Click link below to read the full article, originally published on August 18, 2017.

SCOTUS Limits Criminal Forfeiture in “Honeycutt” by Steven L. Kessler, Aug 18, 2017, New York Law Journal

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By Daniel Wise, New York Law Journal | February 6, 2001

THE GOVERNMENT gets only one bite at the apple when it seeks the forfeiture of cash seized from people as they are leaving the country, an Eastern District judge has ruled.

In a potentially groundbreaking ruling that could throw a monkey wrench into the way the government handles cash forfeiture cases, Judge Charles P. Sifton held that the government’s failure to contest certain findings relevant to sentencing in a criminal case could tie its hands when it later seeks to forfeit cash.

The ruling clears the way for Cesar Castro, who was prosecuted criminally for failing to declare the proper amount of cash he was carrying, to retrieve $119,984 taken from him in 1996 as he was about to leave JFK Airport for the Dominican Republic.

According to Mr. Castro’s lawyer, Steven L. Kessler, Judge Sifton is the first judge in the nation to bar the government from bringing a civil forfeiture proceeding after it has failed to challenge a finding in a pre-sentencing report that there is no link between cash seized by customs officers and criminal activity.

Mr. Castro was sentenced in March 1997 to two year’s probation and a fine of $2,500 for declaring only $2,000 cash, when in fact he was carrying $119,984.

When informed by a customs officer that he had to declare any U.S. currency he was carrying in excess of $10,000, Mr. Castro had told the officer that he was carrying only $2,000. He was subsequently searched and the cash taken from him.

On Jan. 13, 1997, Mr. Castro pleaded guilty to one count of willful failure to report currency that was unrelated to any criminal activity. At his sentencing two months later, Mr. Castro was credited with six points under the U.S. Sentencing Guidelines for proving that the money was neither the proceeds of a crime nor intended to be used for an unlawful purpose.

Without that finding, according to Mr. Kessler, Judge Sifton would have lacked the discretion to impose a sentence of probation.

No Criminal Purpose

The finding was contained in a pre-sentencing report prepared by the probation department, which is a court agency. At the time the report was issued, the prosecution chose not to challenge the probation department’s finding that the cash could not be traced to a criminal activity or purpose.

Two years later, when the government filed a civil action to forfeit the cash, the defense claimed that the lawsuit was undermined by the prior finding relating to the imposition of sentence.

Citing a 1998 U.S. Supreme Court decision, U.S. v. Bajakajian, 524 U.S. 321, the defense contended that the forfeiture of unreported currency derived from a legal source is barred as an excessive fine under the Eighth Amendment.

Judge Sifton agreed that under the doctrine of collateral estoppel, the finding at sentencing that the cash was unconnected to a crime controlled the outcome of the civil forfeiture proceeding two years later.

Mr. Kessler said that the ruling, if sustained, could have a major impact on the way the government handles forfeiture cases. In the two years since the Bajakajian ruling, he said, the government has brought hundreds of forfeiture cases after acquiescing to findings in pre-sentencing reports that the seized cash was unconnected to any criminal activity.

William J. Muller, executive assistant U.S. Attorney in the Eastern District, declined to comment except to say that the decision is “under review.”

Civil Forfeiture

In concluding that collateral estoppel applies, Judge Sifton held in U.S. v. U.S. Currency in the Amount of $119,984, 99-1978, that it was irrelevant whether the matter actually had been contested once the government declined to dispute the probation department’s finding that the cash was clean.

The prosecution in the criminal proceeding had ample incentive to have disputed the fact, but decided not to, he concluded. “The government’s desire to impose appropriate punishment for persons who secretly export the proceeds of illegal activity is at least as great if not greater than the need to add $120,000 to the U.S. Treasury,” he wrote.

In a separate finding, Judge Sifton concluded that Bajakajian’s holding that the excessive fines clause applies to a criminal forfeiture proceeding is equally applicable in the context of a civil forfeiture proceeding like the one the government commenced against Mr. Castro.

Whether the forfeiture is sought within the confines of a criminal prosecution, as was the case in Bajakajian, or a separate civil proceeding, the purpose is “punitive,” he concluded.

Simone Monasebian was co-counsel with Mr. Kessler in representing Mr. Castro. The prosecution was represented by Assistant U.S. Attorney David Goldberg.

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Steven L. Kessler is recognized as one of the leading authorities in the areas of civil forfeiture and RICO. This web site contains information about his law practice, his best-selling authoritative books, and legal articles that have appeared in law journals and newspapers and publications of general circulation.

The New York Times called Steven L. Kessler “an expert in asset forfeiture in the state.” (January 31, 1999, Week in Review, page 6.)

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By Steven L. Kessler

On April 25, 2000, President Clinton signed into law The Civil Asset Forfeiture Reform Act of 2000 (HR 1658), Pub. L. No. 106-185, 106th Cong. (2000), changing the face of federal civil forfeiture for the first time since the First Continental Congress.  The Act is a major step toward reforming the federal forfeiture system and applies to all forfeiture proceedings commenced on or after August 23, 2000.

The Act is not, however, a comprehensive re-evaluation of civil forfeiture.  Instead, it addresses specific problems that both the government and the defense bar have repeatedly encountered, attempting to create solutions acceptable to both sides.  It is a series of practical fixes of specific problems that have been raised during the past decade.  Accordingly, to return forfeiture to its pure and proper form, where the motivation underlying the process is not one of greed and fund-raising, requires revision of the system itself, an agenda left unaddressed by the tweakings to the statutes made by the Reform Act.  For the moment, as with any compromise, the Act leaves both sides somewhat dissatisfied. Prosecutors and police organizations, reaping the benefits of the law prior to this Act, adopted the adage “if it ain’t broke, don’t fix it,” while the defense bar often felt it was conceding too much for little in return.  In the end, the Act appears to carry through a large part of the reform agenda without limiting law enforcement’s use of forfeiture as an effective tool against crime.

i.   Procedures & Deadlines The heart of the Act is Section 2 (18 USC  983), which establishes the general procedures and deadlines that must be followed and provides remedies where the government fails to adhere to these rules.  Within this section is the provision that the burden of proof, which is placed on the government, now must be established by a preponderance of the evidence.  (2(c)).

The government must show that the property is subject to forfeiture.  Merely bringing suit does not, by itself, establish the government’s automatic entitlement to its day in court.  This is a substantial change, which applies to all civil forfeiture cases covered by the Act.  Excluded from the Reform Act are the civil forfeiture statutes codified in Title 19 and Title 26 (Customs and IRs forfeitures) as well as The Food and Drug Cosmetic Act (21 USC  301), The Trading With The Enemy Act (50 U.S.C. App.  1), and The Neutrality Act of June 15, 1917 (22 USC  401).
Section 2 also includes one of the most important concessions of the Justice    Department    the abolition of the dreaded cost bond. (2(a)).  Previously, a claimant was required to submit a cost bond (usually ten percent of the value of the seized property) as a prerequisite for defending against the forfeiture of his or her property.  The abolition of this bond enables claimants to bring suit without having to “pay to play,” thereby opening the court system to those who might not otherwise have access.

While the Reform Act makes it easier for a claimant to have his day in court,  2(h) establishes a civil fine of up to $5,000 that may be imposed in a civil forfeiture proceeding when the court finds the claimant’s assertion of an interest in the property to be frivolous.  Additionally, a prisoner who has brought an action or appeal in a federal court on three occasions, and on each time was rejected, is barred from challenging a civil asset forfeiture unless the prisoner shows extraordinary and exceptional circumstances      The government is also no longer given the power to delay the commencement of proceedings as long as it likes after seizing someone’s property. Written notice must be sent “as soon as practicable,” but no later than 60 days after the seizure.  (2(a)). Note that there are exceptions to this requirement, including a) If the government does not file a civil forfeiture action, but brings a criminal indictment containing an allegation that the property is subject to forfeiture, and sends notice of this indictment within 60 days; b) If the property is seized by a State or local agency, then jurisdiction is transferred to federal authorities, notice must be sent within 90 days; c) If the party who owns the property is not identified, the 60 day time period will not begin to toll until the owner is identified; and d) Upon motion by the government, 60 day extensions may be granted by the Court. But, as a rule, the government cannot simply hold the property until it is ready to proceed.  This is an important change and, if the government fails to live up to its obligation, the claimant may very well be able to overturn the forfeiture.

ii.  The Innocent Owner Defense To file a claim, a claimant must show that he is an “owner” within the definition of the Act.  The Act defines an owner as “a person with an ownership or possessory interest in the specific property sought to be forfeited – including a leasehold, lien, mortgage, recorded security interest, or valid assignment of an ownership interest.”  The term “owner” does not apply to a) a person with only a general unsecured interest in the property, b) a bailee, and c) a nominee who exercises no dominion or control over the property.  18 USC  981(d)(6)(A)(B).

A claimant may prove, by a preponderance of the evidence, that he is an innocent owner. Section 2(d) of the Act creates a uniform innocent owner defense.  The new definition is narrower than that currently codified in 21 USC  881(a) and 18 USC  981(a)(2).  In deciding whether a claimant meets this definition, the court must first determine when the party acquired the interest in the property.  If the interest was acquired prior to the activity underlying the forfeiture, an innocent owner would be someone who 1) did not know of the conduct giving rise to the forfeiture, or 2) upon learning of the conduct giving rise to the forfeiture, did all that could reasonably be expected under the circumstances to terminate such use of the property.  If the person acquired an interest in the property after the conduct giving rise to the forfeiture, he would have to demonstrate that he 1) was a bona fide purchaser or seller for value, and 2) did not know and was reasonably without cause to believe that the property was subject to forfeiture.

If the owner has given nothing of value in exchange for the property, then his status as “innocent” becomes irrelevant.   There are exceptions to the requirement that something of value be given for the property, if 1) the property is the primary residence of the claimant, 2) depriving the claimant of the property would deprive claimant of the means to maintain reasonable shelter in the community for claimant and his/her dependents, 3) the property is not, and is not traceable to the proceeds of any crime, and 4) the claimant acquired his interest through marriage, divorce or legal separation, or claimant was a legal dependent of a person whose death resulted in the transfer of the property to claimant via inheritance or probate.

Further, the court is required to limit the value of any real property to the value necessary to maintain reasonable shelter in the community for the claimant and all of his or her dependents residing therein.  Of course, no person may assert an ownership interest in contraband or any substance that is illegal to posses.  Finally, if a claimant has only a partial interest in that property, the court may sever that interest, transfer the property to the government, provided that the claimant is compensated in the event a forfeiture order is entered (essentially buying out the claimant’s interest), or allow the innocent owner to retain the property subject to a lien in favor of the government to the extent of the forfeitable interest.

iii. Excessive Fines Along the lines of defenses, Section 2(g) implements the Supreme Court’s decision in United States v. Bajakajian, 524 U.S. 321 (1998), allowing the claimant in the civil forfeiture proceeding to show, as an affirmative defense, by a preponderance of the evidence, that the forfeiture is grossly disproportional to the offense.  If the court agrees with the claimant, it will either reduce or eliminate the forfeiture as necessary to avoid a violation of the Excessive Fines Clause of the Eighth Amendment.  18 USC  981(g).  The burden of proof, as with any affirmative defense, is on the claimant.

iv.  Claimant’s Actions & Rights Section 3 of the Act amends the Federal Tort Claims Act (28 USC 2680(c)), waiving sovereign immunity for claims based on injury to or loss of property while in the possession of the government if the property was seized for the purpose of civil forfeiture, and subsequently not forfeited.  This is an important change, as it forces the government to seriously weigh the benefits of forfeiting any piece of property.  If the government proceeds, fails, and damages the property in the process, it will be held liable.
The Act also addresses the reverse scenario.  Section 12 amends 18 USC  2232 and provides that any person who, before, during or after any search for or seizure of property by an authorized party, knowingly damages, wastes, disposes of, or transfers property or knowingly attempts to stop the government,  “for the purpose of preventing,” from seizing or continuing to control the property, shall be fined and be subject to up to five years in prison, or both.  The same punishments apply in in rem proceedings and the execution of warrants.  This amendment is vague, and will likely require clarification for the courts.

v.   Attorneys’ Fees Another major addition to the Act relates to attorneys’ fees.  An attorney who accepts a case in which his client substantially prevails is entitled to (1) reasonable attorneys’ fees and other litigation costs reasonably incurred by the claimant, (2) post-judgment interest, and (3) any interest actually paid or imputed to the government.  Interest, however, only applies to cases involving currency, negotiable instruments or the proceeds of an interlocutory sale.  28 USC 2465, amended by 4 of the Act.

In addition to those clients who retain counsel, the Act permits the courts to authorize counsel to represent an indigent claimant with standing in a judicial civil forfeiture proceeding if the claimant is already represented by a court-appointed attorney in connection with a related federal criminal case.  (2(b)).  In addition, the court is directed to insure that an indigent claimant whose primary residence is subject to civil forfeiture is represented by an attorney for the Legal Services Corporation.  The Legal Services Corporation is paid by the government, regardless of the outcome of the litigation, at rates equivalent to those paid under the Criminal Justice Act.

These provisions will hopefully reduce the number of uncontested forfeitures, which currently represent approximately 80 percent of all forfeiture cases.

Additionally, if the claimant is convicted of a crime for which the interest of the claimant in the property was subject to forfeiture under a Federal criminal forfeiture law, the government is relieved of its obligation to compensate the claimant.  If there are multiple claims to the property, the government will not be liable for costs and attorneys fees if it (1) promptly recognizes the claim, (2) promptly returns to the claimant his interest in the property, if the property can be divided without difficulty and there are no competing claims to that portion of the property, (3) does not cause the claimant to incur additional, reasonable costs or fees, and (4) prevails in obtaining forfeiture with respect to one or more of the other claims. If the Court enters a judgment in part for the claimant and in part for the Government, attorneys’ fees will be reduced accordingly.

There are exceptions for when the government is obliged to pay attorney fees and costs.

If the government agrees to recognize a claimant’s interest in the property without causing the claimant to incur additional reasonable fees and expenses, it will have no obligation to compensate the claimant for costs and fees.  This out for the government will undoubtedly be used when it feels it will not prevail.

vi.  Warrant and Seizure Requirements Section 5 of the Act addresses the Seizure Warrant Requirement, establishing that seizures made under the section must be made pursuant to a warrant, obtained in the same manner as provided for a search warrant under the Federal Rules of Criminal Procedure.  There are, however, a number of exceptions to the warrant requirement.  A seizure may be made without a warrant if a complaint for forfeiture has been filed in the federal District Court and the court has issued an arrest warrant, in rem, pursuant to the Supplemental Rules for Certain Admiralty and Maritime Claims.  Additionally, if there is probable cause to believe that the property is subject to forfeiture and the seizure is made pursuant to a lawful arrest or search, the  warrant requirement is waived.  Finally, if the property was lawfully seized by a State or local law enforcement agency and transferred to a federal agency, a warrant need not be issued.

Section 5(b)(3) provides the claimant with flexibility with regard to making a motion for the return of seized property.  Despite the government strongly lobbying for a rule requiring the movant to litigate in the district court where the seizure warrant was issued, a motion for the return of seized property may be filed either in the district court in which the warrant was issued or in the district court for the district in which the property was seized.

Section 5(b)(4)(a) authorizes the Attorney General to apply for an ex parte order restraining property subject to forfeiture under 981 or under the Controlled Substances Act.

This authorization applies to the arrest or charging of a person in a foreign country, “for such time as is necessary to receive evidence from the foreign country or elsewhere in support of probable cause for the seizure of the property under this subsection.”
Additionally, Section 7 of the Act implements the Supreme Court’s decision in United States v. James Daniel Good Real Property, 510 U.S. 43 (1993), holding that real property may be seized only by the least restrictive means and, except in exigent circumstances, only after giving
the property owner prior notice and an opportunity for an adversarial hearing.  All forfeitures of real property also must proceed as judicial forfeitures.

vii. Claimant Retaining his Property or Securing its Return Under Section 2(f), a claimant may retain possession of his property during the pendency of a forfeiture action or may be entitled to the immediate release of the property if the circumstances demonstrate hardship.  Property will remain in or revert to the claimant’s custody if (a) the claimant has a possessory interest in the property, (b) the claimant has sufficient ties to the community to provide assurances that the property will be available at the time of trial, (c) the continued possession of the property by the government would cause substantial hardship to the claimant, (d) the claimant’s hardship outweighs the risk that the property will be destroyed, damaged, lost, concealed or transferred if it is returned to the claimant, (e) the seized property is not contraband, currency or another monetary instrument or electronic funds, unless it is the assets of a legitimate business which has been seized, (f) the seized property is not to be used as evidence of a violation of the law, (g) the seized property is not by reason of design or other characteristics suited for use in illegal activities, and (h) the seized property is not likely to be used to commit additional criminal acts if returned.

If the requisite criteria are satisfied, the claimant may then make a request to the party that has physical possession of the property.  If a response is not received within 15 days, the claimant may bring a petition to the District Court in which the government originally filed its complaint.

The court must then rule on the petition within 30 days, unless it has good cause to extend the deadline.  A ruling in favor of the claimant will result in the court issuing an order returning the property to the claimant, although the court may also enter any order necessary to ensure that the value of the property is maintained.  This includes permitting the inspection, photographing and inventory of the property, fixing a bond in accordance with Rule E(5) of the Supplemental Rules, or requiring the claimant to obtain or maintain insurance on the property.
If a claimant prevails, the property subject to forfeiture will be returned forthwith to the claimant or his agent.  The claimant will also be entitled to reasonable attorneys’ fees and other incurred litigation costs.  Post-judgment interest will be awarded at the rate applicable to the 30- day Treasury Bill on any money that was held by the court  Further, unless the government or its agents can show that there was reasonable cause for the seizure, the person responsible and the prosecutor may be liable to suits or judgments against them.  As mentioned above, the Act specifically amends the Federal Torts Claim Act (28 USC  2680(c) to waive sovereign immunity for claims based upon injury or loss of the property in the possession of the government if the property was seized for the purpose of civil forfeiture (as opposed to criminal forfeiture) and not forfeited.

The flip side of the coin is that, if the government prevails on the forfeiture, it may compensate “any victim of the offense giving rise to forfeiture, including, in the case of a money laundering offense, any offense constituting the underlying specified unlawful activity.”  18 USC 981(6).

viii.     Staying a Civil Forfeiture Proceeding Section 8, amending 18 USC  981(g), instructs a court when it should stay a civil forfeiture proceeding pursuant to a motion by the government or the claimant.  Upon motion of the government, the court shall stay the forfeiture proceeding if it determines that civil discovery would adversely affect the availability of the government to conduct a related criminal investigation, or hinder the prosecution of a related criminal case.

If the motion for a stay is made by the claimant, a stay will be granted if the court determines that (a) the claimant is the subject of a related criminal investigation or case, (b) the claimant has standing to assert a claim in the civil forfeiture proceeding, and (c) the continuation of the forfeiture proceeding will burden the right of the claimant against self-incrimination in the related investigation or case. Regardless of the moving party, should the court decide that a protective order limiting discovery would be sufficient, it may so order without issuing a stay.

ix.  Preserving Property for Litigation Section 9 expands the options available to the courts, allowing them to enter restraining orders, require the execution of performance bonds, create receiverships, appoint conservators, or take other actions to secure or preserve the availability of property subject to civil forfeiture.  The language used in this section is the same as that used in criminal forfeiture statutes, and while a performance bond bears a striking resemblance to the cost bond, the difference here is that the bond is not dictated by statute.  There is no requirement for a bond, and the issuance of one is within the discretion of the court.

x.   Government Obligations & Responsibilities Section 11 of the Act amends 19 USC  1621, giving the government two years from the discovery of the alleged offense involving the property, or five years from the time the alleged offense was discovered, whichever is later, to file a civil forfeiture action in court.  The two-year clock begins to run once the government is aware of facts that should trigger an investigation leading to discovery of the involvement of the property in the offense.  Without this amendment, there would effectively be no statute of limitations.

