Civil Forfeiture and the Eighth Amendment After Austin

• Publication year: 1995

UNIVERSITY OF PUGET SOUND LAW REVIEWVolume 19, No. 1FALL 1995

ARTICLES

Civil Forfeiture and the Eighth Amendment After Austin

James E. Beaver(fn*)

Kit G. Narodick(fn**)

Joseph M. Wallin(fn***)

Individual freedom finds tangible expression in property rights.(fn1)

Men must turn square corners when they deal with the Government.(fn2)

I. An Introduction to a World where guilt or innocence is irrelevant; all that matters is how Much Your Property Is Worth

Imagine owning an expensive piece of property, a piece of real estate perhaps, or maybe a car or boat. Now imagine having your property forcefully taken away from you because someone suspects, or pretends to suspect, that you are using the property in the commission of criminal acts. Then, imagine having to hire a lawyer and start a lawsuit to recover your property. After spending a small fortune in legal fees to recover your own property, imagine you lose your lawsuit, not because you could not prove your rightful ownership before its forceful seizure, but because you could not prove that the person who seized the property lacked a reasonable suspicion that you were using the property in the commission of criminal acts or that you were not in fact using the property in the commission of criminal acts. Finally, imagine that your only recourse is buying your property back from the person who took it.

Not likely to happen in America? Think again. It might not be likely to happen in America if a private party forcefully seized your property. But if your own government took it, you are in deep trouble. This is, in fact, what is happening all over America thanks to 21 U.S.C. § 881(fn3) (Section 881), the civil forfeiture statute, and other state and federal forfeiture provisions.(fn4)

Government touches virtually all things in the United States and, eventually, injures almost everything it touches. This Article explores the constitutional infirmities of Section 881 in light of the government depredations it has prompted. In particular, the Article examines the significance of the Supreme Court's decision in Austin v. United States.(fn5)

In Austin, the Supreme Court imposed a substantive restriction on governments' forfeiture powers based on the Eighth Amendment's Excessive Fines Clause.(fn6) However, Austin did not define the exact parameters of this restriction. Given governments' tendencies to abuse the powers granted to them, courts should follow the interpretation of Austin that results in the greatest restriction on their forfeiture powers. This Article suggests an explanation of Austin that would severely restrict these powers, at least those of the United States government.

The case of Donald Scott is a good example of the threat to individual freedom posed by the forfeiture laws and the need for a more restrictive interpretation of governments' forfeiture powers. Mr. Scott owned a 200-acre ranch in the Ventura County portion of Malibu, California, adjacent to the Santa Monica Mountains National Recreation Area. The property, worth approximately $3-5 million, attracted the attention of no less then seven governmental agencies(fn7) in the months leading up to Mr. Scott's death at the hands of Los Angeles Sheriffs Department (LASD) deputies attempting to serve a search warrant on Mr. Scott.(fn8) No one of these seven agencies had primary jurisdiction over the situs of Mr. Scott's ranch.(fn9)

After thoroughly investigating the Scott death, Ventura County District Attorney Michael D. Bradbury concluded that the search warrant was defective.(fn10) The warrant was issued based on a DEA agent's claim that, using binoculars from the air, he spotted marijuana being cultivated on the property.(fn11) In fact, however, the DEA agent did not use binoculars to spot marijuana; he used his bare eyes.(fn12) The judge who issued the warrant was not told that the DEA agent was initially reluctant to allow his observation to serve as the sole basis of the warrant.(fn13) Nor was he told that the DEA agent was flying at 1,000 feet when he spotted the marijuana(fn14) by looking for distinctive shades of green.(fn15) Further, the judge was not told that the LASD unsuccessfully attempted to verify the presence of marijuana cultivation on the Scott property from the ground, that the United States Border Patrol had made two incursions onto the property in a similar attempt but was unable to verify marijuana cultivation on the property, and that National Park Service and LASD personnel visited the property under false pretenses and were also unable to verify marijuana cultivation on the Scott ranch.(fn16)

