California Asset Forfeiture Law & Procedure, by Brenda Grantland
Review by Isaac Safier, Esq.
Brenda Grantland is known nationally as one of the foremost experts in asset forfeiture law and has published extensively on federal asset forfeiture law for many years. I had subscribed to her brief bank on her website FEAR.org and used it extensively in my own practice. In this, her latest book, California Asset Forfeiture Law & Procedure, she directs her attention to asset forfeitures under state law in my own state. This is no easy task as the laws and precedent that comprise state asset forfeiture practice are distributed among far flung and numerous legal codes and sections. Thanks to various legislative changes over the years, the legal landscape of state asset forfeiture law in California is a daunting pile to excavate. Grantland’s book delves into this tangled web and makes sense of it an a clear, methodical and most importantly, complete way. There is no equivalent compendium or practical guidebook to California asset forfeiture law on the market today. For any law practitioner or attorney who comes across asset forfeitures in his or her practice, this is an important book to have on their shelf and an excellent investment.
The book is sufficiently complete to act as a stand-alone guide even to a non-attorney pro per claimant who has never litigated a case. There are sections on legal writing, case citations and full explanations of how to conduct discovery under the California civil code of procedure. Unlike some legal books, there is no vague advice or instructions to look elsewhere for more details on aspects of civil procedure. Every statement or explanation is backed up by a specific cite to case or statute, making this an indispensable legal guide when drafting everything from a claim to a proportionality motion.
As a legal practitioner with active asset forfeiture cases I look forward to using this book as a reference and guidebook. Even for attorneys who are deeply familiar with civil asset forfeiture laws and practice, this book has a twofold importance: As a checklist to make sure no option is not explored in a case and no motion is skipped, and as a reference to quickly learn the more tangential and esoteric procedures that are more seldom used. Grantland has done a great service to those opposing asset forfeitures by writing this book.
On July 19, 2017, Attorney General Jeff Sessions announced a new forfeiture policy regarding federal adoptions, Order No. 3946-2017 and Policy Directive 17-1: “Policy Guidance on the Attorney General’s Order on Federal Adoption and Forfeiture of Property Seized by State and Local Law Enforcement Agencies.”
To make sense of this order and what it does you have to put aside what you read in the newspaper articles interpreting the press release, and read the order and policy directive themselves. (Download the order and related documents using the download buttons above.)
The one-page order is signed by Sessions. The only concrete change announced in the order is its repeal of two Obama era Attorney General policy orders issued by former Attorney General Eric Holder. This is the point most of the articles have gone ballistic on. As I explain below, that repeal is no big deal.
The details of the policy changes are set out in Policy Directive 17-1, signed by Deborah Connor, Acting Chief of the Money Laundering and Asset Recovery Section of the Justice Department. It is only three pages long, but contains very specific procedures that will make major changes for the better.
On the same day, the DOJ issued a press release containing Sessions’ remarks – three pages of the usual platitudes about the virtues of asset forfeiture. Sessions’ remarks are worth dissecting, which I will do later, but let’s look at the details of the policy change first.
What federal adoption means
For those who don’t know, “federal adoption” has nothing to do with giving orphans a forever home. It is a Justice Department program, created by statute, that rewards state and local police for seizing property from citizens and turning it over to the feds for forfeiture under federal law, by giving the local police a kickback (“equitable sharing”) of up to 80% of the proceeds of the forfeiture case. See 28 U.S.C. Sec. 524(c). These state and local cops could just use their states’ forfeiture laws to forfeit property, but many prefer federal adoption to get around their state’s forfeiture laws which are more protective of property owners.
When a case is federally adopted, the forfeiture is processed in federal court, under federal forfeiture law, using federal standards, even if the forfeiture would be illegal under state law. Forfeiture opponents argue that allowing the feds to subvert local and state police into disregarding the law of their own states and instead seize property for forfeiture under federal law — by offering them up to 80% of the proceeds of the federal forfeiture.
What the policy order and directive do
1. Repeals “Obama era policy order” limiting federal adoption
The most seemingly dramatic feature of Sessions’ order is its repeal of Attorney General Order No. 3488-2015 (1/16/2015 – Holder order limiting federal adoption) and No. 3485-2015 (1/12/2015). I have not been able to find Attorney General Order No. 3485-2015. The only mention of it anywhere on line is this order repealing it.
