Feeling a squeeze: Changes in forfeiture and seizure rules

McDonald’s is to “Billions and Billions Served” as the federal civil asset forfeiture program was to “Billions and Billions Seized.”

So when U.S. Attorney General Eric Holder Jr. announced in mid-January that he was severely limiting the controversial forfeiture program, law enforcement agencies throughout the country reacted like fast food lovers learning that their favorite value meal had been pulled from the menu.

“From a law enforcement perspective and a public safety perspective this was misguided and ill-advised,” Eddie Caldwell, executive vice president and general counsel for the North Carolina Sheriffs’ Association, said of Holder’s directive. It prevents local agencies from using a federal law to confiscate cash and cars – the most common type of property that gets seized.

The abrupt end of the program known as Equitable Sharing is bound to cause many local and state law enforcement agencies to suffer through a period of withdrawal as they lose a major source of cash flow.

States like South Carolina, which have their own civil forfeiture laws, should be able to cope with the predicament far better than states that lack such laws and for years had relied heavily on the federal seizure program.

Because North Carolina fits into the latter category it faces giving up civil forfeiture cold turkey. And that’s not going to be easy – its police agencies added more than $10.8 million to their coffers in 2014 through Equitable Sharing, according to statistics from the U.S. Department of Justice.

South Carolina is a more casual user of the program. Its agencies relied on federal forfeiture to confiscate about $4.4 million in assets.

Under the program, police departments, sheriff’s offices and other similar agencies could seize property from anyone suspected of wrongdoing – even without having a warrant or charging the person with a crime – and transfer the assets to a federal agency. The feds kicked back 80 percent of the forfeited assets to the local agency and kept the rest for overseeing the adoptive forfeiture process.

Critics had argued that the program blinded police with dollar signs and made them overly aggressive about seizing property. Larry Salzman, an attorney at the Institute for Justice, a libertarian public interest law firm in Arlington, Virginia, said that the federal law “turned the basic American principle of innocent until proven guilty on its head” by requiring people to prove that their seized property was not tied to a crime.

“The deck is really stacked against the property owner, which made this program easily abused by law enforcement,” he said.

Drive-by money

Equitable Sharing allowed North Carolina police agencies to sidestep a state law that requires residents to be convicted of a crime before their property can be forfeited. The state law also bars law enforcement from keeping seized assets, which go into an education fund.

The Institute for Justice, which has been studying and compiling data on civil asset forfeiture for years, gave the Tar Heel State an A-minus grade for its forfeiture law, while South Carolina got an F.

The latter state only requires law enforcement to show that seized property is related to a crime, even if no charges are filed, and police agencies are allowed to keep the proceeds from their seizures.

Holder’s tweaks to the federal forfeiture program, Salzman said, “don’t do anything to improve the really terrible state of South Carolina’s civil forfeiture laws, which are among the most abusive in the country.”

But the state law still holds police to a higher standard than the old federal program. Now, for instance, police will no longer be able to use Equitable Sharing to take large amounts of cash that they find during traffic stops when there is no evidence of a crime, said David Farrell, a Columbia lawyer who files lawsuits in civil forfeiture cases for law enforcement in Richland County.

“With the change there will be nothing law enforcement can do in those circumstances,” he said. “What it means is that the money will just drive right through the state.”

A Washington Post investigative report on civil forfeiture found that police were spending seizure proceeds on everything from military grade weapons, tactical gear and armored cars to luxury vehicles, officer trading cards and even a clown for a community outreach event.

“Now some equipment will not get purchased or the law-abiding taxpayers of the community will have to pay for it. It will probably be a combination of both,” said Caldwell of the North Carolina Sheriffs’ Association. He was unaware of any effort to lobby the legislature to amend the state constitution to allow for civil forfeiture.

“What would be much more likely is, at some point, we get a U.S. attorney general who would fully comply with the law enacted by congress,” he said. “That way we won’t need a constitutional amendment.”

A ‘huge loophole’

While Holder’s order ends Equitable Sharing, local and state law enforcement agencies can still seize property through joint operations with their federal counterparts.

“This is an exception that could swallow the rule,” said Wes Camden, an attorney at Brooks Pierce in Raleigh who prosecuted the Robeson County Sheriff’s Department in the early 2000s for misusing kickbacks from the Equitable Sharing program.

“Having no adoptive forfeitures is a good thing from a civil libertarian standpoint,” he added. “But what stops the state or local law enforcement agent from making a stop on I-95, calling a federal agent and saying, ‘I’ve got this huge amount of currency in the back of a car. Would you like to come down here?’ ”

The federal agent would have to obtain a warrant or find probable cause to seize the money, but the local agency would still get a cut of the seized cash, Camden said. In joint operations, seizure proceeds typically are divvied up based on the amount of resources that each agency put into the investigation.

“This is the biggest concern among attorneys in North Carolina,” said Sonya Pfeiffer, a criminal defense lawyer at Rudolf, Widenhouse & Fialko in Charlotte. “What do we do when it’s a federal-state investigation and are we going to see an increase in these investigations?”

While state and federal law enforcement agents often collaborate, the Institute for Justice does not know the extent to which individual state police agencies profit through joint forfeitures. The institute has filed public records requests seeking that data, according to Salzman. He called joint forfeitures a “huge loophole.”

“Time will tell what happens,” he added. “I think it’s going to be up to judges to really hold the government’s feet to the fire for this to change.”

Follow Phillip Bantz on Twitter @NCLWBantz

Largest Equitable Sharing Forfeitures in Fiscal Year 2014

N.C. State Bureau of Investigation: $885,397

N.C. State Highway Patrol: $710,879

Charlotte-Mecklenburg Police Department: $880,902

Cary Police Department: $839,657

Raleigh Police Department: $557,852

Greensboro Police Department: $553,042

City of Burlington Police Department: $463,512

Cumberland County Sheriff’s Office: $419,415

High Point Police Department: $389,038

*Source: U.S. Department of Justice