Forfeiture - Procedure -- Seizure

Florida v. White, 119 S.Ct. 1555 (1999)

Under Florida state law the police are authorized to seize an automobile for forfeiture purposes. (The same law exists with regard to federal forfeitures). In this case, the police observed the defendant, in his vehicle, involved in a drug transaction, but waited several months before seizing the car from a parking lot at defendant's place of employment. They then performed an inventory search.The Court upheld the warrantless seizure and inventory search even though there were no exigent circumstances and the probable cause to seize the vehicle arose several months earlier.

United States v. James Daniel Good Real Property, 510 U.S. 43 (1993)

Unless there are exigent circumstances, when the government institutes a civil forfeiture action against real property, it may not seize the property absent notice to the property owner and an opportunity to be heard.

United States v. Parrett, 530 F.3d 422 (6th Cir. 2008)

The government may not seize or restrain substitute assets in a criminal forfeiture case prior to trial pursuant to 21 U.S.C. § 853(p). The court suggested that state law, however, may support the filing of a lis pendens.

Smith v. City of Chicago, 524 F.3d 834 (7th Cir. 2008)

The Seventh Circuit holds that if property is seized in contemplation of a civil forfeiture proceeding, in certain circumstances, a post-seizure hearing should be held. Due process requires some opportunity to the claimant to contest the validity of the seizure. CERT GRANTED 2/23/09 and decided that the case was moot and vacated the Seventh Circuit decision. 130 S. Ct. 576 (2009). Nevertheless, the Seventh Circuit decision is worth reading for its reasoning.

United States v. Rutledge, 437 F.3d 917 (9th Cir. 2006)

Criminal forfeiture is now an available tool of the prosecutor in any case in which the assets would be subject to civil forfeiture. 28 U.S.C. § 2461(c). That code provides that criminal forfeiture is permissible in cases in which civil forfeiture of the property in issue is authorized and there is “no specific statutory provision” allowing criminal forfeiture for the charged offense. In this case, this code section supported the pretrial seizure and criminal forfeiture of mail and wire fraud proceeds. However, the Ninth Circuit held that the non-profit corporation that was controlled by the defendant was not itself subject to forfeiture, because of the assets of the corporation were not the proceeds of fraud. Rather, the defendant had “taken control” of the corporation through fraudulent means and had engaged in various schemes to self-deal with the assets of the corporation. The fact that the defendant took control of the corporate assets (i.e., he effectively stole the assets from the membership of the non-profit corporation), this did not make the corporate assets the “proceeds” of his fraud. The Ninth Circuit also held that, pretrial, the defendant could attempt to set aside the government’s seizure of assets if the government couldnot establish probable cause to support the seizure. THE DECISION IN THIS CASE WAS WITHDRAWN AS MOOT, 448 F.3d 1080.

United States v. Undetermined Amount of U.S. Currency, 376 F.3d 260 (4th Cir. 2004)

The government contended that the claimants had defrauded the Federal Crop Insurance program and instituted a civil forfeiture proceeding which included seizing various bank accounts and filing a lis pendens on various pieces of property. The claimants sought to release the property prior to trial on the theory that the funds were needed for attorney’s fees and because of hardship. See United States v. Farmer, 274 F.3d 800 (4th Cir. 2001) and 18 U.S.C. § 983(f). The Fourth Circuit held that releasing the funds was not proper and reversed the decision of the trial court which approved limited release of seized funds for purposes of paying attorney’s fees. The various requirements of § 983(f)(1) and (f)(8) must be met in order to order the release of the money. In this case, however, there was no showing that if the funds were released, there would be assets available to satisfy the forfeiture judgment in the end. The availability of other assets which were themselves subject to forfeiture (i.e., real estate) does not satisfy the requirement that there will be no dissipation of the assets prior to judgment. The Fourth Circuit also held that there was insufficient proof of hardship.

United States v. Bowman, 341 F.3d 1228 (11th Cir. 2003)

The Civil Asset Forfeiture Reform Act of 2000 essentially codified James Daniel Good, by requiring a showing of probable cause and exigent circumstances before real property may be seized without a hearing. If property is seized and at a post-seizure hearing there is evidence of probable cause, but not exigent circumstances, the proper remedy is to pay the rents received between the date of the seizure and the date of the hearing to the owner.

Krimstock v. Kelly, 306 F.3d 40 (2d Cir. 2002)

In this civil class action lawsuit, claimants challenged New York City’s policy of seizing vehicles under the city forfeiture laws without providing a meaningful hearing to the claimants. The Second Circuit concluded that a hearing should be afforded to people whose cars had been seized in order to determine the likelihood of forfeiture, as well as the availability of other options.

