Feb 25, 2013

Houston Criminal Attorney: Asset Seizure and Forfeiture



History of U.S. Federal Forfeiture Laws: 

Forfeiture is a broad term which refers to a loss of property without compensation. The legal history of United States forfeiture laws originated in English Common Law, which allowed for the seizure of properties under three distinct doctrines; escheat upon attainder, in which a person's property reverted to the government upon conviction for a felony or treason; deodand, (guilty property) which allowed the courts to seize property if that particular property was directly involved in an offense regardless of the owner's culpability, and statutory forfeiture which could only be based on specific written laws.
As the laws evolved in the American colonies only statutory forfeiture was legally recognized; forfeiture of property was allowed only if required pursuant to written law. But those written laws did sustain the concept of deodand, which still exists in both Federal and State legislation.

Through most of American history the government itself rarely invoked forfeiture law, except in cases of tax-revenue violations or extreme cases such as piracy. However, in 1970 Congress enacted the Comprehensive Drug Abuse Prevention and Control Act (21U.S.C.A. § 881), which authorized federal prosecutors to bring civil forfeiture actions against the properties of persons convicted of participating in "continuing criminal enterprises". At first this law was severely limited in practice, but by 1978, Congress had amended it to allow the forfeiture of any proceeds and property traceable to the purchase of an illegal drug.

The Racketeer Influenced and Corrupt Organizations Act (RICO) (18 U.S.C.A. §§ 1961 et seq.) is another vehicle for forfeiture in federal court. RICO allows federal authorities to seize the property of persons engaged in a pattern of racketeering; persons who are convicted two or more times within a ten-year period of certain crimes such as murder, kidnapping, perjury, extortion, gambling or narcotics offenses may be forced to forfeit any property that is traceable to the crimes.

Under the 1978 amendments -known as the Psychotropic Substances Act- the federal government was authorized to proceed in rem against property; i.e., forfeiture actions are taken against the property itself, not against its owner. In these proceedings the guilt or innocence of the property owner is irrelevant: the government may seize property from persons suspected of a crime without actually charging them. 

In 1984 the Forfeiture Act was further amended by the Comprehensive crime control act which expanded it to authorize the forfeiture of real property (land and buildings) that is purchased, used, or intended to be used to facilitate narcotics trafficking. However, in some cases courts have allowed real property forfeiture regardless of whether the property was used to store or manufacture drugs.

Texas State Forfeiture Laws: 

In Texas, asset forfeiture is covered by The Code of Criminal Procedure (chapter 59) which defines property subject to forfeiture (“contraband”), the persons who may claim the property, and the procedures required for the state to seize the property. Forfeiture cases are “civil cases” in Texas.

Article 59.01 of the Texas Code of Criminal Procedure defines “Contraband” as “property of any nature, including real, personal, tangible, or intangible" that is used in the commission of any first or second degree felony under the Penal Code, in the statute itself, or in several other statutes. “Contraband” also includes the proceeds acquired from the commission of felonies listed in the statute or gained from a crime of violence.

In order to secure a forfeiture of property in Texas the State must prove by "a preponderance of the evidence” that the property is contraband; in other words, that it was used in the commission of a crime or it is the proceeds from illegal activity. Although Chapter 59 does not provide additional evidentiary requirements beyond proof that the property is contraband, the Texas Supreme Court has ruled that the State must also show probable cause, and in this context the Fifth Circuit Court of Appeals has held that probable cause is a reasonable belief that “a substantial connection exists between the property to be forfeited and the criminal activity defined by the statute.”

In interpreting Chapter 59, Texas courts have ruled that contraband is money or other property derived from or intended for use in a criminal transaction. Forfeiture proceedings are therefore available to prosecutors in almost every conceivable criminal case.
However, Chapter 59 of the Texas Code of Criminal Procedure also provides a safe harbor for "innocent owners." Pursuant to article 59.02(c), "[a]n owner or interest holder's interest in property may not be forfeited . . . if the owner or interest holder:
  1. Acquired and perfected the interest before or during the act or omission giving rise to forfeiture or, if the property is real property, he acquired an ownership interest, security interest, or lien interest before a lis pendens notice was filed; and 
  2. Did not know or should not reasonably have known of the act or omission giving rise to the forfeiture or that it was likely to occur at or before the time of acquiring and perfecting the interest or, if the property is real property, at or before the time of acquiring the ownership interest, security interest, or lien interest." 

The statutory safe harbor is an affirmative defense, i.e. the party must prove their status and that it is exempted from the statute because of the standing of another person (besides the criminal actor) as an owner of the property.


Civil asset forfeiture has been strongly criticized by civil liberties advocates for its reduced standards for conviction and the fact that burden of proof is shifted to the individual. Because the Forfeiture Act allows law enforcement agencies to receive portions of the proceeds from property forfeiture, many critics claim that it detracts from the police function of fighting violent crime and argue that law enforcement agencies may be placed in a situation where they become financially dependent on the very drug activity that they are supposed to curtail. 
Proponents of forfeiture argue that drug activity and racketeering are well documented sources of violent crime, and the proceeds gained through asset forfeitures and the subsequent sales of such property increase the capacity to fight violent crime.

Forfeiture Procedure 

Forfeiture proceedings may be either criminal or civil. If the government seeks forfeiture pursuant to criminal charges it must establish the defendant's guilt beyond a reasonable doubt, and if the defendant is acquitted they are entitled to have the property returned.
 However, in a civil forfeiture proceeding the US Government sues the item of property, not the person; the owner is effectively a third party claimant and does not need to be charged with any crime. The prosecution must only show reasonable grounds to believe that the property was used in (or derived from) illegal activities, and the owner must prove on a "preponderance of the evidence" that it is not. If the defendant fails to rebut the showing of probable cause with sufficient evidence the government may keep the property.

