12 Constitutional Protections

LibraryAsset Forfeiture: Practice and Procedure in State and Federal Courts (ABA) (2014 Ed.)

12 Constitutional Protections

A. Introduction

"We continue to be enormously troubled by the government's increasing and virtually unchecked use of the civil forfeiture statutes and the disregard for due process that is buried in those statutes." See United States v. All Assets of Statewide Auto Parts, Inc., 971 F.2d 896, 905 (2d Cir. 1992).

This statement from the Second Circuit typifies some of the underlying concerns expressed about the increasing use of the asset forfeiture power by federal and state governments. Criticism of asset forfeiture may be categorized into three basic areas: 1) constitutional rights must be recognized and honored; 2) property rights must not be infringed; and 3) protection must be provided for innocent parties.

This section will discuss the constitutional and statutory safeguards applicable to asset forfeiture actions.

B. Eighth Amendment Excessive Fines Clause

1. Federal Litigation

For over 200 years, the excessive fines clause was almost a forgotten part of the Eighth Amendment of the U.S. Constitution because the U.S. Supreme court had little occasion to review it. That all changed in 1993 when it issued two landmark cases relating to the excessive fines clause and asset forfeiture.

In Alexander v. United States, 509 U.S. 544 (1993), the defendant was convicted of federal obscenity and racketeering charges in the operation of several stores and theaters dealing with sexually explicit materials. The jury found that four magazines and three videotapes were obscene. The defendant was sentenced to six years in prison and fined $100,000. Additionally, the court criminally forfeited all of the defendant's interest in his wholesale and retail businesses and almost $9 million in moneys acquired through racketeering activity. Alexander appealed, asserting that the forfeiture violated the Eighth Amendment excessive fines clause. The court determined that an in personam criminal forfeiture action was punishment no different than a traditional fine and was subject to the Eighth Amendment excessive fines clause, and remanded the case to the appellate court to consider the excessiveness issue. Id. at 559.

The same day, the court issued its ruling in Austin v. United States, 509 U.S. 602 (1993). In this matter, the defendant sold two grams of cocaine to a state undercover agent. The agent's declaration stated that the defendant obtained the drugs from his mobile home and the sale took place at his body shop. The defendant pled guilty to state charges of possessing drugs for sale and received a seven-year state prison sentence. The federal government then filed civil in rem forfeiture charges against the mobile home and auto body shop under the facilitation theory.

The U.S. Supreme Court held that the excessive fines clause also applies to a civil action if it is, in part, punishment. After evaluating the language of the federal civil drug forfeiture statutes for conveyances, see 21 U.S.C. § 881(a)(4), and real property, 21 U.S.C. § 881(a)(7), on a facilitation theory, the court found that these statutes are punitive and subject to the excessive fines clause. Austin, 509 U.S. at 622. However, rather than articulate a test for excessiveness, the court deferred on that issue and remanded it back to the lower courts. Id. at 623.

Over the next five years, the lower federal courts developed a dizzying array of tests of excessiveness, such as the "substantial connection test," see United States v. Myers, 21 F.3d 826, 830-31 (8th Cir. 1994); "quantitative test," see United States v. Premises Known as RR # 1,14 F.3d 864, 874 (3d Cir. 1994); "nexus test," see United States v. Chandler, 36 F.3d 358, 365 (4th Cir. 1994); "multifactor test," see United States v. Real Property Located at 6625 Zumirez Drive, 845 F. Supp. 725, 732 (C.D. Cal. 1994); and the "two-prong nexus and proportionality test," see United States v. Real Property Located in El Dorado County, 59 F.3d 974, 982 (9th Cir. 1995).

Some tests limited their review to objective elements demonstrating the nexus of the property to the offense, see Chandler, 36 F.3d at 365, while others considered subjective factors, such as harshness, to insure that the forfeiture was proportional to the offense. See El Dorado County, 59 F.3d at 985. A few circuits adopted a test that incorporated all of the factors articulated by the other circuits and directed their courts to select the most appropriate under the circumstances. See United States v. Certain Real Property (11869 Westshore Drive), 70 F.3d 923, 930 (6th Cir. 1995); United States v. 829 Calle De Madero, 100 F.3d 734, 739 (10th Cir. 1996).

Obviously, this led to a situation where results were fact-driven and contingent on the law of the circuit where the case was litigated, preventing practitioners from having any certain guidelines to determine when a forfeiture action would be excessive.

The U.S. Supreme Court finally articulated a test of excessiveness in United States v. Bajakajian, 524 U.S. 321 (1998). The defendant and his family were preparing to board an international flight out of Los Angeles but failed to report that they were carrying over $357,144 on their person and baggage. Bajakajian was charged with failing to report that he was carrying over $10,000 of currency outside of the United States, see 31 U.S.C. § 5316(a), and criminal forfeiture of the currency. See 18 U.S.C. § 982(a)(1). He pled guilty to the criminal charge and was sentenced to three years' probation and a $5,000 fine. However, rather than forfeit the entire $357,144, the court reduced the forfeiture to $15,000. The government appealed, contending that the statute required forfeiture of the full amount.