Holder’s policy order contained built-in loopholes that told the police how to get around the new policy. All they had to do was put a federal agent on their task force, or get a federal judge to issue a federal seizure warrant for the property and they were back to business as usual.
2. Review by a federal agency lawyer before agreeing to a federal adoption
Policy Directive 17-1 requires that the facts of each seizure be reviewed by the adopting agency’s legal counsel before agreeing to accept the federal adoption.
“To ensure that adoptions involve property lawfully seized, legal counsel at the federal agency adopting the seized property must continue to review all seizures for compliance with law, especially seizures made pursuant to an exception to the Fourth Amendment’s warrant requirement.” Policy Directive 17-1 p. 1-2.
The directive tells the agencies to revise the forms used to request federal adoption and require the seizing cops to provide enough information to determine if there was probable cause for the seizure. The cops are also required to state on the revised form whether a turnover order was obtained, if required by state law. Policy Directive p. 2. (Only a few states have statutes requiring local police to get a turnover order from a state court judge before they can turn over property they seized to the feds for federal adoption.)
These new procedures, if actually followed, will weed out many illegal roadside forfeiture trap seizures at a very crucial time — before sending notice to claimants requiring them to file a claim within 30 days. All of the cases claimants lost by default were lost during that crucial period.
Although there was eventually a review by an Assistant U.S. Attorney before filing a forfeiture complaint in court — which would usually occur 90 days later — that review only occurs after a claimant files a claim. If the claimant defaulted before that point, there would never be a review for probable cause.
3. Additional screening procedures for seizures of $10,000 or less
The vast majority of the highway forfeiture trap cases are these smaller dollar value seizures.
They target travelers on the interstate highways, particularly those with out of state tags, and minorities. They are pulled over for a minor traffic infraction or on the ruse that they fit a vague drug courier profile. In most of those cases, little or no drugs are found and no one is arrested, yet after a search, they seize all of the cash the travelers are carrying, saying it is suspected drug proceeds.
Under the policy directive, when cash totaling $10,000 or less is seized, the seizure can be adopted only if
(1) the seizure was pursuant to a state warrant,
(2) it was seized incident to an arrest for a forfeiture triggering offense,
(3) it was seized at the same time as contraband was seized “relevant to the forfeiture,” or
(4) if the person from whom it was seized admits it was crime proceeds or intended for use to commit a crime.
Policy Directive 17-1 p. 2. If a federal agency wants to adopt a seizure that does not fit into one of those categories they have to get the approval of the U.S. Attorney’s Office first.
This is an excellent reform! Let’s hope they actually follow this policy.
Roadside forfeiture traps rake in a huge number of small dollar value seizures — with values too small for the property owner to hire a lawyer to defend. Many give up instead of filing a claim because hiring a lawyer would cost more than the value of the property. Sessions claimed that “over the last decade, four out of five administrative civil asset forfeitures filed by federal law enforcement agencies were never challenged in court.” That is probably true, but it is not because those people were all guilty, as Sessions suggested. Many defaulted because it was not cost effective to litigate in federal court over these small dollar amounts.
When the feds adopt a state or local police seizure, all money seized (and most other personal property) is sent through the administrative forfeiture process. The adopting agency sends out a notice to the property owner and they have to send in a claim within 30 days or they are in default and automatically lose their property.
When the property is forfeited by default in the administrative process no judge ever reviews the legality of the seizure. The policy directive suggests that a lawyer from the agency would review the case to determine the legality of the seizure before agreeing to adopt it (“the federal agency … must continue to review all seizures for compliance with the law….”) — but if they were already doing this, why would Sessions issue a policy order requiring it?
Also, it appears that the previous forms the local cops filled out to request adoption wouldn’t have had enough information for the federal agency to determine whether the seizure was valid.
For decades these small dollar value highway forfeiture trap cases have been nuisance cases for claimants. Now they are nuisance cases for the government!