The claimant has five years from the date of final publication of the notice of seizure to file a motion to set aside an administrative forfeiture that was not properly noticed.  (2(e)).  This motion will be granted if the government knew, or reasonably should have known, of the moving
party’s interest and failed to take reasonable steps to provide notice, and where the moving party did not know or have reason to know of the seizure within sufficient time to file a timely claim.

Even if the court grants the claimant’s motion, however, there is no guarantee that the forfeited property will be returned.  For nonjudicial forfeitures, the government has 60 days from the entry of the order granting the motion to refile a claim, while that time is extended to six months for judicial forfeitures.  Unless a law specifies otherwise, all civil forfeitures of real property and interests in real property are judicial forfeitures.  A nonjudicial forfeiture would be one initiated by an administrative agency, such as U.S. Customs.

Additionally, criminal prosecutors are now able to share grand jury information with the Assistants handling the civil forfeiture proceedings.  (10).   Prior to this amendment, a court order, under F.R.C.P. Rule 6(e), was required for such an exchange of information.  This amendment to 18 USC  3322(a) dispenses with the requirement.

Finally, Section 13 amends 18 USC  984, allowing the government to rely on a fungible money or monetary instruments theory in any civil forfeiture case, not just money laundering and structuring cases.  Additionally, “precious metals” is added to the category of fungible property, while deleting the catch-all phrase “or other fungible property.”

xi.  Criminal Forfeiture Contained within the Civil Forfeiture Reform Act is a provision “Encouraging the Use of Criminal Forfeiture as an Alternative to Civil Forfeiture.”  Section 16, 28 USC 2461(c), authorizes criminal forfeiture for any offense for which Congress has authorized civil forfeiture.

Thus, the availability of criminal forfeiture is greatly expanded.  The Act does not, however, attempt to reform criminal forfeiture.  That has been accomplished through changes to the Federal Rules of Criminal Procedure that have been approved by the Supreme Court, which are scheduled to go into effect on December 1, 2000.

Under the new rules, the government will not have to prove to a jury that the assets in question belong to the defendant.  Rather, the government will only have to prove its case to a judge in an “ancillary hearing” in which the defendant cannot participate.  Third parties may participate in the hearing, but the burden of showing ownership of any or all of the property falls squarely upon the third party.  If he cannot show ownership at least in part, the property may be forfeited without the defendant ever being given an opportunity to contest the forfeiture.  This provision reeks of unconstitutionality.

Because these changes were made through procedural rules, and not by legislation, no vote was taken by Congress.  This creates a bizarre situation.  Through the Reform Act, Congress has shown its intent to create a fairer process for civil forfeiture.  Yet, the government, now
having the ability to pursue criminal forfeiture in any instance in which it could pursue civil forfeiture, is creating a near impossible burden on defendants in criminal forfeiture cases.

Unwittingly, Congress may have succeeded in sounding the death knell for civil forfeiture.  Why would the government pursue a civil forfeiture action, with all its incumbent rules and regulations, when it might just as easily bring a criminal forfeiture action, where the cards are all stacked in its favor?  If and when the proposed rules changes go into effect, Congress will once again be called upon to reform the rules.

xii. Proceeds The Act  makes it a point to define the term “proceeds.”  Section 20 defines proceeds in three situations:

a.   In cases involving illegal goods or services, unlawful activities and telemarketing and health care fraud schemes, “proceeds” is defined as property of any kind obtained directly or indirectly, as the result of the commission of the offense giving rise to the forfeiture, and any property traceable thereto, and is not limited to the gain or profit realized from the offense.

b.   In cases involving lawful good or services that are sold or provided in an illegal manner, the term “proceeds” means the amount of money acquired through the illegal transactions resulting in the forfeiture, less the direct costs incurred in providing the goods or services.  The claimant shall have the burden of proof with respect to the issue of direct costs.  The direct costs shall not include any part of the overhead expenses of the entity providing the goods or services, or any part of the income taxes paid by the entity.

c.   In cases involving fraud in the process of obtaining a loan or extension of credit, the court shall allow the claimant a deduction from the forfeiture to the extent that the loan was repaid, or the debt was satisfied, without any financial loss to the victim.

These definitions permit civil forfeiture for any offense constituting “specified unlawful activity,” or a conspiracy to commit such offense.  As a result of this change, any money laundering predicate offense will now support proceeds forfeiture without the need to charge or prove money laundering activity.  The addition of telemarketing and health care fraud schemes to subparagraph (a) places the Act in accordance with its criminal counterpart, in which the government is authorized to forfeit “gross proceeds” of telemarketing and federal health care offenses.   18 USC  982(a)(7)-(8).

xiii.     Civil Forfeiture in the International Arena Returning to the Reform Act,  Section 15 encourages international cooperation in forfeiture cases by creating a procedure for foreign states to have their forfeiture or confiscation judgments enforced in the United States against assets found here.

Further, regarding the fugitive disentitlement doctrine, the Act states that a judicial officer may disallow a person from using the resources of the American courts in furtherance of a claim if, after notice or knowledge of the fact that a warrant or process has been issued for his apprehension, in order to avoid criminal prosecution, the fugitive (a) purposely leaves the jurisdiction of the United States, (b) declines to enter or re-enter the country to submit to its jurisdiction, or (c) otherwise evades the jurisdiction of the court in which the criminal case is pending against him.  The fugitive must also not be confined or held in custody in any other jurisdiction for commission of criminal conduct in that jurisdiction.
In any civil forfeiture case, or in any ancillary proceeding in a criminal forfeiture case governed by section 413(n) of the Controlled Substances Act, where financial records located in a foreign country may be material, notwithstanding secrecy laws, the refusal of the claimant to provide the records in response to a discovery request or to take action necessary otherwise to make the records available shall be grounds for judicial sanctions, up to and including dismissal of the claim with prejudice.

Further, Section 18 amends 8 USC 1324(b) to allow forfeiture of the “gross proceeds” of a violation of  1324(a) (forfeiting conveyances used to facilitate alien smuggling offenses), and to make it easier for the government to prove that an alien involved in the alleged violation “had not received prior official authorization to come to, enter, or reside in the United States or that such alien had come to, entered, or remained in the United States in violation of law.”

xiv. Public Access Finally, the Attorney General is required to submit to Congress, and make available to the public, detailed reports for each prior fiscal year.  Such a report should include total deposits, expenses paid, types and amounts of property forfeited, and other relevant information.  The report must be made available no later than four months after the end of each fiscal year.  Audited financial statements must also be made available to Congress and the public within two months of the end of the fiscal year.  In keeping with the times, the Attorney General may satisfy this requirement by posting the reports on an Internet website maintained by the Department of Justice for a period of not less than 2 years, and by notifying the House and Senate Committees on the Judiciary when the reports are available electronically.

• Schedule a FREE 20-minute consultation on asset forfeiture issues
• Interview Steven L. Kessler or book him to speak
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Steven L. Kessler practices white collar criminal law in New York in Manhattan. Prior to entering private practice, Mr. Kessler was head of the Asset Forfeiture Unit of the Bronx District Attorney’s Office in New York, where he supervised and litigated all phases of forfeiture and related matters. In that capacity, he served as a member of the Forfeiture Law Advisory Group of the New York State District Attorney’s Association.

Mr. Kessler has written and lectured extensively on topics relating to forfeiture. He is the author of “Civil and Criminal Forfeiture: Federal and State Practice” (West Group 1993 & Supp. 1998), a 3 volume treatise covering the forfeiture and RICO statutes of all 50 states and the District of Columbia and the major federal forfeiture provisions, and is the author of the forthcoming “New York Criminal and Civil Forfeitures” (Gould Publishing 1998). Mr. Kessler is a contributor to the New York Law Journal on issues relating to forfeiture and is the author and Revisions Editor of eight chapters in Weinstein, Korn & Miller’s “New York Civil Practice,” including the chapter “New York Forfeiture”. He is widely quoted and cited in court opinions and media of legal and general circulation nationwide.

A graduate of the Cornell Law School, Mr. Kessler serves as a member of the House of Delegates of the New York State Bar Association and as editor of One on One, the publication of the 5,000-member General Practice Section of which Mr. Kessler is an officer. He is a member of the White Collar Crime Committee and the RICO, Forfeitures and Civil Remedies Committees of the American Bar Association, the Criminal Justice Section of the New York State Bar Association, and the Forfeiture Abuse Task Force of the National Association of Criminal Defense Lawyers, and serves as co-chair the Forfeiture Law subcommittee of the New York State Association of Criminal Defense Lawyers. An Adjunct Professor of Law at New York Law School, Mr. Kessler is listed in Who’s Who in American Law.

Mr. Kessler is a member of the New York and Connecticut Bars and is admitted to practice before the United States Supreme Court.

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By Steven L. Kessler | Article Posted 9/20/99

On June 24, 1999, by a lopsided vote of 375 to 48, the House of Representatives passed H.R. 1658, the first major revision bill to the federal laws of civil asset forfeiture in more than 30 years. The importance of the measure and the gravity of the wrongs being remedied is reflected in the unlikely and uncommon bedfellows who joined togther to overwhelmingly approve the bill and reject government efforts to pass a watered down version which would have worsened the abysmal laws currently on the books.

Facing the realization that civil forfeiture has lost its primary purpose as a potent weapon in the war on drugs and has, instead, become nothing more than fund-raising on the part of federal, state and local governments, Regan Republicans such as Henry Hyde and Bob Barr joined Carter Democrats such as John Conyers and Barney Frank in sponsoring these much needed changes. The sentiment and support for the bill is reflected by the breadth of the coalition supporting it: the American Bar Association, the National Rife Association, the ACLU, the American Bankers Association, the National Association of Criminal Defense Lawyers, the U.S. Chamber of Commerce, and pilot, boating, hotel and housing organizations. If adopted by the Senate and signed into law, the provisions of the new bill will go a long way toward correcting the abuses experienced under the current structure and remedying injustices under the today’s laws.

Some of bills more important provisions are:

• Placing the burden of proof on the government to prove that, by clear and convincing evidence, the property is subject to forfeiture.
• The current burden is that of probable cause, the same minimal standard required to secure a search warrant and one which can be satisfied on the barest of facts.
• Providing for the appointment of counsel for property owners who cannot afford lawyers to challenge forfeitures, paid for from the Federal Asset Forfeiture Fund.

Currently, claimants in civil forfeiture cases are faced with the strange reality of having their assets seized or frozen and having to pay an attorney to litigate the recovery of their property. As a result, more than 80 percent of all forfeitures go uncontested.

• Clarifying the “innocent ownership” defense, most specifically to state that an owner who takes “reasonable steps” to prevent others from using the property for criminal activity can get his property back.

At present, there is no uniform standard for “innocent ownership”, and the Supreme Court has not clarified the standard.

• Eliminating the requirement that owners post a bond before being allowed to challenge the action.

What a concept! Your house has been seized, your business has been shut down, all of your money has been seized or frozen, and, before you are permitted to challenge the seizure, you have to post a bond of $5,000 or ten percent of the property’s value, whichever is less. In effect, you are paying extra for the right to challenge the government’s seizure of your property. Preposterous.

• Extending from 10 to 30 days after receiving notification of the government’s intent to forfeit the time for property owners to file a claim for the return of their property.

The current 10 day limitation is simply insufficient for most people, especially when the cost bond must accompany the claim. Thirty days is a more reasonable time period.

• Requiring the government to institute judicial forfeiture proceedings within 90 days after the filing of a claim.

Today, the government can wait for months, even years, after receiving a claim before commencing the forfeiture action. This delay gives the government even more leverage atop what it already has in these primarily one-sided proceedings.

• Permitting property owners to sue the government for negligence in handling or storage of their property, if the property is not ultimately forfeited.

Currently, the government is immune from suit. So, when you pick up your formerly brand new car which was seized as you drove it off the dealer’s lot and it looks like it was totaled in a seven car collision, you have no one to sue. The provision would change that.

• Providing federal courts with the ability to grant possession of the contested property to the owner during the pendency of the forfeiture proceeding, if possession by the government during the action would cause the owner to suffer substantial hardship (such as preventing the functioning of a business or leaving an owner homeless).

Currently, the government can shut down a business and keep it shut for as long as the forfeiture proceeding takes. This provision would give the court discretion to reopen the business or release the property to the claimant following a showing of hardship.

Not surprisingly, for six years, the Department of Justice has fought — and fought hard — to change the bill, introducing its own version of a reform measure. No hearings were conducted regarding the DOJ-drafted H.R. 1965, nor has the bill been subjected to public scrutiny or intensive committee review. At 69 pages, it is 54 pages longer than H.R. 1658. Quite simply, it mocked the reform effort of H.R. 1658, a fact reflected by the House’s 268-155 rejection of the DOJ proposal.

It is noteworthy that the government’s proposal is supported by no organizations other than the Department of Justice and its “client” agencies, all of whom have a direct interest in expanding their forfeiture powers. Some law enforcement agencies are funded solely from the assets seized for forfeiture. In fact, the U.S. Attorneys offices in Manhattan and Brooklyn reported that their take of the funds from forfeitures in the most recent fiscal year surpassed their entire operating budgets!

In 1990, Attorney General Dick Thornburgh warned all federal prosecutors that the department was far short of its projection of $470 million in forfeiture deposits with only 3 months remaining in fiscal 1990, and that they must increase the volume of forfeiture actions:

We must significantly increase production in order to reach our budget target . . . Failure to achieve the $470 million projection would expose the Department’s forfeiture program to criticism and undermine confidence in our budget projections. Every effort must be made to increase forfeiture income during the remaining three months of [fiscal year] 1990.

Even federal prosecutors realized the conflict of interest and skewing of priorities created by the forfeiture statutes. In 1993, after a new administration was installed at the Department of Justice, the former director of the DOJ Asset Forfeiture Office, Michael Zeldin, remarked:

The intelligent thing to have done would have been to pick our cases more carefully and not overreach. We had a situation in which the desire to deposit money into the asset forfeiture fund became the reason for being of forfeiture, eclipsing in certain measure the desire to effect fair enforcement of the laws as a matter of pure law-enforcement objectives.

Passage of H.R. 1658 is a major step toward protecting the property rights of ordinary citizens, not involved in criminal activity, who are caught in the web of the ever-expanding war on drugs. The House should be commended for its vote. The Senate would do well to follow its lead.

• Schedule a FREE 20-minute consultation on asset forfeiture issues
• Interview Steven L. Kessler or book him to speak
• Read articles on asset forfeiture by Steven L. Kessler

Steven L. Kessler, a former prosecutor and current defense attorney in Manhattan, is the author of a three volume treatise, Civil and Criminal Forfeiture: Federal and State Practice (West Group), and a one volume handbook, New York Criminal and Civil Forfeitures (Gould 1999), and is a member of the Forfeiture Abuse Task Force of the National Association of Criminal Defense Lawyers.

Mr. Kessler is a principal with the Law Offices of Steven L. Kessler, 60 East 42nd Street, New York, N.Y. and can be reached at 212-661-1500.

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By Steven L. Kessler | Article Posted 9/20/99

On February 22, 1999, New York City Mayor Rudolph Giuliani and Police Commissioner Howard Saphir instituted a new initiative to forfeit the vehicles of motorists arrested for driving while intoxicated. Under the initiative, the City is utilizing Administrative Code §14-140, a dusty, 50+ year old section of the City code, to punish even first-time offenders and those arrested, but not convicted, of a crime.

Nassau and Suffolk counties on Long Island announced similar programs. However, the three initiatives differ in ways that may affect the success of the inevitable statutory and constitutional challenges against them. Because the City is proceeding under a local ordinance and not a State law, Nassau and Suffolk counties must use different statutes to support their programs. As of this writing, neither the City initiative nor the particulars of the programs in Nassau and Suffolk counties have been officially made available to the public. Accordingly, putting aside the issue of whether a municipality can seize and forfeit an individual’s property without providing even basic notice of the statutory provisions or legal authority for its actions, our information regarding the respective provisions and executive orders is based exclusively upon statements by the Mayor and Police Commissioner in New York City, and media reports.

Based upon press reports, the forfeitures in Nassau and Suffolk counties apparently will be limited to cars of drivers who have been convicted of drunken driving. If the driver is acquitted of the underlying charges, his vehicle will be returned immediately. A vehicle seized from a drunken driver who does not own it, the vehicle will be returned to its owner if the arrested driver does not have primary use of the car. However, if the driver is convicted and is the sole driver of the car, and the car is titled in another’s name, the car will be forfeited. In contrast, Mayor Giuliani has stated that he will seek the forfeiture of the vehicles in civil court, under the lowest civil standard, even if the driver has been cleared of criminal charges and irrespective of who owns the car.

According to the Corporation Counsel, if a driver’s blood alcohol level is above .1 percent, he or she will be charged with driving while intoxicated, a class A misdemeanor that, under New York State’s criminal codes, carries a maximum $1,000 fine, six-month license suspension and possibly one year in jail. Drivers whose blood alcohol registers between .05 percent and .09 percent may be charged with driving while impaired, a traffic infraction (not a crime) carrying penalties for a first-time offender of up to 15 days in jail, a 90-day license suspension and a fine of $300.00.

Under the City’s program, drivers charged at the scene with DWI will “automatically lose their cars” through civil forfeiture; those charged with driving while impaired will not have their vehicles forfeited. Ironically, however, drivers whose DWI charges are pleaded down to driving while impaired or those charged with DWI but convicted of driving while impaired will face forfeiture proceedings by the City. In short, people convicted of the same crime face vastly different punishments.

In response to this dichotomy, Daniel S. Connolly, special counsel to the City’s Corporation Counsel, told the New York Daily News: “It’s the same disposition, but it’s a very different crime. Prosecutors create a fiction for the purpose of having a plea bargain.” Daily News, 2/28/99, a p. 6. Using the same logic, it will be interesting to hear the City justify taking the car of someone acquitted of a crime.

Apropos of this is the fact that when determining the punishments for DWI, the state legislature saw fit not to impose the additional punishment of forfeiture. See Vehicle & Traffic Law §1192 (2), (3). Now, by executive order, the mayor of one of the municipalities within the State has chosen to bypass even his own city council and add his own form of punishment for the violation of a state law. As the Court of Appeals held in People v. Letterlough, 86 N.Y.2d 259, 267 (1995), “Under this State’s jurisprudence, the creation of punishment for crimes rests within the realm of the legislature. A sentencing court simply cannot impose forms of punishment not authorized by statute for a particular crime.” (citation omitted). See also People v. McNair, 87 N.Y.2d 772 (1996) (it is beyond the authority of the courts to impose a sentence not prescribed by the Legislature).

New York State has some 17 different statutory forfeiture provisions on the books. CPLR Article 13-A, for example, authorizes, among other things, the forfeiture of vehicles of drunken drivers who are convicted of the felony of DWI. Although drafted to target the profits of criminals, Article 13-A has been used by prosecutors throughout the state to forfeit “DWI cars”. In fact, I believe I was the first prosecutor in New York City to use Article 13-A for such a purpose in 1985 when I was young, naive and an Assistant District Attorney serving the people of Bronx County under Mario Merola.

