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By Peter Joseph Loughlin, J.D.

This paper will examine the passage of the Civil Asset Forfeiture Reform Act of 2000¹ (CAFRA), the history of American civil forfeiture, the need for reform and the effect of the Act to date. Naturally, depending on one’s socio-political perspective, what is legislative anathema to one reader will be a godsend to another. CAFRA is many things, but it is not and arguably cannot be a cure for all the ills of past legislative and case history of civil forfeiture. At best it represents a cooperative effort and a compromise of human concern and endeavor that offers a fledgling start toward incremental improvements and remediation. At worst it is a fragile and futile agreement that offers little more than cursory appeasement. The author leans guardedly toward the former.

While attempting to take a purely analytical approach, I have found it difficult to remain completely dispassionate in light of some of the horror stories of innocent owners who have been treated so unfairly. Similarly I have found it equally difficult to reconcile our Constitutionally protected right of due process with the personification theory and legal fictions advanced by jurists and legislators to justify the punishment of a "thing", notwithstanding that forfeiture of that thing in the non-legal context is tantamount to the absolute punishment of the owner. This aside, I have tried to provide you, the reader, with an opportunity to examine the both the problems and tendered solutions and, ultimately, to come to your own conclusion.

One problem with an undertaking of this nature is that there is normally a certain degree of lag time that is measured in terms of years from the time of the passage of a novel Act to the time case law fully develops, defines and redefines the Act. CAFRA is no different in this respect, however, considering the sheer volume of civil forfeiture actions commenced by the federal (and state) government each day, we may be fortunate to see case law develop more expeditiously than would normally be expected.

One surprising early development in case law, has given CAFRA retroactive authority.² While it is premature to appreciate the full scope of the decision, for the time being, all new appellate actions may fall under CAFRA notice provisions notwithstanding the date of the offense or the date which civil forfeiture actually commences. The Court of Appeals, in orbiter, has opened the door to expanding CAFRA’s retrospective reach to virtually all facets of the Act in its recognition of the remedial nature of the Act. This would provide some new defenses where none were present, but the possibility also exists for an expansion of retrospective prosecutorial powers – a double-edged sword – only time will tell.

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 This paper is divided into two parts. Part I discusses the development of the Act, a brief historical review of American civil forfeiture law and, some of the deficiencies of the pre-CAFRA era. Part II compares some of the important new provisions of the Act and examines the efficacy of those provisions.

The Civil Asset Forfeiture Reform Act (CAFRA) was passed by Congress and signed by President Clinton on April 25, 2000 and became effective, August 23, 2000.³ The Act was the culmination of the joint and competing efforts of a host of advocates and detractors recognizing the need for an overhaul of the American civil forfeiture process. No single proponent of reform was more vocal and persistent than the Chairman of the House Judiciary Committee, Henry Hyde (R. Ill.)

Notwithstanding Congressman Hyde’s passionate and persuasive call for change and the resulting Act that has become synonymous with his name, the compromises necessary to pass the Bill may have, perhaps, created a less than perfect remedy for the perceived unfairness attributed to civil forfeiture actions in this country. " . . .[A] modicum of sanity . . .", this was the mission of Hyde, the acknowledged father of Civil Asset Forfeiture Reform Act (CAFRA); ⁴-- bringing sanity to the federal system of civil forfeiture, a system that that had been widely criticized by the judiciary, academic commentators and the media⁵, would, perforce, require compromise.

While the Department of Justice and federal prosecutors were busy striking devastating financial blows against organized crime, money launderers and drug traffickers, too many innocent owners of property were caught up in a net cast all too wide.

