Utah Asset Forfeiture

Introduction

In 2000, almost 70 percent of Utah voters approved an initiative that overhauled the state’s civil forfeiture laws. Concerned about abuses of forfeiture laws by state and local officials, Utah citizens enacted a law that gave much greater protection to property owners caught up in forfeiture proceedings. Perhaps most importantly, the new forfeiture law ended the perverse incentive structure that previously existed under Utah law. Under the old law, police and prosecutors were entitled to keep all forfeited property and proceeds for their own use, thereby giving them a direct incentive to take as much property as possible. Under the initiative overwhelmingly approved by Utah voters, the profit potential for law enforcement was removed; all forfeiture funds must now go to the state’s education fund, not to the offices of police and prosecutors.

Not surprisingly, law enforcement officials are unhappy with this new law. Nevertheless, public officials are constitutionally required to follow the law, even if they don’t personally support it. But prosecutors in Utah’s Weber, Salt Lake and Davis counties have decided to simply refuse to abide by the new forfeiture initiative. Using a wholly illegitimate justification, those prosecutors have so far diverted nearly a quarter of a million dollars in forfeiture funds into their own accounts rather than the education fund as required under the initiative.

On June 24, 2003, Utah citizens began to fight back. Represented by the Institute for Justice, Utahns for Property Protection along with a group of Utah citizens filed a “notice of claim” with the attorney general of Utah, demanding that he take immediate action against the district attorneys and secure the return of the funds that should have gone to public education. If the attorney general does not act, Utah citizens will go to court to hold public officials accountable for their illegal actions.

This litigation is part of the Institute’s ongoing effort to protect private property rights by eliminating direct profit incentives in forfeiture laws. Giving law enforcement officials a direct financial stake in the outcome of forfeiture proceedings is not only bad public policy, it violates the U.S. Constitution. Fundamental to the Constitution’s due process guarantee is that the government act in an impartial manner in the administration of justice. In the first decision of its kind, a New Jersey court in 2002, in a lawsuit brought by the Institute, struck down a similar civil forfeiture law as an unconstitutional violation of citizens’ due process rights, which like Utah’s old law, permitted law enforcement officials to profit from the law’s operation. Law enforcement efforts must be directed at the fair and impartial administration of justice, not the pursuit of profit.

A Brief History of Civil Forfeiture

Governments can seize property for forfeiture either under criminal or civil law. Criminal forfeiture is tied to the criminal conviction of an individual. But civil forfeiture is a legal fiction that treats inanimate objects used by someone in furtherance of criminal activity as if the objects themselves acted to assist in the commission of a crime. That is why civil forfeiture proceedings have bizarre titles, such as United States v. $10,500 in U.S. Currency or State of Utah v. A Parcel of Land and Buildings. Civil forfeiture actions are in rem proceedings, which means literally “against a thing.”

Under traditional civil forfeiture proceedings, the deck is stacked against property owners. Because the proceeding is civil, the government only needs to prove the property’s connection to allegedly criminal activity by a mere “preponderance of evidence” standard, not proof “beyond a reasonable doubt” as in criminal cases. [1] Moreover, because it is the property itself that is the target of the lawsuit, the owner of the property need not be convicted of or even charged with any criminal activity for the government to confiscate the property. Indeed, one study found that approximately 80 percent of persons whose property was seized by the federal government for forfeiture were never even charged with a crime. [2] Moreover, property can be forfeited even if someone used the property without the owners’ knowledge or consent. [3]

With some exceptions, such as the Civil War and the Prohibition Era, civil forfeiture remained a relative backwater in American law, used primarily in admiralty and maritime disputes. Modern civil forfeiture use exploded during the 1980s, however, as government at all levels stepped up the War on Drugs. Released from its traditional use as a means of enforcing admiralty and customs laws, the forfeiture power has instead become one of the most powerful weapons in the government’s crime-fighting arsenal. Moreover, the forfeiture power is not limited to fighting the Drug War. It has grown to include a plethora of federal and state crimes.