Not satisfied with the requirement of a felony or other elements necessary for a forfeiture under Article 13-A, the Giuliani administration has chosen as the foundation of its new DWI crackdown the only provision that has been successfully challenged under the Constitution. In 1972, in McClendon v. Rosetti, 460 F.2d 111 (2d Cir. 1972), the United States Court of Appeals for the Second Circuit struck down this very provision of the Administrative Code. It found the statute “unconstitutional as applied to persons from whose possession money or property, other than contraband, has been taken or obtained, though such money or property was not related to any criminal proceeding, or, if it was so related, such criminal proceedings had been terminated, or if the money or property had been needed as evidence in a criminal proceeding, it was no longer needed for that purpose, as violative of the due process clauses of the fifth and fourteenth amendments.” The Court remanded to the district court, with instructions “to permit intervention and to establish an appropriate class, for a determination of the respective rights of the parties in accordance herewith and for the purposes of formulating any necessary injunctive relief to avoid further perpetuation of the practices and procedures hereby declared unconstitutional.” 460 F.2d at 116. Interestingly, although the court was correct in believing that the Code provision was obviously unconstitutional, it did not explain why it was unconstitutional other than remarking on its failure to include a meaningful requirement of notice. The case was remanded to the district court to determine the rights of the class and to fashion appropriate injunctive relief.

On remand, Judge Morris E. Lasker, in an unpublished consent order, established a basic procedure consistent with Due Process. Those procedures, when properly utilized by the police, have been upheld by the courts. Yet, Judge Lasker did not rewrite the statute. Indeed, to date, the legislature has not seen fit to rewrite this antiquated and confusing statute to satisfy basic constitutional requirements. The Code is silent as to who has the burden of proof in these proceedings, what standard must be satisfied or whether there is a right to a jury trial. Notice, the ability to know the procedures and one’s rights and responsibilities, is clearly lacking from the statute, because the procedures used under the Code are court ordered, not legislated. The only way to know of the correct procedures under the statute would be to inadvertently stumbled upon the unpublished 25-year-old order of Judge Lasker or its slightly revised 1994 version.

The City has yet to officially issue guidelines outlining the procedures and formalities of the program. Indeed, those following the story in the newspapers would find themselves reading different sets of rules each day. This alone may violate the notice prong of Due Process. Notably, however, the lack of procedures has not stopped the police from seizing at least 23 vehicles in the first week of the new program, five on the first night.

In any event, the City is attempting to use federal procedures under a municipal code. This cannot be done. Every forfeiture action commenced by the City under Administrative Code §14-140 was in personam, against the individual. Indeed, all of New York State’s major forfeiture statutes are crafted accordingly. The sponsors of CPLR Article 13-A took pains in making the powerful State forfeiture law not like the federal in rem statutes by building into it important protections that are ordinarily available only in criminal, in personam actions. See discussion of legislative history of Article 13-A in New York Criminal and Civil Forfeitures (Gould 1999), ch. 4, and in Kessler, Quo Vadis? Assessing New York’s Civil Forfeiture Law, 4 Touro L. Rev. 253 (Spring 1988). Therefore, the City is taking a statute that authorizes only in personam actions and justifying its use as a federal in rem forfeiture statute. True, the courts have upheld forfeitures in the absence of a criminal conviction, but only when (1) it is an in rem action, which utilizes the legal fiction of the property as the “guilty” party or (2) the statute provides for a forfeiture action (i.e., a “pre-conviction” action under Article 13-A, see CPLR 1311(1)(b)) in which the government must prove the elements of a crime by the highest civil standard available, i.e., clear and convincing evidence. No such procedures and protections exist under the Administrative Code.

Also problematic is that the vehicles are being confiscated prior to any judicial hearing or finding of guilt. Even on the federal level, “individuals must receive notice and an opportunity to be heard before the Government deprives them of their property.” United States v. James Daniel Good Real Property, 510 U.S. 43, 48 (1993). Indeed, no pre-hearing seizure can take place without the issuance of a warrant. And Article 13-A requires the District Attorney to move for a hearing within five days of the seizure of the property, a factor which was critical to the Court of Appeals in upholding the constitutionality of the statute. See Morgenthau v. Citisource, Inc., 68 N.Y.2d 211, 222 (1986) (“Although the provisional remedy of the attachment [could] initially be granted ex parte, a motion to confirm the attachment [had to] be made, on notice within five days of the levy”).

However, under the Code, there are no provisions for a hearing. Left un answered are such issues as if and when there will be a hearing before an impartial judge. Does the driver have to wait until the conclusion of the criminal case before having his day in court? That could be months, even years. Will there be “bail” set for the car? Is there a right to a jury trial? What is the scope of the property subject to forfeiture? If a motorist is ultimately acquitted, who pays for his loss of wages, car rental fees? Will he be charged storage fees? Will the motorist have to sue the city to recover the financial loss? Will he be allowed to? Despite the City’s failure to address these and other important issues, the program is proceeding “according to plan”. It is part of the “learn as you go” procedures for the police, and for the public. The public is being asked to take the word of its public officials on how the law will be implemented. And although “learn as you go” may be acceptable for nursery school children, it flies in the face of the basic tenets of the Constitution.

Another issue relates to the fear of discriminatory application of the law by law enforcement authorities. Which cars will be pulled over? Which will be confiscated and forfeited? What factors will go into the arresting officer’s decision? The make and model of the car? The 1969 Chevy or the 1999 Jaguar? Will these decisions depend upon how much cash the sale of the car will generate at auction? Or will they depend on what type of car the officer dreams about for his next “undercover” operation? Will the police now treat people differently depending upon the type of car they drive? What happens if the car does not belong to the driver? Will it be forfeited? What if it is registered to the driver’s spouse? The Mayor has insisted that the police will not forfeit cars belonging to anyone other than the drunken driver. But does this not directly contradict the fundamental theory underlying a federal in rem forfeiture action, namely, that the property is “guilty” and, therefore, forfeitable, regardless of the guilt of its owner? This is selective prosecution from either perspective and is unconstitutional.

This process is complicated even more by what has been described as the “incentive issue”. The proceeds from the sale of the car do not go back to the car’s owner. Instead, they go directly into the police pension fund, or what is euphemistically called the “widows and orphans fund.” Losing your property is one thing. But it becomes even more horrific when those who take and sell your car keep the money for their own pension plans or funds! This is a conflict of interest. As Justice Ira Gammerman remarked in Property Clerk, New York City Police Department v. Hurd, 130 Misc. 2d 358, 364, 496 N.Y.S.2d 197, 201 (Sup. Ct. N.Y. Co. 1985), the fact that “the police can seize property, which is then given into the custody of the property clerk and which, if unclaimed, inures to the benefit of the police by being placed in the police pension fund suggests at least the appearance of impropriety.”

A logical extension of this problem is the Eighth Amendment issue of excessiveness. Since the car is being forfeited as an instrumentality of a crime, the Excessive Fines Clause of the Eighth Amendment is triggered. What is the value of the crime of DWI? Unlike a kilo of heroin, it is difficult, if not impossible, to place a value on the crime of DWI. As such, what factors should a court consider when determining whether the forfeiture of the vehicle is excessive vis-a-vis the crime of DWI? Will it ultimately turn on the book value of the car being forfeited? Is it fair that one driver loses a brand new Jaguar valued at more than $75,000, while another loses an old, beat up Ford wagon worth $500? Or will it turn on the subjective value of the car, i.e., the driver’s means of getting to work, or working at all, whether he has another car at home, or the vehicle’s importance to his family? The punishment must be proportionate to the seriousness of the crime. Using these factors, it would appear that, in most circumstances, the punishment could be very disparate and arbitrary. The City’s interests favoring forfeiture would fair poorly when confronted with the valuation issues and the “cost and value” of the car to the driver and his family, especially in the absence of any “hardship” exception similar to that available under the Vehicle and Traffic Law.

Also of constitutional interest is whether the new punishment for drunken drivers will withstand a challenge under the Double Jeopardy Clause of the Fifth Amendment. The United States Supreme Court, in United States v. Ursery, 518 U.S. 267 (1996), and Hudson v. United States, 522 U.S. 93 (1997), has upheld federal forfeitures against Fifth Amendment challenges. However, those cases relate to in rem forfeiture proceedings, and the Court applied in part the legal fiction of the property’s “guilt” to uphold the forfeitures. Here, actions under the Administrative Code are in personam, against the culpable individual. And according to the initiative’s “executive history,” if that is what it is called, the Guilianni administration has made it undeniably clear that the intent of this new initiative is to punish the driver. With the new program unquestionably punitive in nature, see Austin v. United States, 509 U.S. 602 (1993); Attorney-General v. One Green 1993 Four Door Chrysler, 217 A.D.2d 342, 636 N.Y.S.2d 868 (3d Dept.) (pursuant to Austin, civil forfeitures are subject to both federal and state constitutional prohibitions against excessive fines), appeal dismissed, leave to appeal denied, 88 N.Y.2d 841, 644 N.Y.S.2d 682 (1996); Compare United States v. Bajakajian, 118 S.Ct. 2028, 141 L.Ed.2d 314 (1998) (Court struck down forfeiture as excessive fine under the Eighth Amendment), and with the forfeiture directed against the same individual who is being charged with a crime, there is every reason to believe that an appellate court may remove itself from the Hudson and Ursery rationale and find the program in violation of the Fifth Amendment.

The forfeiture also may be discriminatory and constitute unequal protection under the Constitution. This is especially so because it appears that the procedures under the program grant an inordinate amount of discretion to the police in their actions. Cars may be forfeited based merely upon the arresting officer’s subjective evaluation of a motorist’s physical appearance, an evaluation which, in many circumstances, is wrong.

Which leads to one of the more basic problems resulting from the extraordinarily subjective, and harsh, nature of this program. Pavel Grinberg, the first person whose car was seized under this new policy, blew a .11 percent on the Breathalyzer test. As Breathalyzer experts have said, and as even police sources concede, these tests have a plus or minus .02 percent margin of error. If the test were performed properly, the result may be a .13 percent or a .09 percent. Thus, based solely upon the results of his Breathalyzer test, Mr. Grinberg’s statement that he was not legally intoxicated at the time of his arrest may be true! However, applying the Code to those charged with DWI and not to those charged with driving while impaired, Mr. Grinberg’s car will be forfeited although the police admit that he may not be guilty of DWI. This is a problem. Also, who will determine whether the driver falls within the definition of impaired rather than intoxicated? Will it be solely within the discretion of the arresting police officer? Such a result would be unacceptable.

Another remarkable aspect of this initiative is that, at least according to City officials, the onus is upon the claimant, not the police, to excuse or show the inaccuracy of the Breathalyzer reading. “Say a person comes forward with evidence to show that he is taking a prescription medication that has been proven to produce false, high readings,” Connolly told the News. “That could make a difference.” Aside from the dangerous and confusing nature of this comment, what is most remarkable is the City’s position that such evidence could make a difference. Don’t they mean that it would make a difference?

One side effect of the new policy is that people who would have readily taken pleas in the past may now opt for a trial rather than accept a plea bargain if they believe they have a better chance of keeping their cars. This could flood already crowded dockets of the courts within the five boroughs.

The Mayor has compared this initiative to taking property from drug kingpins. To say that this comparison fails would be an understatement. Using or selling heroin is illegal. Period. Heroin is contraband. One cannot legally use or sell just a little heroin. Alcohol, on the other hand, is legal. It can be sold and used by most people without punishment. Driving is also legal. In fact, driving after having a beer or a glass of wine is also legal. It is only when you consume more than three drinks within a two hour period and proceed to drive that the law steps in to make your actions illegal. It is no wonder, then, why the Mayor’s comparison of DWI to drug use has offended so many law abiding people.

Looking at all of these factors as a package, it is clear why the public as a whole has reacted with outrage over the initiative. If a motorist drinks a couple of glasses of wine with dinner and, while driving home in his own car, is stopped by the police, although he has no prior record, he will lose his car regardless of the outcome of her criminal trial. No hardship exception, no “use for work” exception, no “first time offense” exception. The car is history.

The first challenge to the statute was rejected on May 20, 1999, when Justice Michael D. Stallman upheld the application of the new initiative in Grinberg v. Safir, __ Misc.2d __, 1999 N.Y. Slip. Op. 99317, 1999 WL 455763 (Sup. Ct. N.Y. Co. May 18, 1999) (Stallman, J.). The court found that the vehicle did not have to be contraband or evidence in a criminal action to be forfeitable. Nor did the forfeiture policy act as an impermissible additional DWI sentence. Analogizing almost exclusively to federal, rather than state, forfeiture law, the court found the forfeiture to be civil, not criminal, in nature, and rejected Petitioner’s argument that the policy violated due process because it permits police to take and retain the vehicle without either a pre-seizure or post-seizure hearing while the criminal action is pending. Although rejecting the argument as applied to the instant facts, the court left open the claim that the forfeited value of the vehicle, when compared to the crime of DWI, may violate the Excessive Fine Clause of the Eighth Amendment. Only some of the issues raised in this article were presented before the court in Grinberg, which is currently on appeal. And, in addition to those addressed here, there are scores of other questions relating to the statute and its implementation. While the Mayor should be applauded for his admirable goal, his initiative is laden with legal and practical faults which require discussion and, ultimately, resolution. The first challenges to the initiative are underway. They will be followed closely, as will those in other cities and municipalities nationwide.

• Schedule a FREE 20-minute consultation on asset forfeiture issues
• Interview Steven L. Kessler or book him to speak
• Read articles on asset forfeiture by Steven L. Kessler

Steven L. Kessler is a member of the Board of Directors of the NYSACDL, Co-Chair of the Association’s Forfeiture Law committee and a member of the Forfeiture Abuse Task Force of the NACDL. A practicing attorney in Manhattan, Kessler is the author of Civil and Criminal Forfeiture: Federal and State Practice (West Group 1993 & Supp. 1998) and New York Criminal and Civil Forfeitures (Gould 1999). He is of counsel to the Petitioner in Grinberg v. Safir et al.

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By Steven L. Kessler | Article Posted 5/11/98

If United States v. Ursery slammed the door on Double Jeopardy Clause challenges to forfeitures and other civil penalties, United States v. Hudson padlocked the building and threw away the key. Disturbed that the fact-based reasoning of Halper was still finding its way into some lower court decisions despite Ursery, the Supreme Court aggressively went after Halper with both guns drawn. Although some question remains whether Halper has been actually overruled, there is no doubt that the Court has devalued that decision so greatly that no lower court dare cite it again to support a Double Jeopardy Clause analysis.

The facts of the case are unimportant (as they were — unimportant — to the Court), except to note that after the defendant bank officers agreed to modest fines and conditional debarment for an apparently severe pattern of speculation, they were then prosecuted under criminal statutes for “the same lending transactions that formed the basis for the prior administrative actions . . ..” The defendants’ motion to dismiss on double jeopardy grounds was granted by the district court. The Tenth Circuit reversed, but only because it found that defendants had failed the Halper test — i.e., that “the actual fines imposed by the Government were not so grossly disproportional to the proven damages to the Government as to render the sanctions ‘punishment’ for double jeopardy purposes.”

The Supreme Court granted certiorari to resolve the issue of “whether the imposition upon petitioners of monetary fines as in personam civil penalties . . . is ‘punishment’ for purposes of the Double Jeopardy Clause.” The Supreme Court affirmed the Court of Appeals’ dismissal, but rejected its reasoning. Although all nine Justices concurred in the result, four separate concurring opinions were filed.

The Court used four classic techniques to disown the Halper decision. Technique No. 1: Rely on numerous cases that predate the case to be discredited. This will demonstrate that before the ‘bad’ case was decided, there was a long, unbroken line of well-reasoned decisions that employed a better analysis. That makes the ‘bad’ case appear to be an anomaly, and sets the stage for the Court to present the new decision as a ‘return to tradition.’

The Court was not shy about using Technique No. 1. The very first paragraph of the Hudson decision states that the reasons for the Court’s holding “in large part disavow [Halper] and reaffirm the previously established rule exemplified in United States v. Ward.” The Court heightened this sense of ‘return to precedent’ by avoiding reliance on Ursery at first. Instead, the Court cited older cases to establish its basic premise that “jeopardy” has always meant criminal punishment and, (before Halper), determining what constituted criminal punishment involved first and foremost a literal exercise in statutory construction. In stark contrast to these settled principles, Halper “marked the first time we applied the Double Jeopardy Clause to a sanction without first determining that it was criminal in nature,” and therefore “deviated from our traditional double jeopardy doctrine . . ..” In addition, Halper failed to apply the time-honored multiple-factor analysis originally set forth in Kennedy v. Mendoza-Martinez, instead elevating a single Kennedy factor — excessiveness — to controlling status. The Court polished off Halper with its ultimate put-down: the Halper test was “unworkable” because under its “solely remedial” standard, no penalty could be deemed “beyond the scope of the [Double Jeopardy] Clause” since every civil penalty has “some deterrent effect.”

Technique No. 2: Strongly emphasize the “egregious” facts of the “bad” case. This will demonstrate that an unusually harsh fact scenario understandably induced a sympathetic Court to temporarily (but wrongly) turn away from well- settled precedent and lead with its heart, not with its head. For this, the Hudson Court took pains to point out that Mr. Halper “appeared to be liable for a penalty of $130,000, despite the fact that he actually defrauded the Government of less than $600,” after having been “sentenced to two years’ imprisonment and fined $5,000.” Touching facts, perhaps, but clearly irrelevant under Ursery and Hudson.

Technique No. 3: Re-analyze cases that were decided after the “bad” case to make it appear that they did not contribute in any way to the sustained viability of the ‘bad’ case. To the contrary, only in hindsight can it be seen that these recent cases in fact signalled an instinctive return to the longstanding principles that were in effect before the ‘bad’ case was decided. To accomplish this, the Hudson Court cited Department of Revenue of Mont. v. Kurth Ranch, but downplayed that decision’s double jeopardy finding while emphasizing its use of a “Kennedy-like” test, thereby bringing that somewhat troublesome case into the Hudson fold. It was only at this late portion of the decision that the Hudson Court finally played the Ursery card — not to establish its point, but only to drive home a point already made.

And Technique No. 4: Point out that there are numerous other, more appropriate remedies available to the aggrieved parties whose rights the Court’s decision apparently forecloses. This will demonstrate that, even though it is finally leading with its head, not its heart, the Court has not lost the humanity it displayed when it wrongly decided the “bad” case. To accomplish this, the Hudson Court observed that “some of the ills at which Halper was directed are addressed by other constitutional provisions,” such as the Due Process, Equal Protection and Excessive Fines Clauses. The Court did not explain exactly how these principles would have helped Mr. Halper; nor was this apparently a good time to mention United States v. James Daniel Good, where the Court “rejected the view that the applicability of one constitutional amendment pre-empts the guarantees of another.”

With Halper thus bound, gagged and stuffed in a box, the Hudson Court moved on to applying the “traditional” Ward test (dating all the way back to 1980) to the facts of this case, a process that took about one page of legal analysis. The Court concluded that (1) Congress intended theadministrative banking laws at issue to be civil, not criminal; and (2) there was nothing so punitive in effect about these laws that the Court should override the intent of Congress and deem them criminal for Double Jeopardy Clause purposes.

