Federal Forfeiture

In federal forfeiture, some iteration of the government – be it the Department of Justice itself through the United States Attorney’s office or one of the many agencies – seeks to take private property from an individual or entity because the government claims that the property is related to criminal activity. Cash, personal property and real property are all subject to forfeiture if the government proves its case.

There are more than 200 federal forfeiture statutes. A vast array of federal crimes can provide a basis for forfeiture, including mail and wire fraud, money laundering, drugs, securities fraud and health care-related crimes.

Do not let the complexities of asset forfeiture law overwhelm you – trust in the expertise of Steven L. Kessler to guide you through the process and deliver the best possible outcome. Call (888) 708-6009 today to request a consultation.

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Three General Categories for Federal Forfeiture

Administrative Forfeiture

The most common is administrative forfeiture. There, property is seized by an administrative agency such as Homeland Security, Customs, DEA or the FBI.

An administrative forfeiture does not require a conviction or even the filing of criminal charges. There is no prosecutor. Just the agency and the property owner.

Administrative forfeitures also have strict deadlines. For example, the moment a “notice of seizure” is received from the agency, the clock to take action begins to run.

Typically, there are three options after receiving a Notice from an agency. First, you can choose to do nothing, which will result in the loss of your property. Second, you can file what is called a ‘petition for remission or mitigation,’ which is essentially asking the administrative to ‘pretty please’ return all or some of your seized property. The answer, not surprisingly, is usually ‘no’.

The final choice is option 3 – filing a ‘claim,’ which can be done on a form that the agency is required to provide or in any document that includes the necessary information. With the filing of a claim, the agency must refer the matter to the appropriate U.S. Attorney’s office, which then must either commence a civil forfeiture action in federal district court within a specified period or return the property.

Civil Forfeiture

A civil forfeiture action is a civil proceeding brought directly against the property as the defendant. It is based on the fiction that the property itself is guilty of a crime. As with administrative forfeiture, no criminal conviction or criminal charges are necessary.

In addition to civil proceedings arising from an administrative forfeiture where the owner has filed a claim, the U.S. Attorney’s office my bring a civil forfeiture action in the first instance without an underlying administrative proceeding. In those cases, the government must first obtain a seizure order from the court. Unless the government has physical or legal control over the property, it cannot bring a civil forfeiture proceeding against the property. This is called ‘in rem’ jurisdiction, which is power to determine what happens to seized property.

Also as in administrative forfeiture, the property owner must come forward and assert an interest in the property. Otherwise, the property will be forfeited on default.

The government commences the action with a civil forfeiture Complaint. The claimant must then file a new claim – even if one was filed in the administrative forfeiture – followed by an Answer to the Complaint, just like a party would do in an any other civil action.

What happens next is also similar to an ordinary civil action, except that the plaintiff is the federal government, represented by an Assistant United States Attorney. There can be motions, discovery, including depositions, and potentially a trial. Either side may request a jury trial.

The government has the burden of proving, by the civil standard of a preponderance of the evidence, that the property is subject to forfeiture. It can be proven to be the ‘proceeds’ of criminal activity, such as where a stock fraud scheme generates illegal profits. Or the property can be shown to have been ‘involved in’ or to have ‘facilitated’ the criminal activity, making the crime easier to commit. Examples include property used to grow or store illegal drugs or house unlawful weapons, and vehicles used to transport contraband.

The claimant can prevail by demonstrating that the government has failed to satisfy its burden of proof. Alternatively, even if the property is shown to be subject to forfeiture, the claimant can prevail by establishing innocent ownership of the property. Innocent ownership is a defense for which the claimant has the burden of proof.

Criminal Forfeiture

Criminal forfeiture is not a separate proceeding. It is sought as part of a criminal case. The case is commenced against the criminal defendant, and the court’s power to decide what happens to the property arises from its ‘in personam’ jurisdiction over the defendant, because the property is connected to the defendant’s charged criminal activity.

In criminal forfeiture, unlike administrative or civil forfeiture, the government cannot forfeit anything unless it secures a conviction. Criminal forfeiture, together with fines and restitution, is one of the monetary penalties that may be assessed against a convicted defendant as part of sentencing. It is only after there is a conviction, in the forfeiture phase, that the government and the defendant may litigate the issue of whether the property is subject to forfeiture.

Once the forfeiture phase begins, it is conducted in a manner similar to a civil forfeiture proceeding. While the government’s burden of proof to convict was beyond a reasonable doubt, its burden during the forfeiture phase is only by a preponderance of the evidence. The defendant can prevail if the government fails to satisfy its burden of proof. There is no ‘innocent owner’ defense in criminal forfeiture because the defendant has already been convicted.

Types of Forfeitable Property

Although the types of property and criminal activity that are subject to civil and criminal forfeiture are often interchangeable, there are still substantial differences between the two. Among the most significant is the ability of the government to forfeit “substitute assets,” which can only happen in a criminal proceeding.

In a civil proceeding, the government cannot forfeit the property unless it is available for forfeiture. Not so in a criminal proceeding. In a criminal case, if the government proves that a specific piece of property is subject to forfeiture but that the property is no longer available due to some act or omission of the defendant, the government may forfeit any other property of the defendant up to the amount or value of the missing property, even if the substitute property has no relationship to the criminal activity.

This key difference between civil and criminal forfeiture reflects the difference between in rem and in personam jurisdiction. Because the court’s civil forfeiture jurisdiction flows solely from its jurisdiction over the property, it can only affect the disposition of that property, nothing more. The court’s criminal forfeiture jurisdiction, however, stems from its power over the defendant. It is that power that permits the government to forfeit substitute assets.

Claims and Petitions

A second important difference between civil and criminal forfeiture is how multiple claims to a single property are handled. This difference is more about efficiency than jurisdiction. In civil forfeiture, if there is more than one claimant to the property, all of them must file their claims and Answers at the same time.

In criminal forfeiture, only the defendant’s claim to the forfeited property is litigated in the forfeiture phase of the case. If there are any other parties who assert interests in the criminally forfeited property, they must wait until after the court is finished with the defendant before filing their claims which, in this context, are called ‘petitions.’ Examples of these third-party claimants in criminal forfeiture cases include the spouse of the criminal defendant or other co-owners of the forfeited property.

Those third-party claims are litigated in what are called ‘ancillary proceedings.’ These proceedings are similar to civil forfeiture proceedings in the sense that discovery, motions and trials are available. However, there is no right to a jury trial in an ancillary proceeding.

Do not let the complexities of asset forfeiture law overwhelm you – trust in the expertise of Steven L. Kessler to guide you through the process and deliver the best possible outcome. Call (888) 708-6009 today to request a consultation.

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