Horror stories such as United States v. One Ford Tractor⁶ and Calero-Toledo v. Pearson Yacht Leasing Co.,⁷ caught media attention and public pressure began to grow. In United States v One Ford Tractor, a tractor valued at $50,000.00, was the subject of a forfeiture action. The tractor was beneficially owned by Mr. Berchtold who sold it to a neighbor subject to an installment agreement. According to facts, the "criminal" neighbor inadvertently ran over some endangered species of Tipton kangaroo rats and caught the eager attention of the U.S. Fish and Wildlife Service, a division of DOJ.⁸ Similarly in Calero ,a yacht was summarily seized and subjected to forfeiture despite the fact that the owner/lessor had no knowledge of the lessee’s unlawful activity. Interestingly, in this case the Supreme Court carved out a Constitutionally implicit form of innocent owner defense based on an owner doing all he reasonably could to prevent the misuse of his property.

Such a subjective super-defense⁹ is, however, not very effective for owners who find they have to prove a negative. Think for a moment of the criminal standard of proof required to establish the culpability of a drug trafficker or money launderer, the government must prove the defendant had the mens rea (criminal intent) along with proof of his performing the unlawful act or actus reus. To establish a civil forfeiture action against the thing or property, prior to the passage of CAFRA, the government had only to establish probable cause that property should be seized and forfeited. Once the government met this minimum burden, the innocent owner had to then proof the negative, that he or she had no knowledge of the unlawful use of the property. Further, the innocent owner’s standard of proof was the higher standard of a preponderance of evidence.¹⁰

The above cases and examples serve to underscore the unacceptable inequities, if not abuses of a system that had a worthy and noble objective, that is, to punish criminals by confiscating the fruit and source of funding of their unlawful schemes. Worthy as these objectives were, too few protections were afforded to innocent owners who were left without sufficient due process safeguards to justify its continuation without some major revision.

Congressman Hyde was at the heart of the reform movement and is rightly associated so closely with the passage of CAFRA, however, he was not alone. Support was mustered from a variety of lobbying groups including the National Rifle Association and many other members of Congress. Unlikely "partners" also played a vital role in the passage of the Act, the National Association of Attorneys General, the National District Attorneys Association and Department of Justice (DOJ) were all outspoken and have submitted a number of reform proposals and counter-proposals.¹¹ DOJ was also very interested in reforming the civil forfeiture process albeit for different and somewhat opposing reasons.

Their interest lay in providing long sought after legislative changes that would, inter alia, further strengthen the government’s ability to eliminate loopholes that permitted some criminals to avoid civil forfeiture, for example, by fleeing or remaining outside of the United States.¹²

Before we embark on an examination of the current efficacy of CAFRA, a brief historical review of the development of civil forfeiture in this country will provide us with a better perspective from which to appreciate the changes made, why they were necessary and, more importantly, a determination of their success.

Civil forfeiture in the United States is unique in respect of other countries in that it focuses on in rem jurisdiction as opposed to in personam jurisdiction. Unlike in personam or personal jurisdiction where the court binds the person of the defendant, in rem jurisdiction is based on pure legal fiction whereby the "thing" or property is treated as being the guilty party. This legal fiction rests upon the personification theory whereby an inanimate object, (i.e., one’s property), is imbued with a personality and then held accountable for "its" action.¹³ In rem proceedings are not altogether absent in other jurisdictions throughout the world, however, the United States, uses it as the exclusive theory and basis of civil forfeiture action. However, all forms of civil (in rem) forfeiture can be traced back to Biblical origin¹⁴ and early English common law whereby the deodand required that the Crown be compensated for the loss of life of one of its subjects caused by an inanimate object (or animal). The price of compensation was, of course the value of the thing.¹⁵

The American fascination with in rem forfeitures seems to have started early in American history, however, it was used primarily as a means of collecting revenue and rests primarily in Admiralty law. For example, in the Palmyra "¹⁶ . . .the Supreme court upheld the seizure of a Spanish ship even though there was an acquittal of piracy charges that had caused the initial seizure . . .noting that civil forfeiture was in rem and thus unrelated to the guilt of the ownership or personal acts of the parties."¹⁷ Similar support of in rem civil forfeiture is found in United States v. Daniel Goode Real Property¹⁸, wherein the court rejected the innocent owner defense argument of a car dealer seeking to protect his secured interest in an automobile on the basis that the action was against the thing and not the owner.

