Civil Asset Forfeiture Reform Act: Overview of S. 1931 and H.R. 1658, 106th Congress

Congressional research reportMar 29, 2000

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Civil Asset Forfeiture Reform Act: Overview of

S. 1931 and H.R. 1658, 106th Congress

Updated March 29, 2000

(name redacted)

Specialist in American Public Law

American Law Division

Congressional Research Service ˜ The Library of Congress

ABSTRACT

Property owners who contest the federal seizure of their property allegedly linked to criminal

activity would be afforded greater safeguards under S. 1931 and H.R. 1658, 106th Congress.

Civil Asset Forfeiture Reform Act: Overview of

S. 1931 and H.R. 1658, 106th Congress

Summary

Difficulties still persist for the innocent-third-party who tries to justify his/her

rights in seized property due to its association with criminal conduct. On May 4,

1999, Representative Henry Hyde introduced H.R. 1658 (Civil Asset Forfeiture

Reform Act) which, among other purposes, is designed to provide a more uniform

procedure for Federal civil forfeitures. As reported out of the House Committee on

the Judiciary on June 18, 1999, the bill's main effect would provide greater safeguards

for property owners and make the Government's job of justifying the seizure more

difficult. Among other things, it would (1) provide several protections for people at

risk of having their assets seized; (2) place the burden of proof in civil forfeiture

proceedings upon the government; (3) allow for the provision of counsel to the

indigent; (4) allow for the pre-adjudication return of property to owners upon a

showing of hardship; (5) eliminate the cost bond requirement; (6) creates a uniform

innocent owner defense; (7) allow property owners adequate time to challenge a

seizure; and (8) allow property owners to sue the government for the negligent

damage or destruction of their property.

On June 24, 1999, the House passed H.R. 1658 (Hyde-Conyers civil forfeiture

reform bill) by a vote of 375-48. On June 28, 1999, the measure was referred to the

Senate Judiciary Committee.

Following the incorporation of some of the provisions in S. 1701, S. 1931

amended H.R. 1658 which passed the Senate Judiciary Committee by a voice vote on

March 23, 2000. The full Senate passed the compromise version of H.R. 1658 by

voice vote on March 27, 2000.

Contents

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

H.R. 1658 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Section 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Section 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Current law: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Current law: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Current effect: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Current law (pursuant to unanswered notice): . . . . . . . . . . . . . . . . . . . . . . 4

Current law: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Current law: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Current law: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Current law: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Current law: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Current law: Requirements for Claim and Answer. . . . . . . . . . . . . . . . . . . . 8

Section 3: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Section 4: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Section 5: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Section 6: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

The Substitute Amendment (S. 1931) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Civil Asset Forfeiture Reform Act: Overview of

S. 1931 and H.R. 1658, 106th Congress

Background

As a result of the increased volume of forfeiture, numerous third parties have

been drawn into forfeiture litigation. Coupled with the complexities of forfeiture

litigation and the inconsistencies in the judicial decisions, it has been difficult for the

innocent-third-party to justify his/her rights in the seized property.

Prior to the passage of the Comprehensive Forfeiture Act of 1984, “all third

parties, whether asserting a legal or equitable basis for relief from an order of criminal

forfeiture, [were required to] pursue the remedy of petitioning the Attorney General

for remission or mitigation of forfeiture.”1 The determination of these petitions was

left entirely to the discretion of the Attorney General and was not subject to judicial

review.2 However, Congress and the Department of Justice were not comfortable

with this practice and they agreed to create a limited exception which is as follows:

“[I]f a third party can demonstrate that his interest in the forfeitured property is

exclusive of or superior to the interest of the defendant, the third party’s claim renders

that portion of the order of forfeiture reaching his interest invalid. The [Senate

Judiciary] Committee strongly agrees with the Department of Justice that such third

parties are entitled to judicial resolution of their claims.”3 As a result, Congress

provided two categories of third party, standing to petition the courts to determine

the validity of their claims to forfeited assets. A third party standing to petition the

courts exists: “first, where the petitioner had a legal interest in the property that, at

the time of the commission of the acts giving rise to the forfeiture, was vested in him

rather than the defendant or was superior to the interest of the defendant; or second,

where the petitioner acquired his legal interest after the acts giving rise to the

forfeiture but did so in the context of a bona fide purchaser for value and had no

reason to believe that the property was subject to forfeiture.”4 However, for the

majority of third parties who assert an equitable, rather than a legal basis for relief,

petitioning the Attorney General for remission and mitigation remains the exclusive

remedy.5

S.Rept. 98-225, 98th Cong. 1st Sess., reprinted in 1984 U.S. Code Cong. & Admin. News

3182, at 3390.

