The government's license to steal: Indiana's law barring police departments from enriching themselves through asset forfeiture would be more effective if it weren't ignored.

• Author: Balko, Radley
• Position: Column

IN THE LATE 1990S, after a public backlash against the use of civil asset forfeiture to take money and property from innocent people, seven states passed laws assigning all proceeds from such forfeitures to public schools or the general fund instead of police departments and prosecutors' offices. The idea was to reduce the incentive to seize assets from innocent owners and to target people based on the value of their property instead of the seriousness of their crimes.

In Indiana, the state's original constitution called for criminal forfeitures to be earmarked for a school fund, and recent attorneys general have applied that provision to civil forfeiture as well. But thanks to various evasive maneuvers, very little forfeiture money actually ends up in the fund.

One way around the rule is "adoption," a process in which police departments call the feds when they're about to close a case that promises a big forfeiture payoff. The investigation then becomes a federal case, governed by federal law. The reds collect the proceeds and send as much as 80 percent back to the local cops. The school fund gets nothing, and the perverse incentives remain in place.

Another trick is to negotiate a settlement with the property owner, perhaps by letting him keep some of his allegedly ill-gotten gains. Settlements aren't considered forfeitures and therefore aren't governed by the funding earmark.

Many Indiana counties contract out their civil forfeiture cases to private attorneys, who get to keep a hefty commission of 25 percent or more. This arrangement creates new perverse incentives, since the attorneys choose and help prosecute cases from which they gain financially.

Counties also may deduct police and prosecution costs related to a forfeiture case from the proceeds before sending the remainder to the school fund. Judges do not seem to scrutinize the cost estimates very closely, allowing law enforcement agencies to reap profits by highballing their numbers.

Given all of these ways around the law, how much forfeiture money actually flows into Indiana's school fund? Almost none. In July the Indianapolis attorney Paul Ogden reported on his blog, Ogden on Politics, that "millions of dollars of civil forfeiture funds are being kept by law enforcement agencies, prosecutor's offices, and private attorneys hired by prosecutors, rather than turned over to the State for education." His conclusion was echoed a month later in a front-page Indianapolis Star story...