Notwithstanding this apparent judicial support of in rem forfeiture, such actions were actually quite rare and were generally restricted to customs and revenue collection related cases. This restrictive posture of the judiciary, Congress and state legislators made an abrupt and sudden change in 1970.

In 1970 Congress enacted the Comprehensive Drug Abuse Prevention and Control Act.¹⁹ This Act empowered the government use civil forfeiture against property used or acquired in violation of federal drug laws.

The benefits to the government were immediate and thus precipitated a number of reforms over the following years to broaden the overall scope of civil forfeiture to include a whole multitude of criminal activity.

The doctrine of fugitive disentitlement has long been recognized by the courts in matters of criminal forfeiture. The doctrine sets forth the principle that a person who is a fugitive by virtue of fleeing or remaining outside the jurisdiction of the court, should not have rights or standing to defend a civil forfeiture action related to that criminal action. For a time and within certain circuits, this principle was extended to include civil forfeiture actions. In 1996 the Supreme Court decision in Degen v. United States²⁰ sounded the death knell to the doctrine – at least for civil forfeitures.

Degen came to the court on certiorari from the ninth circuit court of appeals and concerned the typical fugitive disentitlement scenario. Brian Degen owned several properties in the United States and was under indictment in the U.S. District Court for the District of Nevada for distributing marijuana, laundering money and other related crimes. In conjunction with the criminal indictment, the District court also unsealed a civil complaint against the properties seeking their forfeiture.²¹ Brian, a dual citizen of the U.S. and Switzerland had no intention to appear and answer the criminal charges and he could not be extradited. However, he did attempt to answer the civil complaint without physically appearing before the court, an attempt that was flatly denied by the District Court citing the Fugitive Disentitlement Doctrine. The Ninth Circuit Court of Appeals affirmed.

The Supreme Court however, rejected this argument and refused to extend the fugitive disentitlement doctrine to civil forfeiture. The Supreme Court provided a valuable legal strategy for "innocent" owners who cannot or will not (perhaps for valid reason) return to the U.S. to defend against a related criminal action. The fugitive disentitlement doctrine has thus been generally inapplicable to civil forfeiture since 1996.

The provisions of CAFRA have effectively reversed the Degen decision by legislation.

"The [Act] invents the principle of ‘fugitive disentitlement’ by empowering the U.S. to ‘disallow’ a person from claiming an interest in property in a civil forfeiture case if he or she flees the U.S. to avoid criminal prosecution or refuses to return to face charges."²²

CAFRA, then, essentially contravenes the wisdom of the Supreme Court’s finding that " . . . disentitlement was too blunt an instrument for advancing either the interest of redressing the indignity visited upon the district court by the owner’s absence from the criminal prosecution or the interest in deterring flight from criminal prosecution by the owners and others."²³ With the blunt stroke of the pen CAFRA has, in this area, actually reduced the rights of innocent owners.

The courts have long recognized the relationship between civil forfeiture and punishment, notwithstanding the personification theory and in rem jurisdiction. The Supreme Court seemed to recognize, albeit indirectly, that there is a fundamental unfairness about forfeiting one’s property for a crime one has neither been convicted of nor, perhaps, even charged with. In United States v. Bajakajian,²⁴ the decision rested on the excessive fines clause of the Eighth Amendment. That is, whether or not a civil forfeiture is excessive if it is grossly disproportional to the gravity of the offense. The court ruled in the affirmative and arguably in recognition that the punishment is to the owner rather than the thing.

CAFRA, is essentially the codification of Bajakajian and, like its progeny, the claimant must establish the Eighth Amendment violation.²⁵ In this sense, CAFRA does not create any new rights for owners but rather maintains the status quo.