Id.

Id. at 3391.

Id. at 3392.

Id. at 3391.

CRS-2

Similar to H.R. 1965, which was introduced in the 105th Congress, H.R. 1658

was created to make federal civil forfeiture procedures more equitable for property

owners in general and in addition give innocent property owners a process for

recovering their property and make themselves whole.6

On June 24, 1999, the House passed H.R. 1658 by a vote of 375-48.7 The

Senate passed an amended version of H.R. 1658 on March 27, 2000. This report sets

forth the provisions of H.R. 1658 and then describes the amendments which formed

the compromise.

H.R. 1658

Section 1 States its title: Civil Asset Forfeiture Reform Act.

Section 2 Creation of General Rules Relating to Civil Forfeiture Proceedings. This

section in general sets out an extensive addition to Title 18 of the United States

Code8 regarding the creation of general rules relating to civil forfeiture proceedings.

Section 981 of Title 18 of the United States Code would be amended “by

inserting after subsection (i) the following: (j)(1)(A) In any nonjudicial civil

forfeiture proceeding under a civil forfeiture statute, with respect to which the

agency conducting a seizure of property must give written notice to interested

parties, such notice shall be given as soon as practicable and in no case more than

60 days after the later of the date of the seizure or the date the identity of the

interested party is first known or discovered by the agency, except that the court may

extend the period for filing a notice for good cause shown. (B) A person entitled to

written notice in such proceeding to whom written notice is not given may on motion

void the forfeiture with respect to that person’s interest in the property, unless the

agency shows—(i) good cause for the failure to give notice to that person; or (ii) that

the person otherwise had actual notice of the seizure. (C) If the government does not

provide notice of a seizure of property in accordance with subparagraph (A), it shall

return the property and may not take any further action to effect the forfeiture of

such property.

Current law: Once the decision has been made with regard to proceeding with the

administrative forfeiture, an unjustified delay by the seizing agency may later be the

basis for a finding that a claimant has been denied his/her due process right to a

hearing within a reasonable time on the forfeitability of the seized property.9

See H.Rept. 98-358, 105th Cong. 1st Sess. 27 (1997).

145 Cong. Rec. H4878 (daily ed. June 24, 1999).

Title 18 of the United States Code concerns crimes and criminal procedure.

See United States v. Certificate of Deposit No. 8101730026, First National Bank of Omaha,

84 F.3d 1034 (8th Cir. 1996); United States v. $52,800.00 in U.S. Currency, 33 F.3d 1337,

1339 (11th Cir. 1994); United States v. $23,407.69 in U.S. Currency, 715 F.2d 162, 165 (5th

Cir. 1985).

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(2)(A) Any person claiming property seized in a nonjudicial forfeiture

proceeding may file a claim with the appropriate official after the seizure. (B) A

claim under subparagraph (A) may not be filed later than 30 days after—(i) the date

of final publication of notice of seizure; or (ii) in the case of a person entitled to

written notice, the date that notice is received. (C) The claim shall state the

claimant’s interest in the property.

Current law: A claim in a civil forfeiture action must be filed within ten days after

the execution of process, and an answer must be filed within twenty days after the

filing of a claim.10

(D) Not later than 90 days after a claim has been filed, the Attorney General

shall file a complaint for forfeiture in the appropriate court or return the property,

except that a court in the district in which the complaint will be filed may extend the

period for filing a complaint for good cause shown or upon agreement of the parties.

Current law: Formal judicial forfeiture proceedings are initiated by the filing of

a complaint against the property pursuant to the Federal Rules of Civil Procedure

Supplemental Rule C(2). Rule C(2) provides that complaints in civil forfeiture actions

must be verified. The purpose of the verification requirement is to cause an

authorized government official to satisfy himself that the allegations in the complaint

are true, based either on personal knowledge or on information and belief.11 A

complaint for civil forfeiture should consist of the following facts, statements, and

allegations:12 (1) the basis for the court’s jurisdiction;13 (2) a description of the

property that is the subject of the forfeiture proceeding, including its appraised value,

and, if the action began as an administrative, a statement that a claim and cost bond

were filed; (3) a statement that the property is or will be within the judicial district

during the pendency of the action; (4) the place of seizure and whether it took place

on land or navigable water; (5) the date of seizure and the identity of the seizing

agency; (6) the circumstances from which the forfeiture claim arises; (7) an allegation

that the property has been forfeited to the United States; and (8) a request for such

relief as the court deems proper.

