Acting Chief of DOJ Asset Forfeiture Division Issues Guidance on Holder Equitable Sharing Order
On Tuesday, February 10, 2015, DOJ Asset Forfeiture and Money Laundering Section Acting Chief M. Kenndall Day issued a memo guiding agency participants in the DOJ's Asset Forfeiture Fund on the implementation of US Attorney General Eric Holder's January 16, 2015 order (effective March 1, 2015) governing use of the adoptive forfeiture process through the DOJ's Equitable Sharing program.
When it was released, Holder's order was widely misunderstood; some commentators went to far as to claim the order ended civil forfeiture. However, the Holder order is extremely limited, and the Kenndall Day memo provides some clarity as to the scope of behavior implicated:
Central to the application of the Attorney General's order is whether there was federal law enforcement oversight or participation at the time of seizure by state and local law enforcement. To ensure sufficient federal participation in all seizures that lead to federal forfeiture, an attorney from a federal agency must provide justification in writing for the federal forfeiture of an asset that is seized by a state or local law enforcement officer as a task force or joint investigation seizure, applying the factors outlined below. A prosecutor at the U.S. Attorney's Office for the district where the seizure took place (or if the seizure is part of an ongoing investigation, a prosecutor at the relevant U.S. Attorney's Office or Department litigating section) then must agree, in writing, that the forfeiture is permissible under the Attorney General's order.' This requirement extends to all types of forfeiture, including administrative. Federal prosecutors asked to provide such agreement must also consider the factors below when determining whether the seizure constitutes either a task force or joint investigation seizure.
Factors to Consider When Deciding Whether a Seizure Qualifies as a Task Force or Joint Investigation Seizure
Was the Seizure Effected by a Federal Task Force Officer? -- Is the state and local law enforcement officer who effected the seizure a task force officer on a joint federal and state task force? Is the officer deputized to enforce federal criminal law under either Title 18 or Title 21? Does the officer possess credentials issued by a federal law enforcement agency? Is the officer assigned to work on a task force full-time? Is the officer bound by the rules, regulations, and policies that otherwise govern the conduct of federal agents employed by the agency that issued the credentials to the officer? If the officer is assigned to the task force only part time or for a specific investigation, do the facts clearly demonstrate that the seizure was part of the officer's task force duties rather than a state or local law enforcement action, as described below?
Were Federal Authorities Involved Prior To and At the Moment of Seizure? -- Was the seizure made with direct, pre-seizure involvement by federal law enforcement? For example, at the time of the seizure, was the seizing officer acting under the direction of, or in real-time, hand-in-hand cooperation with, federal law enforcement? Was the seizure made as part of a preexisting federal or joint federal-state investigation in which federal agents are involved in the pursuit of federal criminal charges?
Does the Seizure Relate Primarily to State or Local Law Enforcement Action? -- Was the seizure made pursuant to a state seizure warrant without federal involvement? Is the state pursuing a criminal case under state law against the owner of the property? Did the officer seize the asset pursuant to his or her authority as a state or local law enforcement officer?
I've noted in previous commentary that the Holder order will incentivize a proliferation of federal partnerships with state and local law enforcement, as agencies seek to retain their federal asset forfeiture revenues. The Day memo only clarifies the process and best practices for the operation of those partnerships.
While M. Kenndall Day's guidance on the implementation of the Holder memo resolves some fundamental questions about the implementation of the Holder order, it is to be noted that it does not represent statutory law, nor does it offer additional protections to property owners facing asset forfeiture. Any US Attorney who does not strictly adhere to the policy would only face the discretionary sanction of the President (practically speaking, this never happens).
New Holder Policy Means Fewer Bal Harbours, More Motel Caswells
Last Friday, January 16, 2015, US Attorney General Eric Holder released an order stating that "Federal adoption of property seized by state or local law enforcement under state law is prohibited..." with some exceptions: 1) cases involving firearms, ammunition, explosives, and child pornography and 2) for cases where there is coordination or assistance from federal authorities. As I'll show below, these exceptions make Holder's policy change virtually meaningless for advocates of sensible reforms to federal asset forfeiture practices, and only affect a small number of forfeitures processed through the Equitable Sharing Program. Worse, this policy change essentially formalizes federal partnerships as a modus operandi for Equitable Sharing forfeiture revenues for state and local law enforcement, giving the federal government a slightly stronger hand to play against the authority of states to dictate the policy and practices of their own executive agencies.
How the Exceptions to the Holder Memo Swallow the Rule
It's important to realize that the first set of exceptions for "firearms, ammunition, explosives, and child pornography" is very broad. A Pew Research Center survey found in February 2013 that some 37% of American households own a firearm. And a recent investigative report from 10 News in Tampa Bay, Florida, found that Florida law enforcement agencies are using often-spurious felony accusations of child pornography to seize vehicles from victims who are never charged:
In addition to federal grant dollars used to run the ICAC stings, 10 Investigates found law enforcement agencies frequently took the vehicles from men arrested and kept them as their own – even when charges against the men were dropped.