Agency lawyers will have to plow through thousands of cases and weed out bogus seizures that they would have otherwise won by default. I can imagine agency lawyers will perform triage and drop cases that wouldn’t be cost effective to prosecute. Many of those people who would previously have lost by default will get their money back.
4. Additional scrutiny of seizures of real property
The Policy Directive warns officials to “proceed with caution” when deciding whether to waive the Department’s net equity thresholds for real estate, and in taking cases where real estate is owned by innocent people.
Their concern many not be altruistic as much as economic. Real estate can’t be put through the administrative forfeiture process where claimants so often default because it is not cost effective to hire a lawyer. The government has to work to forfeit real estate. It’s hard for the government to make profits off forfeiture if the litigation involves real estate with low equity when innocent owners and lienholders will have to be paid off.
5. Expediting the forfeiture process by 45 days
The statutes give the government 90 days after seizure to commence the administrative forfeiture process by sending notice. Sessions’ order shortens that time to 45 days.
This is not a big deal for claimants. In cases that are contested, after the claimant files a claim, the case goes to federal court where it bogs down for several years.
Because the new 45 deadline is just a policy deadline, the claimant cannot enforce it and nothing happens if they miss it. The 90 day deadline is statutory, and missing it has consequences for the government — including dismissal of the case and return of the property. I suspect that the 45 day deadline is to hurry things along so the feds don’t miss the 90 day deadline.
Other forces have begun to curtail the federal adoption program
Actually “equitable sharing” under the federal adoption program has been curtailed in recent years, but not by policy changes at the Department of Justice.
A few years ago Congress put a rider in the budget appropriation bill prohibiting the DOJ from spending money from its budget on federal adoption. When the police lobby went ballistic about losing their federal sharing revenue, the DOJ found a way to get around it. They increased forfeitures in federal agency originated cases and used that money to fund the state and local cops who were feeding them forfeiture cases.
Congress has since imposed another limit on the federal adoption program which no Attorney General can override. In a budget appropriations rider Congress prohibited the DOJ from spending any money from its budget to thwart the implementation of state medical marijuana laws:
None of the funds made available in this Act to the Department of Justice may be used, with respect to the States of Alabama, Alaska, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, Oregon, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Washington, and Wisconsin, to prevent such States from implementing their own State laws that authorize the use, distribution, possession, or cultivation of medical marijuana.
Consolidated and Further Continuing Appropriations Act, 2015, Pub. L. No. 113-235, § 538, 128 Stat. 2130, 2217 (2014). The Ninth Circuit interpreted this statute to preclude the feds from prosecuting medical marijuana providers who were in full compliance with state law legalizing and regulation medical marjuana. United States v. McIntosh, 833 F.3d 1063 (2016). That limit on prosecutions would bar federal forfeiture prosecutions as well.
State legislation restricting federal adoption
Federal adoption will also likely decrease substantially because state legislatures have been passing laws to curtail federal adoption. Unhappy with the feds’ use of federal adoption to lure state and local police into disregarding limitations on state forfeiture laws, several states have passed legislation stopping the state and local cops from receiving equitable sharing revenue for federal adoption cases that conflict with state laws.
According to a National Review article, thirteen states have passed state forfeiture reform legislation curbing federal adoptions.
California’s forfeiture reform statute, SB 443, effective January 1, 2017, bars any police force from accepting revenue from federal adoptions unless they can prove there was a conviction in the related criminal case – that is, if a criminal conviction is required under state law. Under the new law, a criminal conviction is required in a related criminal case in order to forfeit anything except cash and negotiable instruments totaling $40,000 or more. This provision was obviously meant to curb the “highway robbery” type forfeiture trap, where local cops stop travelers on the highway for minor traffic infractions (or nothing at all) and seize their cash on the ruse that it is drug proceeds or intended for use to purchase drugs – even though they found no drugs. They could never get a criminal conviction in such a case because the burden of proof is beyond a reasonable doubt. In most of these highway forfeiture trap cases they didn’t even arrest anyone, yet their money was subjected to the civil forfeiture process.
This will likely be a very effective way to curb federal adoption. Would local police go to the trouble of mounting these highway forfeiture traps just to turn the money over to the feds and get nothing in return? This may force them to enforce their own state forfeiture laws instead!