Claimants must file claims with the clerk of the court on or before a date named

in the notice. For cause shown, the court may enlarge the time within which claims

may be filed.

(E) If the government does not file a compliant for forfeiture of property in

accordance with subparagraph (D), it shall return the property and may not take any

further action to effect the forfeiture of such property.

Supplemental Rules For Certain Admiralty And Maritime Claims, Federal Rules of Civil

Procedure (Supplemental Rule C(6)).

See United States v. Banco Cafetero International, 608 F. Supp. 1394, 1400 (S.D.N.Y.

1985).

F.R.C.P., Supplemental Rules C(2) and E(2)(a).

28 U.S.C. §§ 1345, 1355, 1395 (1994).

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Current effect: The government’s reasons for postponing judicial forfeiture

proceedings is generally the critical factor in the determination of whether the

claimant has been denied the right to due process. The reason most often offered and

found acceptable are based on related criminal investigations and proceedings14

(F) Any person may bring a claim under subparagraph (A) without posting

bond with respect to the property which is the subject of the claim.

(3)(A) In any case where the Government files in the appropriate United States

district court a compliant for forfeiture of property, any person claiming an interest

in the seized property may file a claim asserting such person’s interest in the

property within 30 days of service of the Government complaint or, where

applicable, within 30 days of alternative publication notice.

(B) A person asserting an interest in seized property in accordance with

subparagraph (A) shall file an answer to the Government’s complaint for forfeiture

within 20 days of the filing of the claim.

Current law (pursuant to unanswered notice): If no one claims the seized

property and files the necessary cost bond within twenty days, the seizing agency may

declare the property forfeited administratively to the United States and dispose of it

according to law.15

(4)(A) If the person filing a claim is financially unable to obtain representation

by counsel, the court may appoint counsel to represent that person with respect to

the claim.

(B) In determining whether to appoint counsel to represent the person filing the

claim, the court shall take into account such factors as—

(i) the claimant’s standing to contest the forfeiture; and

(ii) whether the claim appears to be made in good faith or to be frivolous.

equivalent to that provided for court-appointed representation under section 3006A

of this title, and to pay such cost [that] are authorized to be appropriated [and] such

sums as are necessary as an addition to the funds otherwise appropriated for the

appointment of counsel under such section.

United States v. One Rural Lot, 739 F.Supp. 74, 77 (D. Puerto Rico (1990) (Both civil

forfeiture proceedings and criminal actions can proceed simultaneously or consecutively

because a criminal case is an entirely separate action from a civil forfeiture proceeding);

United States v. U.S. Treasury Bills Totaling $160,916.25 and U.S. Currency Totaling

$2,378.75, 750 F.2d 900, 902 (11th Cir. 1985) (per curiam)(holding that a 14-month delay

was not unreasonable because of the government’s “diligent pursuit” of the pending criminal

proceeding); United States v. Eighteen Thousand Five Hundred and Five Dollars and Ten

Cents, 739 F.2d 354, 356 (8th Cir. 1984)(holding that the delay was justified because the

property was being held as evidence for a state criminal proceeding).

19 U.S.C. § 1609 (1994).

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Current law: Indigents are entitled to appoint counsel to assist them in criminal

forfeiture cases16, but not in civil forfeiture cases.17

(5) In all suits or actions brought under any civil forfeiture statue for the civil

forfeiture of any property, the burden of proof is on the United States Government

to establish by clear and convincing evidence, that the property is subject to

forfeiture.

Current law: Reasonable grounds to believe that property constitutes proceeds

derived from an illegal activity may be based upon the government’s showing of

probable cause. Probable cause for forfeiture is generally defined as a reasonable

ground for belief of guilt, supported by less than prima facie proof but more than

mere suspicion.18

Probable cause for forfeiture may be shown by direct evidence, such as

eyewitness testimony or a claimant’s admission against interest.19

Circumstantial evidence may also be used to satisfy the probable cause

requirement in civil forfeiture cases.20 For example probable cause to believe that

cash was or would have been used in exchange for illegal drugs21 may be established

by a showing that it was discovered in large amounts along with drug paraphernalia

and other indications of drug activity or dealing.22 Also, reasonable grounds to

believe that property constitutes proceeds derived from an illegal drug transaction23

may be proved by a showing that the subject items were purchased (usually in cash)

when the buyer had no known source of income except drug trafficking.24 Disclosure

18 U.S.C. § 3006A(c) (1994); Lewis v. Casey, 518 U.S. 343, 371 (1996)(Thomas, J.

concurring); United States v. Martinson, 809 F.2d 1364, 1370 (9th Cir. 1987).

