CIVIL ASSET FORFEITURE REFORM ACT HEARING BEFORE THE COMMITTEE ON THE JUDICIARY HOUSE OF REPRESENTATIVES ONE HUNDRED FOURTH CONGRESS SECOND SESSION ON H.R. 1916 CIVIL ASSET FORFEITURE REFORM ACT JULY 22, 1996 Serial No. 94 DEPT. OF JUSTICE JAN 28 1997 Legislative Office MAIN LIBRARY MAIN LIBRARY U.S. Dept. of Justice Printed for the use of the Committee on the Judiciary U.S. GOVERNMENT PRINTING OFFICE 36-668 CC WASHINGTON : 1996 For sale by the U.S. Government Printing Office Superintendent of Documents, Congressional Sales Office, Washington, DC 20402 ISBN 0-16-053850-5 COMMITTEE ON THE JUDICIARY HENRY J. HYDE, Illinois, Chairman CARLOS J. MOORHEAD, California JOHN CONYERS, JR., Michigan F. JAMES SENSENBRENNER, JR., PATRICIA SCHROEDER, Colorado Wisconsin BARNEY FRANK, Massachusetts 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, California STEPHEN E. BUYER, Indiana ZOE LOFGREN, California MARTIN R. HOKE, Ohio SHEILA JACKSON LEE, Texas SONNY BONO, California MAXINE WATERS, California FRED HEINEMAN, North Carolina ED BRYANT, Tennessee STEVE CHABOT, Ohio MICHAEL PATRICK FLANAGAN, Illinois BOB BARR, Georgia ALAN F. COFFEY, JR., General Counsel /Staff Director JULIAN EPSTEIN, Minority Staff Director (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 of Illinois, and chairman, Committee on the Judiciary 1 WITNESSES Blanton, Jan P., Director, Executive Office for Asset Forfeiture, Department of the Treasury 237 Cassella, Stefan D., Deputy Chief, Asset Forfeiture and Money Laundering Section, Criminal Division, Department of Justice 42 Cutkomp, King 18 Edwards, E.E. (Bo) III, Esq., on behalf of the National Association of Criminal Defense Lawyers 14, 278 Komie, Stephen M., secretary, Illinois, State Bar Association 27 Jones, Willie 12 Kappelhoff, 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 of Chiefs of Police 241 Reed, Terrance G., chairperson, RICO, Forfeiture, and Civil Remedies Com­ mittee, Section of Criminal Justice, on Behalf of the American Bar Associa­ tion 256 LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING Blanton, Jan P., Director, Executive Office for Asset Forfeiture, Department of the Treasury: Prepared statement 239 Cassella, Stefan D., Deputy Chief, Asset Forfeiture and Money Laundering Section, Criminal Division, Department of Justice: Prepared statement 215 Cutkomp, King: Forfeiture bill and analysis 43 Information concerning successful forfeiture challenges 248 Prepared statement 20 Edwards, E.E. (Bo) III, Esq., David 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 of Chiefs of Police: Prepared statement 243 Reed, Terrance G., chairperson, RICO, Forfeiture, and Civil Remedies Com­ mittee, Section of Criminal Justice, on Behalf of the American Bar Associa­ tion: Prepared statement 258 (III) IV Page APPENDIX Material submitted for the hearing 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 Office Building, Hon. Henry J. Hyde (chair­ man of the committee) presiding. Present: Representatives Henry J. Hyde, George W. Gekas, 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 CHAIRMAN HYDE Mr. HYDE. The committee will come to order. Under our rules, it is permissible for purposes of hearings 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 of the 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 of Members, 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 of the 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) 2 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 of sex, age, race or economic status, we are all potential victims of civil asset forfeit­ ure procedures. Just ask Willie Jones, owner of a Nashville landscaping business. In 1991, 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 of legal 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 of the 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 3 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.