In 1984, Congress passed the Comprehensive Crime Control Act, vastly expanding both the powers of government to seize and forfeit private property while also adding forfeiture provisions to numerous federal criminal statutes. At the federal level alone, there are more than 200 forfeiture statutes, allowing confiscation of private property for federal crimes ranging from drug offenses, mail fraud and immigration violations to illegally collecting the feathers of a migratory bird and failing to report to the IRS money order purchases of more than $3,000. [4]

Perhaps most significantly, Congress also established the Assets Forfeiture Fund, administered by the U.S. Department of Justice and charged with collecting and distributing proceeds from forfeitures. [5] Previously, all proceeds from forfeitures exceeding $5 million were transferred to the general fund of the Treasury. [6] The 1984 changes eliminated the ceiling and allowed unlimited proceeds to be placed in the fund for exclusive use by law enforcement agencies. [7] This form of “revenue enhancement” is outside the normal appropriation and budget processes. [8] The 1984 amendments also revolutionized civil forfeiture by allowing federal forfeiture proceeds to be shared with state and local law enforcement agencies. [9]

After law enforcement agencies were granted a direct financial incentive to initiate and prosecute forfeiture actions, the use of the new statute and revenues generated by civil forfeiture skyrocketed. Proceeds from civil forfeiture jumped from $27 million in 1985 to $644 million in 1991, an increase of more than 1,500 percent. [10] And from 1991-1998, more than $5.5 billion has been deposited in the federal government’s forfeiture accounts. [11]

Many states followed the federal government’s lead, strengthening their own civil forfeiture laws by adding crimes to which forfeiture penalties applied and permitting law enforcement officials to keep forfeited revenue and property. Utah was no exception to this trend. In most states today, the perverse forfeiture incentive structure is the same as that on the federal level. Some states, such as Oregon and North Carolina, correctly require forfeiture proceeds to be deposited into the state’s general fund or the education fund, and then elected officials decide how the money is going to be spent. But in most states, including Utah until the passage of Initiative B, forfeiture proceeds are funneled directly back to the very agencies and offices that are charged with enforcing the law.

The Abuse of Civil Forfeiture Laws and the Nationwide Reform Effort

Not surprisingly, the vast powers granted to governments under forfeiture laws led to widespread abuse, documented in numerous studies and investigations throughout the 1990s. [12] Wholly innocent individuals or individuals with attenuated connection to illegal activity saw their property taken by the government with very little recourse. In the early 1990s, the Pittsburgh Press (now the Pittsburgh Post-Gazette) exposed how the police subverted the rule of law, targeted minorities, and killed small businesses to fund the war on drugs through the use of civil forfeiture. [13] The Orlando Sentinel showed how lax civil forfeiture laws helped create the Volusia County Sheriff’s Department extortion racket along Interstate 95. [14] And CBS’s 60 Minutes stunned the nation with the story of Donald Scott, who was killed in a botched drug raid by local, state and federal police who hoped to seize his $5 million dollar ranch. [15]

And the abuses of forfeiture laws continue. In March 1999, Jim and Amba Patel had their hotel forfeited and sold because drugs had been sold on the premises. Despite the motel owners’ attempts to keep drug dealers off the premises by installing floodlights and fences and calling the police, their property was nevertheless taken. [16] No charges were filed against the Wichita, Kan. couple, because, as U.S. Attorney Jackie Williams noted: “the most effective way to deal with the Patels themselves was to go the civil route, where the burden of proof is somewhat less than in a criminal case.” [17] As Supreme Court Justice Clarence Thomas noted, the numerous horror stories of property owners caught in the web of government’s enormous forfeiture power has spawned “distrust of the Government’s aggressive use of civil forfeiture statutes.” [18]

The unfairness of forfeiture proceedings and the abuse of federal and state civil forfeiture laws prompted the U.S. Congress to change federal procedures to give greater protections to property owners. On April 25, 2000, then-President Clinton signed civil forfeiture reform legislation passed by wide margins in the Senate and House, which, among other protections, raised the burden of proof in federal forfeiture proceedings and allowed property owners more time to challenge forfeiture before losing their property by default. But these changes at the federal level had no impact on state civil forfeiture laws. Moreover, even at the federal level, one aspect of civil forfeiture was not changed, and indeed it is this aspect of civil forfeiture that is in most desperate need of reform: the direct profit incentive granted to prosecutors and police to forfeit as much property as possible.

