The Multibillion-Dollar Legal Theft Industry

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Scholars argue that civil forfeiture laws allow the government to deprive people of their property unjustly.

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In late 2020, police raided Cristal Starling’s home, confiscating over $8,000 in cash. Although officers reportedly took the money because they suspected Starling’s boyfriend of dealing drugs, they never charged Starling with a crime. Even after Starling’s boyfriend was acquitted, the government kept the cash. Years later, Starling is still fighting to reclaim her savings.

Starling’s case may sound extreme, but local, state, and federal government entities seize billions of dollars in assets from similarly situated property owners each year through a legal process known as civil forfeiture. That process enables government actors to take and keep valuables such as cash, cars, and even homes without charging anyone with a crime.

Various state and federal civil forfeiture laws authorize government officials to pursue lawsuits called in rem actions against property they suspect of being involved in a crime. In an in rem proceeding, the government brings suit against the property itself, not the person who owns it. This technicality has led to cases as absurd-sounding as United States of America v. Approximately 64,695 Pounds of Shark Fins, in which the U.S. Department of Justice lost its bid to keep seized shark parts.

Despite their sometimes laughable titles, in rem proceedings can have somber consequences for property owners: They strip away many of the procedural protections required in a typical lawsuit and force owners to prove the “innocence” of their property to reclaim it. The lack of protections for people whose property is seized has caused some critics to deem civil forfeiture “legalized theft” and has garnered legislative attention.

Notably, lawmakers have introduced the Fifth Amendment Integrity Restoration Act (FAIR Act) to reform civil forfeiture laws. The 2023 bipartisan bill “would enact a major overhaul of federal civil forfeiture laws” by foreclosing some of the existing law enforcement profit incentives that lead to exploitation.

For example, laws allowing officials to keep the assets they seize create a perverse incentive for officials to take as much property as possible, some advocacy groups note. A loophole known as “equitable sharing” allows state law enforcement officers to circumvent state-level reforms by ceding forfeiture cases to their federal counterparts. Federal officials can then retain forfeiture proceeds under federal law and pay state officials a share of the assets in exchange for providing the case.

The FAIR Act would close this loophole and eliminate profit incentives while ensuring better access to courts for forfeiture victims. The bill would also impose a higher burden of proof on the government, tipping the legal odds in property owners’ favor.

Although many scholars and rights organizations support the FAIR Act, some law enforcement groups have opposed its passage. They consider civil forfeiture an essential tool in disrupting and deterring crime and an important source of revenue for community services. These groups argue that equitable sharing encourages collaboration between state and federal law enforcement, facilitating effective joint operations against organized crime.

In this week’s Saturday Seminar, scholars discuss the policy concerns that civil forfeiture raises and identify avenues for reform.

  • In a Competitive Enterprise Institute report, General Counsel Dan Greenberg seeks to dispel myths surrounding civil forfeiture that he claims government interest groups use to justify its continuation. For example, Greenberg explains that civil forfeiture defenders typically portray cash seizures as confiscations of hundreds of thousands of dollars in suspicious bills that could have “no innocent explanation.” In reality, data collected by several states show that cash seizures are usually much smaller—making it more likely that the owner had a legitimate reason for possessing the cash, Greenberg argues. Greenberg also rebuts assumptions that civil forfeiture targets have adequate access to courts by arguing that nearly 85 percent of victims lose their property by default.
  • The University of Illinois Chicago School of Law’s Claire Johnson Raba argues in an article for the Fordham Urban Law Journal that in civil forfeiture cases, substantive due process requires authorities to perform an ability-to-pay analysis to ensure that the government’s use of seizure as a criminal fine is not “excessive.” Raba contends that the Eighth Amendment of the U.S. Constitution contains a proportionality test that requires balancing the harm of deprivation from civil forfeiture against the state’s interest in the forfeiture. In addition, Raba recommends that state civil forfeiture statutes shift the procedural burden from the claimant to the state to initiate a forfeiture action.
  • In an article for Theoretical Criminology, University of Oregon professor Jackson Smith argues that cash forfeitures in Philadelphia are shaped by a “racialized geography of financial inequality.” In his study of cash forfeitures between 1984 and 2016, Smith found that the $86 million seized by the Philadelphia Police Department and city prosecutors during that time constituted a significant wealth transfer from the city’s poor, predominantly Black and Latinx neighborhoods to its narcotics policing apparatus. Smith notes that financial inequality and cash forfeitures are organized geographically in Philadelphia and mirror the city’s longstanding pattern of racial segregation in housing.
  • In a Cato Institute handbook, policy scholars Roger Pilon and Trevor Burrus urge Congress to abolish civil forfeiture and instead require a criminal conviction before property can be seized. If outright elimination is not possible, Pilon and Burrus suggest reforms to ensure that any property subject to forfeiture bears a “significant and direct connection” to criminal activity. Pilon and Burrus also advocate strengthening the innocent owner defense, which allows owners to reclaim their property if they can show that they were unaware of its connection to illegal activity. Although current law requires owners to prove their innocence by a preponderance of the evidence, Pilon and Burrus argue that the government should bear the burden of proof beyond a reasonable doubt.
  • In a recent article published by the New York University Law Review Online, Dick M. Carpenter II of the Institute for Justice argues that academic conceptions of official government theft should be broadened to include civil forfeiture. Carpenter explains that scholars have used the term stategraft to describe individual state officers’ illegal transfer of property “from residents to the state in violation of the state’s own laws or basic human rights.” Carpenter notes that although civil forfeiture largely fits the stategraft framework of unjust property transfers, it is still legal. Consequently, Carpenter argues that the definition of stategraft should extend to both unlawful individual actions and unethical laws and legal systems such as civil forfeiture.
  • In another recent New York University Law Review Online article, Beth A. Colgan of the University of California, Los Angeles School of Law argues that addressing official government theft may also help to mitigate lawful but unethical property seizures. Colgan notes that although government actors sometimes seize private property unlawfully, they may also do so in lawful but predatory ways. Furthermore, she acknowledges that calling lawmakers’ attention to state theft may distract them from addressing more common forms of unethical property seizure like civil forfeiture. Colgan concludes that addressing state theft will provide opportunities to address related, unethical practices by creating new tools for broad legal reform.

The Saturday Seminar is a weekly feature that aims to put into written form the kind of content that would be conveyed in a live seminar involving regulatory experts. Each week, The Regulatory Review publishes a brief overview of a selected regulatory topic and then distills recent research and scholarly writing on that topic.