In his report, the Ventura County District Attorney concluded that a motivating factor behind the service of the search warrant was the possible forfeiture of the Scott ranch to government authorities.(fn17) Mr. Bradbury speculated that when the LASD learned of Scott's wife's marijuana possession conviction, sheriffs deputies arranged to search the property, aware that if marijuana was found growing on the property, or if other drugs were found in sufficient quantity, a valuable piece of property could be forfeited to the government.(fn18) Mr. Bradbury further speculated that the Ventura County Sheriffs Department, which had primary jurisdiction over the geographic area, was not notified of the service of the warrant "because Los Angeles County did not want to split the forfeiture proceeds with [Ventura County]."(fn19)

Most importantly, the Ventura County District Attorney's report concluded that "[t]here would have been no legal impropriety [in forfeiture being one of the motivating factors for obtaining and serving the search warrant] under existing law if the search warrant had been supported by probable cause."(fn20) In other words, the only error of the LASD and its deputies was their failure to secure a valid warrant for their search.

The Scott case amply demonstrates the perverse incentives put in place by the forfeiture laws. When authorities happen upon valuable property in the hands of potential criminals, their incentive is to discover sufficient evidence of criminal wrongdoing to undergird a valid search warrant so the property can be forfeited to the government. This perverse incentive exists because the focus of a forfeiture investigation is entirely on the determination of probable cause, not on the actual commission of wrongdoing. If the government meets a relatively easy burden of probable cause, the property will be forfeited unless the property owner, the claimant, can prove his or her innocence.

In another demonstration of the gross excesses in which government may indulge in this modern age, the Office of Thrift Supervision of Resolution Trust Corporation (OTS) proceeded against the prominent and famous law firm of Kaye, Scholer, Fierman, Hays, and Handler (Kaye Scholer) in March 1992.(fn21) Kaye Scholer was charged with withholding information secured from its client, Lincoln Savings and Loan Association, a failed thrift. The charges against Kaye Scholer were accompanied by an unprecedented, draconian asset freeze-a unilateral, no court-consideration freeze(fn22)-based upon a single government agency finding that the law firm had failed to comply with a subpoena about its finances and had threatened to amend its liability insurance policy so as to prejudice OTS's ability to recover restitution.(fn23)

The idea that Kaye Scholer would engage in such behavior was, and is, ridiculous. It was an obvious pretext to impose the freeze against the entire firm.(fn24) The Wall Street Journal justly called this freeze a "terrifying trump card."(fn25) "[C]lients got fidgety and banks questioned the firm's ability to repay loans."(fn26) Obviously, the freeze was deliberately intended by the OTS to coerce Kaye Scholer to settle the charges without defending the basic claim.(fn27) The intention succeeded because the firm, unable to function under the freeze order, could not continue in existence long enough for the charges to be adjudicated.(fn28)

The New York City Bar Association concluded: "[The] OTS confronted the firm with the choice of settling promptly or going out of business. The effect of this order apparently has been to deprive Kaye Scholer of its right to defend itself in court on the merits."(fn29) The firm had little choice but to fork over a $41 million settlement. The alternative was bankruptcy.(fn30)

The OTS apparently assumed that Kaye Scholer's duty was to ignore attorney-client privilege and volunteer information it had secured from its client that was "of interest" to the OTS or to Federal Home Loan Bank Board (FHLBB) examiners.(fn31) The OTS's position required Kaye Scholer to divulge even negative information about its client whether responsive to any particular inquiry or not.(fn32)

Kaye Scholer asserted that its statements to the FHLBB examiners were truthful, and that to simply volunteer information just because it might be of "interest" to the bank examiners was directly in violation of its responsibilities to a client under the canons of ethics.(fn33) The duty of inquiry on which the OTS charges were based would not only require lawyers to overstep the scope of their representation but would also make any relationship of trust between lawyers and their clients an impossibility.(fn34) Even heinous serial murderers are entitled to counsel. Even Charles Keating...