Justice Stevens, in the most extensive and fully-reasoned of the four concurring opinions, criticized the Court for selecting a completely inappropriate case in which to express “concern about the danger that [Halper] might be interpreted too expansively,” since the facts of Hudson were blatantly insufficient to warrant double jeopardy protection under any theory, including Halper. Indeed, this is what the Court of Appeals had already found. Therefore, it was difficult to understand exactly why the Court had taken up this case. Justice Stevens found disingenuous the Court’s purported “concerns about the wide variety of novel double jeopardy claims spawned in the wake of Halper”, particularly since every single case it cited to illustrate this “wide variety” in fact applied Ursery to conclude that the civil penalty in issue was not punishment for double jeopardy purposes. Justice Stevens quoted Ursery to rebut the Court’s attempt to paint Halper as an “oddball” case whose standard was unworkable:

‘Whether a particular sanction cannot fairly be said solely to serve a remedial purpose is an inquiry radically different from that we have traditionally employed in order to determine whether, as a categorical matter, a civil sanction is subject to the Double Jeopardy Clause. Yet nowhere in Halper does the Court purport to make such a sweeping change in the law, instead emphasizing repeatedly the narrow scope of its decision.’

Having just recently emphasized Halper’s narrow rule in Ursery, it is quite odd for the Court now to suggest that its overbreadth has created some sort of judicial emergency.

In fact, Justice Stevens noted, Halper itself stated that its rule was “for the rare case where a fixed penalty provision subjects a prolific but small-gauge offender to a sanction overwhelmingly disproportionate to the damages he has caused.”

Justice Stevens then slyly eviscerated the Court’s attempt to show that Halper was inconsistent with both older and more recent cases:

Despite my disagreement with the Court’s decision to use this case as a rather lame excuse for writing a gratuitous essay about punishment, I do agree with its reaffirmation of the central holding of Halper and [Kurth Ranch which] reconfirmed the settled proposition that the government cannot use the ‘civil’ label to escape entirely the Double Jeopardy Clause’s command, as we have recognized for at least six decades . . . However the Court chooses to recalibrate the meaning of punishment for double jeopardy purposes, our doctrine still limits multiple punishments of the rare sort contemplated by Halper.

Justice Stevens completed the reintegration of Halper into the Court’s Double Jeopardy Clause doctrine by demonstrating Halper’s conformance with the Kennedy multi-factor approach that the Court held out as an example of its “traditional” double jeopardy analysis in Hudson. Then he turned the tables and demonstrated that in fact it is the Court’s opinion in Hudson, not Halper, that suffers from “the danger of changing approaches midstream” and demonstrates “a new attitude” which may “unduly influence[]” lower court decision-making to the exclusion of “our established approach,” which, of course, is exemplified by Halper. Justice Stevens finished off the Court’s Hudson opinion by describing it as a mere “advisory opinion,” and thus a breach of the Court’s most basic constitutional responsibility under Article III to decide only actual “Cases” and “Controversies.” Justice Stevens, therefore, ‘out-traditioned’ the Hudson Court by showing that its decision violated a 200-year-old constitutional mandate. In short, Justice Stevens negated each of the techniques employed by the Court in its attempt to disown Halper: (1) Halper was in fact consistent with traditional double jeopardy doctrine; (2) the Halper decision itself recognized its unique facts and narrow holding, therefore rendering unnecessary any attempt to marginalize it further, and (3) Halper was consistent with recent Court double jeopardy cases as well, including Ursery.

Justice Scalia’s brief concurrence only restated his objections to Kurth Ranch, where he opined that the Double Jeopardy Clause does not prohibit successive punishment. Justice Souter agreed with Justice Stevens that the basis for the Court’s decision was unnecessary, since the Hudson case failed the “same-elements” test, and thus should have been affirmed on that ground alone. Justice Souter also cautioned against the mechanical use of the “clearest proof” test to determine whether a civil penalty should be deemed punishment for double jeopardy purposes, suggesting that the proof should vary with the “strength of the countervailing indications of civil nature. . ..” This point was triggered by Souter’s concern that forfeitures will continue to proliferate, “spurred by the increasingly inviting prospect of its profit to the Government;” thus, continued scrutiny of civil sanctions will be critical to ensuring protection of constitutional rights in the future.

Justice Breyer’s concurrence, in which Justice Ginsburg joined, disagreed with the Court’s opinion in two respects: (1) the “clearest proof” test the Court purportedly derived from Ward was in fact not the test the Court actually uses; as demonstrated in Kurth Ranch, the true test applies “factors of the Kennedy variety,” and (2) the Court’s attempt to disavow the use of any factual analysis in evaluating civil sanctions for double jeopardy purposes was inconsistent with Kennedy, which included such factors in its approach.

The Impact of Hudson

As Justice Stevens accurately pointed out, the most mystifying aspect of the Court’s opinion in Hudson is why it exists at all. It adds nothing to existing double jeopardy jurisprudence, nor does it effectively eliminate the reasoning underlying Halper from being applied by the lower courts in the future. If, following a criminal prosecution, a civil penalty for the same offense is found to be grossly disproportionate to the harm, it can still be found violative of the Double Jeopardy Clause under the Kennedy multi-factor test. As long as the court cites Kennedy and not Halper, there should be no basis for reversal.

Justice Stevens also was on the mark in noting the Hudson Court’s inability to cite a single federal case decided after Ursery that found a civil sanction in any area of the law to be violative of the Double Jeopardy Clause. Each of the cited cases involved a “challenge” under Halper to a civil sanction; none resulted in a violation. If the results of such challenges in the lower courts already accord with the double jeopardy principles espoused by the Hudson Court, if none of these cases would have been decided differently as a result of Hudson, why did the Court grant certiorari and render what Justice Stevens accurately characterized as an ‘advisory opinion’?

The answer has to do with hats. The Hudson Court rendered a blatantly advisory opinion because it was not wearing its Article III “Cases” and “Controversies” judge’s hat at the time. Rather, the Court was wearing its “judicial administration” hat — the hat it puts on when it wants to assume the role of ‘master gatekeeper’ for the entire federal court system. Hudson is not about changing the actual results of Double Jeopardy Clause challenges. It is about eliminating those challenges completely at the district court level. (Recall that the district court in Hudson had ruled in favor of the defendants). Thus, as Justice Stevens noted, the real purpose of Hudson is to “unduly influence . . . the Government and the lower courts [to] unduly restrict the protections of the Double Jeopardy Clause.”

Perhaps down the road, attorneys will advise their clients not to bother even raising a double jeopardy argument at all, because the attempt will be futile after Hudson. In fact, it is difficult not to conclude that such a result was exactly the intention of the Hudson Court. Double jeopardy claims are the grist of convicted criminals, drug dealers, jailhouse lawyers, pro se litigants and other undesirables clogging the court system and ‘wasting’ judges’ time with frivolous, poorly-pleaded claims. The Hudson Court would willingly throw out the few viable double jeopardy claims buried in the pack in the name of a more ‘efficient’ administration of justice.

Many of the concurring justices, however, are uneasy with these implications, fearing, justifiably, that civil sanctions can be used against people not so very different from themselves. As Justice Stevens wrote, Double Jeopardy Clause protection against sanctions labeled “civil” by the government is extremely important because the States and the Federal Government have an enormous array of civil administrative sanctions at their disposal that are capable of being used to punish persons repeatedly for the same offense, violating the bedrock double jeopardy principle of finality. ‘The underlying idea, one that is deeply ingrained in at least the Anglo-American system of jurisprudence, is that the State with all its resources and power should not be allowed to make repeated attempts to convict an individual for an alleged offense, thereby subjecting him to embarrassment, expense and ordeal and compelling him to live in a continuing state of anxiety and insecurity . . ..’

• Schedule a FREE 20-minute consultation on asset forfeiture issues
• Interview Steven L. Kessler or book him to speak
• Read articles on asset forfeiture by Steven L. Kessler

Steven L. Kessler practices white collar criminal law in New York in Manhattan. Prior to entering private practice, Mr. Kessler was head of the Asset Forfeiture Unit of the Bronx District Attorney’s Office in New York, where he supervised and litigated all phases of forfeiture and related matters. In that capacity, he served as a member of the Forfeiture Law Advisory Group of the New York State District Attorney’s Association.

Mr. Kessler has written and lectured extensively on topics relating to forfeiture. He is the author of “Civil and Criminal Forfeiture: Federal and State Practice” (West Group 1993 & Supp. 1998), a 3 volume treatise covering the forfeiture and RICO statutes of all 50 states and the District of Columbia and the major federal forfeiture provisions, and is the author of the forthcoming “New York Criminal and Civil Forfeitures” (Gould Publishing 1998). Mr. Kessler is a contributor to the New York Law Journal on issues relating to forfeiture and is the author and Revisions Editor of eight chapters in Weinstein, Korn & Miller’s “New York Civil Practice,” including the chapter “New York Forfeiture”. He is widely quoted and cited in court opinions and media of legal and general circulation nationwide.

A graduate of the Cornell Law School, Mr. Kessler serves as a member of the House of Delegates of the New York State Bar Association and as editor of One on One, the publication of the 5,000-member General Practice Section of which Mr. Kessler is an officer. He is a member of the White Collar Crime Committee and the RICO, Forfeitures and Civil Remedies Committees of the American Bar Association, the Criminal Justice Section of the New York State Bar Association, and the Forfeiture Abuse Task Force of the National Association of Criminal Defense Lawyers, and serves as co-chair the Forfeiture Law subcommittee of the New York State Association of Criminal Defense Lawyers. An Adjunct Professor of Law at New York Law School, Mr. Kessler is listed in Who’s Who in American Law.

Mr. Kessler is a member of the New York and Connecticut Bars and is admitted to practice before the United States Supreme Court.

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By Steven L. Kessler | Article Posted 9/16/96

I know what you’re thinking: This article is going to be drier than Death Valley at noon. But, if you handle any forfeiture cases on the federal or state level, the few moments it takes for you to read this may be well worth your — and your client’s time.

In the forfeiture area, New York is what is called a “turnover order” state. This means that an order must be obtained from the state court which signed the warrant before the seized property is transferred to a court of another jurisdiction. This scenario arises most frequently when property is seized pursuant to a state warrant but, for any of a myriad of reasons, the District Attorney decides not to proceed, preferring instead to hand over the case to the federal authorities for prosecution.

To appreciate the issue in this context, discussion of some basics are in order.

First, although state forfeiture proceedings under CPLR Article 13-A are in personam — commenced against the individual — the subsequent federal forfeiture action is in rem — directed against the property. In an in rem forfeiture proceeding, jurisdiction is obtained only when the res is properly under the control of the federal court.

Moreover, when deciding the propriety of a federal court’s jurisdiction, the court must look to the law of the state pursuant to which the property was seized and transferred to its control. If there is a state law requiring that a court “turnover” order must be obtained prior to the transfer or adoption, that statute must be complied with. Without such an order, the federal action must be dismissed and the property must be returned.

Under New York’s statutory scheme, Criminal Procedure Law _690.55, once a New York court receives property pursuant to its warrant, the court may: (a) Retain it in the custody of the court pending further disposition thereof pursuant to subdivision two or some other provision of law; or (b) Direct that it be held in the custody of the person who applied for the warrant . . . upon condition that upon order of such court such property be returned thereto or delivered to another court.

Section 690.55 does not permit the transfer of the property to an investigatory authority, such as the U.S. Attorney’s office. Further, a proper, although as yet untested, reading of the statute requires the pendency of another criminal action.

Accordingly, even Federal civil term, before whom a civil forfeiture action might be filed, would not have jurisdiction.

Tangentially, the fact that the state prosecutor decides not to pursue a state forfeiture proceeding does not divest the state court of jurisdiction over the res. Once property has been seized pursuant to a state warrant, jurisdiction over the res is not lost until the court makes a determination pursuant to C.P.L. _690.55. Also, the subsequent ssuance of an in rem warrant does not remedy the initial unlawful transfer of the property, the subsequent unlawful retention of the property or the government’s refusal to return the property. Without the statutorily required turnover order, the federal court is without jurisdiction.

Even if the state court directs another person to retain custody of the property, the “property seized pursuant to a search warrant technically remains in the custody of the court, and the District Attorney or property clerk possesses the property only as an officer of the court, subject to the court’s direction and disposition.” In re Documents Seized Pursuant to a Search Warrant, 124 Misc.2d 897, 478 N.Y.S.2d 490, 494 (Sup. Ct. N.Y. Co. 1984), quoted by Mansour v. Abrams 151 Misc.2d 121, 573 N.Y.S.2d 364, 368 (Sup. Ct. Monroe Co. 1991); see Stuhler v. State of New York, 127 Misc.2d 390, 485 N.Y.S.2d 957, 959-960 (Sup. Ct. N.Y. Co. 1985) (holding that _690.55 provides a state court with the “power to direct [the State of New York] to retain [seized property] pending distribution pursuant to a restitution plan”), cited by United States v. Benitez, 779 F.2d 135, 139 (2d Cir. 1985) (noting that _690.55 provides the court with “the power to retain custody of property seized pursuant to a search warrant”). New York’s statutory scheme, therefore, provides that the disposition of the res is subject only to orders of the state court. Mandeville v. Canterbury, 318 U.S. 47, 49, 63 S.Ct. 472, 87 L.Ed. 605 (1943) (recognizing that “possession and control of the property . . . are indispensable to the exercise of [in rem] jurisdiction”); United States v. One 1987 Jeep Wrangler, 972 F.2d 472, 477 (2d Cir. 1992) (noting that “custody . . . over the res” is the “elemental distinction of in rem jurisdiction which allows for jurisdiction”).

So what happens if the local DA transfers the property to the feds without first securing a turnover order? That was the issue before the district court in United States v. $490,920 in United States Currency, 911 F.3d 720?? (S.D.N.Y. 1996), a case to which the remainder of this article will be devoted. Note that, as you might guess, the decision in each case must be fact specific, relying heavily upon the fact pattern before the court. In any event, the following discussion should prove instructive.

In $490,920, the state and federal authorities failed to secure a turnover order from New York State Supreme Court Justice Franklin Weissberg prior to transferring nearly half million dollars from state to federal custody in January 1995. Based upon this failure, Claimants argued that the state court retained exclusive in rem jurisdiction over the funds until the U.S. Attorney’s office and the District Attorney’s office complied fully with Justice Weissberg’s order directing the return of the property, and that the federal forfeiture action, initiated after the issuance of Justice Weissberg’s order, should be dismissed for lack of in rem jurisdiction.

The court agreed. Finding C.P.L. _690.55 to be jurisdictional in nature, the court interpreted the statute as providing the state court with exclusive in rem jurisdiction until it relinquishes its jurisdiction upon full compliance with its final disposition order regarding the seized property.

Decisions from other circuits suggest that turnover order requirements are indicative of the jurisdictional nature of a state’s warrant and seizure scheme. One such case is Scarabin v. Drug Enforcement Administration, 966 F.2d 989 (5th Cir. 1992), a case that should be taped to the office wall of any attorney practicing in the forfeiture area. In Scarabin, the Fifth Circuit interpreted a Louisiana statute which provided that “when property is seized pursuant to a search warrant, it shall be retained under the direction of the judge. If seized property is not to be used a [sic] evidence or is no longer needed as evidence, it shall be disposed of according to law, under the direction of the judge.” 966 F.2d at 994. State deputies executed a search warrant issued pursuant to this provision and seized, among other things, $12,360 in cash allegedly derived from drug dealing. Id. at 991. Three days later, the state officials, without the knowledge or authority of the state court, bought a cashier’s check using the seized funds. The state authorities then transferred the cashier’s check to the DEA for civil forfeiture under federal law. Subsequently, the DEA proceeded to administratively forfeit the $12,360 cashier’s check while purporting to forfeit the $12,360 seized.

The Circuit court held that the forfeiture “never happened” because the DEA only had custody of the cashier’s check, not the underlying currency. Absent anything for the court to review, the court dismissed the appeal due to the lack of jurisdiction.

But even if this court were to ignore the DEA’s recent confession that it never had physical control over the res — Scarabin’s $12,360 in cash — we would nevertheless conclude that the DEA lacked in rem jurisdiction to forfeit Scarabin’s property. From the moment of seizure the state district court had exclusive control over the res by virtue of issuing the search warrant that procured the seized funds and never relinquished that control to the DEA or any other agency or person. A federal agency cannot obtain jurisdiction over the res — and thus cannot find the res administratively forfeit — when a state court obtains jurisdiction first and never relinquishes that jurisdiction. Id. at 993.

The court expressly rejected the notion that “a state court may acquire in rem jurisdiction only through [the] . . . commencement of forfeiture proceedings in that court.” Id. at 994. Further, the court stated, under Louisiana’s warrant statute — a broader scheme than New York’s — the “state court’s control terminates when, but only when, the seized property is dispose of according to the law,” and may not be defeated by “unsanctioned transfers by local police.” Id. at 993. Accordingly, the court instructed the DEA, if it still wished to bring a forfeiture proceeding against the $12,360, to “first seek a turnover order from the state court, or wait until that court relinquishes control over the res, and then proceed anew.” Id. at 995. More recently, the Eighth Circuit was confronted with a “conflict between state jurisdiction over seized property and federal adoptive forfeiture of that property.” In Madewell v. Downs, 68 F.3d 1030, 1041 (8th Cir. 1995), the court discussed its prior holding that the seizure of property pursuant to a Missouri warrant does not establish exclusive state jurisdiction over the seized property preventing its voluntary transfer to federal authorities. Rather than disagreeing with the Fifth Circuit’s contrary opinion in Scarabin, however, the Eighth Circuit distinguished it, basing its holding on a fundamentally different state warrant and seizure scheme than that addressed by the Fifth Circuit.

Missouri, unlike the Louisiana statutes at issue in Scarabin, had “no such jurisdictional element to its statutory warrant and seizure scheme, but instead approves of the voluntary turnover of seized property from state or local officials to federal agencies for the commencement of forfeiture proceedings.” The court continued by noting that “although Missouri now has a statute specifically requiring a turnover order from the court before transfer of property to federal control, it did not have such a statute at the time of the events in question here.” Id. at 1042-1043 (footnote omitted).

The Seventh Circuit affirmed a district court’s dismissal of a forfeiture action based upon the lack of in rem jurisdiction. United States v. One 1987 Mercedes Benz, 2 F.3d 241 (7th Cir. 1993). Although state forfeiture proceedings were not instituted, the state officials transferred the Mercedes to the DEA without obtaining the requisite state court turnover order. In this regard, the court held that lacking a turnover order, federal authorities did not obtain lawful possession of the Mercedes.

“Indeed, their possession has been improper since the unauthorized transfer took place. As a result, the Mercedes was not properly before the district court, and thus the court had no jurisdiction to order the vehicle forfeited. Therefore, the district court’s first dismissal for lack of in rem jurisdiction was correct, as was the order that the Mercedes be returned to the Clerk of the Circuit Court of Cook County.” Id. at 243. The court stressed that, even if a state forfeiture proceeding was pending, its decision did ” not turn upon who won the forfeiture “foot race” in the courts, but rather upon the fact that there is no authority for the type of transfer between executives of agencies that took place here.'” Id. (citation omitted). See also United States v. One 1979 Chevrolet C-20 Van, 924 F.2d 120 (7th Cir. 1991).

In a related context, the Ninth Circuit affirmed a district court’s order forfeiting an automobile, but reversed and remanded an order forfeiting currency. United States v. One 1985 Cadillac Seville, 866 F.2d 1142 (9th Cir. 1989). While state forfeiture proceedings against only the currency were pending, the DEA seized both the currency and the automobile.

Regarding the currency, the Circuit court declined to “substitute a rule of force for the principle of mutual respect embodied in the prior exclusive jurisdiction doctrine.” Id. at 1146 (citation omitted). The court held that the district court should not have exercised in rem jurisdiction because the state forfeiture proceeding commenced prior to the federal proceeding, and the “last recorded order of the state court . . . requires the money to be held by state authorities pending disposition.” Id. at 1145.

