Aug 14

Federal Lawsuit Highlights Powerful Civil Forfeiture Tool

This post was co-authored by White Collar Alert contributor, Erin Dougherty.

In a federal complaint filed on Monday, three Philadelphia homeowners whose homes have been targeted for state civil forfeiture have sued the city of Philadelphia, Mayor Michael Nutter, the Philadelphia Police Department, District Attorney Seth Williams, and the Philadelphia District Attorney’s Office. Civil forfeiture, unlike criminal forfeiture which occurs after a person has been found guilty of a crime, can happen before the final adjudication and allows the government to literally sue the property in order to obtain it. Plaintiffs’ lawyers are seeking class action status for the case. The complaint claims the defendants are using this process as a cash cow by:

Using a rigged system of copied ‘form’ legal documents and endless proceedings in a  court run by the prosecutors themselves, Philadelphia’s ‘robo-forfeiture’ program stripped thousands of city residents of over 1,000 residences, 3,200 vehicles and $44 million in cash over an 11-year period, ultimately raking in more than $64 million in revenue outside its appropriated budget.

The District Attorney’s Office has denied the allegations in the lawsuits and previously defended the civil forfeiture program and said that is has transformed drug-ridden communities that had few other means of recourse against dangerous local dealers. On Tuesday, District Attorney Williams released a statement that the District Attorney’s Office “pursues forfeiture as a final disposition judiciously.”

The primary statute for civil forfeiture in the federal white collar criminal context is 18 U.S.C. § 981, which provides extremely broad authority for the government to obtain assets. The assets specified by statute as subject to civil forfeiture include, inter alia, “any property, real or personal, which constitute or is derived from proceeds traceable to a violation” of “any offense constituting ‘specified unlawful activity’ (as defined in section 1956(c)(7) of this title), or a conspiracy to commit such offense.” 18 U.S.C. § 981(a)(1)(C). Pursuant to § 981, “[t]he burden of proof is on the government to establish, by a preponderance of the evidence, that the property is subject to forfeiture. 18 U.S.C. § 983(c)(1). Once the government meets its burden, the burden then shifts to the claimant to establish, by a preponderance of the evidence, that the property is not subject to forfeiture and should not be confiscated. Such a showing requires evidence that the claimant did not know of or consent to the illegal activity. See United States v. Funds from Prudential Securities, 362 F. Supp. 2d 75 (D.D.C. 2005).

The average citizen is usually unaware of how low the burden is for the government to take property in a state or federal civil forfeiture proceeding. As a white collar attorney, it is important to advise your client fully about this possibility in the beginning of your representation. Let’s hope the federal complaint filed on Monday sheds some more light on this powerful tool for prosecutors.

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