CIVIL ASSET FORFEITURE REFORM ACT v« ^^ Y 4. J 89/1:104/94 Civil Asset Forfeiture Reforn Act,... HEARING BEFORE THE COMMITTEE ON THE JUDICIAKY HOUSE OP REPRESENTATIVES ONE HUNDRED FOURTH CONGRESS SECOND SESSION ON H.R. 1916 CIVIL ASSET FORFEITURE REFORM ACT JULY 22, 1996 Serial No. 94 Printed for the use of the Committee on the Judiciary U.S. GOVERNMENT PRINTING OFFICE 35-668 CC WASHINGTON : 1996 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-053850-5 CIVIL ASSET FORFEITURE REFORM kCl v« Y 4. J 89/1:104/94 Civil Asset Forfeiture Reforn Act,... HEARING BEFORE THE COMMITTEE ON THE JUDICIARY HOUSE OF REPRESENTATrVES ONE HUNDRED FOURTH CONGRESS SECOND SESSION ON H.R. 1916 CIVIL ASSET FORFEITURE REFORM ACT JULY 22, 1996 Serial No. 94 ''f8 2 m? Printed for the use of the Committee on the Judiciary U.S. GOVERNMENT PRINTING OFFICE 35-668 CC WASHINGTON : 1996 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-053850-5 COMMITTEE ON THE JUDICIARY HENRY J. HYDE, Illinois, Chairman CARLOS J. MCX)RHEAD, California JOHN CONYERS, JR., Michigan F. JAMES SENSENBRENNER, Jr.. PATRICIA SCHROEDER, Colorado Wisconsin BARNEY FRANK, Massachusette BILL McCOLLUM, Florida CHARLES E. SCHUMER, New York GEORGE W. GEKAS, Pennsylvania HOWARD L. BERMAN, California HOWARD COBLE, North Carolina RICK BOUCHER, Virginia LAMAR SMITH, Texas JOHN BRYANT, Texas STEVEN SCHIFF, New Mexico JACK REED, Rhode Island ELTON GALLEGLY, California JERROLD NADLER, New York CHARLES T. CANADY, Florida ROBERT C. SCOTT, Virginia BOB INGLIS, South Carolina MELVIN L. WATT, North Carolina BOB GOODLATTE, Virginia XAVIER BECERRA, Cahfomia STEPHEN E. BUYER, Indiana ZOE LOFGREN, California MARTIN R. HOKE, Ohio SHEILA JACKSON LEE. Texas SONNY BONO, California MAXINE WATERS, Cahfomia FRED HEINEMAN, North Carolina ED BRYANT, Tennessee STEVE CHABOT, Ohio MICHAEL PATRICK FLANAGAN, Illinois BOB BARR, Geoi^a Alan F. Coffey, Jr., General Counsel/StaffDirector Julian Epstein, Minority StaffDirector (II) CONTENTS HEARING DATE Page July 22, 1996 1 TEXT OF BILL H.R. 1916 4 OPENING STATEMENT Hyde, Hon. Henry J., a Representative in Congress from the State ofIllinois, andchairman. Committeeon theJudiciary 1 WITNESSES Blanton, Jan P., Director, Executive Office for Asset Forfeiture, Department ofthe Treasury 237 Cassella, Stefan D., Deputy Chief, Asset Forfeiture and Money Laundering Section, Criminal Division, DepartmentofJustice 42 Cutkomp, King 18 Edwards, E.E. (Bo) III, Esq., on behalfofthe NationalAssociation ofCriminal Defense Lawyers 14, 278 Komie, Stephen M., secretary, Illinois, State BarAssociation 27 Jones, Willie 12 KappeUioff, Mark J., legislative counsel, on behalf of the American Civil Liberties Union 262 McMahon, James, superintendent, New York State Police, on behalf of the International Association ofChiefs ofPolice 241 Reed, Terrance G., chairperson, RICO, Forfieiture, and Civil Remedies Com- mittee, Section ofCriminal Justice, on Behalfofthe American BarAssocia- tion 256 LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING Blanton, Jan P., Director, Executive Office for Asset Forfeiture, Department ofthe Treasury: Prepared statement 239 Cassella, Stefan D., Deputy Chief, Asset Forfeiture and Money Laundering Section, Criminal Division, DepartmentofJustice: Prepared statement 215 Cutkomp, King: Forfeiture bill and analysis 43 Information concerningsuccessful forfeiture challenges 248 Edwards, E.E. (Bo) III, Esq., fiavid B. Smith, and Richard J. troberman, Cochairs, National Association of Criminal Defense Lawyers Asset Forfeit- ure Abuse Task Force, on behalf of the National Association of Criminal Defense Lawyers: Prepared statement 282 Kappelhoff, Mark J., legislative counsel, on behalf of the American Civil Liberties Union: Prepared statement 265 Komie, Stephen M., secretary, Illinois, State Bar Association: Prepared state- ment 33 McMahon, James, superintendent, New York State Police, on behalf of the International Association ofChiefs ofPolice: Prepared statement 243 Reed, Terrance G., chairperson, RICO, Forfeiture, and Civil Remedies Com- mittee, Section ofCriminal