Supreme Court Sees Criminal Asset Forfeiture Can Be Abused Too; Almost Does Something About It

Legal Issues

from the have-a-bandaid dept

Recently, the Supreme Court passed on a case that could have seen it address the highly-problematic civil asset forfeiture issue head on. In that case, cops seized $201,000 (and a bill of sale for a home) from two people during a traffic stop. Despite having no evidence of criminal activity, the cops kept the $201,000 and claimed it was the result of narcotics trafficking. And, despite this claim, law enforcement never arrested the couple it took the money from and charges were never brought.

The Supreme Court refused to touch the appeal, choosing to let the lower courts’ rulings stand (and the officers keep the $201,000). Justice Clarence Thomas had a problem with the Supreme Court letting this case slide, writing that the civil asset forfeiture system is easily-abused and provides the worst of incentives.

I am skeptical that this historical practice is capable of sustaining, as a constitutional matter, the contours of modern practice, for two reasons.

First, historical forfeiture laws were narrower in most respects than modern ones…. Most obviously, they were limited to a few specific subject matters, such as customs and piracy. Proceeding in rem in those cases was often justified by necessity, because the party responsible for the crime was frequently located overseas and thus beyond the personal jurisdiction of United States courts…. These laws were also narrower with respect to the type of property they encompassed. For example, they typically covered only the instrumentalities of the crime (such as the vessel used to transport the goods), not the derivative proceeds of the crime (such as property purchased with money from the sale of the illegal goods)….

Second, it is unclear whether courts historically permitted forfeiture actions to proceed civilly in all respects. Some of this Court’s early cases suggested that forfeiture actions were in the nature of criminal proceedings… Whether forfeiture is characterized as civil or criminal carries important implications for a variety of procedural protections, including the right to a jury trial and the proper standard of proof. Indeed, as relevant in this case, there is some evidence that the government was historically required to prove its case beyond a reasonable doubt….

This alone doesn’t do anything useful, other than signal at least one justice wants to take a swing at civil asset forfeiture. The Supreme Court, however, did choose to examine another form of forfeiture, this one related to actual criminal charges and convictions.

The question before the court was this: is is legally-acceptable to attempt to recover illicitly-obtained profits from someone who didn’t directly profit from the illicit activity? The government (of course) argued “yes.” The court isn’t so sure. Here’s the background, from the Court’s synopsis of its opinion [PDF]:

Terry Honeycutt managed sales and inventory for a Tennessee hardware store owned by his brother, Tony Honeycutt. After they were indicted for federal drug crimes including conspiracy to distribute a product used in methamphetamine production, the Government sought judgments against each brother in the amount of $269,751.98 pursuant to the Comprehensive Forfeiture Act of 1984, which mandates forfeiture of “any property constituting, or derived from, any proceeds the person obtained, directly or indirectly, as the result of” certain drug crimes, 21 U. S. C. §853(a)(1). Tony pleaded guilty and agreed to forfeit $200,000. Terry went to trial and was convicted. Despite conceding that Terry had no controlling interest in the store and did not stand to benefit personally from the sales of the product, the Government asked the District Court to hold him jointly and severally liable for the profits from the illegal sales and sought a judgment of $69,751.98, the outstanding conspiracy profits.

The district court said Terry was just a salaried employee who did not directly benefit from the profits of the sale of an item used in crystal meth manufacturing. The appeals court decided Terry was just as culpable as the store’s owner. The Supreme Court sides with the district court.

Because forfeiture pursuant to §853(a)(1) is limited to property the defendant himself actually acquired as the result of the crime, that provision does not permit forfeiture with regard to Terry Honeycutt, who had no ownership interest in his brother’s store and did not personally benefit from the illegal sales.

This is a solid determination, as far as it goes. This only deals with criminal asset forfeiture, which isn’t abused nearly as much as the civil side, thanks to the government actually having to build a solid criminal case before it can permanently acquire other people’s property.

But it’s also a question of semantics. As Scott Greenfield points out in this post, the opinion focuses on the wording of the statute as applied to this particular case, which doesn’t exactly make this blanket coverage for all similar cases. The Court presents a hypothetical situation that makes it appear it’s headed down the blanket coverage path…

An example is instructive. Suppose a farmer masterminds a scheme to grow, harvest, and distribute marijuana on local college campuses. The mastermind recruits a college student to deliver packages and pays the student $300 each month from the distribution proceeds for his services. In one year, the mastermind earns $3 million.The student, meanwhile, earns $3,600. If joint and several liability applied, the student would face a forfeiture judgment for the entire amount of the conspiracy’s proceeds: $3 million. The student would be bound by that judgment even though he never personally acquired any proceeds beyond the $3,600. This case requires determination whether this form of liability is permitted under§853(a)(1). The Court holds that it is not.

As Greenfield points out, this would shift jurisprudence to substantially alter the way the government seeks restitution through criminal asset forfeiture. But the Court doesn’t limit itself to the contours of its own hypothetical. Instead, it spends too much time circling the semantic drain.

Despite the example given, which has broad if not universal application limiting the culpability and liability to the actual conduct, the actual profit, perhaps even the actual knowledge of that college student who got $300 per month to play the mule, the holding relies primarily on the word “obtained.” Change the word and the limiting concept disappears, even though the example of its unfairness, its inapplicability, remains every bit as accurate.

The problem is the government still wants to use “joint and several liability” in criminal prosecutions, even if the facts don’t show any reason to do this. The opinion here focuses on the word “obtained,” pointing out there’s not a dictionary out there that supports the government’s definition in the context of criminal forfeiture. And yet, the practice will go on the way it has for years because of the lack of a blanket interpretation by the Supreme Court. This leaves it up to lower courts to determine the extent of shared liability on a case-by-case basis. And when things are handled this way, it forces the hypothetical college student with $300 to expend far more than that simply to try to avoid being saddled with millions of dollars of restitution as the result of a criminal conspiracy.

Where the court could have clarified, it chose not to. It will hopefully serve as a deterrent to such forfeiture abuse in the future, but its application is narrow, limited, and subject to multiple interpretations. Here’s Greenfield to sum it up:

So is it the concept of banging the kid for the boss’ conduct and profit the problem, or is it the word “obtained” in the statute? Is joint and several liability a wrong in itself, or is it only wrong this time? Or is it a misbegotten concept entirely, which should never apply to hold a defendant to greater culpability and liability then the facts, the conduct, warrant? The questions need answers, but the opinion fails to say.

Terry Honeycutt will emerge from his 60-month sentence without a future burden of paying off the forfeited sum. Whether anyone else will be relieved of the joint and several burden remains to be seen.

So, in two cases, the Court has failed to budge the needle on forfeiture. Civil asset forfeiture received nothing more than some judicial tongue-lashing in lieu of certification and criminal asset forfeiture can continue to be used to hold those who don’t profit directly from criminal activity responsible for any dollar amount the government can show is likely ill-gotten gains.

Filed Under: asset forfeiture, criminal asset forfeiture, scotus, supreme court