United States v. Sardone, 94 F.3d 1233, 1236 (9th Cir. 1996) see also United States v.

Michelle’s Lounge, 39 F.3d 684, 698 (7th Cir. 1994).

See United States v. 1982 Yukon Delta Houseboat, 774 F.2d 1432, 1434 (9th Cir. 1985);

United States v. Four Million Two Hundred Fifty-Five Thousand, 762 F.2d 895, 903 (11th

Cir. 1985); United States v. One 1979 Mercury Cougar XR-7, 666 F.2d 228, 230 n.3 (5th Cir.

1982).

See United States v. $49,576.00 U.S. Currency, 116 F.3d 425, 427 (9th Cir. 1997); Ted’s

Motors v. United States, 217 F.2d 777, 780 (8th Cir. 1954).

See, e.g., United States v. $93,685.61 in U.S. Currency, 730 F.2d 571, 572 (9th Cir. 1984),

cert. denied, 469 U.S. 831 (1984).

21 U.S.C. § 881(a)(6) (1994).

United States v. $93,865.61 in U.S. Currency, 730 F.2d at 572; United States v. Twenty To

Thousand, Two Hundred Eight Seven Dollars ($22,287) United States Currency, 709 F.2d

442, 449 (6th Cir. 1983).

21 U.S.C. § 881 (a)(6) (1994).

United States v. Certain Real Property Located at Route 3, 568 F.Supp. 434, 436 (W.D.

Ark. 1983); United States v. $131,602.00 in U.S. Currency, 563 F.Supp. 921, 923 (S.D.N.Y.

(continued...)

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of the taxpayer’s (wrongdoer) recent tax returns pursuant to 26 U.S.C. §

6103(i)(4)(A) (1994) may be useful under these circumstances.

(6)(A) An innocent owner’s interest in property shall not be forfeited under any

civil forfeiture statute.

(B) With respect to a property interest in existence at the time the illegal

conduct giving rise to forfeiture took place, the term `innocent owner’ means an

owner who—

(i) did not know of the conduct giving rise to forfeiture; or

(ii) upon learning of the conduct giving rise to the forfeiture, did all

that reasonably could be expected under the circumstances to

terminate such use of the property.

the forfeiture has taken place, the term `innocent owner' means a person who, at the

time that person acquired the interest in the property, was-(i)(I) a bona fide purchaser or seller for value (including a purchaser

or seller of goods or services for value); or

(II) a person who acquired an interest in property through probate

or inheritance; and

(ii) at the time of the purchase or acquisition reasonably without

cause to believe that the property was subject to forfeiture.

(7) For the purpose of paragraph (6)-(A) ways in which a person may show that such person did all that

reasonably can be expected may include demonstrating that such person,

to the extent permitted by law-(i) gave timely notice to an appropriate law enforcement agency of

information that led the person to know the conduct giving rise to a

forfeiture would occur or has occurred; and

(ii) in a timely fashion revoked or attempted to revoke permission for

those engaging in such conduct to use the property or took

reasonable actions in consultation with a law enforcement agency to

discourage or prevent the illegal use of the property; and

(B) in order to do all that can reasonably be expected, a person is not

required to take steps that the person reasonably believes would be likely

to subject any person(other than the person whose conduct gave rise to the

forfeiture) to physical danger.

Current law: Congress crafted an "innocent owner" defense to forfeiture in 21

U.S.C. §§ 881(a)(4), (a)(6), and (a)(7) (1994). The "innocent owner" defense under

(a)(6) and (7) are the same: no owner's interest in property may be forfeited "by

reason of any act or omission established by that owner to have been committed or

omitted without the knowledge or consent of that owner."25 Congress later added the

innocent owner defense of subsection 881(a)(4), which is somewhat different: no

owner's interest in a "conveyance" shall be forfeited "by reason of any act or omission

(...continued)

1982); cf. 21 U.S.C. § 853(d) (1994)(rebuttable presumption as to forfeitable drug proceeds

in a criminal forfeiture trial).