A word or two about the accompanying press release
If you wonder how journalists could so poorly understand what Sessions order and the policy directive do, I believe it is because they only read the DOJ press release. The press release is comprised primarily of Session’ remarks, which are loaded with pro-forfeiture propaganda, such as his repeated claim that civil forfeiture targets “organized crime.” If it were “organized crime” why wouldn’t they be going after them criminally, where they could just use criminal forfeiture?
This passage is a doozy:
“When I was in the Senate, I worked with Senator Schumer to make modifications to the civil asset forfeiture program. We required probable cause for the seizure of property. And we raised the burden on the government, who has the initial burden in all of these cases, to the same preponderance of the evidence standard used in all civil cases. In addition, if the government lost the case, then the government pays attorneys’ fees. I believe those were good reforms that strengthened the program.”
Those modifications to the civil asset forfeiture program he is talking about is the Civil Asset Forfeiture Reform Act of 2000 – “CAFRA.” I can’t believe he is trying to take credit for CAFRA’s reforms!
I consulted with Representatives John Conyers and Henry Hyde in drafting CAFRA, and my organization Forfeiture Endangers American Rights lobbied for it for 8 years before it passed.
Sessions and Schumer were major opponents of forfeiture reform. They fought CAFRA’s positive reforms every inch of the way!
Once CAFRA passed in the House, Sessions and Schumer introduced a competing bill drafted by the DOJ, which added about 200 new forfeiture triggering offenses and poked huge loopholes in our due process reforms.
Because of Sessions and Schumer — and Orrin Hatch, who wouldn’t let our bill go out of his Senate committee without forcing a compromise — those 200 new offenses got added to CAFRA. Even worse, Sessions and Schumer forced the DOJ’s proposed loopholes into our reform provisions too, watering down the Hyde bill and eroding its due process reforms.
Sessions tries to take credit for the probable cause requirement, saying the modifications to the forfeiture program that he and Schumer made “required probable cause for the seizure of property.” He can’t take credit for that. The Fourth Amendment requires probable cause before property is seized.
It was nice of him — or more likely Deborah Connor, Acting Chief of the Asset Forfeiture and Money Laundering Section — to require agency lawyers to review local police seizures for probable cause before agreeing to federal adoption. They should have been doing it all along.
The March 2017 report from the Justice Department’s Office of the Inspector General — Review of the Department’s Oversight of Cash Seizure and Forfeiture Activities — sounds like a snoozer but drops quite a few fact bombs. How did the news media miss this when it came out a few weeks ago?
The report’s mind-numbingly boring prose was a clever way to slip it in under the radar, but just as you’re about to nod off you trip on a fact bomb and you have to do a double take and reread the passage. There are some pretty amazing things in it.
1. The DOJ doesn’t keep statistics that could prove whether asset forfeiture deters criminal activity
“The Department asserts that asset forfeiture is an effective law enforcement tool that dismantles criminal organizations by removing the proceeds of crime used to perpetuate criminal activity…. However, we found that although Department investigative components have the authority to and do forfeit cash from individuals without charging these individuals with a crime, they do not collect data to measure, among other factors, how often seizures and forfeitures advance or relate to criminal investigations. Without fully evaluating the relationship between seizures and law enforcement efforts, the Department cannot effectively assess whether asset forfeiture is being appropriately used and it risks creating the impression that its law enforcement officers prioritize generating forfeiture revenue over dismantling criminal organizations.” OIG Report p. 16.
“[W]ithout evaluating data more systemically, it is impossible for the Department to determine (1) whether seizures benefit law enforcement efforts, such as advancing criminal investigations and deterring future criminal activity, or (2) the extent to which seizures may present potential risks to civil liberties.” OIG Report pp. ii-iii.