United States v. Melrose East Subdivision, 357 F.3d 493 (5th Cir. 2004)

The government is only required to establish probable cause in order to obtain a pretrial order enjoining the sale or disposal of assets seized for civil forfeiture under 18 U.S.C. § 983(j)(1)(A). The claimant unsuccessfully argued that the government was required to establish the forfeitability of the assets by a preponderance of the evidence. The probable cause standard applies even when the claimant contends that he needs the assets to retain an attorney.

United States v. Land, Winston County, 163 F.3d 1295 (11th Cir. 1998)

It is not proper for the government to post a “No Trespassing” sign on property prior to the time that a hearing was held to determine the validity of a seizure. Such a sign inhibits the owner’s right to full occupancy, use, and enjoyment of the property. The appropriate manner for the government to protect its interest in property it seeks to forfeit is to file a lis pendens.

United States v. 408 Peyton Rd., S.W., 162 F.3d 644 (11th Cir. 1998)

The government must provide notice and the right to be heard before executing an arrest warrant for property. The failure to provide such notice does not require that the forfeiture proceedings be dismissed, however. Rather, the only remedy is that the government should return any rents received or other proceeds realized from the property during the period of illegal seizure.

United States v. Gotti, 155 F.3d 144 (2d Cir. 1998)

A post-indictment pre-trial seizure is not authorized for substitute assets under 18 U.S.C. § 1963(d)(1)(A), because the pre-trial seizure provision only authorizes the seizure of proceeds, or property affording a source of interest over the enterprise. The substitute asset provision, § 1963(m) does not define a species of proceeds, but, rather, property that may be seized, posttrial, in the event that proceeds are not available.

United States v. Kirschenbaum, 156 F.3d 784 (7th Cir. 1998)

The defendant was indicted on charges of fraud and money laundering related to his alleged Medicare fraud. The indictment sought the forfeiture of $31 million in various accounts. The trial court ordered the freeze of accounts containing $20 million. The Seventh Circuit reached the following conclusions: (1) Protective orders entered pursuant to 18 U.S.C. § 982(b)(1) are immediately appealable; (2) property that is alleged to be involved in (or traceable to) money laundering is subject to pre-trial seizure. The Court of Appeals held that the pre-trial seizure provisions are not limited to drug offenses. When § 982(b)(1) states that pre-trial seizure procedures are governed by 21 U.S.C. §853(e), this refers to the procedure by which seizures should be handled – it is not a limitation on what can be seized. (3) If the restrained money was needed to retain an attorney, a post-indictment hearing may be required (and a pre-indictment hearing is statutorily required) though the defendant made an inadequate showing in this case. (4) The court declined to decide whether there was a Due Process right to a post-seizure hearing. The court noted numerous decisions in other Circuits that ruled both ways on this topic: United States v. Crozier, 777 F.2d 1376 (9th Cir. 1985); United States v. Roth, 77 F.3d 1525 (7th Cir. 1996); United States v. Monsanto, 924 F.2d 1186 (2d Cir. 1991); United States v. Bissell, 866 F.2d 1343 (11th Cir. 1989). (5) The restraint on the defendant’s wife’s property was the proper subject of an appeal and was not proper. The wife was not a party in the district court and could not be restrained from transferring her own assets.

United States v. Jones, 160 F.3d 641 (10th Cir. 1998)

The defendant was indicted for health care fraud, 18 U.S.C. § 1347 and the indictment alleged that certain real and personal property was subject to forfeiture, pursuant to 18 U.S.C. § 982(a)(6). Post-indictment, the government moved to freeze certain assets – $1.5 million – pursuant to 21 U.S.C. § 853(e)(1)(A). The district court denied the defendant’s motion for a pretrial hearing. The defendant argued that the Due Process Clause of the Fifth Amendment required a pre-trial hearing at which the government must establish probable cause to believe that defendants committed health care fraud and the assets named in the indictment are traceable to the offense. The Tenth Circuit holds that in certain situations, the defendant is entitled to a postrestraint, pre-trial hearing. The defendant must first demonstrate to the court’s satisfaction that she has no assets, other than those restrained, with which to retain private counsel and providefor herself and her family. The defendant must also establish a prima facie showing of a bona fide reason to believe the grand jury erred in determining that the restrained assets constituted or were derived, directly or indirectly, from gross proceeds traceable to the commission of the health care offense.