21 U.S.C. §§ 881(a)(6) and (a)(7) (1994).

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established by that owner to have been committed or omitted without the knowledge,

consent, or willful blindness of the owner."26 Paragraphs (6) and (7) specifically

recognize an owner's innocence as a defense to the forfeiture of his interest in the

property if he did not know of or consent to the illegal conduct. The statutory

defense, which is available to "any person with a recognizable legal or equitable

interest in the property seized,"27 must be established by the owner.28 These statutory

provisions appear to offer broader protection than the Calero-Toledo v. Pearson

Yacht Leasing Co.29 claimant's defense because it does not require the owner to show

that he/she "... did all that [he/she] reasonably could to avoid having [his/her] property

put to an unlawful use.30

(8) As used in this subsection:

(1) The term civil forfeiture statute means any provision of Federal law

(other than the Tariff Act of 1930 or the Internal Revenue Code of 1986) providing

for the forfeiture of property other than as a sentence imposed upon conviction of

a criminal offense.

Current law: Forfeiture procedures apply to any civil forfeiture action brought

under title 18 U.S.C. § 1 et seq., the Controlled Substances Act, or the Immigration

and Naturalization Act.

(2) The term `owner' means a person with an ownership interest in the specific

property sought to be forfeited, including a leasehold, lien, mortgage, recorded

security device, or valid assignment of an ownership interest. Such term does not

include— (i) a person with only a general unsecured interest in, or claim against, the

property or estate of another; (ii) a bailee unless the bailor is identified and the

bailee shows a colorable legitimate interest in the property seized; or (iii) a nominee

who exercises no dominion or control over the property.

Current law: No comparable provision found.

(k)(1) A claimant under subsection (j) is entitled to immediate release of seized

property if-- (A) the claimant has a possessory interest in the property; (B) the

continued possession by the United States Government pending the final disposition

of forfeiture proceedings will cause substantial hardship to the claimant, such as

21 U.S.C. § 881(a)(4)(C) (1994). Judicial interpretations of these statutory (§§ 881(a)(4),

(a)(6), and (a)(7) defenses have not been consistent (see CRS Report 96-869, "Crime and

Forfeiture: The Innocent Third Party", by P. Wallace): one notable difference in the proposed

bill is that it would create an automatic "innocent owner" defense for people who took

reasonable measures to make sure their property was not used illegally.

Joint Explanatory Statement of Titles II and III, H.Rept. 95-1193, 95th Cong., 2d Sess.

(1978), reprinted in 1978 U.S. Code Cong. & Admin. News 9522.

21 U.S.C. § 881 (a)(6) and (a)(7) (requiring the owner to establish his/her lack of awareness

or involvement) see also 21 U.S.C. § 885 (a)(1) (1994).

416 U.S. 663, 690 (1974).

Id.

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preventing the functioning of a business, preventing an individual from working, or

leaving an individual homeless; and (C) the claimant's likely hardship from the

continued possession by the United States Government of the seized property

outweighs the risk that the property will be destroyed, damaged, lost, concealed, or

transferred if it is returned to the claimant during the pendency of the proceeding.

Current law: For property owners to get their property back, they must overcome

tremendous procedural impediments such as posting a cost bond of $5,000 or ten

percent of the value of the property seized, whichever is less, but in no case less than

$25031 and proving that their property is "innocent" after probable cause has been

shown. If no one claims the seized property and files the necessary cost bond within

twenty days, the seizing agency may declare the property forfeited administratively

to the United States and dispose of it according to law.32

(2) A claimant seeking release of property under this subsection must request

possession of the property from the appropriate official, and the request must set

forth the basis on which the requirements of paragraph (1) are met.

(3) If within 10 days after the date of the request the property has not been

released, the claimant may file a motion or complaint in any district court that would

have jurisdiction of forfeiture proceedings relating to the property setting forth--(A)

the basis on which the requirements of paragraph (1) are met; and (B) the steps the

claimant has taken to secure release of the property from the appropriate official.

(4) If a motion or complaint is filed under paragraph (3), the district court shall

order that the property be returned to the claimant, pending completion of

proceedings by the United States Government to obtain forfeiture of the property, if

the claimant shows that the requirements of paragraph (1) have been met. The court

may place such conditions on release of the property as it finds are appropriate to

preserve the availability of the property or its equivalent for forfeiture. (5) The

district court shall render a decision on a motion or complaint filed under paragraph

(3) no later than 30 days after the date of the filing, unless such 30-day limitation

is extended by consent of the parties or by the court for good cause.