The OIG was particularly concerned about the DOJ’s lack of automated statistics linking forfeited assets to particular criminal investigations and prosecutors. Without this information, it is impossible to determine the percentage of forfeiture seizures for which no one was prosecuted for a crime. There are challenges to gathering that data into a database, as the OIG recognized. For example, there may be an arrest and prosecution of someone associated with the seized property by a different sovereign — the state vs. the US government. It would be hard to gather that information, but without it — “particularly for those seizures and forfeitures that occur without judicial involvement, the Department cannot effectively oversee its asset seizure and forfeiture activities to ensure these activities sufficiently benefit law enforcement’s efforts to dismantle criminal organizations and do not present significant risks to civil liberties.” OIG Report p. 17.
2. Random stops in airports and on highways “present risks to civil liberties”
Civil libertarians and forfeiture reformers have long known that roadside forfeiture traps and airport profile stops use racial profiling to target the most vulnerable population because they are more easily intimidated into submission and often lack the funds to fight back. We just know this because we see how frequently the police target minorities and how lame the cops’ excuses are for making the stop. It’s kind of surprising when you hear the Justice Department’s Office of Inspector General recognize that. You have to read their words carefully to understand that, though, because they talk in code.
They call these random stops in airports and on highways “cold consent encounters.” Sounds like a new Ben & Jerry’s flavor!
The report doesn’t really define cold consent encounters, but you can figure it out from the context — “cash seizures that… appeared to have occurred without a court-issued warrant and without the presence of narcotics….” Generally they occur in “airports, parcel distribution centers, train stations, and bus terminals, or as a result of a highway interdiction or traffic stop.” OIG Report p. iii. They have a likelihood of being “susceptible to racial profiling.” A cold consent encounter can occur in two ways “an agent approaches an individual based on no particular behavior by the individual” or “an agent approaches an individual based on the officer’s perception that the person is exhibiting characteristics indicative of a drug crime without any independent predicating information.” OIG Report p. 2.
The report concluded that “… the DEA did not use data sufficiently to assess whether cold consent encounters were conducted in an unbiased or effective manner. This was a concern because seizures resulting from these encounters can be random or triggered by an individual’s behavior rather than foreknowledge of the individual’s involvement in criminal activity; thus, such seizures can present risks to civil liberties.” OIG Report p. 2. The OIG made the surprising conclusion that “the DEA had not collected sufficient data on cold consent encounters to assess whether they are conducted in an unbiased or effective manner” and that the DEA failed to ensure “that training and operational requirements were clearly established and communicated to the interdiction task force members who conduct these encounters or that all group members had attended the DEA’s interdiction training.” OIG Report pp. 2-3.
Because the agencies did not keep the data, the OIG conducted a “judgmental sample of 100 DEA cash seizures.” These were not strictly random samples, but were selected based on criteria that made them suspect — no warrant and no drugs or other evidence of criminal behavior. Of that 100, 85 occured during “interdiction operations” (forfeiture traps) at airports, parcel distribution centers, train stations, bus terminals.and in highway stops. The OIG found that “all but 6 of the 85″ seizures” — in other words, 79 out of 85 — “were initiated on the observations and immediate judgment of DEA agents and task force officers absent any preexisting intelligence of a specific drug crime (the remaining six were based on preexisting intelligence).”
From that sample of 100 “the DEA could verify that only 44 of the 100 seizures, and only 29 of the 85 interdiction seizures, had (1) advanced or been related to ongoing investigations, (2) resulted in the initiation of new investigations, (3) led to arrests, or (4) led to prosecutions. When seizure and administrative forfeitures do not ultimately advance an investigation or prosecution, law enforcement creates the appearance, and risks the reality, that it is more interested in seizing and forfeiting cash than advancing an investigation or prosecution.” OIG Report p. iii.
Wow – did they just admitt policing for profit is rampant?
3. Task forces and the local cops that seize property under the federal adoption program are not adequately trained in federal law
“We also found that the Department’s investigative components do not require their state and local task force officers to receive training on federal asset seizure and forfeiture laws and component seizure policies prior to conducting federal seizures. As a result, state and local task force officers, who wield the same authorities to make seizures as the Department’s Special Agents, may not have received training on these topics beyond what is included in their respective law enforcement academy curriculum.” OIG Report p. iii-iv.