Under the old law an owner’s property could be seized and subjected to civil asset forfeiture proceedings without any opportunity to establish a hardship. CAFRA addresses this inadequacy with 18 U.S.C § 983(f) which provides for the release of a claimants possessory property provided the property is not contraband, cash, evidence likely to be used in a crime, etc.²⁶ Essentially, the court will balance the interest of the government with the owners interest looking to such factors as the owners ties to the community, the severity of the hardship (e.g., homelessness, loss of profits, etc.), and the likelihood the property "by reason of design or other characteristic" or by weakening of the governments case.²⁷

This new reform can provide a great deal of relief to owners who would otherwise be displaced from their homes and businesses while scrambling to defend against forfeiture action and perhaps a criminal action. This provision takes a great leap forward toward basic fundamental fairness with negligible loss to the government.

Prior to the enactment of CAFRA owners had little protection against federal civil asset forfeiture. For the government such actions were "easy-pick’ns" as the burden of proof essentially rested with the owner who had to show by a preponderance of evidence that the property should not be forfeited. In actuality the Government had a preliminary burden to establish, by mere probable cause, that the property should be forfeited, at which point the real burden shifted to the owner.

The House Judiciary Committee noted that the government had the burden to " . . . prove almost nothing."²⁸ This forces the owner to prove a negative (see discussion in Part I), and permitted the government to impose " . . . a sort of ‘super innocence’ that even the criminal law does not require of citizens, as it authorizes civil forfeiture of property for mere knowledge (mens rea), broadly defined, or inaction (the failure to prevent others from crime)."²⁹

CAFRA has, for all intents and purposes, corrected this unfair advantage and now imposes upon the government the burden of proving, by a preponderance of evidence, that the property should be forfeited. Congressman Hyde and other members of Congress were actually pushing for a much more stringent burden of proof, that is, by "clear and convincing evidence", however, this effort fell victim to compromise.³⁰ Additionally, CAFRA dispenses with another previously held troublesome government advantage, the use of hearsay in the government’s forfeiture case.³¹

Despite the obvious advantages advanced by this provision of the Act, sharp criticism has continued to be launched against the government. Brant Hadaway, for example, believes the governments [insatiable] pecuniary interest in forfeited proceeds will not precipitate a policy change on the current emphasis from seizing property in favor of fighting crime."³²

Notwithstanding the criticisms and imperfections of the Act, the burden of proof change presents an enormous new advantage for owners and represents a major victory for reformist, fairness and sanity. It seems likely to this author that the increased burden of proof requirements will ultimately trickle down to effect modifications in law enforcement seizure policies.

Under the old law, the government had little pressure to meet administrative deadlines other than a general requirement that notice to the owner be made promptly.³³ Further, once noticed, the owner had to post a cost bond in addition to filing a claim. However, government policy was normally to give notice of intent to commence forfeiture within 60 days of seizure. The exceptions were, as would be expected, where such notice would risk a criminal investigation, concealment or destruction of evidence, danger to witnesses, informants, etc. Obviously, some forfeiture notice, from time-to-time, did not fall within the self-imposed 60 day period and did not fall within the recognized exceptions – but nevertheless satisfied the promptness provisions of the statute – this created uncertainty and an open door to abuse.

Under the new Act, the government must give the owner notice within 60 days of seizure or upon identifying the property’s owner. However, the Act also provides for the safeguarding of the aforementioned exceptions by permitting the government extensions to the 60 day notice requirement.

In order to invoke the extension, the government must file a written motion with the court stating the request and reason for the extension.³⁴

Once noticed, the Act provides that the owner must file a claim within 30 days, but the cost bond requirement has been completely abolished. Another rigorous deadline placed on the government by CAFRA is that the government must actually file a civil forfeiture complaint within 90 days of receipt of the owners claim or forfeiture will be permanently barred.³⁵

One further point on limitation period changes deserves mention, challenges to completed forfeitures. In the past, where the government was successful in a forfeiture action after giving proper notice³⁶ to the owner/claimant, there was little a claimant could do other than appeal to the discretion of the Attorney General. Where lack of proper notice was at issue, an owner/claimants rights were preserved under case law and could be extended for up to 11 years.³⁷ This was, however, ambiguous and could vary from Circuit to Circuit and thus cause uncertainty and unfairness.