Utah Citizens Change Civil Forfeiture Laws

The effort to reform civil forfeiture laws came to Utah in the form of an initiative in 2000. In November 2000, the voters passed overwhelmingly the Utah Uniform Forfeiture Procedures Act [19] with 69 percent of the vote. This Act is also referred to as Initiative B. The initiative gave much greater protections to property owners, especially innocent property owners, swept up in civil forfeiture proceedings. For instance, the initiative placed the burden of proof on the government in forfeiture proceedings and eliminated the bond requirement, whereby property owners had to post a bond in order to even challenge the seizure of their property.

One of the primary components of Initiative B concerned the revenues gained from forfeiture proceedings. Under the old civil forfeiture statute, all of the forfeiture proceeds collected went directly to law enforcement officials performing the seizures. Initiative B mandates that revenue from forfeiture proceedings be deposited in the Uniform School Trust Fund of the state and used for education and for compensating crime and forfeiture victims. Initiative B thereby deprived police and prosecutors of the direct benefits generated through civil forfeiture.

Utah Law Enforcement Officials Refuse to Follow Initiative

Many Utah law enforcement officials, including current Utah Attorney General Mark Shurtleff, adamantly opposed the forfeiture initiative during the campaign. And once it was passed in a landslide, they took immediate steps to challenge it in a wide array of forums. Salt Lake County Sheriff Aaron Kennard and seven other law enforcement officials challenged it in federal court, but U.S. District Judge Dee Benson upheld the initiative from constitutional challenge. [20] Attorney General Shurtleff then led a legislative campaign starting in 2002 to undo the initiative. State Senator John Valentine originally sponsored legislation to once again direct forfeited revenue to law enforcement agencies. But Valentine was forced to withdraw his sponsorship of the legislation after an angry constituent uprising. [21] Attorney General Shurtleff has pledged to continue his effort to alter the initiative in the legislature. [22]

While several law enforcement officials have sought to gut Initiative B in the courts and legislature, the district attorneys of Weber, Salt Lake and Davis counties have chosen to flagrantly violate it. In January 2003, State Auditor Auston G. Johnson found that law enforcement agencies in those three counties kept at least $237,000 in forfeited revenue for their own use rather than depositing the funds in the Uniform School Fund as required by the initiative. [23] As the auditor bluntly put it: “It’s the law [referring to Initiative B], and they are disregarding it.” The district attorneys, unchastened by the auditor’s report, continue to press their claim to the forfeited revenue in ongoing forfeiture cases.

The attorney general’s response to their flagrant disregard of the law has been timid and toothless. In the wake of the auditor’s report, the attorney general wrote a letter stating that he too believed the county attorneys were wrong in their interpretation of the law. He had little choice to do otherwise—the prosecutors’ arguments border on the frivolous. He also filed papers in three current forfeiture cases stating it was the position of the attorney general’s office that Initiative B controlled the outcome of the case. However, the attorney general has taken no steps to demand that the previously diverted forfeiture revenue be turned over to the education fund, thus giving rise to the need for citizen action.

Litigation Strategy

The district attorneys justify their actions on an absurd reading of a Utah statute passed before the approval of the initiative changing civil forfeiture law. In early 2000, the Utah Legislative General Session passed Senate Bill 168 (“SB 168”), which reorganized and re-codified a number of Utah statutes, including the Controlled Substances Act. The SB 168 revisions kept in the statute the profit incentive under the old forfeiture law. As with most statutes and initiatives, SB 168 had a later date by which it went into effect. Although approved in 2000, SB 168 became effective on July 1, 2001, while Initiative B had become effective on March 29, 2001.