4. Eric Holder’s order limiting federal adoption had a significant financial impact
Federal Adoption, and the wider “Equitable Sharing” program are big money makers for state and local cops. According to the DOJ, its Equitable Sharing program has paid over $6 billion to state and local cops since fiscal year 2000. OIG Report p. 1. [Since this report was issued in early 2017, it probably relied on data through the end of fiscal year 2016. See 2016 audit of annual report https://oig.justice.gov/reports/2016/a1706.pdf]
The OIG studied the effect of former Attorney General Eric Holder’s order limiting federal adoption of state seizures and concluded that “the elimination of most adoptions contributed to a reduction in the annual number of DEA cash seizures by over half and the annual value of DEA cash seizures by more than a third.” OIG Report p. iv. [Note: that doesn’t mean that property was necessarily given back to the owner — the cops may have used their own state laws to forfeit it.] Holder’s limitation on federal adoption especially reduced the forfeiture income in two states where the cops used federal adoption to get around state laws that “placed limitations on state forfeiture.” OIG Report p. iv. [It did not say which states those were, but I suspect one of them is California where the cops have to get a conviction to forfeit some property.]
The OIG was concerned about the Holder policy’s loophole for joint task forces because “seizures derived from joint interdiction operations may not always advance a federal criminal investigation or lead to a prosecution.” OIG Report p. iv. However, the OIG said the agencies believe the funds from federal adoptions “foster cooperation among all levels of law enforcement by enabling them to contribute personnel to federally led task forces and joint investigations,” which it portrays as a laudable goal.
5. DEA cash seizures overwhelmingly result in forfeiture
“Of the DEA’s 80,141 cash seizures that occurred between FYs 2007 and 2016, a claim or a petition was filed for 15,867 (20 percent). Of these 15,867 seizures with a related claim or petition, 6,232 (39 percent) resulted in a full or partial return. The DEA also returned part or all of an additional 492 cash seizures for which it had not received a claim or a petition.
“Overall, the DEA returned all or part of 6,724 cash seizures, or 8 percent of the seizures it made, between FYs 2007 and 2016. In terms of value, we also found that the DEA returned approximately $153 million of its cash seizures, while approximately $3.8 billion was forfeited and deposited into the Department’s Assets Forfeiture Fund.” OIG Report p. 14.
6. Administrative forfeiture makes up the majority of forfeitures
The OIG analyzed data from the Justice Department’s Consolidated Asset Tracking System (“CATS”) and found that between fiscal years 2007 and 2016, three federal agencies (ATF, DEA and FBI) “forfeited 77 percent of the number and 23 percent of the value of all assets through the administrative process.” Translated into plain English, that means 77% of property seizures were obtained through administrative forfeiture, but administrative forfeitures account for only 23% of the total revenue from property forfeiture.
The report attributed the huge variation in the percentages to a few really, really large civil forfeitures that skewed the data, giving the example of one asset worth $7.2 billion from the Bernie Madoff case. It overlooked the fact that a statute limits administrative forfeitures to seizures of property worth $500,000 or less. Larger value seizures have to commence with the judicial civil forfeiture process.
7. Some forfeiture revenue is “returned to crime victims”
“According to the [Justice] Department, it has returned more than $4 billion in forfeited funds to crime victims since fiscal year (FY) 2000.” OIG Report p. 1. This is $2 billion less than the amount paid out to state and local law enforcement under the Equitable Sharing program.
The nonchalant way the government describes this practice of “returning” forfeiture revenue to crime victims hides the fact that many of these cases involved crime victims whose money it was in the first place. The DOJ has raked in some really big bucks from the collosal Ponzi schemes that were exposed when the 2008 recession caused them to crash. In a true Ponzi scheme, such as Madoff’s and Thomas Petters,’ money from later investors were used to pay off earlier investors. There was valuable commodity being bought and sold, and no profit generating activity of any kind. The Ponzi schemer was merely robbing Peter to pay Paul. So when the DOJ seized and forfeited billions in each of these schemes, in reality they were seizing and forfeiting the victims’ money. Yes, the seized property was the proceeds of crime and therefore subject to forfeiture, but it is still the victims’ money. They are not punishing the criminal defendant by taking the money which he never had a right to in the first place; they are only punishing the victims who were defrauded.
