Congress passed the Civil Asset Forfeiture Reform Act of 2000 (CAFRA), in part, to stop government agencies from using civil asset forfeiture as a leaner, and meaner, eminent domain. And while many of Henry Hyde’s reforms were watered down, or disposed of, the uniform innocent owner defense was an important reform that survived. The Department of Justice is ignoring the legislative intent, and history, of CAFRA’s innocent owner safe harbor language. CAFRA includes a checklist for whether one is covered as an innocent owner. The checklist sounds very much like it was written with a motel owner in mind–because it was. The animating horror story (for that portion of the code) was the Red Carpet Inn. Legislators were appalled at the DOJ’s conduct. Congress expanded innocent owner language with the intent that the language would provide sufficient safe harbor to prevent recurrences of what law enforcement did to the Red Carpet Inn–and to clarify what that safe harbor meant.
The Civil Asset Forfeiture Reform Act of 2000 (CAFRA) states
‘‘(d) INNOCENT OWNER DEFENSE.— ‘‘(1) An innocent owner’s interest in property shall not be forfeited under any civil forfeiture statute. The claimant shall have the burden of proving that the claimant is an innocent owner by a preponderance of the evidence. ‘‘(2)(A) With respect to a property interest in existence at the time the illegal conduct giving rise to forfeiture took place, the term ‘innocent owner’ means an owner who— ‘‘(i) did not know of the conduct giving rise to forfeiture; or ‘‘(ii) upon learning of the conduct giving rise to the forfeiture, did all that reasonably could be expected under the circumstances to terminate such use of the property. ‘‘(B)(i) For the purposes of this paragraph, ways in which a person may show that such person did all that reasonably could be expected may include demonstrating that such person, to the extent permitted by law— ‘‘(I) gave timely notice to an appropriate law enforcement agency of information that led the person to know the conduct giving rise to a forfeiture would occur or has occurred; and ‘‘(II) in a timely fashion revoked or made a good faith attempt to revoke permission for those engaging in such conduct to use the property or took reasonable actions in consultation with a law enforcement agency to discourage or prevent the illegal use of the property. ‘‘(ii) A person is not required by this subparagraph to take steps that the person reasonably believes would be likely to subject any person (other than the person whose conduct gave rise to the forfeiture) to physical danger.
Thus, a safe harbor is created for an owner who notifies police and revokes or attempts to revoke (to the extent permitted by law) permission to use the property by those who are using it in the course of criminal activity. The owner’s obligations end right there—property owners should not have to assume the responsibilities of police to stop crime. In the Red Carpet Motel incident described earlier, the hotel owner could have taken advantage of the bill’s safe harbor by (as he did) notifying police of drug sales taking place at the motel and making a good faith attempt to evict the responsible motel guests from their rooms. – Henry Hyde, Chairman of the House Judiciary, June 18, 1999 – Submitting CAFRA to the Committee of the Whole House After Passing the House Judiciary Committee 27-3.
There were no allegations that the hotel owners participated in any crimes. Indeed, motel personnel called the police to the establishment dozens of times to report suspected drug-related activity. U.S. Attorney James DeAtley readily bragged to the press that he envisioned using current civil asset forfeiture laws in the same fashion against similar types of legitimate commercial enterprises, such as apartment complexes.
The government claimed the hotel deserved to be seized and forfeited because it had “failed” to implement all of the “security measures” dictated by law enforcement officials. This failure to agree with law enforcement about what security measures were affordable and wise from a legitimate business-operating standpoint was deemed to be the “tacit approval” of illegality cited by the prosecutors, subjecting the motel to forfeiture action.
-Samuel J. Buffone, National Association of Criminal Defense Lawyers (NACDL), appearing at the Senate Judiciary hearings on CAFRA, July 21, 1999
It provides a uniform innocent owner defense, and that was involved in the case Senator Biden talked about where this motel in a very tough neighborhood, a crime-ridden neighborhood, had drug transactions going on. And the owners repeatedly reported it to the police, withheld permission. You try to evict some drug dealers sometime; I wish you a lot of luck. But the police couldn’t do it, and the police took his property, and he finally got it back after the Houston newspapers raised hell and wrote editorials, and I have them here. So an innocent owner defense is where you do everything you can. You report it to the police, you withhold permission for these illegal transactions, and that gives you a safe harbor. -Henry Hyde, House Judiciary Chairman, appearing at the Senate Judiciary hearings on CAFRA, July 21, 1999
In the past year, Americans have had firsthand experience with what can happen when a prosecutor with all the powers of his office throws judgment to the wind and succumbs to zealotry. There is one example of a motel that was being used by drug dealers.There was no allegation that hotel owners participated in any crimes. Indeed, the motel people had called the police dozens of times to report suspected drug-related activity in the motel’s rooms by some of its overnight guests. I mean, they were doing what an honest citizen should do; they called and reported it.But the government said they didn’t do all the security measures suggested. What did they suggest? Well, among other things, they said, well, you have got to raise your room rates. And because they didn’t, they were giving tacit consent to the drug activity, and so they seized the motel.- Senator Patrick Leahy, appearing at the Senate Judiciary hearings on CAFRA, July 21, 1999
One of the government’s “recommendations” refused by the motel owners was to raise room rates. A Houston Chronicle editorial pointed to the absurdity and danger of this government forfeiture theory when applied to a legitimate business: “Perhaps another time, the advice will be to close up shop altogether.” The editorial [Houston Chronicle, Mar. 12, 1998] went on to make these additional, points:
“The prosecution’s action in this case is contrary not only to the reasonable exercise of government, but it contradicts government-supported enticements to businesses that locate in areas where high crime rates have thwarted development. Good people should not have to fear property seizure because they operate business in high crime areas. Nor should they forfeit their property because they have failed to do the work of law enforcement * * *. This case demonstrates clearly the need for lawmakers to make a close-re-examination of federal drug forfeiture laws.”