The district attorneys in Weber, Salt Lake and Davis counties claim that because SB 168 had a later effective date than Initiative B, it overrides the initiative passed by the voters. The county attorneys are simply looking for an argument to permit them to keep the funds. Indeed, their position violates fundamental rules of statutory construction and flies in the face of common sense.

As Attorney General Shurtleff pointed out in a February 21, 2003, letter to Utah State Senate President L. Alma Mansell, at the time the Utah legislature adopted SB 168 in early 2000, there was no such thing as Initiative B. It had not even qualified for inclusion on the ballot. Unless the legislature was clairvoyant, it could not have known that any measure affecting forfeiture funds would pass later that year. In November 2000, Utah citizens did pass Initiative B, which substantially modified the previous forfeiture provisions. The citizens therefore clearly intended to change these former provisions through the initiative process and their intent must be given effect.

As mentioned, Attorney General Shurtleff has intervened in three ongoing Salt Lake County forfeiture cases, all before Judge Tyrone E. Medley in Utah’s Third District Court. Although it is good that he has taken this step, it is thoroughly inadequate to address the illegal actions of the district attorneys. Moreover, whatever Judge Medley finds in those cases, it will not affect the hundreds of thousands of dollars already unlawfully diverted from the education fund of the state. As deputy Salt Lake attorney Clark Harms correctly noted to the Salt Lake Tribune upon the filing of the interventions, “District courts aren’t bound by other district court rulings.” [24]

The attorney general’s actions with regard to the misappropriated money and the continued illegal behavior on the part of the district attorneys have been inadequate. Immediate action has to be taken against the district attorneys to both return the previously diverted forfeiture revenue to the education fund and to enjoin the district attorneys from any further diversions of forfeiture funds to their own coffers. Rule 65B of the Utah Rules of Civil Procedure permit citizens to pursue actions against public officials if they fail to carry out and/or violate their statutory duties. The first step is to file a notice of claim with the Utah Attorney General, and, failing action by him, citizens may pursue their own actions against public officials. That is what the citizens here have done. Their intent is to hold public officials accountable and ensure that Initiative B is followed.

Ending Profit Incentives in Civil Forfeiture Law

Direct profit incentives for law enforcement officials are a terrible policy that lead to predictable abuses. While many individuals within a government organization may share a principled commitment to carrying out the mission of the agency, government officials, operating in what they perceive as their own self-interest, will also attempt to maximize the size and budget of their office. Larger budgets will benefit everyone within an office through higher salaries, greater job security, better equipment, and increased power and prestige.

Giving law enforcement officials a direct stake in the outcome of civil forfeiture efforts creates a perverse incentive structure. The supposed intent of forfeiture laws was to deprive criminals of their ill-gotten property and cash and then use those proceeds to enforce the very laws the wrongdoers violated. The unintended consequence of this effort, however, was that many officials now view raising revenue—not enforcing the law fairly and justly—as the primary goal of their activities. A recent study found that “numerous law enforcement agencies now rely on forfeitures to fund a significant part of their operations.” [25]

Under many forfeiture laws, the more an agency seizes and successfully forfeits, the richer it becomes. As Gary Schons, a former California deputy attorney general observed, “Much like a drug addict becomes addicted to drugs, law enforcement agencies have become dependent on asset forfeitures. They have to have it.” [26] Memoranda issued by various officials at the federal level through the 1990s highlight the goal of revenue generation by encouraging “increased forfeiture production,” actions that can be taken to maximize deposits to the [Asset Forfeiture] Fund,” and threats to cut agency funding if “projected levels of forfeiture deposits” were not met. [27] One former director of the Justice Department’s Asset Forfeiture Office candidly admits, “We had a situation in which the desire to deposit money into the asset forfeiture fund became the reason for forfeiture, eclipsing in certain measure the desire to effect fair enforcement of the laws.” [28]

