion, that doesn’t mean the state is moving toward dumping CAF and conducting only criminal forfeitures, however.
“Pennsylvania has stuck with civil forfeiture. They made the policy a little fairer,” Rudovsky said. He said his state, like Alabama, is more conservative than the U.S. House before the November 2018 elections. Plus, “the DAs’ association has strong political influence.”
The New Mexico Legislature voted to end civil asset forfeiture in 2015, but that didn’t convince the city of Albuquerque to give it up. NPR told this story in 2016:
Months after the law was changed, Albuquerque police seized Ashley Martinez’s parents’ 2006 Pontiac because her mechanic friend was driving it to diagnose a transmission problem, and the friend had a revoked license for DWI.
The Martinez family hired lawyer Lisa Torraco, a state senator who had voted to abolish CAF, to get the car back. She sued the city, and the case was dismissed on technical grounds.
Then the IJ joined Torraco for a federal court appeal. Discovery revealed that Albuquerque was receiving $500,000 a year from seized vehicles, a sum that was budgeted along with annual targets.
Albuquerque Halts Forfeiture
City officials defended CAF as an important weapon against drunk driving. Their municipal program was authorized to operate independently of the new state law, they argued. An official with the police chiefs’ association said the problem with abolishing CAF is that evidence rooms would overflow with property that couldn’t be sold.
Unpersuaded, U.S. District Judge James Browning ruled in August 2018 that Albuquerque’s CAF program was unconstitutional.
“We were very excited by that. It wasn’t appealed, and the city stopped their forfeiture program,” Torraco said in a recent interview.
A Republican who lost her legislative seat in 2016, Torraco said bipartisanship won the CAF battle in New Mexico. A Democratic colleague in the legislature who helped change the law later became Albuquerque’s mayor. Despite the concern about crowded evidence rooms, he made sure CAF was a thing of the past.
“This was one of those issues that reached across party lines, and we had a really nice coalition of people on both sides,” Torraco said. “I just think we get more done building bridges than not.”
Joanna Weiss, of the Fines and Fees Justice Center, said she’s encouraged by all the court and legislative action that is slowly moving the U.S. away from policing for profit.
“There’s increasing recognition in cities across the country that they have to change their practices to ensure that people are not incarcerated when they’re not able to pay,” she said. “There’s a lot more work to be done, but the momentum is going in the correct direction.”
Back in Spirit Lake, Iowa, Carole Hinders’ life has returned to normal. Her neighbors long ago stopped regarding her suspiciously; her puckish sense of humor never faltered.
She tried to reach the IRS many times and didn’t hear back. After the whole mess about retrieving her money was over, she left one last phone message: “‘I’m sure you’ll be very happy for me.’ They aren’t happy for me, but I thought, I’ll leave a polite note.”
Sources: ammo.com, greenvilleonline.com, harvardlawreview.org, ij.org, justice.gov, nytimes.com, npr.org, rstreet.org, scotusblog.com, washingtonpost.com.
Additional source: Timbs v. Indiana, 138 S. Ct. 2650 (2018).
Noreen Marcus is a Miami-based freelance journalist whose work has appeared in U.S. News & World Report, American Lawyer’s Law.com, and other publications. She has a bachelor’s degree from Northwestern University and a law degree from the University of Miami.
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