CAFRA now provides for a uniform statutory period of five years from the date of publication of final forfeiture to challenge the forfeiture. Although this is, at least potentially, less than what may have been available under the old law, the degree of certainty that comes within the Act seems to provide for a fair tradeoff.

The limitation periods set forth in CAFRA, on the surface, provide little more than a codification of the former system, however, the deadline requirements are now firm and leave little room for the government to abuse the due process rights of owners. The government still retains the right to delay notice in "sensitive" cases, but must now justify those delays and extensions and must have judicial approval as well. As such, these provisions seem to have achieved a fair balance between prosecutor and owner.

Under the old law, the government was generally exempt from tortuous claims stemming from their seizure and possession of an owners property in connection with civil forfeiture actions. Under CAFRA, the Federal Tort Claims Act is amended³⁸ to provide for compensation to victims of forfeiture where their property was seized for the purposes of forfeiture and the claimant was not convicted of a crime giving rise to that forfeiture.³⁹ Brant Hadaway is highly critical of this feature as being too vague, particularly with respect to the "seized for the purposes of forfeiture" clause.⁴⁰ Mr. Hadaway is of the opinion that law enforcement might use the imprecise wording as a loophole from which to seize the property under the guise of some other plausible purpose such as for evidence rather than for its true purpose of civil forfeiture. The emphasis would later shift to the true purpose once the government is certain it is on strong legal footing.

While it is true that the potential for abuse does exist and will no doubt be exploited to some extent, the Act sets forth a clear Congressional mandate and a departure from the virtual absolute government immunity of the past.

CAFRA is ground-breaking in that it provides for court-appointed counsel for indigent/owners provided that: 1) the indigent/owner makes a "good faith" claim and is already represented by court-appointed counsel in the related criminal case;⁴¹ and 2) if the subject of the forfeiture is the indigent’s primary residence.⁴²

Moreover, non-indigent claimants may be entitled to court and litigation costs provided they "substantially prevail" in the civil forfeiture action.⁴³ The term "substantially prevail" may be somewhat ambiguous and is, in fact, not very clearly defined, however, this is not dissimilar to other legal terms used in statutory construction. For example, in criminal law statutes defining the mens rea for murder, we frequently see the term "intent to inflict grievous bodily harm"; the word grievous has been criticized as being ambiguous, however, it provides the trier of fact with a certain range of discretion upon which to make a sound judgment. "Reasonable" is another good example of this planned ambiguity. Therefore, by choosing "substantially prevail", the drafters of CAFRA may have actually built in a safety valve by which the wisdom of the court could make a discretionary but rational decision on whether reimbursement meets the standards of justice.

CAFRA provides for an innocent owner defense. On the surface this does not seem to be a major development as most pre-CAFRA laws often contained provisions, statutorily or by case law, for the innocent owner defense. What is unique about CAFRA is that it created a uniform innocent owner defense applicable to all federal civil asset forfeiture statutes. The new law establishes that "[a]n innocent owner’s interest in property shall not be forfeited under any civil forfeiture statute".⁴⁴

Innocent owners fall into two possible categories, pre-existing owners and after-acquired owners. In the case of the former they must establish by a preponderance of evidence that they are innocent owners. After meeting this initial burden they must show: 1) that they are "in fact" the owner of the property; and 2) that they did not know of the unlawful activity associated with their property; or 3) that upon learning of the conduct they did all they could reasonably be expected to do to prevent it.⁴⁵ The owner is not, however, required to endanger himself or others not engaged in the unlawful activity.⁴⁶

In the case of the latter, owners who have an "after-acquired interest in the property, they must establish 1) that they are "in fact" the owner of the property; and 2) that they, are bona fide purchasers for value; and 3) at the time of acquisition they did not know or have reason to know that the property is the proceeds of criminal activity. This is a departure of the old law and favors the government.

