DALLAS, October 17, 2013 ― Yesterday the Supreme Court heard oral arguments in Kaley vs. The United States, a case involving assets forfeiture laws and the government’s right to seize private property without the defendants being convicted of a crime. In the Kaley case, the federal government seized money Kerri and Brian Kaley had borrowed to pay for their legal defense against charges that they planned to steal and then re-sell prescription medical devices.
When they learned they were being investigated in 2005, the Kaleys took out a home equity loan of $500,000 to pay for legal counsel. When they were indicted two years later, the government froze those funds through an ex parte restraining order, meaning the Kaleys had no representation at the hearing. They are seeking the right to have a hearing to determine if they can use their money to provide for a legal defense before that money is frozen.
Darpana Sheth, an attorney for the Institute for Justice authored a friend-of-the-court brief on behalf of the Kaleys and attended the oral arguments at the Supreme Court. She believes the justices are leaning in favor of the Kaleys, noting the questions and comments from the justices about the defendants’ ability to pay for the counsel of their choice.
“If the Kaleys were convicted this money—the $500,000 in their home equity—would be forfeited. If they spend it right now, they’d have nothing,” Sheth said. “It’s really kind of putting punishment before trial, which is very un-American in our justice system.”
While this case deals with criminal forfeiture procedures, civil forfeiture is another tool that law enforcement uses to seize property allegedly used in the commission of a crime. Law enforcement claims both types of assets forfeiture are necessary so that criminals aren’t able to gain from their criminal activity. On its website, the FBI says, “Asset forfeiture ‘takes the profit out of crime’ by helping to eliminate the ability of the offender to command resources necessary to continue illegal activities.”
However, opponents of civil forfeiture argue that it violates constitutionally protected property rights and due process. “A lot of people are unfortunately ensnared in these civil forfeiture proceedings in which all the procedural protections or constitutional protections are not afforded because they’re not technically criminal defendants,” said Sheth.
In civil forfeiture, the property itself is said to be guilty of the crime, and the government takes action against the property by seizing it. Because the property owner is not accused of the crime, he or she is not afforded the same constitutional rights available in criminal proceedings, such as the right to counsel, a jury trial, or pre-trial hearings.
One example of such an action against property is United States v. $35,651.11 in U.S. Currency, a case involving a grocery store owned by Terry and Sandy Dehko in Michigan. In January, the IRS seized the contents of the business’s bank account because the owner’s regularly made deposits less than $10,000, which the IRS claims is a way to avoid reporting requirements. IJ is representing the Dehkos in their efforts to regain their property. They have not been charged with a crime.
Often there are never any criminal charges filed at all, but the burden of pursuing civil recourse can be more costly to pursue them than the property is worth. Sheth notes, “Often times the property that is seized—it might be your car, something that is very essential to you—but your legal fees contesting the forfeiture would certainly outweigh the value of the car.”
Because federal law allows the seized assets to go directly to law enforcement, they have a perverse incentive to use these civil forfeiture proceedings, argues Sheth. “Currently the Department of Justice’s Assets Forfeiture Fund is over $4 billion, … and there’s no congressional oversight about how that money is spent.”
While civil forfeiture laws vary by state with some states having laws more protective of property rights, federal law allows state and local law enforcement to circumvent their state laws and benefit financially. State or local law enforcement may receive a percentage of assets forfeiture for participating in joint federal investigations. They can also get 80% of the forfeited proceeds simply by referring the case to the federal government, much like a finder’s fee, encouraging them to circumvent their own state’s laws.
While organizations like the Institute for Justice and other organizations speak out against civil forfeiture abuses, it is growing as a tool for law enforcement. The amount of private property seized by state, local, and federal law enforcement has grown steadily over the years. The Institute for Justice found that 14% of Texas local law enforcement budgets were funded from assets forfeiture.
The Associated Press contributed to this report.
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