Justice, on Behalfofthe American BarAssocia- tion: Prepared statement 258 (III) IV Pace AI'PENDIX Material submitted forthehearing 357 CIVIL ASSET FORFEITURE REFORM ACT MONDAY, JULY 22, 1996 House of Representatives, Committee on the Judiciary, Washington, DC. The committee met, pursuant to notice, at 9:40 a.m., in room 2141, Rayburn House Ofifice Building, Hon. Henry J. Hyde (chair- man ofthe committee) presiding. Present: Representatives Henry J. Hyde, Greorge W. Grekas, Car- los J. Moorhead, Bob Barr, and Barney Frank. Also present: Alan F. Coffey, Jr., general counsel/staff director; Diana Schacht, deputy general counsel; Kenneth Prater, clerk; Stephanie Peters, minority counsel; and Melanie Sloan, minority counsel. OPENING STATEMENT OF CHAIRMANHYDE Mr. Hyde. The committee will come to order. Under our rules, it is permissible for purposes ofhearings to pro- ceed with less than a full complement, and while today is Monday morning and the House doesn't go into session until sometime later and votes later this afternoon, it is understandable that a lot of Members aren't present. But frankly, this subject is an important one, and because ofthe press of other calendar matters, we haven't gotten to it this year until this morning. And I am loath to forgo the opportunity to advance this legislation. So we are going to pro- ceed with it, but I apologize for the paucity ofMembers, and I con- gratulate my friend George Gekas for his being here. Mr. Gekas. Thank you, Mr. Chairman. Mr. Hyde. The gentleman from Pennsylvania. Mr. Gekas. Yes. I am eager to listen to the witnesses and to per- haps engage in a colloquy with one or more of them on this, like you say, important subject. I just wanted to lay a little background on the basis that this committee in the early 1980's, in furtherance of then President Reagan and then President Bush, and even more recently under President Clinton, we were considering this subject matter in one form or another. As a matter of fact, all the comprehensive crime plans which we have either contemplated or adopted in one way or another touched upon this subject, and I must say that you cannot have a comprehensive crime program unless you include forfeiture as one ofthe matters which you must consider thoroughly. I am eager to see where we have failed, where we can improve, what it really means to law enforcement, and, therefore, I join with (1) the chairman in moving ahead to make a record on this very im- portant subject. Thank you, Mr. Chairman. Mr. Hyde. I thank the gentleman. Those people in the room who are in the Navy will recognize the phrase, "now hear this." Well, now hear this: Federal and State officials have the power to seize your home, your car, your business and your bank account, all without indictment, hearing or trial. Regardless ofsex, age, race or economic status, we are all potential victims ofcivil asset forfeit- ure procedures. Just ask Willie Jones, owner ofa Nashville landscaping business. In 1—991, he made the mistake of paying for an airplane ticket in cash behavior that was deemed to fit a drug courier profile. Mr. Jones was detained. His luggage was searched. No drugs were found, but his wallet contained $9,600 in cash. The money was seized, but Mr. Jones was not charged with any crime. After 2 years oflegal wrangling, his money was finally returned. In 1989, during a fruitless 7-hour search for drugs aboard Craig Kline's $24,000 new sailboat. Federal agents wielding axes, power drills and crowbars nearly destroyed the boat. No evidence of con- traband was found. The boat was sold for scrap, and only after Congress intervened did Mr. Kline receive a reimbursement of $9,100, a third ofthe boat's value. Over the course of several years, Florida police routinely con- fiscated cash, an estimated $8 million total, from hundreds of mo- torists who supposedly fit profiles of drug couriers. Criminal charges were rarely filed in these cases, and only in three instances did the individuals successfully have funds returned. According to one estimate, in more than 80 percent of civil asset