After more bad publicity all over Texas, in July 1998, the government finally released the motel back to the owners and dropped its forfeiture proceedings. It exacted a face-saving, written “agreement” with the motel owners. The agreement, however, in fact only put into words the security measures and goals the owners had already undertaken and those which it had always strived to meet. The motel owners had lost their business establishment to the government’s seizure for several months, suffered a significant loss of good business reputation, and were forced to spend substantial amounts of time and money on hiring an attorney and defending against the government’s forfeiture action, which should never have been undertaken in the first place. -Samuel J. Buffone, National Association of Criminal Defense Lawyers (NACDL), appearing at the Senate Judiciary hearings on CAFRA, July 21, 1999
We said before and we say again that the burden of proof in civil forfeiture cases should be on the government. If the government seeks to forfeit a person’s house,the government should have to prove that a crime was committed and that the property was involved in that crime; the burden should not be on property owner (e.g.,to prove that he did not know that his property was being used illegally). We said before and we say again that there should be a uniform innocent owner defense available to claimants in all civil forfeiture cases. While the Supreme Court held in Bennis v. Michigan that an innocent owner defense is not mandated by the Due Process Clause of the Fifth Amendment, that does not mean Congress cannot enact such protection by statute. We think it should….
We support the enactment of a uniform innocent owner defense. A person who does not know that his/her property is being used illegally, or who becomes aware of the illegal use but takes all reasonable steps to try to stop it, should not suffer the loss of the property through forfeiture. – Eric Holder, Deputy Attorney General, appearing at the Senate Judiciary hearings on CAFRA, July 21, 1999
The Red Carpet Inn was a center for illegal drug trafficking and other crimes including auto theft, aggravated robbery, kidnapping and sexual assault. Calls to the Houston Police and subsequent arrests at the hotel for drug-related offenses increased over 300 percent when the current owner took over in 1994, and police seized narcotics worth nearly $800,000 at the hotel in 1996 and 1997.
The hotel’s owner and manager were well aware of the illegal drug activity. The Houston City Attorney sent numerous letters to the owner putting him and the corporation on notice of the ongoing criminal activity, and officers from a Houston anti-drug task force held repeated meetings with the hotel’s owner/manager to discuss recent drug and criminal activity and to offer suggestions for controlling narcotics activity at the hotel. These requests and suggestions were ignored.
After nearly three years of fruitless appeals by Houston officials to the hotel’s owner for cooperation in curtailing illegal drug activity at the hotel, the United States Attorney’s Office commenced a civil legal action in February 1998 seeking forfeiture of the Red Carpet Inn. The hotel was never seized, controlled or operated by the United States or any federal agents; it remained at all times in the possession and control of its owner, who continued to operate the business; and we have no evidence to confirm that an employee suggested raising the room rates, this would have been inappropriate and something we wouldn’t condone. Faced with the prospect of forfeiture, however, the owner finally agreed in July 1998 to implement steps suggested by local law enforcement authorities to help curtail illegal drug activity and other crimes on the property, including the installation of additional lighting, maintaining and monitoring the hotel’s existing security cameras 24 hours a day, and having a licensed security guard on the premises at night who would notify the police if he became aware of any drug law violations. In return, the United States Attorney agreed to discontinue the forfeiture lawsuit. Since that agreement, the number of narcotics-related police service calls for the Red Carpet Inn has declined and police narcotics officers have observed significantly less drug activity at the hotel. – Department of Justice, prepared statement entered into the record of the Senate Judiciary hearings on CAFRA, July 21, 1999
FBI Prepared Statement
One of the major issues in civil asset forfeiture is the handling of property in instances where there are “innocent owners”. FBI policy indicates that under no circumstances will property be forfeited from “innocent owners”. This term is defined differently in various statutes, but generally refers to persons who did not consent to the illegal use of their property, or who reasonably should not have known that the property was the proceeds of crime or otherwise subject to forfeiture. The FBI strongly supports the creation of a uniform innocent owner statute. - Federal Bureau of Investigation, prepared statement entered into the record of the Senate Judiciary hearings on CAFRA, July 21, 1999
CAFRA was written with the Red Carpet Inn in mind. Legislators thought that it intolerable that pre-CAFRA American law arguably permitted our Department of Justice to do this to innocent motel owners. And, it was written for future innocent owners like Russell Caswell. CAFRA’s safe harbor text supports the notion that the Motel Caswell should be safe. And the legislative history shows that Congress intended for the Motel Caswell to be safe.
CAFRA has severe deficiencies. It is inadequate to protect American rights. It desperately needs to be strengthened. In the meantime, the DOJ needs to respect CAFRA’s minimal restraints.
The Institute for Justice’s Scott Bullock and Lawrence Salzman have asked for a motion of summary judgment to dismiss the government’s complaint against the Motel Caswell–arguing that it impermissibly violates constitutional protections. I hope that they are successful.
Regardless, the Red Carpet Inn should re-enter the civil forfeiture debate.