The U.S. Supreme Court held that, since this was a criminal in personam forfeiture, it was punishment and subject to the excessive fines clause. Bajakajian, 524 U.S. at 328. It then held that a punitive forfeiture violates the excessive fines clause if it is grossly disproportional to the gravity of the defendant's offense. Id. at 334. Under this test, the lower court must conduct a proportionality review by comparing the amount of the forfeiture to the gravity of the defendant's offense. Id. at 336-337.

In the aftermath of Bajakajian, some courts hold that Austin has been narrowed somewhat, finding that traditional civil in rem forfeitures fall outside of the Eighth Amendment because they are "remedial," but "punitive" civil forfeitures are subject to an Eighth Amendment analysis. United States v. Cheeseman, 600 F.3d 270, 283 (3d Cir. 2010); United States v. Davis, 648 F.3d 84, 96 (2d Cir. 2011) (stolen artwork under customs laws is "remedial" and exempt from Eighth Amendment challenge); Conservation Force v. Salazar, 677 F. Supp. 2d 1203, 1209 (N.D. Cal. 2009) (forfeitures under Endangered Species Act are "remedial" and do not violate Eighth Amendment). However, other courts abandon the "punitive-remedial" categorization and find that all civil forfeitures are subject to the Eighth Amendment excessiveness analysis. United States v. Ferro, 681 F.3d 1105, 1114 (9th Cir. 2012).

Although Bajakajian was a criminal forfeiture case, it has been equally applied to civil forfeiture actions. United States v. Collado, 348 F.3d 323, 328 (2d Cir. 2003) (civil in rem real property forfeiture under 21 U.S.C. § 881(a)(7)); United States v. Six Negotiable Checks, 389 F. Supp. 2d 813, 823 (E.D. Mich. 2005) (civil Currency or Monetary Instruments reporting (CMIR) statute 31 U.S.C. 5317(c)); United States v. $293,316 in U.S. Currency, 349 F. Supp. 2d 638, 644-46 (E.D.N.Y. 2004) (civil bulk cash smuggling statute 31 U.S.C. § 5332(c)).

In view of the Bajakajian case, there are certain general rules that may be stated pertaining to excessive fines challenges. The first is that there are certain forfeiture actions that should never be excessive under the Eighth Amendment excessive fines clause including 1) contraband; 2) proceeds; 3) smuggled goods; and 4) substitute assets.

1) Contraband forfeitures are never excessive because they are merely removing property that is illegal to possess, such as illegal drugs or weapons. See United States v. One Assortment of 89 Firearms, 465 U.S. 354, 364 (1984); Austin, 509 U.S. at 621.
2) Proceed forfeitures are generally not excessive because they are remedial, not punitive, and merely take away the illicit profits from the defendant that he or she had no legal right to possess. Therefore, they should always be proportional to the offense. This was the law before Bajakajian, see United States v. Ursery, 518 U.S. 267, 291 (1996); United States v. Tilley, 18 F.3d 295, 300 (5th Cir. 1994); United States v. Alexander, 32 F.3d 1231, 1236 (8th Cir. 1994), reaffirmed after remand, 108 F.3d 853, 858 (8th Cir. 1997); United States v. Wild, 47 F.3d 669, 676 (4th Cir. 1995); United States v. One Parcel (Lot 41, Berryhill Farm), 128 F.3d 1386, 1395 (10th Cir. 1997), and after Bajakajian. See United States v. Real Property Located at 22 Santa Barbara Drive, 264 F.3d 860, 874-75 (9th Cir. 2001); United States v. One Parcel of Real Estate Located at 1948 Martin Luther King Drive, 91 F. Supp. 2d 1228, 1245 (C.D. Ill. 2000); United States v. Loe, 248 F.3d 449, 464 (5th Cir. 2001); United States v. Betancourt, 422 F.3d 240, 250-51 (5th Cir. 2005). However, a criminal forfeiture judgment on a proceeds theory based on joint and several liability could be disproportional if the defendant's role in the underlying criminal case was minimal and is subject to an excessive fines review. United States v. Jalaram, Inc., 599 F.3d 347, 354-56 (4th Cir. 2010).
3) Customs forfeitures for illegally smuggled goods or contraband also are not excessive as the court has determined that they are considered liquidated damages for costs borne by the government and society for violation of the statute and thus proportional to the offense. See One Lot of Emerald Cut Stones v. United States, 409 U.S. 232, 237 (1972); United States v. $273,969.04

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