In November, 10 Investigates reported how Florida's Contraband Forfeiture Act made it easy for agencies to seize property as their own from anyone accused of committing a felony – even if charges are ultimately never filed.
Sex stings have become especially rich sources for seizures, since almost every man arrested is accused of traveling to seduce, solicit, or entice a child to commit a sexual act…even though no real children are ever involved in the stings. However, the accusations are felonies, meaning law enforcement can seize suspect's vehicles, making it extremely difficult for them to ever get them back without paying thousands of dollars – or more - in cash to the arresting agency.
In context of these exceptions, we can predict that law enforcement agencies will increasingly look to generate accusations of illegal activity involving firearms or child pornography to sustain forfeiture revenues that state and local law enforcement have become increasingly dependent on.
The second set of exceptions to Holder's prohibition of federal adoption is very broad as well, and in fact virtually negates the direct prohibition on adoption by allowing adoptive forfeitures as long as the seizure is accomplished with federal assistance or cooperation through a joint task force, a joint investigation, or pursuant to a federal seizure warrant. First, this will have a rather small impact; as Jacob Sullum at Reason noted today:
That means adoptions, which the DOJ says represented about 3 percent of deposits, accounted for less than 14 percent of equitable sharing. In other words, something like 86 percent of the loot that state and local law enforcement agencies receive through federal forfeitures will be unaffected by Holder's new policy.
Moreover, these forfeitures are not entirely prohibited; all the Holder memo means is that the Department of Justice now requires a federal partnership to accept them. This is a very low bar to reach; every state or local task force in existence has access to a federal law enforcement agency liaison through which such partnership may be possible.
How the Holder Memo Will Drive Increasing Federalization of State and Local Law Enforcement Practices and Priorities
The Holder memo essentially formalizes that continued receipt of federal forfeiture revenues by state and local law enforcement must happen in coordination with a federal law enforcement agency. State and local law enforcement that have previously conducted their own asset seizure and forfeiture programs unilaterally and just sent forfeitures for adoption through Equitable Sharing must now develop an active federal agency partnership to facilitate continued forfeiture activity under federal law. This increasing reliance on federal law and agencies to drive asset forfeiture revenues thus corrodes the federalist checks on state sovereignty by giving state and local law enforcement incentives to ignore following state law and legislative priorities.
Two major recent scandals involving local law enforcement agencies are instructive here. Consider first the happenings in Bal Harbour, Florida, which are likely now prohibited by the Holder memo:
It puts an end to egregious abuses such as the slush fund created by police in Bal Harbour, Florida, with the proceeds of federally adopted forfeitures. The Miami Herald reported that the little town's cops raked in $19.3 million over three years, which they used for parties, trips, and fancy equipment such as "a 35-foot boat powered by three Mercury outboards" and "a mobile command truck equipped with satellite and flat-screen TVs."
It's a good thing that the Holder memo might restrict such activity. Yet, it's not much of a reform to mandate that future uses of the Equitable Sharing Program involve federal agency partnerships. In November 2012, Jacob Sullum covered the story of the Motel Caswell in Massachusetts:
Caswell, who has been running the motel since 1983, says he has no way of knowing what his customers are doing behind closed doors. He has always cooperated with the police, calling them to report suspicious activity and offering them free rooms for surveillance and sting operations.
In 2009 he got his reward: a forfeiture notice. Police had never suggested additional steps he could take to discourage crime or warned him that the motel—which supports him, his mother, his wife, their son, their daughter-in-law, and their granddaughter—could be at risk.
This cruel surprise was engineered by Vincent Kelley, a forfeiture specialist at the Drug Enforcement Administration who said he read about the Motel Caswell in a news report and found that the property, which the Caswells own free and clear, had an assessed value of $1.3 million. So Kelley approached the Tewksbury Police Department with an "equitable sharing" deal: The feds would seize the property and sell it, and the cops would get up to 80 percent of the proceeds.
Under Massachusetts law, by contrast, police would have received only half the loot, and forfeiture may have been harder. State law says a seized property has to be used not just to "facilitate" a drug crime but "in and for the business of unlawfully manufacturing, dispensing, or distributing controlled substances," which suggests a stronger connection.
Under the Holder memo, this kind of activity is not prohibited; in fact it is formalized. While we might now see fewer scandals like Bal Harbour, we will likely see more cases like the Motel Caswell, where a federal agency seeks to seize valuable property from innocent owners with the aid of local law enforcement despite federal law prohibiting such activity.
Next Steps for Forfeiture Reform
It is important to recognize that the Holder memo does NOT change federal law and is not legally enforceable in a court of law. It provides no relief to property owners facing asset forfeiture. It is simply a directive from the Attorney General that federal agencies follow a certain policy, possibly in ways that increase the risks facing property owners in the United States substantially.
AFR Research Director Scott Meiner notes that "the other part of the story that no one seems to be commenting on is that Holder did order a "comprehensive review" of the federal asset forfeiture program. Paired with lawmaker pressure, meaningful findings and maybe even reforms could come out of that review". It is essential that Congress act to provide real legislative reform of this system; a good step would be to abolish the Equitable Sharing Program entirely.