Current law: Requirements for Claim and Answer. The requirements

for a claim33 in a civil forfeiture action, like the complaint, must be verified on oath

or solemn affirmation.34 It must set forth the interest in the property by virtue of

which the claimant seeks its restitution and asserts the right to defend the forfeiture

action.35 If the claim is made on behalf of the claimant by agent, bailee, or attorney,

See 19 U.S.C. § 1608 (1994).

See 19 U.S.C. § 1609 (1994).

Supplemental Rules for Certain Admiralty and Maritime Claims, Federal Rules of Civil

Procedure (Supplemental Rule C(6)).

The Supreme Court has noted that, whenever possible, it should be the principal who verifies

the claim, rather than an agent, who may "... from his want of knowledge, be the dupe of

cunning and fraud." The Schooner Adeline and Cargo, 13 U.S.(9 Cranch) 244, 285 (1815).

Supplemental Rule C (6).

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it must also contain a statement indicating that he/she has authority to act for the

claimant.36

The Supplemental Rules do not establish any particular requirement as to content

of the answer in a civil forfeiture case, and therefore the matter is generally

determined by Rule 8 of the Federal Rules of Civil Procedure.37

Section 3: Section 3 would repeal 21 U.S.C. § 888. This statute, which contains

a filing deadline in forfeiture cases involving automobiles used to facilitate drug

trafficking offenses, would be rendered unnecessary by the general purpose filing

deadline included in 18 U.S.C. § 983.

Section 4: Provides compensation for damage to seized property. If claims for

damage or loss to seized property caused by a law enforcement officer cannot be

settled under the Federal Tort Claims Act, the Attorney General may settle the claim

for not more than $50,000.38

Section 5: Upon entry of a judgment for the claimant in a proceeding to condemn

or forfeit seized property, the United States shall be liable for postjudgment interest

pursuant to 28 U.S.C. § 1961 (Interest).39

The United States would not be liable for prejudgment interest, except in cases

involving currency, proceeds of an interlocutory sale or other negotiable

Id.

See Supplemental Rule A. One difference between forfeiture proceedings and other civil

actions is that no one has the right to answer a forfeiture complaint unless he/she has first put

himself/herself in the position of a claimant. See The Antoinetta, 49 F. Supp. 148, 151 (E.D.

Pa. 1943), aff'd, 153 F.2d 138 (3d Cir. 1945), cert. Denied, 328 U.S. 863 (1946).

The Federal Tort Claims Act is a waiver of sovereign immunity, providing general authority

for tort suits against the government. Section 2680, however, creates several exceptions to

this broad waiver of sovereign immunity, including one for damages resulting from the

detention of goods. See Bazuaye v. United States, 83 F.3d 482, 486-87 (D.C. Cir. 1996) (suit

could be brought under the Federal Tort Claims Act to seek money damages for alleged

negligence and intentional interference with rights concerning government's seizure of bail

money); Kurinsky v. United States, 33 F.3d 594, 598 (6th Cir. 1994) (the exception to waiver

of statutory immunity of the United States for claims arising from seizure of property by

F.B.I. agents were not related to the collection of taxes or custom duties which 28 U.S.C. §

2680(c) is limited to); But see Haverson v. United States, 972 F.2d 654 (972 F.2d 654 (5th

Cir. 1992) (§ 2680(c) exception is not limited to losses resulting from detention of goods and

merchandise by customs or tax officers). T. Wright, Discussion of historical background of

"other law-enforcement officer" and federal court rulings concerning the exception of section

2680(c), "Any other Law-Enforcement Officer": Federal Tort Claims Act § 2680(c), 83 Ky.

L. J. 707 (1994-1995).

Calabro v. United States, 830 F. Supp. 175, 179 (E.D. New York 1993)( claimant was

entitled to the return of money and interest from the date of judgment entered ten years

earlier).

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instruments.40 The United States would surrender to the claimant any funds

representing: (A) interest paid to the United States from the date of seizure of the

property that resulted from the investment of the property in an interest-bearing

account; and (B) any period during which no interest was paid, but would be paid

based upon an imputed amount of interest that the currency, proceeds, or

instruments would have earned.