Absent “some affirmative act of abandonment” of the property by the state court, the state court retains the exclusive jurisdiction over the res. It is not sufficient for state executive authorities to approve the federal seizure of the res, because the exclusive in rem jurisdiction rule was “intended to promote comity between courts, not executives.” Id. With respect to the car, the court upheld district court jurisdiction because the vehicle “was the subject of neither the state forfeiture complaint nor of any state court order.” Thus, as the court in $490,920 held, statutory turnover requirements, such as C.P.L. _690.55, provide the state court with in rem jurisdiction which, absent compliance with the requirement, will defeat an attempt by another court subsequently to exercise in rem jurisdiction over the same res.

The $490,920 court properly distinguished decisions which suggested that the institution of a state forfeiture action, rather than the issuance of a warrant, is necessary to obtain in rem jurisdiction. For example, the First Circuit addressed a claimant’s argument that a district court lacked in rem jurisdiction over a res already subject to a prior state proceeding. United States v. One 1986 Chevrolet Van 927 F.2d 39, 44-45 (1st Cir. 1991). The court disagreed, holding that the only state action pending was an in personam criminal action against the claimant. In addition, the court stated that “contrary to Claimant’s contentions, this conclusion is not altered by the fact that the car was seized following a search conducted pursuant to a state warrant.” Id. However, as recognized by the Fifth Circuit, the First Circuit offered “no explanation for its bald assertion that state court control begins with the commencement of state forfeiture proceedings,” rather than the issuance of a warrant. Scarabin, 966 F.2d at 944. See also United States v. Salen/Forsyth County Bd. of Educ., 902 F.2d 267, 269 (4th Cir. 1990) (decision relied upon authority that did not involve a competing state warrant or proceeding; in fact, the seizing official was a federal official. Concerns of comity between the state and federal judiciaries, therefore, were not implicated).

Of note in $490,920 was the court’s discussion of the general rule of exclusive in rem jurisdiction. ” A common-law rule of long standing prohibits a court, whether state or federal, from assuming in rem jurisdiction over a res that is already under the in rem jurisdiction of another court.'” Chesley v. Union Carbide Corp., 927 F.2d 60, 66 (2d Cir. 1991) (quoting United States v. One 1985 Cadillac Seville, 866 F.2d 1142, 1145 (9th Cir. 1989); China Trade and Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33, 36 (2d Cir. 1987) (“A long-standing exception to the usual rule tolerating concurrent proceedings has been recognized for proceedings in rem or quasi in rem, because of the threat a second action poses to the first court’s basis for jurisdiction”); Lankenau v. Coggeshall & Hicks, 350 F.2d 61, 64 (2d Cir. 1965) (“Where the jurisdiction of the state court has first attached, the federal court is precluded from exercising its jurisdiction over the same res to defeat or impair the state court’s jurisdiction”).

The purpose of the rule of exclusive in rem jurisdiction is clear. “It would be a most unseemly intrusion, inconsistent with the implications of federalism, were an order of one court to deprive the other court of its basis for jurisdiction and power to proceed.” Lankenau, supra; accord Mandeville, 318 U.S. at 49 (expressing the “necessity to prevent unseemly conflicts between the federal and state courts and to prevent the impasse which would arise if the federal court were unable to maintain its possession and control of the property, which are indispensable to the exercise of the jurisdiction it has assumed”); Princess Lida v. Thompson, 305 U.S. 456, 466, 59 S.Ct. 275, 83 L.Ed. 285 (1939) (“The doctrine is necessary to the harmonious cooperation of federal and state tribunals”); Chesley, 927 F.2d at 66 (“The purpose of the rule is the maintenance of comity between the courts . . . .”) (citation omitted).

There is, however, an exception to exclusive in rem jurisdiction. At least in the Second Circuit, the government highlights this exception by relying upon United States v. $3,000,000 Obligation of Qatar Nat’l Bank, 810 F. Supp. 116 (S.D.N.Y. 1993) to assert that even if New York’s statutory scheme is jurisdictional, “two courts can exercise jurisdiction concurrently over the same res where the rulings and judgments of the second court do not interfere with the first court’s jurisdiction over the res or give rise to concerns of comity.” A careful reading of $3,000,000 Obligation and the cases upon which it relies, however, demonstrates that although a second court may adjudicate rights in a res subject to a first court’s in rem jurisdiction or issue other orders which are related to the res, this exception does not sanction a second court exercising its jurisdiction to interfere with the possession of the res in the custody of the first court.

In $3,000,000 Obligation, the government commenced a forfeiture action under 18 U.S.C. _981 against funds allegedly derived from an unlawful sale of aircraft parts to Libya. In August 1989, one of the individuals involved in the illegal export scheme filed an action in New York state court and, by way of an order to show cause, sought to restrain the payment of the funds. The court issued the temporary restraining order and, on April 24, 1990, issued a preliminary injunction enjoining payment of the funds to certain individuals involved in the export scheme. In October 1990, the federal government filed its forfeiture action against the funds.

Although the claimant argued that the federal court lacked in rem jurisdiction over the funds, the court rejected this argument. The court denied the motion to dismiss for lack of jurisdiction. The court held that the “first exercised jurisdiction is exclusive only so far as . . . exercise [of exclusive jurisdiction] is necessary for the appropriate control and disposition of the property.'” Id. at 118, quoting Penn General Casualty Co. v. Pennsylvania, 294 U.S. 189, 198, 55 S.Ct. 386, 79 L.Ed. 850 (1935).

The rulings and judgments of this court need not in any way affect or interfere with the state court’s jurisdiction over the res, or give rise to concerns of comity, . . . because, in an action of this nature, the federal court could stay the execution of its judgment as to the res and assert a lien that would result in seizure of the asset only upon its release from the state court’s control.

$3,000,000 Obligation, 810 F. Supp. at 118.

But although they qualify the absolute nature of the exclusive in rem jurisdiction doctrine, the cases upon which the court relied in $3,000,000 Obligation leave unfettered the doctrine’s underlying concern, based on comity, for respecting the first court’s control over the res within its possession or custody. Under the facts in $490,920, this concern mandated “the denial of the Government’s request for a seizure warrant . . . and the dismissal of the complaint.” In $490,920, the government filed its complaint in the midst of “its intentional violation of the [state court’s order] regarding the possession and custody of the Funds. With each passing day, in other words, the Government and the D.A.’s office are in further violation of an order that directly implicates the concerns of comity which lie at the core of the doctrine of exclusive in rem jurisdiction. Further, for reasons unarticulated, the Government chose not to appeal the [state court order] or to renew its request of Justice Weissberg for a turnover order after filing the instant action. . . .” Instead, the Government stands before this Court requesting an in rem seizure warrant in an attempt to cure what it concedes is a potential defect in in rem jurisdiction’ (citation omitted). The Government’s plea to the need to indicate its independent interest in seeking forfeiture of the funds’ (id.) does not mask the reality of its willful and continuous violation of an order regarding the possession and custody of a res already subject to another court’s jurisdiction. To encourage this ongoing violation is to render the concerns of comity a nullity. The Government’s reliance on decisions which suggest that certain exercises of concurrent in rem jurisdiction are permissible is without merit and thus does not allay the concerns of comity.

Accordingly, the district court held, until the state court relinquishes its jurisdiction over the property upon full compliance with his order or otherwise, i.e., by entering a turnover order, the federal court may not exercise concurrent in rem jurisdiction over the funds.

A few final thoughts. The government in $490,920 subsequently secured from the court an anticipatory seizure warrant. These proceedings are pending in district court, with an order to show cause pending in state court to compel the government’s compliance with the state court order. Notably, the attorneys from both prosecutors’ offices have insisted in affirmations and at oral argument that the situation surrounding this “mistaken, inadvertent, once-in-a-lifetime transfer” will not happen again as “measures have been put in place to prevent its reoccurrence.” Take that from whence it comes, because, only a few weeks ago, a potential client approached me with a virtually identical scenario. The point is: Beware of the turnover situation, especially in the adoptive forfeiture setting. Catching the government in this “rare, inadvertent, once-in-a-lifetime mistake” may secure the return of your client’s property without lengthy and costly litigation.

• Schedule a FREE 20-minute consultation on asset forfeiture issues
• Interview Steven L. Kessler or book him to speak
• Read articles on asset forfeiture by Steven L. Kessler

Steven L. Kessler is a practicing attorney in New York City and the author of Civil and Criminal Forfeiture: Federal and State Practice (Clark Boardman Callaghan 1993 and 1996 Supp.), a three-volume treatise on the forfeiture and RICO statutes in all 50 states and the District of Columbia and major federal forfeiture provisions, with interpretive case law and analysis. A sustaining member of the NYSACDL and a member of the Forfeiture Abuse Task force of the NACDL, Mr. Kessler represented the Claimants in the $490,920 litigation.

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By Steven L. Kessler | Article Posted 8/8/96

My 5-year-old nephew recently asked me: “When is a door not a door?” When I gave up trying to guess, he looked at me sweetly and said: “When it’s ajar!” He giggled, and walked away.

Never in my wildest dreams did I believe that the Supreme Court of the United States would adopt the same reasoning in analyzing the Bill of Rights and its relation to the intricacies of civil forfeiture. But on June 24, 1996, the Court proved me wrong.

Writing for the Court in United States v. Ursery, Chief Justice William H. Rehnquist held that for purposes of the Excessive Fines Clause of the Eighth Amendment, civil forfeiture constitutes punishment. For purposes of the Fifth Amendment protection against Double Jeopardy, however, civil forfeiture does not constitute punishment.

This decision reads like plain vanilla: in rem forfeitures are neither “punishment” nor criminal for purposes of the Double Jeopardy clause. Accordingly, in all but the most extreme situations where the civil forfeiture is so clearly punitive as to be the “equivalent to a criminal proceeding”, the Fifth Amendment will not prohibit the government from bringing parallel criminal prosecutions and in rem forfeiture actions in cases prosecuted under 21 U.S.C. 881(a)(6) and (a)(7) and 18 U.S.C. 981.

Justice Rehnquist, writing for the majority, made short shrift of the scores of federal and state decisions that held that the Supreme Court’s long line of cases approving civil forfeitures and criminal convictions based upon the same conduct had been undermined by seven years of recent precedent. The Ursery court said, quite simply: they were wrong. The lower courts had relied primarily on United States v. Halper, Austin v. United States and Department of Revenue of Montana v. Kurth Ranch.

Reading these three cases together, courts had concluded that in rem drug forfeitures qualified as punishment under the Fifth Amendment. The courts then struggled with various issues raised by the Double Jeopardy Clause, such as if and when jeopardy attaches, whether the underlying acts constitute the same offense, whether the civil and criminal actions are separate proceedings or constitute a single prosecution and whether the loss of specific property constitutes punishment or is wholly remedial.

The decision in Ursery renders the resolution of these divisive issues unnecessary. The Court affirmed “a long line of cases,” dating back to 1827, which “adhere to a remarkably consistent theme” that in rem forfeitures are not punitive for purposes of double jeopardy. Specifically, the Court focused upon Various Items of Personal Property v. United States. There, the Court, contrasting in rem proceedings against “guilty” property with in personam proceedings against the guilty person, stated: “The forfeiture is no part of the punishment for the criminal offense.” That, Rehnquist said, has never changed. He cited United States v. One Assortment of 89 firearms, decided more than 53 years later, in which the Court confirmed the Various Items approach and developed a two-part test for determining whether an in rem forfeiture qualifies as punishment: (1) Did Congress intend the forfeiture to be civil or criminal? (2) Is the forfeiture scheme so punitive in purpose or effect as to negate Congress’ intent? This approach should be followed today, the Court said. As to Halper, Austin and Kurth Ranch, the Court said that they did not overrule the 89 Firearms line of cases. Indeed, Justice Rehnquist observed that their reasoning would not apply in a double jeopardy analysis. Halper, for example, “involved not a civil forfeiture, but a civil penalty.” The difficulty of applying Halper’s proportionality analysis to in rem proceedings such as these, the Court said, demonstrates that it was never intended to be used outside the context of in personam civil penalties. Further, the Court said, Halper’s “case-by-case” analysis for “the rare case” is inconsistent with the categorical approach later applied in Austin, which, Justice Rehnquist emphasized, was not even a double jeopardy case, but, rather, an excessive fines case. Thus, Austin’s conclusion that in rem drug forfeitures were punitive enough to be subjected to scrutiny for excessiveness under the Eighth Amendment — a conclusion which the Ursery court reaffirmed — was not a conclusion that such forfeitures were so punitive as to constitute punishment under the Fifth Amendment.

Further, the Court said that the lower courts had misunderstood this trio of cases as creating a “radical jurisprudential shift.”

“Halper dealt with in personam civil penalties under the Double Jeopardy Clause; Kurth Ranch with a tax proceeding under the Double Jeopardy Clause, and Austin with civil forfeitures under the Excessive Fines Clause.” Nothing in those rulings “purported to replace our traditional understanding that civil forfeiture does not constitute punishment for the purpose of the Double Jeopardy Clause.” However, the Court did leave an opening, albeit small, for a civil forfeiture case to constitute punishment for Fifth Amendment purposes where the civil forfeiture is so clearly punitive as to be the “equivalent to a criminal proceeding”.

Applying the 89 Firearms test to in rem drug forfeitures under 21 U.S.C. 881(a)(6) and (a)(7), Justice Rehnquist had little trouble concluding that Congress’ choice of in rem procedures over in personam procedures demonstrated its clear intent that such proceedings be “civil”. As for the second prong, the Court acknowledged that, while civil forfeitures do “perhaps hav[e] some punitive aspects,” they also “serve important nonpunitive goals,” such as “encourag[ing] property owners to take care in managing their property and ensur[ing] that they will not permit that property to be used for illegal purposes.” This, it should be noted, is in direct contrast with the Austin Court’s analysis, which held that civil forfeiture was punitive even if, in part, it served remedial goals.

Regarding forfeiture of proceeds of illegal activity under 881(a)(6), all nine justices agreed that this “serves the additional nonpunitive goal of ensuring that persons do not profit from their illegal acts.” Justice Rehnquist noted that such forfeitures have not been regarded historically as punishment nor do they require proof of scienter. And although they do serve the goal of deterrence and, consequently, are tied to the commission of criminal activity, that is insufficient to constitute the ” clearest proof’ necessary to show that a proceeding is criminal,” he said, quoting the 89 Firearms language. The same reasoning supported the Court’s conclusion with respect to money laundering forfeitures pursuant to 18 U.S.C. 981(a)(1)(A).

Justice Anthony M. Kennedy, in his concurrence, argued that the Court was not readopting the legal fiction that a civil forfeiture action is brought solely against the “guilty” property and not against the owner. He acknowledged that forfeiture “punishes the owner by taking property involved in a crime.” However, because a property owner may be subject to civil forfeiture “whether or not he committed any criminal acts, it is not punishment for a person’s criminal wrongdoing,” and, therefore, is not a punishment for purposes of double jeopardy.

Calling the decision a “stunning disregard not only for modern precedents but for our older ones as well,” and referring to the Court’s earlier decision in Bennis v. Michigan, Justice John Paul Stevens said in a scathing and articulate dissent that “the Court has begun dismantling the protections it so recently erected” in the forfeiture arena. He could not understand how the Court could conclude that the owner is not punished by the loss of his residence, a fact-pattern never before approved in Supreme Court jurisprudence. He accused the majority of repudiating Halper, Austin and Kurth Ranch, because those cases presented an inconvenience for the Court.

Specifically, Justice Stevens said that the majority “today stands Austin on its head.” It is “difficult to imagine why the Framers of the two amendments would have required a particular sanction not be excessive, but would have allowed it to be imposed multiple times for the same offense.”

Justice Stevens was surprised by what he perceived as the Court’s selective reading of Austin with regard to 89 Firearms. “In reality, both cases rejected the monolithic view that all in rem civil forfeitures should be treated the same, and recognized the possibility that other types of forfeitures that could not properly be characterized as remedial’ might constitute an additional penalty for the commission of a criminal act.”

Justice Stevens attacked the Court’s conclusion that since the statute serves the purpose of deterrence, it helps illustrate that it is remedial rather than punitive in character. “If deterrence is a legitimate remedial rationale distinct from’ any punitive purpose, then the $130,000 fine in Halper could not be condemned as excessive because it plainly served a powerful deterrent function. … [This] simply ignores Halper without explanation or comment.”

Following a thorough analysis of the facts of the two cases and a review of the “divisive” issues debated in the lower courts, Justice Stevens lamented that the majority’s analysis would have authorized, during Prohibition, “the forfeiture of every home in which alcoholic beverages were consumed.” “Our recent decisions in Halper, Austin, and Kurth Ranch, dictate a far different conclusion.”

The Impact of Ursery

Putting it bluntly, Ursery is an intellectually dishonest and result-oriented decision. Justice Ginsburg’s statement at oral argument that “Austin is just one case” highlights the true purpose behind the decision: To put to rest “outrageous decisions” which, following Supreme Court precedent of some seven years, permit the property of “bad” people — most of whom, mind you, have never been so much as charged with a crime — to be seized and confiscated. Forfeiture is not “remedial” in nature nor does it serve “important nonpunitive goals”, the Court said. Ironically, as an example of such “nonpunitive goals”, Justice Rehnquist cited discouraging property owners from allowing their property to be used for criminal purposes. Sounds like deterrence. And deterrence evokes criminal activity and punishment, at least according to the Supreme Court three years ago, and Justice Stevens.

The majority seemed to distinguish punishing an individual with punishment.

Forfeiture is not a penalty, it said; it’s a forfeiture. And, the Court said, although there may be punitive aspects to it and, most definitely, it is punishment for purposes of the Eighth Amendment — the clause just a few lines below the Fifth Amendment’s Double Jeopardy Clause in the same document called the Bill of Rights — the Framers envisioned the same phrase to have two different and incompatible meanings. There is no coherence to this jurisprudence. The Court should have said candidly that it was deciding this case based on the facts and what it wanted the outcome to be.

Indeed, in his concurrence, Justice Kennedy acknowledged that forfeiture “punishes the owner by taking property involved in a crime.” It is this statement, however, read in conjunction with his impassioned dissents in prior forfeiture cases, including Bennis, that leads one to believe that Justice Kennedy’s thinking was irrational when he wrote the rest of his concurrence here.

Even Justice Antonin Scalia could not swallow the majority’s analysis regarding “punishment”. Vehement in his opposition to the government’s — and majority’s — characterization of forfeiture as remedial, Justice Scalia displayed his displeasure during oral argument. And although concurring with the majority in judgment, he stood by his long-held belief that the Fifth Amendment prohibits successive prosecutions, not multiple punishments. Since civil forfeiture is not a “prosecution”, Scalia argued, it does not fall within the scope of the Double Jeopardy Clause.

The New Test

Under the new test, the analysis becomes a case-by-case review, rather than looking at the nature and/or effect of the statute as a whole. Given that the facts of the two cases before the Court did not fall within the “criminal proceeding” exception provided by the majority, it is questionable what egregious fact pattern would constitute double jeopardy under the Court’s new standard of review.

Also, Justice Kennedy’s beliefs notwithstanding, the Ursery decision resurrects the ancient fiction that the property is guilty of the crime. The notion that the owner is not punished by the forfeiture of his property was slighted in Halper and firmly rejected in Austin. But, as those pesky silver screen gremlins might say, “it’s back”.

