Posts Tagged ‘forfeiture’

Finally, reform of structuring-law seizures

For years this website has covered the injustices of structuring law, under which persons who deposit or withdraw sums deemed too close to the $10,000 reporting threshold, even if for reasons that prove innocuous, can face seizure of their accounts. Now, under a tax-bill provision unanimously adopted by Congress and signed by President Trump, “the IRS can now only seize property for structuring if it’s ‘derived from an illegal source’ or if the money were structured to conceal criminal activity.” [Nick Sibilla, Forbes; Jacob Sullum, Reason; earlier]

Crime and punishment roundup

  • “Authorities noted in the complaint he lived ‘9 houses’ away from the site of a residence where drug transactions were occurring…” [Tim Cushing, TechDirt on $626,000 Missouri civil asset forfeiture seizure]
  • As Loyola lawprof Dane Ciolino points out, Louisiana “victims’ rights” bill seems meant to hobble public defenders’ witness investigations without holding law enforcement and D.A.s to same standards [Kira Lerner, The Appeal, earlier here, here, here, and here]
  • A “truly disgraceful chapter in the history of British policing” culminates in conviction of fantasist who made up child abuse charges against prominent figures [Dan Rivers, ITV]
  • The May 19 story on Dallas’s nonprosecution policy for lower-level offenses (“shoplifters’ holiday”) resulted in a discussion in comments of the similar policy of Suffolk County, Mass. (Boston) district attorney Rachael Rollins. Rollins’s policy has since come in for considerable controversy: “A Globe review of Rollins’s record reveals that, not only is the Suffolk DA dropping more cases than before, but some of the cases don’t seem “low-level” at all, involving serious bodily injury, major thefts, and career criminals.” [Andrea Estes and Shelley Murphy, Boston Globe, July 6]. [h/t reader Hugo C., who writes: “Two cases stood out to me: (a) an assailant who put an attorney in the hospital with long-term brain damage got no prison time, and (b) a criminal caught breaking into a warehouse with a crowbar (and found to be in possession of 39 stolen credit cars) was turned loose.”]
  • Electronic ankle monitors that not only report location, but also capture and report back audio of the wearer’s surroundings, raise difficult privacy issues [Kira Lerner, The Appeal via Chaz Arnett]
  • Alexandra Natapoff discusses her recent book Punishment without Crime: How Our Massive Misdemeanor System Traps the Innocent and Makes America More Unequal [Cato event video with Jonathan Blanks; related Cato podcast]

“Congress Passes Bill To Protect Small-Business Owners from IRS Seizures”

On June 13 “the U.S. Senate unanimously approved legislation that stops the Internal Revenue Service from raiding the bank accounts of small-business owners. The Clyde-Hirsch-Sowers RESPECT Act, passed as part of the Taxpayer First Act (H.R. 3151), is named after Institute for Justice clients Jeff Hirsch and Randy Sowers, two victims of the IRS’s aggressive seizures for so-called ‘structuring.’ Through structuring laws, the IRS has routinely confiscated cash from ordinary Americans simply because they frequently deposited or withdrew cash in amounts under $10,000. And by using civil forfeiture, the IRS can keep that money without ever filing criminal charges.” [Nick Sibilla, Institute for Justice] We’ve covered the problems with structuring law, as well as asset forfeiture, for many years.

Elizabeth Warren on white-collar prosecution — and what to do instead

My new piece at Cato, citing Carissa Byrne Hessick and Benjamin Levin at Slate, discusses Sen. Elizabeth Warren’s proposal to lower the standard for criminal culpability in many white-collar prosecutions to simple negligence. It begins:

Presidential candidate and Sen. Elizabeth Warren (D-Massachusetts) wants to see more business people behind bars, and she’s not fussy about how to make that happen. In a Washington Post op-ed last week she unveiled a new Corporate Executive Accountability Act, which in her words would expand “criminal liability to any corporate executive who negligently oversees a giant company causing severe harm to U.S. families.” She says she wants top executives to know that they can be (again in her own words) “hauled out in handcuffs for failing to reasonably oversee the companies they run.”

And ends:

The civil courts already hear many thousands of cases seeking damages over claims that serious harm arose from industry conduct that falls short of being reckless or deliberately wrongful. Not infrequently – as with claims over supposed “sudden acceleration” in cars, cancer from Roundup, and autoimmune disease from silicone breast implants – large sums get paid even when science finds no basis for concluding the products caused the harms alleged, such is our legal system’s tendency to tilt against business defendants as unsympathetic. Under the Warren standard, complaints that driverless cars have gotten into avoidable accidents or vaccines have caused side effects – maybe even that cheeseburgers, supersize sodas, and margaritas have worsened the harms of obesity – will put business people at risk for long prison terms. To her backers, will this count as a bug? Or a feature?

