by Noreen Marcus
Carole Hinders built a better taco that drew diners to Mrs. Lady’s Food in Spirit Lake, Iowa, for 37 years. Then, one day in 2013, right after breakfast with the grandkids, two men showed up at her home, flashed badges, and told Hinders the IRS had emptied her bank account, taking nearly $33,000 in revenue from her cash-only restaurant business.
“I was in shock,” Hinders, now 72 and retired, said recently. She had committed no crime.
During the frightening chaos that followed, Hinders called Senator Chuck Grassley (R-Iowa).
“He said, ‘It must be some kind of scam. The IRS would never do that. They don’t spring on you that way.’”
“I said, ‘Yeah, they did.’”
The official reason: Hinders routinely made cash deposits of less than $10,000, triggering concern that she was evading a tax reporting rule.
“They thought I was either a drug dealer or a money launderer,” Hinders said. “Could I launder my own money? How does that work?”
Many in law enforcement defend the process that Hinders endured: civil asset forfeiture (“CAF”), when the government seizes property allegedly related to a crime.
Unless you live in one of the dozen states that ended CAF in favor of post-conviction, or criminal, asset forfeiture, the government can confiscate your money, vehicle, important documents, and sometimes your home on little more than a whim.
It’s nearly impossible to reclaim what was taken if you can’t afford a lawyer. Generally, you must prove a negative: Your property had nothing to do with crime.
Justice Reform Target
Not surprisingly, from Spirit Lake to Philadelphia to Albuquerque, New Mexico, civil asset forfeiture is a prime target of the justice reform movement.
“It’s a grave injustice that occurs every day in this country,” said Wesley Hottot, senior attorney with the nonprofit Institute for Justice (“IJ”). “Police and prosecutors take people’s property, and they do so as a matter of course to fund their operations.”
Since the mid-1990s, the IJ has led a national effort to beat back CAF through carefully vetted, statement-making cases. “There are too many people to represent. We hear sad stories every week,” Hottot said. “We just look for the greatest injustices.”
The IJ chose Hinders and filed a lawsuit that convinced the IRS to return her money, though the agency used a technicality to avoid paying the interest and attorney fees she should have received. Hinders is disappointed that her “fabulous” pro bono lawyers weren’t compensated.
Fortunately, the IJ also handled the appeal of an Indiana man named Tyson Timbs, because on Feb. 20, 2019, Hottot and his colleagues won Timbs’ case in the U.S. Supreme Court. Justice Ruth Bader Ginsburg wrote for a unanimous panel that the states must honor the Eighth Amendment prohibition against “excessive” fines.
“For good reason, the protection against excessive fines has been a constant shield throughout Anglo-American history: Exorbitant tolls undermine other constitutional liberties,” Ginsburg wrote in an opinion that cited the Magna Carta of 1215.
Fines “may be employed ‘in a measure out of accord with the penal goals of retribution and deterrence,’ for ‘fines are a source of revenue,’ while other forms of punishment ‘cost a State money,’” Ginsburg noted, quoting a 1991 opinion of the late conservative Justice Antonin Scalia.
In Timbs’ case, the “fine” was a $42,000 Land Rover he had bought with proceeds of his late father’s life insurance. Timbs drove it somewhere to sell heroin for $225—money intended to score opioids—and the buyer, an undercover cop, arrested him.
“It was a first-time offense,” Hottot said. “We’re not talking Pablo Escobar’s Cessna, but a drug addict’s attempt to get more drugs.”
No matter; police took Timbs’ Land Rover, which was worth more than four times the $10,000 maximum fine he might have paid. Before his case reached the U.S. Supreme Court, the trial judge and an appellate court agreed his punishment dwarfed his crime. The Indiana Supreme Court reversed them, prompting the showdown in D.C.
Ginsburg’s opinion strongly suggests the SUV forfeiture in Timbs’ case was excessive, but Indiana courts will have the final say. Since the high court didn’t spell out a test for determining how much is too much, more litigation over this open question is a given. But importantly in the ongoing struggle against abuse use of CAF, what the U.S. Supreme Court clarified for the first time is that the states are subject to the Eighth Amendment’s prohibition of excessive fines.