For now, Ursery will bring to a grinding halt the flood of double jeopardy challenges nationwide in the civil forfeiture context. Also, at least in the short term, expect to see the government’s use of civil forfeiture revert to “the way it used to be”, as one prosecutor put it. Unfortunately, the government has never really understood the problem with the double jeopardy issue.Following Ursery, Gerald E. McDowell, Chief of the Asset Forfeiture and Money Laundering Section for the Department of Justice, justified the decision by stating that “[w]ithout civil forfeiture, we could not confiscate the assets of drug cartels whose leaders remain beyond the reach of United States extradition laws and who cannot be brought to trial.”

Fine. At least the government no longer makes the flag-waving, benefiting society, argument of the past. But the issue is not — and never has been — “taking the profit out of crime.” It is punishing an individual twice for the same crime. Few would advocate permitting criminals to reap the benefits of their illegal activity. But that is what grand juries, indictments and criminal courts are for. The government may choose between a criminal forfeiture count in the indictment, with its higher burden of proof, or a civil forfeiture proceeding, with its substantially lower standard. But if the latter is chosen, a parallel criminal prosecution should be prohibited. This discussion, however, appears moot, at least in the lion’s share of situations. To the government, only the bottom line is important: dollars, and lots of them — a concept with which a majority of the Supreme Court appears to concur. It remains for Congress and the state legislatures to perform the difficult and unenviable task of reforming our existing laws and providing fairness and justice in the world of civil forfeiture.

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Steven L. Kessler, an attorney in private practice in Manhattan and Adjunct Professor of Law at New York Law School, is the author of Civil and Criminal Forfeiture: Federal and State Practice (Clark Boardman Callaghan 1993 and 1996 Supp.), a three-volume treatise on the forfeiture laws of all 50 states and the federal statutes.

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By Steven L. Kessler | Article Posted 6/25/96

“The excitement over civil forfeiture and its constitutional ramifications is now spilling into the state courts. With three forfeiture cases pending before the United States Supreme Court this term, Bennis v. Michigan, 447 Mich. 527 (Mich. 1994), cert. granted, 116 S.Ct. 35 (U.S. 1995); United States v. $405,089.23 United States Currency, 33 F.3d 1210 (9th Cir. 1994), amended in part on denial of hearing, 56 F.3d 41 (9th Cir. 1995), cert. granted, __ U.S. __ (U.S. Jan. 1996); United States v. Ursery, 59 F.3d 568 (6th Cir. 1995), cert. granted, __ U.S. __, 133 L.Ed.2d 707, 64 U.S.L.W. 3484 (U.S. Jan. 1996), it is no wonder that the appellate courts in New York are beginning to take note. It is only surprising that it has taken them so long to do so.

In January, the Appellate Division, Third Department, in Matter of Attorney-General of the State of New York v. One Green 1993 Four Door Chrysler et al., 1996 N.Y. App. Div. Lexis 373 (3d Dept. Jan. 18, 1996), found New York’s Public Health Law 3388 the statute to be punitive for purposes of Eighth Amendment analysis. In a thorough examination of the statute and relevant United States Supreme Court precedent, the court adopted the analysis of the Supreme Court in Austin v. United States. 509 U.S. __, 113 S.Ct. 2801, 125 L.Ed.2d 488 (1993). There, the Court held that forfeitures under 21 U.S.C. 881(a)(4) and (a)(6) were subject to the limitations and protections of the Eighth Amendment’s Excessive Fines Clause. The Court determined that “”forfeiture generally and statutory in rem forfeiture in particular historically have been understood, at least in part, as punishment.”” Id. at 2810. Although finding that the provisions of PHL 3388 are “”not a mirror image”” of the Federal statute, the Appellate Division held that they are “”indistinguishable in purpose and design””. The presence of an innocent owner exemption in subsection 6 of the statute “”is strong evidence that the statute is intended at least in part to punish a guilty owner.”” 1996 N.Y. App. Div. Lexis 373, at *4-5.

Once the statute was deemed punitive and subject to Eighth Amendment scrutiny, the court was faced with whether the forfeiture before it constituted an excessive fine under the Eighth Amendment’s Excessive Fines Clause. Being a case of first impression in the New York state courts, the Third Department was left to review determinations made by other state courts and by the federal circuit courts to determine a test for deciding excessiveness. In Austin, the Supreme Court expressly left open the factors to be included in such a test, stating that “”prudence dictates that we allow the lower courts to consider the question in the first instance.”” 113 S.Ct. at 2812. Little did the Court know that such prudence would create a multitude of inconsistent and divergent opinions on the issue. See Kessler, Civil and Criminal Forfeiture: Federal and State Practice (Clark Boardman Callaghan 1993 and Supp. 1995).

The Appellate Division analyzed approaches taken by various courts in deciding an appropriate test for determining excessiveness. Calling it a “”more balanced approach””, the court chose the test adopted by the Second Circuit in United States v. Milbrand, 58 F.3d 841 (2d Cir. 1995). There, the circuit court, while not outlining a definitive test, concluded that “”appropriate excessiveness analysis entails a multi-factor test combining the principles of both instrumentality and proportionality.”” Id. at 847. Specifically, the court explained that consideration should be paid to (1) the harshness of the forfeiture (e.g., the nature and value of the property and the effect of forfeiture on innocent third parties) in comparison to a) the gravity of the offense, and b) the sentence that could be imposed on the perpetrator of such an offense; (2) the relationship between the property and the offense, including whether use of the property in the offense was a) important to the success of the illegal activity, b) deliberate and planned or merely incidental and fortuitous, and c) temporally or spatially extensive; and (3) the role and degree of culpability of the owner of the property. Id. at 847-848.

In adopting the Milbrand approach, the Appellate Division found that the test “”properly balances the remedial and punitive elements and applies the relevant factors necessary for making an excessiveness determination under the 8th Amendment.”” 1996 N.Y. App. Div. Lexis 373, at *7. The court, however, went one step further than the circuit court and held that the issue of whether a forfeiture would be excessive and constitute an Eighth Amendment violation is one for a court rather than a jury to decide. The court found support for this matter of first impression in United States v. All Assets of G.P.S. Automotive Corp., 66 F.3d 483, 502 (2d Cir. 1995), where the Second Circuit held that “”since the District Court has not yet closely scrutinized the forfeitures in this case and we are unable to do so on the record before us — we cannot decide whether the forfeitures here ordered are constitutionally valid under the Excessive Fines Clause.”” The Appellate Division said that requiring the court to determine excessiveness was in accord with its usual view regarding Eighth Amendment challenges. 1996 N.Y. App. Div. Lexis 373, at *10. Practitioners Note:

One must now ask, in light of existing Supreme Court analysis and the holdings of Austin and One Green 1993 Four Door Chrysler et al., how the forfeiture of an innocent owner’s property can be anything but inherently excessive under the Eighth Amendment Excessive Fines Clause. If a property owner is innocent, a one dollar fine imposed without “”legitimate purpose”” should be considered both an excessive fine and excessive punishment, and, consequently, would be unconstitutional.

Accordingly, in a forfeiture action where the claimant is an innocent owner, we, as counsel, must allege a constitutional violation of the Eighth Amendment Excessive Fines Clause.

In addition, where an innocent owner is the claimant in a forfeiture action, the practitioner should consider alleging a violation of the Fifth Amendment Takings Clause. In Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663 (1974), the Supreme Court implied that the forfeiture of property from an innocent owner would also violate the Takings Clause insofar as it forces an innocent owner to suffer a taking of their property, or interest therein, to finance the cost of law enforcement, a cost which should be borne by the public as a whole. An order of forfeiture issued by any state or federal court would, by statute, direct that net proceeds from the forfeiture be used to pay for the direct costs of the action with any remaining balance to be paid to the general treasury of the seizing sovereign. When a sovereign seizes property, without compensation, and adds the proceeds from the sale of that property to the general treasury for use in meeting the sovereign’s general financial obligations, the sovereign is financing costs which should be borne by society as a whole. Therefore, if the property owner is an innocent owner, the seizure of his or her interest in the property without compensation is a taking and unconstitutional.

Finally, given the wind and the way it is blowing in Washington and beyond, it might constitute malpractice in virtually any case, where there is a criminal and parallel civil forfeiture action, not to argue Double Jeopardy. By the end of this term, we hope to have a definitive work from the Supreme Court. In the meantime, those of you in the Second Circuit should read United States v. All Assets of G.P.S. Automotive Corp., 66 F.3d 483 (2d Cir. 1995), and United States v. Idowu, 1996 U.S. App. Lexis 431 (2d Cir. Jan. 12, 1996).

• Schedule a FREE 20-minute consultation on asset forfeiture issues
• Interview Steven L. Kessler or book him to speak
• Read articles on asset forfeiture by Steven L. Kessler

Steven L. Kessler is an attorney in New York City and author of Civil and Criminal Forfeiture: Federal and State Practice (Clark Boardman Callaghan 1993 and 1995 Supp.), a three-volume treatise on the forfeiture and RICO statutes in all 50 states and the District of Columbia and the major federal forfeiture provisions, all with interpretive case law and analysis.

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By Steven L. Kessler | Article Posted 5/26/96

“Nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb . . . .”

Once upon a time, oh, about 204 years ago, there was a group of English gentlemen who sat around a beautifully polished table in Philadelphia and crafted a document that was meant to capture and embody the essence of human rights, many of which were denied them under their former rulers. That document, the United States Constitution, seemed to many to say it all. But, those old Brits were unhappy with their masterpiece. They desired instead to attach thereto a list of ten specific rights and protections for which no citizen should want. Those “amendments” to the masterpiece were called the Bill of Rights.

About halfway down that top ten list, inserted in the Fifth Amendment, was a clause that struck many as unnecessary. Nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb . . . . A bit archaic? Perhaps. An essential part of a democratic society? Absolutely. If a person is twice subject to punishment for the same offense, double jeopardy protection attaches and the person is spared from the second prosecution. The clause prevents a second prosecution for the same offense — following a conviction or an acquittal — and multiple punishments for the same offense.

Double Jeopardy

The founding fathers were not the first to conceive of the concept of double jeopardy. While the concept of double jeopardy first emerged in the English common law nearly seven hundred years before its adoption in the Bill of Rights, its roots lie even deeper in antiquity. Known to the Greeks and Romans, the notion of double jeopardy is found in the Digest of Justinian promulgated in the year 533. There, the concept is expressed as “The governor should not permit the same person to be again accused of a crime of which he had been acquitted.” The canon law had also long recognized that even God does not punish twice for the same act.

These early civil and canon law roots from which the modern notion of double jeopardy grew became evident in the common law of England during the 12th century reign of King Henry I (1100-1135). Under Henry I’s rule, the need for double jeopardy protection was particularly important, because punishment upon a second conviction for almost any offense was death or mutilation. It appears, then, that the historical derivation of the Fifth Amendment phrase “in jeopardy of life or limb” is from a gruesomely literal source.

The doctrine gained a more secure foothold in the common law during the reign of King Henry II (1135-89), arising from the king’s close relationship to Thomas Becket, his Lord Chancellor and later Archbishop of Canterbury. Becket, using his high church office, challenged Henry II’s Clarendon Articles, which made the clergy, already subject to trial and punishment in ecclesiastical courts, subject also to being convened before lay judges. The controversy between the two erstwhile friends resulted in Becket’s murder, and his subsequent canonization. But in 1176, Henry II conceded St. Thomas’ point that “no man ought to be punished twice for the same offense,” thereby firmly fixing the notion of no double punishment in the common law.

The important aspect of the rule that for modern day purposes limits the sovereign’s power to prosecute did not become a feature of double jeopardy in England until the end of the 13th century. Previously, criminal prosecution frequently depended on suits by private persons. The practice of initiating criminal prosecution by private appeal was a survival of Anglo-Saxon law, and was not wholly abolished in England until 1819. During the 13th century, indictments by the Crown existed in parallel with private prosecutions. A judgment of acquittal or conviction in a suit brought by a private person barred that person’s further suit, and judgment on an indictment by the Crown barred further suit by the Crown. But double jeopardy principles did not prevent the Crown from bringing further suit in cases where a private person’s suit had resulted in an acquittal. By the 15th century, acquittal on a private appeal, after trial by jury, barred indictment by the Crown, and an acquittal on an indictment generally barred further prosecution for the same offense by appeal. Thus, the right of private appeal fell into disuse, and repeated prosecution for the same crime began to be eliminated.

The two English common law commentators who most influenced colonial American jurisprudence were Sir Edward Coke and Sir William Blackstone. Blackstone in his commentaries penned the oft-quoted statement: “The plea of autrefois acquit, for a former acquittal, is grounded on the universal maxim . . . that no man is to be brought into jeopardy of his life, more than once, for the same offense.”

During the 17th century, when Coke’s writings appeared, double jeopardy began to assume the outline of its present form. Yet even in the writings of Coke and Blackstone, the protection is narrower than in contemporary American doctrine. Coke believed that double jeopardy was not an absolute, but a conditional protection, depending upon the quality of the prior acquittal. Blackstone noted that the concept was limited to felonies, and that for the doctrine to apply there was a requirement for either a guilty verdict or an acquittal.

That double jeopardy in America is a more fundamental right than in England may be traced back to early colonial times. The Massachusetts Bay Colony extended its protection to all criminal prosecutions and to civil trespass as well. In New England’s first established code of laws, the Body of Liberties, the Massachusetts Bay Colony provided: “No man shall be twise sentenced by Civill Justice for one and the same Crime, offence, or Trespasse.” James Madison, who fathered the doctrine in the Bill of Rights (1791), proposed that it read: “No person shall be subject, except in cases of impeachment, to more than one punishment or trial for the same offense.” The Supreme Court later stated as a settled principle of the common law that no person may be twice punished in the same court on the same facts, for the same offense, or “as Coke has it, ‘Nemo debet bis puniri pro uno delicto.’ No one can be twice punished for the same crime or misdemeanor . . . .”

Civil Forfeiture

The tale of civil forfeiture has a different beginning, although its presence in today’s jurisprudence is creating quite a stir. Despite being relatively new to us, the concept of forfeiture was acknowledged even before the Greeks. In Exodus, chapter 21, verse 28, it is written: “If an ox gore a man or a woman that they die, then the ox shall be surely stoned, and his flesh shall not be eaten. But the owner of the ox shall be quit.” The perfect civil forfeiture? Not really. Here, unlike in a true civil forfeiture, the sovereign did not get the offending property or its value. Nor did society benefit by eating the ox. Rather, this was a social justice, probably to discourage revenge from the deceased’s family.

As our predecessors traveled through the generations, they adopted many of the Biblical practices. Revenge was the common thread. Rome had its Twelve Tables. The Greeks followed closely behind. And Britain had its common law. Indeed, at common law, civil forfeitures were in the nature of a deodand, the spiritual predecessors of forfeiture statutes”. Derived from the Latin phrase “Deo Dandum”, meaning “to be given to God”, the deodand itself originated in pre-Judeo-Christian practices. These practices, similar to the Talmud’s interpretation of the “goring ox” passage, reflect the view that the instrument of death is accused and that religious atonement is required. Property or its value was given to the Crown “with the belief that the king would provide money for masses to be said for the good of the dead man’s soul, or insure that the deodand was put to charitable uses.” For the kings, however, the motivation was hardly spiritual. It was pure, unadulterated greed.

In medieval times, the scope of forfeiture was absolute. Known as “forfeiture of estate”, it deprived the offender of all personal and real property. Subsequently, under the guise of redressing a loss caused by criminal activity, civil forfeiture became a premium source of revenue for the Crown in common law England. Centuries later, long after the religious purpose of the deodand had ended, the practice remained a source of revenue for the Crown and was further supported as a deterrent to negligence. The final justification, however, remained revenue, and lots of it. It was fundraising at its best. Things were so frustrating for the commoner, and lord alike, in merry old England that, bowing to their pressure, one of the concessions granted in the Magna Carta was the creation of what was called the “year and the day” rule. The king held real property for non-treasonous offenses of one year and a day, after which time the property would revert to a tenant’s lord. Personalty, however, would escheat to the Crown.

When the British left home and settled a New World called America, they brought with them many of their old, indeed despised, habits. Remarkably, too, when a custom, formerly distrusted, was seen from the opposite side of the fence for the first time, it looked much better. This was true with forfeiture. Although “forfeiture of estate” was abolished for federal offenses by the first Congress of the United States in 1790, and the Federal Constitution protected property through both the Due Process Clause and a specific limitation on the scope of forfeiture in the context of treason, the forfeiture tradition was maintained in the colonies through the maritime and customs laws, the reason why some of the more powerful federal forfeiture laws today are codified in the Admiralty laws. The founding of a new nation did little to change these ancient traditions. Almost immediately following the adoption of the Constitution, ships and cargo were made subject to forfeiture under federal law. Indeed, in justifying modern civil forfeiture statutes, the Supreme Court concluded that they were “too firmly fixed in the punitive and remedial jurisprudence of the country to be now displaced.” So much for thorough examination and constitutional analysis. Today’s civil forfeiture is truly quasi-criminal in nature, as is evident by the protections offered litigants is such proceedings.

The Lion and the Lamb

Which brings us to the present. As illustrated, double jeopardy and civil forfeiture were not born of the same parents. Yet, in the last twenty years, they have grown up, parallel, side by side, with little supervision. That unsupervised play, however, has come to an abrupt halt, and the courts have begun to oversee the courtship between these two powerful concepts. This article will discuss the relationship between these two doctrines, and the issues which may — or should — come before the courts in the near future.

Same Conduct

Any double jeopardy analysis must, of course, begin with a determination of whether the conduct underlying both prosecutions is the same. If the crime for which the defendant was prosecuted is different from the offense on which forfeiture was based, the later prosecution will be permitted to proceed. The test in place today is the “same elements” test. This test focuses on whether each offense contains an element not contained in the other. If not, they are the “same offense” and double jeopardy bars additional punishment. Under Blockburger and its progeny, if the second crime cannot be abstracted from the elements of the first, the second crime is a species of a lesser-included offense and satisfies the “same-element” test.

This test is not always a stressful one. In determining whether the cases involve the same offense, one court merely compared the indictment with the civil forfeiture notice, complaint of affidavit. Where the indictment charges many counts spanning criminal conduct over an extended time period, however, the process may be a bit more difficult. Presented with this scenario, the court in United States v. Plunk dismissed the counts which the government had reason to believe the defendant had committed at the time of the seizures and which were the basis for the administrative forfeitures. The defendant’s motion to dismiss was denied with respect to the remaining counts.

In City of Portland v. 1985 Porsche 944, a man was criminally prosecuted for soliciting a prostitute while in his Porsche. Subsequently, the city sought forfeiture of the car in a civil forfeiture proceeding. Using classic language and reasoning on the double jeopardy issue, the court held that the “city’s civil forfeiture complaint is based on precisely the same conduct that was addressed in the state’s criminal case, and it addresses identical violations of identical laws.” The court had no difficulty with the fact that the defendant was charged with solicitation by the state and the car was seized and prosecuted by the city, reasoning that the two proceedings could have been combined.

Jeopardy will not attach when a count is dismissed pursuant to a plea bargain. The courts have indicated that in such an instance, the defendant’s remedy is to seek enforcement of that plea bargain, a type of specific performance.

Two courts have addressed the issue of when jeopardy attaches in the civil forfeiture context. In United States v. Stanwood, the court held that the entry of final judgment is when jeopardy attaches in a civil forfeiture case. Accordingly, in Stanwood, since the defendant pled guilty before the entry of the forfeiture judgment, his criminal conviction was the first punishment and did not violate double jeopardy.