Aside from the propriety of criminalizing simple negligence, the issue is not so much that individuals as such are the wrong target for white-collar prosecution — as Stephen Bainbridge has argued, holding them personally culpable will often make more sense than prosecuting the corporate entity — as that notions of collective guilt must not be used to impute criminal culpability to others within an organization not proved to have committed wrong acts or acted with wrong mind. While the Warren proposal would march off in the wrong direction, in the Cato Handbook for Policymakers two years ago,
I contributed a chapter on white-collar prosecution with the following recommendations:

Congress and state lawmakers (and where appropriate, the president and executive branch law enforcement officials) should

  • review existing law with an eye toward rolling back overcriminalization and replacing criminal penalties with civil sanctions where feasible;
  • enact reforms such as the model Criminal Intent Protection Act to bolster recognition of mens rea (punishment should ordinarily require a guilty state of mind, not inadvertent noncompliance) as well as the related mistake of law defense in criminal law;
  • codify the common law rule of lenity (ambiguity in law should be resolved against finding guilt), as Texas joined other states in doing in 2015;
  • devise safe harbor provisions that enable economic actors to avoid criminal liability by behaving reasonably and in intended compliance with the law;
  • limit agency discretion to create new crimes without an act of the legislature;
  • enact guidelines to strengthen judicial oversight of deferred prosecution agreements and nonprosecution agreements (explicit court approval, not the unilateral say-so of government prosecutors, should be required for appointment of corporate monitors or the extension of time under supervision);
  • enact asset forfeiture reforms such as Rep. Jim Sensenbrenner’s (R-WI) Due Process Act, including requiring that conviction be a prerequisite for forfeiture; review and, where appropriate, reduce or coordinate per offense fines and sanctions to avoid levying penalties disproportionate to the gravity of misconduct;
  • prohibit, as a proposed New Mexico law would do, the allocation of settlement moneys (cy pres) to charities, nonprofits, or advocacy groups not themselves injured;
  • assign penalties, forfeitures, and settlement proceeds to the public treasury or, where appropriate in certain cases, to private parties who can show specific individual injury from the offense (penalties should not fund particular government agencies in ways that incentivize zealous enforcement or insulate the agencies from appropriations oversight);
  • prohibit the payment of public lawyers and forensics experts on contingency, that is, in ways dependent on case outcome or the magnitude of penalties (this principle should apply alike to career prosecutors, other staff public lawyers, experts, and outside law firms); existing contingency arrangements should be terminated; and
  • impose transparent principles of selection and payment on outside contracting for legal services.

Brooklyn: “Court Rules Against City, Millions of Dollars Of Wealth Restored”

A noteworthy victory for property owners in Brooklyn, following investigative journalism that had exposed a pattern of a seizures by New York City of homes and other properties after procedurally or substantively dubious findings of distressed condition or tax/water arrears. The city then sometimes handed the property over to politically connected developers. In the new decision, Kings County Supreme Court Judge Mark Partnow “ruled that the City of New York violated the U. S. Constitution in the seizure of six central Brooklyn properties, and ordered the city to give them back to their owners.” [Stephen Witt and Kelly J. Mena, Kings County Politics, earlier on the journalism]

Timbs v. Indiana: state forfeiture can violate Excessive Fines Clause

A unanimous Supreme Court ruling in Timbs v. Indiana confirms that state governments, like their federal counterpart, may not impose excessive fines. The ruling also holds that “at least some state civil asset forfeitures” violate the Excessive Fines Clause. “As a result, the ruling could help curb abusive asset forfeitures, which enable law enforcement agencies to seize property that they suspect might have been used in a crime – including in many cases where the owner has never been convicted of anything, or even charged. Abusive forfeitures are a a widespread problem that often victimizes innocent people and particularly harms the poor.” [Ilya Somin; ABA Journal]

Now keep your eye on the Privileges and Immunities Clause, advises Ilya Shapiro; Justice Gorsuch used a concurrence to signal that he is interested in revitalizing it, a position already held by Justice Clarence Thomas [Cato; see also Josh Blackman on Twitter]

Asset forfeiture: Philly, Texas, South Carolina, Mississippi

Investigation of asset forfeiture outrages in Philadelphia, where the D.A. “pursued nearly door-to-door confiscation of real estate” on some blocks [Ryan Briggs, Plan Philly] Texas police made more than $50 million in 2017 from seizing people’s property, but not everyone was guilty of a crime [Texas Tribune] How police departments in South Carolina make millions by seizing property [Anna Lee, Nathaniel Cary and Mike Ellis, Greenville News] “Civil Asset Forfeiture: An Overview & Conversation”, short video featuring Stefan Cassella and Darpana Sheth [Federalist Society] And this is how the Governor of Mississippi, Phil Bryant, defends forfeiture [@PhilBryantMS on Twitter]

Philadelphia might finally clean up its forfeiture act

“If a judge accepts the agreement, Philadelphia’s process of seizing many millions of dollars in property from innocent owners will be dismantled. Darpana Sheth of the Institute for Justice explains why” in this Cato Daily Podcast with Caleb Brown. More: Tom McDonald, WHYY; C.J. Ciaramella, Reason; Tim Cushing, Techdirt, and earlier from our long-running coverage of Philadelphia’s remarkable and outrageous forfeiture practices.

Police roundup