Also certain, Hottot said, is the IJ’s unflagging support of Timbs, now a free man who drives a borrowed car to work. He served a year of home detention and five years of probation.
“We believe it’s real world reasonable to stop fighting, but they [Indiana officials] believe it’s important to establish what the standard of excessiveness is,” Hottot said. “We will stand shoulder to shoulder with Tyson to win the next phase of the case.”
Rooted in War on Drugs
Early on, asset forfeiture was a big gun in the nation’s war on drugs. A May 1971 congressional report that showed widespread heroin addiction among U.S. troops in Vietnam alarmed the public and raised a clamor for action.
The next month, President Richard Nixon declared drug abuse “public enemy number one” and created a special office to deal with prevention. That was the one and only time more federal resources were mobilized for drug addiction treatment than for control and punishment, according to a report by PBS’s Frontline.
In 1972, the Nixon administration launched the Office of Drug Abuse Law Enforcement. Joint federal and local task forces would battle the drug scourge at street-level America.
Over decades, the war on drugs evolved into institutionalized strategies to target the giant Colombian and Mexican cartels and their U.S. tentacles. Breathless headlines announced record drug busts by the feds.
A certain cachet attached to cartel chiefs like Escobar, with his Robin Hood image, private airport—a place to land that Cessna—and herd of exotic animals. “Cocaine cowboys” catered casual drug use by the American leisure class.
In 1978, Congress changed the law to allow federal agents to seize money and “other things of value furnished … by any person in exchange for a controlled substance [and] all proceeds traceable to such an exchange.” That was the origin of asset forfeiture, followed by the states writing their own versions.
‘Equitable Sharing’
a Political Football
Then, in 1984, a federal program called “equitable sharing” started spreading the wealth of drug-asset money between federal and local agencies. Since they were already working together on task forces, this was the next logical step.
A Justice Department review of the program found that during fiscal years 2000-2016, more than $6 billion went to state and local law enforcement, representing up to 80 percent of the proceeds from seized property.
Despite the popularity all that largesse inspired, the initiative became a political football. During the Obama administration, Attorney General Eric Holder cut back the equitable-sharing program; President Trump’s Attorney General Jeff Sessions revived it in 2017.
Equitable sharing is not universally admired, even by people who lean conservative. One of them is Arthur Rizer, director of criminal justice and civil liberties at R Street, a nonprofit that promotes “free markets and limited, effective government.”
“My libertarian friends fight equitable sharing because they see it as an abuse of power issue,” Rizer said. “It’s a run around the states, especially states like North Carolina, where they don’t do asset forfeiture anymore, but they still do it through this other provision. And being a states’ rights guy, we really see that as an affront to our principles.”
That said, Rizer isn’t a fan of civil asset forfeiture at the state level, either. “It’s just not fair, it’s not justice, it’s not equitable,” he said.
Rizer has a panoramic perspective based on his background—police officer, major crimes federal prosecutor, and now, policy influencer.
As a cop in the early 2000s, Rizer learned cash was the gold standard for a successful search. When he served a warrant and found drugs or other contraband, “my supervisor would say, ‘Forget about that, we’re looking for the money.’”
Cash is fungible. It can get lost in the inventory but can’t easily be separated out and returned. So much for the mission to defeat drug traffickers, Rizer found out the hard way.
He studied law and joined the Justice Department as a prosecutor. During the George W. Bush and Barack Obama eras, while Rizer pursued “high-level cartel people” and their property, he said, “there was an aura of weightiness about this on the federal level.”
“The states have always seen it as a money-maker,” he added, calling CAF “a powerful tool” that should be treated respectfully.
“I’m not a hippie, I don’t feel bad for these people,” Rizer said. “What I’m concerned about is the rule of law and the appearance of procedural justice. It’s who we are and how we identify, and if we lose that because cops want espresso machines, that’s really contrary to the spirit of the Constitution and the rule of law.”
These days, the war on terrorism is more likely than drugs to produce sensational CAF results. On June 29, 2017, a federal jury in Manhattan determined that 650 Fifth Avenue was part of a scheme …