In United States v. Oakes, the facts were a bit different. On March 6, 1991, Petitioner pleaded guilty and simultaneously forfeited his interest in his family’s home, which was the subject of the civil forfeiture action, pursuant to the plea agreement. It is important to note, however, that the criminal indictment did not include a forfeiture count. In addition, neither of the criminal judgments referred to the forfeiture.

Subsequently, the court sentenced the Petitioner to six months alternative custody and three years probation. On August 28, 1991, the court entered its formal written sentencing judgment. On January 4, 1992, the Petitioner began serving his sentence. Five days later, a decree of forfeiture was entered against the real property, following the resolution of the third party claims of petitioner’s father.

Petitioner argued that punishment attached in the criminal context when he commenced serving his sentence on January 4, 1992. Because punishment was imposed in the civil action at the time he forfeited his interest in his real property pursuant to the plea agreement on March 6, 1991, Petitioner argued that the criminal sanction occurred after the civil sanction and constituted the second prohibited punishment.

The government took a different approach. Jeopardy in the criminal context attached when the court pronounced its sentence, while in the civil context it attached when the decree of forfeiture was entered. Thus, the government contended, because the decree was entered in the civil action on January 9, 1992, it was the second prohibited punishment.

The court found that punishment in the forfeiture proceeding — the first punishment — occurred at the time of the guilty plea. On that date, the court said, the Petitioner lost his interest to his real property. In response to the government’s argument that title to the real property was not perfected until later, the court stated: We are here concerned with the issue of when punishment was imposed, not when title was perfected. The Government’s argument therefore failed, because it presupposed the conclusion that punishment was not imposed until title was perfected. Yet, as the court found, clearly, Petitioner was punished when he forfeited his interest. This punishment was not abrogated by the fact that the Government subsequently had to address the interests of third parties claiming a right to the property.

Finally, the court found that, at the time of the plea, the Government considered Petitioner’s interest forfeited. “This court, however, cannot allow the Government to, in essence, change its mind three years after the civil action was closed. If, in 1991, the Government took the position that Petitioner forfeited his interest pursuant to his plea agreement on March 6, 1991, than it cannot now attempt to argue that nothing was lost on that date.” Lots of equity here.

Punishment

The question giving the courts the most difficulty in this double jeopardy analysis is whether the civil forfeiture of assets constitutes punishment. The answer for many courts is a resounding: It depends. Some courts have decided the issue based upon a comparison of the type of property involved in the forfeiture action with the value of the property in relation to the damage caused by the underlying crime. Kind of intertwining an Eighth Amendment excessiveness analysis with the double jeopardy test. Others have compared the statutes themselves, arguing that any civil sanction, such as civil forfeiture, that cannot fairly be said solely to serve a remedial purpose, “but rather can only be explained as also serving either retributive or deterrent purposes, is punishment as we have come to understand the term.”

For the answer to the question, however, one should turn to two recent Supreme Court opinions, Austin v. United States and Department of Revenue of Montana v. Kurth Ranch. In Austin, the Supreme Court focused its analysis on the punitive effect of the forfeiture upon the property owner rather than on the civil or criminal nature of the provision. Using an exhaustive review of English and American law and the historical understanding of forfeiture as support, the Court held that forfeitures are inherently punitive, thereby constituting punishment for purposes of the Excessive Fines Clause of the Eighth Amendment. The Court refused to conclude that forfeitures pursuant to section 881(a)(7) and (a)(4) served solely remedial purposes. Rather, they also had deterrent and retributive goals. The critical question, the Court observed, is whether the forfeiture can be defined as solely remedial, not whether the forfeiture is solely punitive. The Court rejected the notion that the multiple part test from Kennedy v. Mendoza-Martinez must be used, finding that such a test was limited solely to determine whether constitutional protections incident to a criminal trial must be applied to a civil action. It thereby set, for the first time, a Constitutional limitation on the government’s power and authority to seize and forfeit property.

Justice Blackmun questioned the use of forfeiture’s legal fiction as a matter of constitutional law:

If forfeiture had been understood not to punish the owner, there would have been no reason to reserve the case of a truly innocent owner. Indeed, it is only on the assumption that forfeiture serves in part to punish that the Court’s past reservation of that question makes sense.

The Court concluded:

[E]ven though this Court has rejected the “innocence” of the owner as a common-law defense to forfeiture, it consistently has recognized that forfeiture serves, at least in part, to punish the owner. See Peisch v. Ware, 4 Cranch, at 364 (“the act punishes the owner with a forfeiture of the goods”); Dobbins’s Distillery, 96 U.S., at 404 (“the acts of violation as to the penal consequences to the property are to be considered just the same as if they were the acts of the owner”); Goldsmith-Grant Co., 254 U.S., at 511 (“‘such misfortunes are in part owing to the negligence of the owner, and therefore he is properly punished by the forfeiture'”). More recently, we have noted that forfeiture serves “punitive and deterrent purposes,” Calero-Toledo, 416 U.S., at 686, and “imposes an economic penalty,” id., at 687. We conclude, therefore, that forfeiture generally and statutory in rem forfeiture in particular historically have been understood, at least in part, as punishment.

In its statutory analysis, the Court discussed Halper positively, but, unlike in Halper, the Court held that forfeiture statutes were not designed to serve remedial goals with only an occasional punitive affect. Instead, the Court held that forfeiture statutes were designed to be, and are, punitive.

The Court left for lower court interpretation the formulation of a test to be used in determining the excessiveness and disproportionate nature of a forfeiture. In his concurrence, however, Justice Scalia said that the “relevant inquiry for an excessive forfeiture under 881 is the relationship of the property to the offense: Was it close enough to render the property, under traditional standards, ‘guilty’ and hence forfeitable?” It remains to be seen if this becomes the test used by the courts, or if some hybrid balancing of the value and use of the property becomes the norm. The latter would be preferable. The “taint” theory, discussed above, retains potential for disproportionate forfeitures. There must be some provision to enable a court to do “the right thing” rather than merely follow the cold black letter language of a statute. As has been illustrated with the federal sentencing guidelines, rigidity does not work well in our judicial system. “Justice” is the result everyone desires, not fund-raising.

In his concurrence, Justice Scalia also questioned the Court’s focus on the culpability of the property owner in determining whether forfeiture is punitive. Following an extensive discussion of the differences between in rem and in personam forfeiture as they relate to the punishment, Justice Scalia raised an interesting point:

If the Court is correct that culpability of the owner is essential, then there is no difference (except perhaps the burden of proof) between the traditional in rem forfeiture and the traditional in personam forfeiture.

According to Justice Scalia, the offense of which the owner/claimant has been convicted is not relevant to the forfeiture.

Section 881 requires only that the Government show probable cause that the subject property was used for the prohibited purpose. The burden then shifts to the property owner to show, by a preponderance of the evidence, that the use was made without his “knowledge, consent, or willful blindness,” 21 U.S.C. 881(a)(4)(C), see also (a)(7), or that the property was not so used. See 881(d) (incorporating 19 U.S.C. 1615). Unlike monetary fines, statutory in rem forfeitures have traditionally been fixed, not by determining the appropriate value of the penalty in relation to the committed offense, but by determining what property has been “tainted” by unlawful use, to which issue the value of the property is irrelevant. Scales used to measure out unlawful drug sales, for example, are confiscable whether made of the purest gold or the basest metal. But an in rem forfeiture goes beyond the traditional limits that the Eighth Amendment permits if it applies to property that cannot properly be regarded as an instrumentality of the offense — the building, for example, in which an isolated drug sale happens to occur. Such a confiscation would be an excessive fine. The question is not how much the confiscated property is worth, but whether the confiscated property has a close enough relationship to the offense.

Although leaving his answer for another time, Justice Anthony Kennedy was also troubled by the issue of whether forfeiture would be permitted when the property owner committed no wrong of any sort, intentional or negligent. “That for me would raise a serious question.” Justice Kennedy also reserved judgment on whether an in rem forfeiture would always amount to an intended punishment of the owner of the forfeited property.

Interestingly, before Austin was announced, the Northern District of New York struck down, as a violation of the Eighth Amendment, a forfeiture of a family residence for a seven gram marijuana sale, worth $45, on the premises and possession of another six ounces of marijuana inside the home. Analyzing the facts before it using the three-prong test set down by the Second Circuit in United States v. 38 Whalers Cove Drive, the court in United States v. Real Property at 835 Seventh Street, Rensselear, N.Y., deemed the forfeiture of the claimant’s $69,778 equity in the home “clearly disproportionate”, bordering on “aberrational”, and in excess of any legitimate civil purpose for the forfeiture. Since, under the statute, the law required forfeiture of all or nothing, the court felt it better to err on the side of protecting the owner’s constitutional rights and dismiss the forfeiture action than to overcompensate the government for implementing the drug laws.

In 835 Seventh Street, it is important to note several things. First, this case involved the forfeiture of the claimant’s home. Thus, the fact that the court disallowed the entire forfeiture may have had something to do with a homestead-type analysis.

In addition, the court used as part of its analysis the federal sentencing guidelines and the range, especially relating to fines, subject to which the defendant would have been in the underlying criminal case. Because of the discrepancy between this range and the penalty of forfeiture, the court dismissed the government’s forfeiture action. The tests used by the district court may be a starting point for the test left open by the Austin court.

It appears, then, that the Supreme Court has overcome its adolescent fixation that civil forfeiture is remedial in nature. Laughable as it was, the extensive history of this flawed “fictitious” rationale was anything but humorous. It remains to be seen what direction the state courts will take in interpreting their own constitutions.

As a reflection of the far-reaching impact Austin is likely to have, on January 7, 1994, the Justice Department issued a 63-page memorandum, ostensibly to “provide guidance and uniformity in responding to excessiveness challenges” stemming from Austin and Alexander. The memorandum is important, not just for its content but for its tone as well. The courts and defense bar should use it to gain insight into the mindset of the government prosecutors and prepare to counter their arguments.

The Courts deal with this Dilemma

So, at least to the majority of the Supreme Court justices, civil forfeiture is punishment. That being the case, the issue seems relatively clear. Or so one might think. However, with fact patterns varying and courts clearly inclined to forfeit a defendant’s property and keep a steady flow of money into law enforcement coffers, the picture has been clouded by a mixture of other arguments.

First, one must understand the history of the often violent clash between civil forfeiture and double jeopardy. The Supreme Court itself twice has rejected double jeopardy challenges to civil forfeiture actions. Each time, the Court analyzed the relevant forfeiture statutes and concluded that the forfeiture served a remedial function, not a criminal punishment, and consequently did not violate double jeopardy. In United States v. One Assortment of 89 Firearms, the forfeiture of firearms following owner’s acquittal of dealing firearms without a license was found to be remedial because it removed dangerous or illegal items from society. In One Lot Emerald Cut Stones v. United States, the Court held that forfeiture of emeralds and a ring following owner’s acquittal of smuggling was remedial because it was similar to a “reasonable form of liquidated damages”. The remedial purposes identified by the Supreme Court were (1) controlling or preventing the circulation of regulated or forbidden merchandise, and (2) reimbursing the government for the expenses of investigation and enforcement. Clearly, these decisions were result oriented.

United States v. Halper

But more recent Supreme Court and circuit courts decisions have counseled that a civil forfeiture constitutes punishment and thereby triggers the protection of the Double Jeopardy Clause. In United States v. Halper, the Supreme Court addressed what it characterized as an unresolved problem: “whether and under what circumstances a civil penalty may constitute punishment for purposes of the Double Jeopardy Clause [of the Fifth Amendment].” In Halper, a civil defendant alleged that he could not be prosecuted for a “civil” violation of the federal False Claims Act after he had already been criminally prosecuted for the same conduct as a criminal offense under 18 U.S.C. section 287. The Supreme Court agreed.

In reaching its conclusion, the Court declined to follow the contention of the government that “punishment” in the relevant sense is melted out only in criminal proceedings, and that whether proceedings are criminal or civil is a matter of statutory construction.” The Court distinguished a prior opinion to the effect as not dealing with the “‘humane’ interests safeguarded by the Double Jeopardy Clause.” After reviewing its prior precedent, the Court drew the following line:

[I]t follows that a civil sanction that cannot fairly be said solely to serve a remedial purpose but rather can be explained only as also serving either retributive or deterrent purposes, is punishment, as we have come to understand the term.

The Court did not hold that remedial civil sanctions which “carry the sting of punishment” are therefore criminal. Rather, the Halper opinion stated “merely that in determining whether a particular civil sanction constitutes criminal punishment, it is the purposes actually served by the sanction in question not the underlying nature of the proceeding giving rise to the sanction, that must be evaluated.” In the case before it — a subsequent civil suit in which the civil financial sanction bore no rational relation to the government’s losses — the Court held that the “civil” sanction imposed criminal punishment for purposes of triggering the Double Jeopardy Clause of the Fifth Amendment.

The Supreme Court returned to the borderline between civil and criminal law in Browning-Ferris Indus.v. Kelco Disposal, a case which asked whether the Excessive Fines Clause of the Eighth Amendment applied to punitive damage awards in state civil actions. While the Browning-Ferris opinion answered this question in the negative, its reasoning shed further light on the dividing line between civil and criminal actions under the Constitution.

According to the Browning-Ferris opinion, although punitive damages are clearly punitive and serve public interests other than that of compensating tort victims, they are pursued by private parties, not government entities. Of course, punitive damage awards are enforced by the states. But, according to the Supreme Court:

Here the government of Vermont has not taken positive step to punish, as it most obviously does in the criminal context, nor has it used the civil court to extract large payments or forfeitures for the purpose of raising revenue or disabling some individual.

The Browning-Ferris opinion went on to distinguish the Halper case as one involving the Government’s effort to exact punishment in a civil action, whereas the plaintiff in Browning-Ferris was a private party who would obtain the punitive award.

The upshot of these two opinions was that if the government-initiated sanctions are punitive in purpose or effect, they are criminal within the meaning of the Fifth Amendment. Moreover, Halper in particular signaled a shift away from the deferential position the Court had taken earlier toward legislative characterizations of statutes as being civil or criminal. When applied to the proposed application of “civil” forfeiture beyond an area justified by a taint rationale, Halper clearly illustrated that the sanction imposed would be punitive in effect, as it bears no relation to government losses, and Browning-Ferris suggested that this would be a government-initiated “forfeiture[] for the purpose of raising revenue or disabling some individual.” If such a disabling forfeiture is sufficiently punitive to trigger the constitutional protections of the Double Jeopardy Clause of the Fifth Amendment or the Excessive Fines Clause of the Eighth Amendment, it likewise triggers the Due Process Clause of the Fifth Amendment and the incorporated criminal process rights thereunder.

In Halper, the Court concluded:

[U]nder the Double Jeopardy Clause a defendant who already has been punished in a criminal prosecution may not be subjected to an additional civil sanction to the extent that the second sanction may not fairly be characterized as remedial, but only as a deterrent or retribution.

The Court cautioned against widespread application of its holding, noting that this was “a rule for the rare case” where the civil sanction was “overwhelmingly disproportionate to the damages … caused.”

After Halper, none of those who requested double jeopardy protection met with success. One court summarily concluded that Halper simply did not apply to forfeiture proceedings. In United States v. McCaslin, the court found no double jeopardy violation where the defendant was required to forfeit a $30,000 equity interest in property that was used to cultivate marijuana. The court noted that “Halper has no application to the very ancient practice by which instrumentalities of a crime may be declared forfeit to the government.” But McCaslin clearly has been overruled by the Supreme Court in Austin. Finding civil forfeiture to be punishment, the Court held that the government’s power to forfeit was limited by the Excessive Fines Clause of the Eighth Amendment. The key was that the instant forfeitures operated at least “in part” as punishment. Repeatedly citing Halper, the Court also limited One Assortment of 89 Firearms and One Lot Emerald Cut Stones, citing those cases as instances where the forfeitures were “purely remedial”.

Separate Proceedings

The prohibition against multiple punishments is only triggered where the government seeks to impose the punishments in separate proceedings. After Austin was decided, but still seeking that “just” resolution whereby all the property would be forfeited, two courts innovatively side-stepped Austin. In United States v. Millan, the government indicted the defendants on counts including conspiracy and criminal forfeiture relating to a heroin distribution ring. Subsequently, the government filed a civil forfeiture action based upon the same conduct and offenses. Two of the defendants then settled with the government in return for the release of a portion of the seized property.

Before trial, two of the defendants filed a motion to dismiss the superseding indictment on double jeopardy grounds, relying on Halper. The Second Circuit rejected this challenge and held that the settlement agreement “was part of a single coordinated prosecution of persons involved in alleged criminal activity”. Therefore, there was not a “separate” prosecution for double jeopardy liability.

Shortly after Millan, the Eleventh Circuit echoed the Second Circuit’s reasoning and held that parallel civil forfeiture proceedings did not constitute “separate proceedings” for double jeopardy purposes. In United States v. 18755 N. Bay Road, the court relied upon the “simultaneousness” of the civil and criminal proceedings as “falling within the contours of a single, coordinated prosecution”. The courts in Millan and 18755 North Bay Road reasoned that the parallel proceeds were really a “single action”, distinct only in procedure.

But if decisions from the Seventh and Ninth Circuits are any indication, this battle is far from over. In United States v. Torres, the Seventh Circuit strongly suggested that the government should seek forfeiture and criminal sanctions in a single proceeding to avoid a double jeopardy problem. In Torres, the defendants purchased $60,000 of cocaine from undercover agents. The government filed separate but parallel criminal and administrative forfeiture proceedings against Torres and the money, respectively. Torres pled guilty in the criminal case but did not file a claim in the forfeiture proceeding. In his appeal from a sentence of 73 months in the criminal case, he argued that the forfeiture, which occurred first, was a former jeopardy which barred the subsequent sentence of imprisonment.

The Seventh Circuit upheld Torres’ plea and sentence. In dictum, however, the court said that the government “would do well to seek imprisonment, fines and forfeiture in one proceeding”. “The nomenclature ‘civil’ does not carry much weight” anymore, the court said. The court stated that cumulative punishments imposed in a single proceeding are permissible, encouraging the government to seek both imprisonment and forfeiture in the same indictment.

The court saw the Supreme Court’s decision in Department of Revenue of Montana v. Kurth Ranch as dispositive. In Kurth Ranch, the Court held that the imposition of a drug tax upon person arrested and convicted for drug offenses relating to the same illegal conduct violates the Fifth Amendment prohibition on successive punishment for the same offense, counting as a separate jeopardy for purposes of double jeopardy. The Court found that “[t]he proceeding Montana initiated to collect a tax on the possession of drugs was the functional equivalent of a successive criminal prosecution that placed the Kurths in jeopardy a second time ‘for the same offense.'” Using the framework of Halper to determine whether the Montana tax could be fairly characterized as punishment within the meaning of the double jeopardy prohibition, the Supreme Court recognized that governments may and often do tax unlawful activities. Additionally, the Supreme Court acknowledged that “neither a high rate of taxation nor an obvious deterrent purpose automatically makes this tax a from of punishment.”

However, the Supreme Court found four factors to be of great significance:

(1) the high rate of tax, being a multiple of the value of the property being taxed; (2) the deterrent, rather than revenue-raising, purpose for the statute; (3) the fact that the tax hinges on the commission of a crime and is exacted only after the taxpayer has been arrested for the precise conduct that gives rise to the tax obligation in the first place; and (4) the fact that the tax is levied on goods that the taxpayer neither owns nor possesses when the tax is imposed, since the state already has destroyed the contraband goods at the time the tax is assessed.