Not surprisingly, some of the very same types of abuses that occur on the federal level also take place with alarming frequency on the state and local level. The seizure of Donald Scott’s ranch, mentioned previously, where Scott was shot dead in front of his wife and no drugs were ever found on his property was, the Ventura County District Attorney’s office found, “motivated, at least in part, by a desire to seize and forfeit the ranch for the government.” [29] Moreover, in the late 1990s, it was exposed that local law enforcement in Louisiana fabricated drug crimes to seize innocent people’s property, and the police then used the proceeds for ski trips to Aspen, Col. [30] In 1999, the Kansas City Star uncovered how local law enforcement officials turned forfeitures over to the federal government for prosecution to avoid the state law requirement that forfeiture proceeds go to the public schools. The federal government and state officials then divided up the forfeiture bounty amongst themselves. [31] Thankfully, Initiative B now makes this practice illegal in Utah. [32]

In addition to profit incentives being bad public policy, they are also unconstitutional. The due process clauses of both the U.S. and Utah constitutions guarantee to all citizens fair and impartial administration of justice. The former civil forfeiture law in Utah, modified by Initiative B, mandated that property and currency forfeited by the government be kept by and used for law enforcement. Law enforcement officials thus benefited directly from the operation of civil forfeiture laws and had a significant stake in their operation.

Due process prohibits statutory schemes that create actual bias, the potential for bias, or even the appearance of bias in the administration of justice. When public officials and their agencies have a direct financial stake in the outcome of their actions, as is often the case with civil forfeiture, the U.S. Supreme Court subjects such actions to particularly close scrutiny under the due process guarantees of the Constitution. [33] In Marshall v. Jerrico, Inc., [34] for instance, while upholding civil penalty provisions under the Fair Labor Standards Act, the Supreme Court declared that “[a] scheme injecting a personal interest, financial or otherwise, into the enforcement process may bring irrelevant or impermissible factors into the prosecutorial decision and in some contexts raise serious constitutional questions.” [35] Such serious questions are raised, in part, when a government official’s “judgment will be distorted by the prospect of institutional gains as a result of zealous enforcement efforts.” [36]

Indeed, in December 2002, a New Jersey court declared the state’s method of financing police and prosecutors through forfeiture revenue—the very same system in place in Utah before the passage of Initiative B—unconstitutional. [37] By removing the perverse incentive structure behind Utah’s civil forfeiture law, Initiative B reoriented law enforcement priorities away from profit-making and back to fair and impartial administration of justice. It was a result that both protected Utah citizens and was required by the U.S. and Utah constitutions. The effort of Utah citizens, aided by the Institute for Justice, will ensure that all law enforcement officials in the state follow the initiative overwhelmingly passed by Utah citizens.

Litigation Team

The lead lawyer for the Institute for Justice in this case is Senior Attorney Scott Bullock. Also on the litigation team is Institute President William H. Mellor. IJ is joined by able local counsel Maxwell A. Miller of Parsons Behle & Latimer in Salt Lake City.

Through strategic litigation, communications, training and outreach, the Institute for Justice advances a rule of law under which individuals can control their own destinies as free and responsible members of society. We litigate to secure economic liberty, school choice, private property rights, freedom of speech and other vital individual liberties, and to restore constitutional limits on the power of government. Through these activities we challenge the ideology of the welfare state and illustrate and extend the benefits of freedom to those whose full enjoyment of liberty is denied by government. The Institute was founded in 1991 by William H. Mellor and Clint Bolick.

For more information contact:

John Kramer

Vice President for Communications

Institute for Justice

901 N. Glebe Road, Suite 900

Arlington, VA 22203

W: (703) 682-9320 , ext. 205

Lisa Knepper

Director of Communications

Institute for Justice

901 N. Glebe Road, Suite 900

Arlington, VA 22203

W: (703) 682-9320 , ext. 202

[1] Hyde, Henry, Forfeiting Our Property Rights 6-7 (1995) (hereinafter “Hyde”).