 Since the government can choose the type of case, a civil case is almost always chosen. These cases can take up to three years and the costs are generally very high for the owner, often exceeding the value of the property itself.

The United States Marshals Service is responsible for managing and disposing of properties seized and forfeited by Department of Justice agencies, with the United States Treasury Department being responsible for properties seized by Treasury agencies. Both programs maximize the net return from seized property by sales at auctions or to the private sector.

Criminal Forfeiture Defense: 

Criminal forfeiture is a punitive action by the government against the offender, and occurs as part of a sentence following a conviction. 18 U.S.C. § 982 and 21 U.S.C. § 881 outline the various offenses and procedures governing criminal forfeiture.

The nature of a criminal case allows the defendant protections under the Fourth and Fifth Amendments. The property must be specifically identified in the indictment in order to serve notice to the defendant, and opportunity must be given to contest the forfeiture. Although the conviction requires the government to prove guilt "beyond a reasonable doubt," the forfeiture is subject to the lower burden of preponderance of the evidence. The burden also shifts to the defendant if the government can adequately show that the property was acquired around the time of the crime, and no other likely source existed.

Since criminal forfeiture requires conviction of a crime the first line of defense is against the actual conviction, but the defense is required to prove the property did not have the necessary relationship to the crime in order to avoid the penalty.

Civil Forfeiture (In Rem) Defense: 

Unlike criminal forfeiture civil forfeiture proceeds directly against the property rather than the owner. In theory, civil actions are remedial; the government seeks to remedy a harm through the fiction of the property's "guilt" rather than punish the defendant. The same statutes apply, but also include Customs procedures from 19 U.S.C. § 1602 which involve searches, seizures, administrative procedure, holding, and disposal. Since the government determines which form of forfeiture to use, it is not surprising that most are carried out using the civil procedure. Civil forfeiture cases generally involve cash or real properties which the government contends were the proceeds generated by criminal activity, such as drug sales or racketeering.

Once the government establishes probable cause of the property's connection to a crime it may seize the property by executing a warrant. No criminal charges or convictions against the owner are required. Notice occurs through presentation of the warrant and publication in a newspaper, and a party must file a claim within the designated answer period to request a civil hearing.
The roles of the parties are now changed; instead of a criminal prosecutor the hearing concerns a plaintiff (the United States in the case of Federal forfeitures) and a defendant (the property in question). The owner is effectively put in the position of being a third party claimant.

Civil hearings also involve a more lenient burden of proof than "beyond a reasonable doubt." Once the government establishes probable cause that the property is subject to forfeiture the owner must prove by "preponderance of the evidence" that it is not.

Defending Asset Forfeiture and Motions for Return of Seized Property: 

Courts interpret the statutory defenses stringently. For instance, courts may apply an objective standard to determine if the owner should have had knowledge of the property's illegal use, rather require proof of actual knowledge. The law enforcement agency that confiscated the property must still prove that the officers possessed reliable information (Probable Cause) that the property was connected to an illegal activity; the owner may argue that no crime actually occurred, that the government lacked probable cause, or that the property is not closely enough connected to the crime to be considered an instrumentality or proceeds. If a probable cause challenge fails the owner may also attempt to prove that the property involved was derived from a legitimate source.

Yet another potential defense exists if the owner can show that they did not know about or consent to the illegal use of their property. This defense is generally easier to make in cases where the third party owner acquired their interest in the confiscated property before the illegal activity took place, however some statutes specifically exclude innocent third party owners from being able to seek relief.

Finally, there are time limits imposed on the government when filing forfeiture cases and / or bringing them to trial: excessive delays may be legal cause for a dismissal of the case. And due to the remedial nature of civil forfeiture cases, seizure of properties with a value disproportional to the case may be deemed unconstitutional and unjust.

Motions for return of seized property may be brought under Rule 41(g) of the Federal Rules Of Criminal Procedure in both criminal forfeiture matters and, under the court's general equity jurisdiction, in civil forfeiture matters. Civil forfeiture claimants may also pursue the return of seized property by filing motions for summary judgment or motions to dismiss the forfeiture complaint. Other issues can also be raised in a motion for summary judgment or a motion to dismiss. Filing these motions forces the government to show that it has probable cause for the seizure of the property.

When it comes to criminal law cases, an experienced and effective criminal defense attorney can mean the difference between a prison sentence and reduced or dismissed charges. The lawyers of Parnham & McWilliams are dedicated to defending the rights of the accused and our criminal defense attorneys are committed to the presumption of innocence. Even in less serious cases, a good criminal defense attorney can make a serious impact on the outcome of the case by ensuring that the rights of the accused are protected throughout the legal process. For these and other reasons, it is vital that those accused of a crime select the most competent, experienced and effective attorney available. 

Comprehensive Drug Abuse Prevention and Control Act (21U.S.C.A. § 881)
Psychotropic Substances Act of 1978 [Pub. L. No. 95-633, tit. III, § 301(a), 92 Stat. 3768, 3777 (codified as amended at 21 U.S.C.A. § 8821(a)(6))]). 
Comprehensive crime control act (Pub. L. No. 98-473, § 306, 98 Stat. 1837, 2050 
Texas State Code of Criminal Procedure, Art. 59.01 "Forfeiture of Contraband" 
THE ASSET FORFEITURE MANUAL Version 1.0: Edited by Frederick Mann and TLH staff