The old law looked to the state of mind of the after-acquired owner at the time of the crime.⁴⁷

The innocent owner defense provisions of the Act bring sanity and uniformity to the civil forfeiture. The modifications with respect to after-acquired property interest do not present a substantial diminution of the defense and helps avoid sham transfers of property by criminals to third parties for the sole purpose of avoiding forfeiture. Furthermore, the definition of "bona fide purchaser for value" is expanded to include property acquired by inheritance, probate, or even acquired for no value where the property is the claimants primary residence.⁴⁸

As indicated in the introduction, it is rare to have case law develop quickly after the enactment of such novel legislation as CAFRA. One recent case, United States v. Real Property,⁴⁹ raises the specter of retroactive application of CAFRA. Although technically confined to the sixth Circuit Court of Appeals the decision is potentially far reaching. The ratio of the decision was limited to the issue of notice, but the court, in orbiter, noted the Act’s retrospective authority. In particular, the court took the view that where the Act states it is applicable to any forfeiture proceeding after its enactment date of August 23, 2000, "any" was interpreted to include an appellate proceeding and thus treated as a de novo action for purposes of applying CAFRA. Further, the court went on to directly point out that "[t]he dangers that the rule against retrospective application of statutes guards against are not generally present when the new legislation is remedial in nature and is designed to rectify an unfairness to an individual vis-a-vis the government." . . . "[I]t [CAFRA] corrects an aberration that existed previously by leveling the playing field between the government and persons whose property has been seized".⁵⁰

Again, it must be understood that we are at the very early stages of the judicial shaping of the Act, however, such decisions as this provide some interesting guideposts to where civil asset forfeiture may be heading.

CAFRA provides a beginning for much needed change in American civil asset forfeiture law. The passage of the Act was only possible through a compromise of conflicting and competing interests. In this respect it stands as a testimony to our republican form of government. As with any compromise, each party walks away with something that is less than they wished for, a true quid pro quo, but one where neither side is quite satiated. This is the essence of CAFRA.

Not every deficiency and inequity of federal civil asset forfeiture has been addressed, yet considerable gains have been achieved for claimants.

U.S. Attorneys and law enforcement agencies have also been successful in making certain their interests are represented in the Act as well – sometimes contravening Supreme Court precedent favoring the claimant.⁵¹ Therefore, all walk away from the negotiating table with a sense that something very substantial was accomplished in CAFRA.

Admittedly, some of the more criticized and controversial problems in civil asset forfeiture remain untouched. For example, the very concept of in rem forfeiture and the punishment of the "thing" seems to tear at the very seams of our Constitution and our common sense. To ignore that the depravation of one’s property is a form of condemnation and punishment is logically unsound. CAFRA has not changed this fundamental premise behind civil forfeitures notwithstanding the overall merits of the Act.

America has been distinguished as a leader in the global fight against crime. As such, rightly or wrongly, we, as a nation, are often looked upon as a paradigm for other countries to emulate. CAFRA is groundbreaking, however, it would be premature for anyone to consider the Act to be a model for wholesale exportation. The Sixth Circuit Court of Appeals has rightly pointed out that the Act is remedial in nature and by its own title, it is a "reform" Act.⁵² American civil asset forfeiture law is undergoing evolutionary changes that offer advances in the principles of fundamental fairness that have heretofore been conspicuously absent. Thus the only approach to take is the prudent one, that is, to wait and watch closely and determine whether or not the expectations of reformation have been achieved and remain ever mindful that change will come slowly and will likely require modifications, amendments and, of course, compromise.

For now, we can be assured the CAFRA has brought at least a "modicum of sanity" to the federal civil forfeiture system

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