[2] Cited in Hyde at 6.

[3] Hyde, at 6-8.

[4] Copeland, Cary H. “Civil Forfeiture for the Non-Lawyer,” U.S. Dep’t of Justice, Bureau of Justice Assistance Forfeiture Project, Spring 1992.

[5] 28 U.S.C. § 524(c)(1).

[6] See Fried, Charles, Rationalizing Criminal Forfeiture, 79 J. Crim. L. & Criminology 328, 364 (1988).

[7] 28 U.S.C. § 524(c)(4).

[8] 28 U.S.C. § 524(c)(1).

[9] 28 U.S.C. § 853(i)(4).

[10] See U.S. Dep’t of Justice, Federal Forfeiture of the Instruments and Proceeds of Crime: The Program in a Nutshell 1 (1990).

[11] Ehlers, Scott, “Policy Briefing: Asset Forfeiture,” The Drug Policy Foundation, Washington, D.C. 1999.

[12] An excellent summary of these reports is contained in the 1999 Policy Briefing on Asset Forfeiture written by Scott Ehlers, Senior Policy Analyst at the Drug Policy Foundation cited above (hereinafter “Ehlers”).

[13] Ehlers at 8.

[14] Id.

[15] Id.

[16] Id.

[17] Hegeman, Roxana, “Agencies Split Motel Sale Proceeds, Former Owners Cry Foul,” Associated Press, March 20, 1999.

[18] U.S. v. James Daniel Good Real Property, 114 S.Ct. 492, 515 (1993) (Thomas, J., concurring and dissenting).

[19] Utah Code Ann. § 24-1-1 et seq.

[20] Vigh, Michael, “Judge Rules on Forfeiture Statute,” Salt Lake Tribune, August 3, 2002.

[21] Biele, Katharine, “AG’s Office Targets Forfeiture Law,” Salt Lake Tribune, May 5, 2003.

[22] Id.

[23] Stewart, Kirsten, “Seized Assets Are Pocketed,” Salt Lake Tribune, January 25, 2003. The auditor found in his review that “28 [forfeiture cases] involved cash and property that should have been transferred to the State Treasurer.” Instead, $ 237,999 in cash and other property—cars, guns, cell phones and computer equipment—went to the West Valley City and Midvale police, the Weber/Morgan crime strike force and the narcotics division of the Salt Lake City Police Department.

[24] Stewart, Kirsten, “Forfeiture Cases Are Challenged,” Salt Lake Tribune, April 29, 2003.

[25] Blumenson, Eric & Eva Nilsen, Policing for Profit: The Drug War’s Hidden Economic Agenda, 65 U. Chi. L. Rev. 35, 40 (1998) (hereinafter “Blumenson & Nilsen”).

[26] Ehlers at 3.

[27] Blumenson & Nilsen, 65 U. Chi. L. Rev. at 63-64 n. 103.

[28] Ehlers at 7.

[29] Hyde at 14-15.

[30] Ehlers at 8.

[31] Dillon, Karen, “Police Keeping Cash Intended for Education,” Kansas City Star, January 2, 1999.

[32] Utah Code Ann. § 24-1-15.

[33] See Tumey v. Ohio, 273 U.S. 510 (1927) (overturning fine where mayor, who also sat as a judge, personally received a share of the fines); Ward v. Village of Monroeville, 409 U.S. 57 (1972) (due process violated where substantial portion of town’s income came from fines imposed by town mayor sitting as judge).

[34] 446 U.S. 238, 249-50 (1980)

[35] Id.

[36] Id. at 250.

[37] See State of New Jersey v. One 1990 Ford Thunderbird, et al., No. CUM-L-720-99 (Superior Court. N.J. December 11, 2002).