Section 6: Provides that in general, the applicability of these amendments would

apply to forfeiture proceedings commenced on or after the date of the enactment of

this Act.

The Substitute Amendment (S. 1931)

On March 23, 2000, Senators Hatch, Leahy, Sessions, and Schumer offered a

substitute amendment to H.R. 1658 which the Senate Judiciary Committee approved

by a voice vote. In essence, S. 1931 (Hatch/Leahy) was combined with suggestions

from Senators Sessions/Schumer (S. 1701) to form the new compromise measure

(H.R. 1658) which the full Senate passed by voice vote on March 27, 2000.41 The

new measure will go back to the House for floor action. Among the most significant

changes made by the Hatch/Leahy/Sessions/Schumer substitute amendment are as

follows:42

Burden of Proof. The substitute amendment puts the burden of proof on

the government to prove that the property to be seized was connected to

a crime by a preponderance of the evidence. H.R. 1658 establishes a clear

and convincing evidence burden of proof for the government. Under the

substitute amendment, the burden of proof for the government and the

claimant would be the same.43

Cost Board. The substitute amendment and H.R. 1658 provide for the

elimination of the “cost bond”. If the court finds that the claimant’s

assertion of an interest in the property was frivolous, the court may impose

a civil fine on the claimant of an amount equal to 10 percent of the value of

the forfeited property, but in no event shall the fine be less than $250 or

greater than $5,000. Under the current law, a property owner who seeks

See United States v. $277,000 U.S. Currency, 69 F.3d 1491, 1492 (9th Cir.1995); United

States v. Giovanelli, 853 F. Supp. 88, 93 (S.D. New York 1994) (petitioner was entitled

prejudgment interest at prime interest rate and postjudgment interest to compensate for any

additional costs incurred following judgment).

146 Cong. Rec. S 1762 (daily ed. March 27, 2000).

Id. at 1761.

The claimant would have the burden of proving that he/she is an innocent owner by a

preponderance of the evidence.

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to recover his property after it has been seized by the government must pay

for the privilege by posting a bond with the court.44

Legal Assistance and Attorney Fees. The substitute amendment permits

courts to authorize counsel to represent an indigent claimant only if the

claimant is already represented by a court-appointed attorney in connection

with a related federal criminal case. Under H.R. 1658, if the person filing

a claim is financially unable to obtain representation by counsel, the court

may appoint counsel to represent that person with respect to the claim. For

claimants who are not provided with counsel, the substitute amendment

allows for the recovery of reasonable attorney fees and other costs if they

substantially prevail on their claim.

Filing Deadlines. Under the current law, a claim in a civil forfeiture action

must be filed within ten days after the execution of process, and an answer

must be filed within twenty days after the filing of a claim. Under H.R.

1658 and the substitute amendment, the current law is retained but both

extend the claimant’s time to file a claim following the commencement of

an administrative or judicial forfeiture action to 30 days. The amendment

also codifies current Department of Justice policy with respect to the time

period for sending notice of seizure, and establishes a 90-day period for

filing a complaint.

Release of Property for Hardship. The amendment would allow the

property owner to hold on to his property pending the final disposition of

the case, if he can show that continued possession by the government will

cause the owner substantial hardship, such as preventing him from working,

and this hardship outweighs the risk that the property will be destroyed or

concealed if returned to the owner during the pendency of the case. H.R.

1658 has a similar provision, however unlike H.R. 1658, the substitute

adopts the primary safeguards that property owners must have significant

ties to the community to provide assurance that the property will not

disappear, and if certain property, such as currency and property

particularly suited for use in illegal activities are involved, the hardship

provision would not apply and the property would not be returned.

Criminal Proceeds. In cases involving lawful goods or lawful services that

are sold or provided in an illegal manner, the term “proceeds” is defined in

the amendment to mean the amount of money acquired through the illegal

transaction resulting in the forfeiture, less the direct costs incurred in

providing the goods or services. An exception is made for cases involving

certain health care fraud schemes, since it would allow those who provide

unnecessary services to deduct the cost of those unnecessary services. The

amendment extends the government’s authority to forfeit criminal proceeds

under the civil asset forfeiture laws.

19 U.S.C. § 1608 (1994).

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Fugitive Disentitlement. The substitute amendment provides a basis for the

judge to disallow a civil asset forfeiture claim by a fugitive, while leaving

discretion to allow such claim in the interest of justice. There is no

comparable provision in H.R. 1658.

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