My point is, the government has no right to brag about returning $4 billion in forfeited property to crime victims — it was the victims’ money. What the report doesn’t say is that, even in crimes where the seized money really belongs to victims, the government keeps some of the seized money for itself, and shares some of it with state and local police or other federal agencies that assisted with the case. The victims get what is left, if anything.
Unfortunately the OIG report was just too tedious to finish reading. I started skimming at about page 8 and stopped reading at all on page 18 (out of 40 pages). If you read the rest of the OIG report and find something juicy, please email me.
It is terrifying when police seize your property and you have to fight to get it back.
They may be trying to take your home. At least you’ll get to use it while the case is pending.
Maybe they took your car. They usually get to hold onto cars pending trial. The federal statute allows you to ask the judge to release your car pending trial if you can show substantial hardship, but those motions are not always granted.
They may have taken your bank account, crippling your finances and your ability to hire a lawyer to defend your forfeiture case.
Unfortunately, those things may only be part of the nasty fallout from a forfeiture case.
You may have separate criminal charges brought against you, and even if you are not arrested initially, you may be later. The statute of limitations is generally five years on federal crimes, so you may be sweating bullets for years. After a few years of no charges the chances that charges will be brought dwindle, but you won’t be completely rid of them until the statute of limitations runs. Every time you see a police car coming down your street your heart will skip a beat.
To compound your problems the IRS may audit you, especially if it is a financial crime. Make sure your tax returns are filed and your taxes are paid – even if you have to borrow money to do that.
There are also some other commonly seen, horrific, side-effects of forfeiture cases:
Friends and co-workers may shun you
When the government files a forfeiture case against your property, many people assume you must have done something wrong or the government wouldn’t have gone after your property.
Unfortunately, the general public is blissfully ignorant of the wide reach of asset forfeiture laws and their ability to target totally innocent people for someone else’s crime. They are blissfully ignorant because they want to believe they could never be a target. So if they hear you were targeted they may assume you did something illegal so they can continue believing it won’t happen to them.
The reality is that forfeiture laws were designed to help police forfeit property more easily by taking away due process from property owners. Law enforcement has a very powerful lobby. They usually get what they want from the legislatures, especially when there is no organized opposition. Law enforcement wrote most of the forfeiture laws, with little input from defense counsel – because defense counsel cannot afford to lobby. Law enforcement sends paid employees to lobby for new forfeiture laws and oppose any reforms that benefit citizens.
The diabolical designers of these laws built it into the law that property owners do not have to be involved in the crime to have their property seized and forfeited. Civil forfeiture is an in rem proceeding — against the property itself — and the issue is whether the property is guilty. The government does not have to prove that the owner did anything wrong. The Supreme Court has held that the Constitution does not protect truly innocent owners from forfeiture. Whatever rights innocent owners have depend entirely on what the statutes create, the Supreme Court said.
You, or another affected family member may lose your job over it
When breadwinners miss work because they are in jail, their employer may fire them. That is understandable, but sometimes the forfeiture victim-employee did not get arrested, but they lost a job or were threatened with loss of the job — anyway, because of innuendos and assumptions arising from the forfeiture case.
Sometimes police go to your employer and ask questions in such a way as to imply guilt. Imagine if they interrogated your boss or co-worker the way they interrogate suspects on television, trying to elicit a certain answer by asking a loaded question that suggests the answer. Example: Did you have any indication that he/she was selling drugs at work? That implies that you were selling drugs elsewhere. Maybe you were not selling drugs anywhere, but when the police ask it that way it suggests that they know you were selling drugs. A person who is susceptible to suggestion may falsely volunteer their damaging suspicions that aren’t even true. You see how unfair this is?
This is really police misconduct, in my opinion, but most people feel too intimidated to complain or only suspect that is what happened because their co-worker won’t tell them.
Why do people believe the police over a person they have known and worked with for years? It’s human nature. Some people naturally assume the police would never lie because they were brought up to believe the police are honest. But it is part of the cop’s job to lie. Lying to suspects is an approved interrogation method. Unscrupulous cops sometimes apply those techniques to co-workers and other witnesses to get damaging accusations against forfeiture victims to build their forfeiture case.
