Executive weapons to combat infection of the art market.

• Author: Kreder, Jennifer Anglim

We all know that criminal proceedings implicate heightened constitutional protections in comparison to civil proceedings. Many of us also have at least heard of civil forfeiture, somewhat of a hybrid of criminal and civil process that has its roots in this country in the first session of Congress. (1) A civil forfeiture proceeding is filed directly against a piece of real or personal property on the premise that its association with criminal activity has tainted it such that it is subject to forfeiture. (2) In the 1990s, the government's use of civil forfeiture to seize assets in its War on Drugs was widely criticized, and the Supreme Court determined that certain constitutional protections applied in particular circumstances. (3) But in (1996), in Bennis v. Michigan, (4) the Supreme Court ruled that the seizure of property, even one's residence, when the property owner "had no knowledge of, and did not consent to, the illegal use of the property," was not prohibited by the Due Process or Takings Clauses, which drew widespread criticism from legal academia. (5) Congress responded to Bennis by enacting the Civil Asset Forfeiture Recovery Act of 2000 (CAFRA), which raised the government's burden of proof in many civil forfeiture actions filed after 2000 from "probable cause" to "preponderance of the evidence" and codified a widely, but not universally, applicable "innocent owner defense." (6)

Over the years, the executive branch has seized Nazi loot in various ways. (7) The seizure that launched the modern Holocaust-era art movement was that accompanying the civil forfeiture proceeding filed in federal court in 1999 against Portrait of Wally, a painting by Egon Schiele. (8) The seizure caused an uproar in the art world, which largely was concerned about future art loan prospects. (9) At the time, even I was concerned about the impact of the civil forfeiture seizure--despite the fact that I support widespread restitution of Nazi-looted art--because I worried about hindering State Department efforts to resolve remaining Holocaust-era issues globally and alienating museums and other possessors of tainted art, whose cooperation is essential for widespread restitution. (10) Now that some prominent museums have demonstrated the lengths to which they will go to try to prevent objective resolution of claims, (11) the issue has been cast in a whole new light: Should one feel sympathy about depriving obstinate possessors of Nazi-looted art of purported property rights pending resolution of colorable claims? The Portrait of Wally case recently settled for $19 million; (12) without the seizure, we likely never would have seen the Washington Principles, (13) the Vilnius Declaration, (14) or the Terezin Declaration of 2009, (15) all of which support undertaking and publicizing provenance research and restitution.

Back in 2005, when I voiced some criticism of the case, I was inspired by the fact that the museum community seemed so responsive to the problem of Holocaust-era art--it had passed its own ethics codes that stated that museums should, on their own initiative, conduct and publicize provenance research so that survivors and heirs may have the opportunity to claim their property and obtain restitution. (16) Although we have seen significant restitution from museums, (17) that old inspiration has turned to disappointment. In complete contradiction to museums' ethics codes, the Washington Principles, the Vilnius Declaration, the Terezin Declaration, and U.S. executive policy dating back to 1943, (18) some of the most esteemed museums in this nation (19) have run to court to file declaratory judgment actions to shut down claims of survivors and their heirs on statute of limitations grounds. The claimants likely were not able to complete expensive provenance research in multiple countries, multiple languages, and previously classified archives, to maximize their chances of succeeding in court. (20) My sympathy for one of those museums, the Museum of Modern Art in New York (MoMA), was obliterated when it refused to turn over simple provenance documents from its files, (21) despite the fact that its own web site proclaims that its files are open to serious researchers. (22) MoMA successfully shut down the case on statute of limitations grounds before discovery began. (23)

Since Wally, the executive branch has used civil forfeiture to retrieve three other Nazi-looted paintings and has negotiated settlements without filing proceedings. (24) First, it initiated United States v. One Oil Painting Entitled Femme en Blanc By Pablo Picasso after the purchaser moved the painting to Chicago, seemingly to avoid jurisdiction in California. (25) Second, just in December 2010 (and while the Supreme Court continued to consider petitions for certiorari in some cases brought by private litigants, which are still pending as of this writing (26)), the Immigration and Customs Office of Homeland Security initiated another civil forfeiture proceeding to seize two recently resurfaced paintings by Julian Falat that the Nazis looted from the Polish National Museum. (27) The underlying premises for the forfeitures include failures to declare the paintings to customs, (28) generally importing property contrary to law, (29) the crime of smuggling, (30) and violations of the National Stolen Property Act (NSPA). (31) The first two grounds fall under Title 19 of the United States Code, which pertains to customs. The criminal smuggling and NSPA violations fall under Title 18, which pertains to crimes.

A criminal smuggling prosecution requires that the defendant knowingly conspired or attempted to sneak the property across the border or "in any manner facilitate[d] the transportation, concealment, or sale of such merchandise after importation, knowing the same to have been imported or brought into the United States contrary to law." (32) A person violates the NSPA if he or she (1) "transports, transmits, or transfers in interstate or foreign commerce" property "knowing [it] to have been stolen, converted or taken by fraud" (33) or (2) "receives, possesses, conceals, stores, barters, sells, or disposes" of property that has "crossed a State or United States boundary after being stolen, unlawfully converted, or taken." (34)

Civil forfeiture under either title results in forfeiture of the property, not potential jail time and fines, provided that the preponderance of the evidence supports the government's case that someone violated one of the listed provisions in connection with the property. (35) Title 18 forfeitures are now subject to the CAFRA innocent owner defense, whereas customs forfeitures fall beyond the scope of CAFRA. (36) Seizure power under the NSPA is vast, particularly since the 1986 amendments foreclosed defenses premised on the grounds that the goods "came to rest" in a jurisdiction and thus were no longer in interstate commerce. (37) Professor Stephen Urice maintains that a U.S. Attorney would have the power to...