As in Halper, the Kurth Ranch Court rejected the government’s argument that it was merely attempting to raise revenue for the remedial purpose of defraying the costs of prosecuting drug criminals. Here, the state had made no showing that there was any such relationship, and it was obvious from the statutory scheme that “the formula by which Montana computed the tax assessment would have been the same regardless of the amount of the state’s damages and, indeed, regardless of whether it suffered any harm at all.”

The Court explained that Montana could have chosen to levy this tax, to exact a punishment on the Kurths, without violating their legal rights. What Montana did wrong, said the Court, was to levy this punitive tax as a second punishment or the same offense for which the Kurths earlier had been indicted and convicted.

But the Supreme Court said that “Montana no doubt could collect its tax on the possession of marijuana, for example, if it had not previously punished the taxpayer for the same offense, or indeed, if it had assessed the tax in the same proceeding that resulted in his conviction.” To the Torres court, however, the Supreme Court’s decision in Kurth Ranch, decided after both Millan and 18755 North Bay Road, would have required different results in the “single action” cases. “Civil and criminal proceedings are not only docketed separately but also tried separately, and under the double jeopardy clause separate trials are anathema.”

Under the government’s theory, and under the reasoning in Millan, because the tax assessment proceeding and the criminal prosecution were pending at the same time, they constituted part of single coordinated prosecution. However, the Supreme Court in Kurth Ranch concluded that the four proceedings involved in that case — a criminal prosecution, a civil forfeiture, a civil tax assessment and a bankruptcy proceeding — were not part of a single coordinated prosecution, but instead were four separate proceedings. Had the Supreme Court utilized the Millan analysis, the Court would have held that the Montana tax was not barred by double jeopardy.

Unfortunately for the defendant in Torres, he never made a claim for the $60,000 and consequently did not become a party to the forfeiture. As the forfeiture action proceeded without opposition, jeopardy did not attach. “If Torres lacked an interest in the cash, its forfeiture did not impose any penalty on him, and again the argument derived from Kurth Ranch fails. . . . Torres is not entitled to escape time in prison just because the forfeiture may have penalized one of his confederates in crime, even his best friend.” The moral of this story is easy: Object to all forfeiture proceedings and file timely claims and answers.

Waiver

Speaking of waiver, in United States v. Morgan, the Second Circuit in April 1995 held that the waiver of a double jeopardy argument must be voluntary, knowing and intelligent, shown to have been done “with awareness of its consequences.” The presumption is against the waiver of such a constitutional right. In that case, the defendant conceded knowledge that a criminal investigation was pending against him when he signed a stipulation waiving the government’s right “to bring other actions.” Because the settlement did not contain language expressly stating that the defendant would be barred from asserting double jeopardy as a defense in future criminal proceedings, the court held that it could not operate as an effective waiver of his constitutional right. Were the rule otherwise, the court held, the government, when entering into a civil settlement, “could safely prevent any double jeopardy defense being raised in a later criminal proceeding simply by advising the putative defendant of the existence of a criminal investigation against him. We reject the notion that a constitutional right may be waived in such an implied fashion.”

It should be noted, however, that, as illustrated, the fact that the double jeopardy protection is of constitutional magnitude does not mean that it cannot be waived. Indeed, as the Supreme Court found, double jeopardy is a personal constitutional right that can be waived. Where there is an opportunity to oppose the action and the defendant decides to forego that opportunity, there is no functional equivalent of a successive prosecution for the same offense. As such, no determination of personal culpability has occurred. Therefore, without risk of determination of guilt, jeopardy does not attach.

Notable in this area are the cases dealing with administrative forfeiture proceedings. Where a petitioner defaulted or failed to file a claim in the administrative proceedings, usually he has not in any way demonstrated that he has been punished with respect to the forfeiture, a finding which is essential to a claim of a double jeopardy violation. For a court to determine whether the civil proceeding constituted a punishment, one would have to quantify the value of petitioner’s interest in the seized property to determine whether the forfeiture lacked any remedial character. A default in the administrative case would result in petitioner losing his standing to make such a claim and to proceed further.

The Ninth Circuit Chimes In: United States v. $405,089.23 U.S. Currency

In the wake of the Torres decision, and in what may prove to be a sign of a most significant shift in analysis, the Ninth Circuit found that the Double Jeopardy Clause mandated the dismissal of a civil forfeiture proceeding that had been instituted less than one week after a grand jury indictment that resulted in the defendants’ convictions. In United States v. $405,089.23 U.S. Currency, the government seized defendants’ cash and stayed the forfeiture proceeding pending the disposition of the parallel criminal case. Eight months after the defendants’ convictions for conspiracy and money laundering, the government moved for summary judgment in the forfeiture proceeding, relying entirely on the criminal convictions and supporting documentation. The district court granted the motion, stating that defendants’ convictions, standing alone, were sufficient to demonstrate probable cause for the forfeiture.

The Ninth Circuit reversed. “The forfeiture complaint in this case was based on precisely the same conduct addressed in the claimants’ criminal case, and it sought to forfeit title to the claimants’ property on the basis of precisely the same violations of the same statutes.” “We are not willing to whitewash the double jeopardy violation in this case by affording constitutional significance to the label of ‘single, coordinated prosecution.'”

The circuit court also made it clear that the civil forfeiture proceeding and the criminal action did not constitute a “single, coordinated prosecution”, as alleged by the government. “We fail to see how two separate actions, one civil and one criminal, instituted at different times, tried at different times before different fact-finders, presided over by different district judges, and resolved by separate judgments, constitute the same ‘proceeding’.” Where the government chooses to proceed against claimants on two separate fronts in parallel proceedings, the government gains a significant advantage in having the civil forfeiture action heard before the criminal trial. “We believe that such a coordinated manipulative prosecution strategy heightens, rather than diminishes, the concern that the government is forcing an individual to ‘run the gauntlet’ more than once.” The Double Jeopardy Clause, at its most fundamental level, protects an accused from being forced to defend himself against repeated attempts to exact one or more punishments for the same offense.

The court’s analysis involved a two-pronged test: (1) whether the civil forfeiture action and the claimant’s criminal prosecution constituted “separate proceedings” and (2) whether forfeiture under 18 U.S.C. 881(a)(6) and 18 U.S.C. 981(a)(1)(A) constitutes “punishment”. The court found that each action seeks to impose “punishment” and each constitutes a “separate proceeding”. The court cited as support the Supreme Court’s 1977 decision in Jeffers v. United States, in which the Court held that parallel prosecutions for conspiracy and continuing criminal enterprise, both of which were part of what could be categorized as a single and coordinated, albeit criminal, prosecution, were barred by the Double Jeopardy Clause. Even more so, the Ninth Circuit said, “we can discern no reason why two proceedings should be deemed one when one of the proceedings involves a criminal prosecution and the other a civil forfeiture action. . . . [A] civil forfeiture action which is brought and tried separately from a criminal prosecution and is based upon the same offense constitutes a separate ‘proceeding'”.

As to the issue of punishment, the court had no trouble finding Austin conclusive as to the issue of “punishment”. “[T]he only fair reading of the Court’s decision in Austin is that it resolves the “punishment” issue with respect to forfeiture cases for purposes of the Double Jeopardy Clause [of the Fifth Amendment] as well as the Excessive Fines Clause [of the Eighth Amendment]. In short, if a forfeiture constitutes punishment under the Halper criteria, it constitutes punishment for both clauses.

Interestingly, the $405,089.23 court rebuked the Fifth Circuit’s decision in United States v. Tilley. In Tilley, the Fifth Circuit ruled that a prior civil forfeiture of “proceeds” was not punishment under Halper and, consequently, did not preclude a subsequent prosecution based upon the same underlying offense. Tilley involved the forfeiture of proceeds of drug trafficking pursuant to 21 U.S.C. 881(a)(6). The court focused on the relationship of the confiscated property to the underlying criminal activity, emphasizing that the property was the proceeds of illegal activity. The court drew a sharp distinction between the mobile home involved in Austin and the drug profits involved in Tilley, concluding that the forfeiture of the proceeds of drug sales can never be excessive in view of the enormous costs involved in prosecuting narcotics trafficking and the fact that drug proceeds are by definition proportional to the criminal activity.

Tilley’s reasoning, if adopted, would refute any double jeopardy challenge where the object of forfeiture constituted proceeds of illegal activity. A double jeopardy challenge has a greater chance of succeeding when (1) the forfeiture is directed against either unreported funds or against property used in connection with illegal activity and (2) the value of the property is overwhelmingly disproportionate to the damage caused by the underlying crime.

However, although the Fifth Circuit held that the forfeiture of proceeds was entirely remedial and thus not punishment, the court observed that if the prior proceeding had involved punishment, double jeopardy would have applied and would have barred the pending criminal trial. The court clearly implied that it would have found the criminal action barred by double jeopardy if the forfeiture had not involved proceeds. “We should make clear, however, that the sanction in Halper did not involve the proceeds from the crimes charged and the fact that the property forfeited in today’s case constitutes unlawful proceeds is crucial to our analysis.” Two Illinois district courts have followed the Fifth Circuit’s analysis, as have the Fourth Circuit and the Circuit of the District of Columbia.

The $405,089.23 court took exception to Tilley. The Ninth Circuit found that the Austin court explicitly refused to apply Tilley’s “case-by-case” approach. Instead, the Austin court adopted a “categorical approach to ‘punishment’ determinations in the forfeiture context”, requiring a reviewing court to look “to the entire scope of the statute which the government seeks to employ, rather than to the characteristics of the specific property the government seeks to forfeit.” Since the Austin court did not distinguish between drug proceeds and non-drug proceeds, the Ninth Circuit found, any determination of whether forfeiture constitutes punishment must look to the broader punitive purposes of the forfeiture statute as a whole. Having little difficulty classifying the instant proceeding as punitive under the Austin test, the court held that “[b]ecause the government is attempting to exact this form of ‘punishment’ in a proceeding separate from the claimants’ criminal trials, this action is barred by the Double Jeopardy Clause”.

Finally, distressed by the government’s litigation strategy, the court admonished the government for not seeking all of its remedies in one proceeding. By proceeding with the criminal case first, the government could then argue for summary judgment in the forfeiture proceeding; if it lost the criminal case, the government could still seek forfeiture of the property under the more permissive standards of civil forfeiture. “Such a coordinated manipulative prosecution strategy”, observed the court, “heightens rather than diminishes the concern that the government is forcing an individual to ‘run the gauntlet’ more than once.” Now, the court said, the government must choose “whether to include a criminal forfeiture count in the indictment (and thus forego the favorable burdens it would face in the civil forfeiture proceeding) or to pursue only the civil forfeiture action (and thus forego the opportunity to prosecute the claimants criminally).” A far cry from McCaslin. What a difference three years make. At least two district courts have applied $405,089.23 retroactively to cases pending at the time of the decision.

Speaking of McCaslin, the reader should make note of a remarkable decision from the Western District of Washington. In United States v. McCaslin, a distant relative of the Ninth Circuit’s 1991 decision, the district judge vacated the defendant’s conviction and sentence for a conspiracy and the manufacture and distribution of marijuana under 28 U.S.C. 2255, because the defendant previously forfeited his home as part of a consent judgment following the filing of a civil forfeiture under 21 U.S.C. 881(a)(7). Relying heavily upon Kurth Ranch, this vacatur highlights the importance of Kurth Ranch and the difficulty the government will have should the circuit and district courts follow this trend. In fact, in the month of September 1994 alone, no fewer than four courts in the Ninth Circuit addressed the concept of civil forfeiture and double jeopardy, all of which decided in favor of the claimant. Another extraordinary opinion against the government was handed down in October 1994. At least four other courts have followed the lead of $405,089.23. This string of setbacks, coupled with new leadership in Washington on the executive level, should prompt the government to take a good look at its strategy before the courts completely whitewash their civil forfeiture prosecutions.

That being said, however, the conflict among the circuits remains. In United States v. Smith, a criminal defendant offered to concede in a parallel civil forfeiture action against property allegedly involved in the same offense. The court found that this act did not raise a double jeopardy bar to continuing the criminal prosecution. The court acknowledged that Austin supports the proposition that civil drug forfeiture counts as “punishment” for purposes of double jeopardy analysis. It also found that Halper and Kurth Ranch hold that a civil forfeiture would trigger the Double Jeopardy Clause’s prohibition of successive punishments, even if Congress intended to permit imposition of multiple punishments in a single proceeding. However, stating that it was “constrained” by its circuit’s conclusion that parallel criminal and civil proceedings count as a single prosecution, the court denied the defendant’s motion for dismissal of the indictment.

Notably, the government, realizing it was on very shaky ground, attempted to take the “punishment” out of the forfeiture action by removing the “facilitation” theory from its forfeiture complaint and relying solely on a proceeds theory.

Similarly, in United States v. One Parcel of Real Property located at 13143 S.W. 15th Lane, Dade County, Miami, the court held that “despite the result that the Austin holding would seem to dictate in this case, the Supreme Court’s finding that civil forfeiture under 21 U.S.C. 881(a)(7) constitutes punishment does not end the inquiry, for the Eleventh Circuit has also spoken on this precise issue.” Does this mean that a circuit court decision takes precedent over a Supreme Court decision which, admittedly, would require a different result? Apparently in the Eleventh Circuit it does. The district court, clearly pained by so doing, held that despite the logic of the both the Austin court and the Ninth Circuit, “since the Eleventh Circuit’s [pre-Kurth Ranch] decision is binding, this court is constrained to find that the criminal prosecution and the civil forfeiture proceedings involving [defendant’s] same conduct constitute a single, coordinated proceeding for the purposes of double jeopardy analysis.”

But, in Massachusetts, a district court judge held that, although a forfeiture claimant’s offer to concede was patently a ploy to raise a double jeopardy bar to his prosecution in a parallel criminal action, the court did not have the authority under the forfeiture statute to grant a stay on that ground. Accordingly, the subsequent criminal prosecution was barred.

Double Jeopardy Adventures in Texas

With the trend against the government’s “separate prosecution” argument is just now beginning to take shape with the Double Jeopardy issues are making their way through the courts, of note is what has happened with respect to this issue in Texas. In three post-Austin cases, the District Courts in the Lone Star State addressed the nature of the forfeiture statute. In Ward v. State, the court observed that the fact that forfeiture actions are governed by the civil rules of procedure and that the state’s burden of proof is the preponderance of the evidence is not dispositive in this regard. “The labels ‘criminal’ and ‘civil’ are not of paramount importance. It is commonly understood that civil proceedings may advance punitive as well as remedial goals…”. The court, however, found the state statute to be civil in nature, pointing to the fact that forfeited assets are used for law enforcement purposes, and drug abuse and chemical dependency treatment programs, both of which it cited as “clearly remedial”. In apparent dictum, however, the court said that were the statute punitive, the “relatively modest value of [a radar and $2,165 in cash] is [not] ‘overwhelmingly disproportionate to the damage’ appellant has caused”, referring to the 78 pounds of marijuana seized from the defendant. Inexplicably, however, although the court looked to Halper for guidance, it did not even cite the Supreme Court’s decision in Austin.

In Johnson v. State, however, the same court, five months later, rethought its analysis in Ward, acknowledging that while “we believe the purpose of the statute is remedial, we acknowledge it may not be solely remedial”. Accordingly, the court applied the disproportionality analysis of Halper and Austin, and determined that prosecution for the charged offenses did note subject the defendant to double jeopardy. Interestingly, however, the court, in a footnote, distinguished Kurth Ranch, finding that since Kurth Ranch involved a tax statute rather than a forfeiture provision, the Texas court was not bound by the Supreme Court’s analysis therein. Query if this narrow — and, we believe, incorrect — reading of Kurth Ranch will prevail in future litigation.

It took the defense one more try, but finally, on July 21, 1994, the same litigants as in Johnson achieved a result more in tuned with Austin and Kurth Ranch. In Fant v. State, the state Court of Appeals held that double jeopardy barred the defendant’s trial for possession of a controlled substance after the state had obtained a forfeiture judgment arising from the same underlying criminal activity. Calling the statutory labels “civil” and “criminal” a “distinction without a difference”, the court analyzed the Supreme Court opinions and found that the Court’s language, especially in Kurth Ranch, “clearly indicates that . . . forfeitures are punishment.” The Fant court focused on three factors in making its determination: the history of forfeiture, the statutory innocent owner defense and the fact that the it focused on the culpability of the owner, and the fact that the innocent owner defense revealed legislative intent to punish only those involved in drug trafficking. All three, coupled with the fact that Texas’ forfeiture provision is codified in the state Code of Criminal Procedure, led the court to its conclusion. However, the court made sure to note, as the Supreme Court did in Kurth Ranch, that the state could proceed against an individual both criminally and via civil forfeiture proceedings so long as it did so in the same proceeding. Ironically, the court did not even bother to discuss Ward or Johnson, except to cite them as contrary to its holding.

If upheld, the Fant decision would mean that the state Legislature would have to change forfeitures from a civil to a criminal proceeding with higher standards of proof, or law enforcement would have to pick and choose more carefully which drug forfeitures it would prosecute in lieu of a criminal prosecution. This would be a major blow to many counties in the state which have made forfeiture a cash cow in their fight against drug-related criminal activity. It also might set a trend for other states with statutory schemes similar to that in Texas. First, however, the Texas courts must design uniformity among themselves.

Conclusion

As the Ninth Circuit has realized, it is no longer possible to distinguish Austin’s Eighth Amendment analysis from Halper’s double jeopardy review using a strict reading of the two clauses. Both apply to all cases, not just criminal prosecutions. With the Supreme Court structuring its double jeopardy analysis to include “multiple punishment” as well as multiple prosecution, the old arcane reasoning logically falls apart if it rejects a double jeopardy analysis in the forfeiture context simply because forfeiture is civil punishment. In addition, distinguishing between Halper’s fines and Austin’s forfeitures would undermine previous decisions suggesting that actions which are civil in form cannot constitute double jeopardy unless the amount extracted is significant. Indeed, these arguments would seem to contradict much of Austin’s holding to conclude that civil forfeiture is punishment for Eighth Amendment purposes but not for cases brought pursuant to the double jeopardy clause of the Fifth Amendment.

Also, based upon Kurth Ranch and the cases upon which it relies, criminal fines, civil penalties, civil forfeitures and taxes should now all be subject to both Eighth Amendment excessiveness limitations and Fifth Amendment double jeopardy prohibitions. Justice Scalia may well be right that other Fifth and Sixth Amendment protections afforded to criminal defendants may be grafted onto certain “civil” proceedings for forfeitures, penalties and taxes.

It appears, then, that we have come full circle since the Supreme Court’s first major double jeopardy opinion more than 100 years ago in Coffey v. United States. There, the Court held that an in rem forfeiture action against the property instituted following an acquittal on criminal charges relating to the removal and concealing of distilled spirits constituted a penalty after the acquittal and was barred under double jeopardy.

But forfeiture is not an offense; it is a consequence; indeed, a punishment. Even if the courts use the same elements test, the focus in these cases will be on the offense underlying the forfeiture action. So long as both actions stem from and are based upon the same set of facts, jeopardy should attach. But, as a wise man once said, the future is uncertain. It remains to be seen how far this debate will go. We await Supreme Court review and guidance.

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Steven L. Kessler is an attorney in New York City and author of Civil and Criminal Forfeiture: Federal and State Practice (Clark Boardman Callaghan 1993 and 1995 Supp.), a three-volume treatise on the forfeiture and RICO statutes in all 50 states and the District of Columbia and the major federal forfeiture provisions, all with interpretive case law and analysis.

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