forfeiture cases, the property owner is not charged with a crime. Nevertheless, Government officials usually keep the seized prop- erty. Furthermore, to justify its seizure, the Government need only present evidence of what its agents see as "probable cause." That is the same standard required to obtain a search warrant, but in that situation, police are permitted to seek evidence of a crime, not to permanently take somebody's property. Even worse, under present law, the burden of proof is on the property owner, who must establish by a preponderance of the evidence that his or her property has not been used in a criminal act or not otherwise for- feitable. The uncharged victim must prove the negative. The basic presumption in American law, you are innocent until proven guilty, has been turned on its head. Property owners who lease their apartments, cars or boats risk losing their property be- cause of renters' conduct, conduct over which the actual owner has no control. To contest Government forfeiture, owners are allowed only a few days within which to file a claim and post a 10-percent cash bond based on the value of the property. Even if the owner is successful in getting the property returned, the government is not liable for any damage to the property which occurs while in the Govern- ment's possession. In 1992, former New York City Police Commissioner Patrick Murphy observed that the large monetary value of forfeitures has created a great temptation for State and local police departments to target assets rather than criminal activity. Now, let me stress, I view criminal asset forfeiture following a criminal conviction as an appropriate punishment. There, the guilty party has been accorded due process of law. But civil asset forfeiture all too often punishes innocent persons. These procedures may have made sense in the 18th century, when ships containing contraband or smuggled goods were seized, but in today's modern world, the targets of noncriminal forfeiture are residences, busi- nesses and bank accounts. We need to reform these procedures so as to ensure fundamental fairness and due process rights. For these reasons, I have introduced the Civil Asset Forfeiture Reform Act, H.R. 1916. First and foremost, this legislation revives the notion that property, like individuals charged with crimes, is innocent until proven guilty. It allows property owners to recover for the damage done to property while in the custody of law en- forcement agencies and protects innocent property owners, such as landlords, who are unaware of illegal activity. Further, the bill would eliminate the regressive cash bond now required of property owners who file an appeal in a seizure case and would extend the period of time for appeal of a seizure from the current 10 or 20 days to a more reasonable 30 days. The fifth amendment to our Constitution reads: "No person shall be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use withoutjust com- pensation." Today this committee embarks on a path ofreform that hopefully will comport Federal civil asset forfeiture law with the true spirit ofthe fifth amendment. [The bill, H.R. 1916, follows;] — 104TII ('()N(}RKSS H.R.1916 1st Skssion To ivfonii cntaiii statutes irfranliii":n\i\ assi't foifi-ituiv. IN THE HOUSE OF REPllESENTATR^S .Jink 22. 1995 Ml-. IIydk iiitHKhu'cd tlu' t()ll()\viii<r l)ill; wliicli was rofonod to the (\)inmittoe on tlic* Jiuiiciary, and in addition to the ("oniinittee on Ways and .Moans, for a |H'i-iod to Ik- sul>se<]utMitly detorniined l)y tlio Speaker, in eaeli ease for eonsideration of sueh provisions as fall witliin thejurisdietion of the eoinmittee eoneerned A BILL To reform certain statutes regarding: ei\il asset forfeiture. 1 Be it enacted by the Senate and House ofRepresenta- 2 tives ofthe United States ofAmenca in Congress assembled, 3 SECTION 1.SHORTTITLE. 4 This Act may be cited as the "Ci\'il Asset Forfeiture 5 Reform Act". 6 SEC. 2. LIMITATION OF CUSTOMS AND TAX EXEMPTION 7 UNDERTHETORTCLAIMSPROCEDURES. 8 Section 2()80(c) of title 28, United States Code, is 9 amended