If you get fired or threatened with firing because you were arrested or because of something the police said to them, ask for a conference with your boss and find out what the police told them. Ask your coworkers too. They may not say that the police told them you were selling drugs etc., because they didn’t actually tell them that, they just suggested it in their loaded questions. So ask them what the police asked them, and how they asked the questions. If you get the feeling that the employer now believes something false about you, find out what it is. Calmly tell your employer or co-worker that it is a common police tactic to ask loaded questions that suggest criminal conduct even when they have no evidence of it. That is how they get people to confess or give information about others. If you calmly discuss this with your boss and calmly get them to admit that the police poisoned their opinion of you, then you have the opportunity to undo the damage. Your employer has known you for X years and has worked closely with you every day. Ask them, “do you really believe I would do such a thing? What have I ever done which would make you believe that?” Remind them of how your patterns of behavior in the past are completely inconsistent with what the police are suggesting you did.
You may be able to talk them into giving you your job back.
When either of these things happens what do you do about it?
1. Stand up for yourself and refuse to be shamed
Maybe your husband or child was arrested and that triggered the forfeiture. That doesn’t mean you did anything wrong. Don’t let them shame you. They cannot take away your dignity and self-esteem unless you let them.
Stand up straight, look them in the eye and tell them that you did nothing wrong, and they shouldn’t blame you. This is what people expect an innocent person to do. Defend yourself! Isolating yourself from their prying eyes makes you look guilty to them.
Whether or not you have pending charges you should not talk about the details of your case with anyone other than your attorney – not even a family member. If anyone asks for details, tell them your attorney has advised you not to give any details. But you can still respond to the questions in a way that difuses unwarranted suspicions. Get your attorney to help prepare a statement you can recite to family and acquaintances. For example: “I’m not allowed to talk about my case to anyone, but I can just tell you that I plan to fight back. I have confidence in my attorney, and I believe I will win.” If you can honestly say you were not guilty it may be okay to tell people that you plan to rigorously defend your innocence – but ask your attorney first.
How you act around people who may be called as witnesses could well determine whether they will be witnesses for you or against you. Don’t skulk around and avoid people who were your friends just because they are asking about your case. Be especially careful what you say to your friends, because if you are used to confiding in them, you may forget and tell them something confidential. Remember you can’t talk to even your own witnesses about the facts of your case. If they are called as witnesses they can’t refuse to tell what you told them because the Fifth Amendment doesn’t allow someone to assert the privilege against self-incrimination to avoid incriminating another person. (That’s why it’s called “self-incrimination.”
2. Refuse to be paralyzed by it
Sometimes forfeiture victims are so stressed out that they are paralyzed and can’t think straight. You have to do whatever it requires to get over that. Try meditation, yoga, exercise, listening to music, self-hypnosis, burying yourself in work, etc. — whatever works to get your mind off it for a while until you gather your composure.
You can’t afford to be falling apart when everything you worked for all your life is at stake. Get to work!
You will need to summon your inner strength and give your undivided attention to putting together your case with (or for) your lawyer.
3. Gather and organize your records
Find out what the elements of the forfeiture statute and your defenses are, and then brainstorm about what evidence you need to gather to prove those things. Make lists of witnesses and evidence you will need and add to it as you think of new things.
If the case is based on allegations of financial crimes like fraud, money laundering, or allegations that proceeds of crime went into your property, immediately order bank statements and copies of cancelled checks covering the period. Do that right away because banks destroy those items after a certain number of years and you won’t be able to get them after that.
Also order credit card statements. Those are often full of evidence of where you were on a particular date. Order cellphone records. Those may also show where you were on a particular date, but they will also show who you talked to and when. Find your calendars. Find your receipts for the things they are trying to forfeit, and contracts showing how you paid for the property. Get your tax returns for all the relevant years and maybe the years proceeding that if they show where you got money that you later invested in the property.
If you corresponded with any potential witnesses in the case by letter or email, gather all of those letters and emails and save those to folders too. See if you can get your text messages from your cellphone provider if there may be relevant texts there.
Some of these things may not be necessary in your particular case. I just wanted to give you an idea of the wide range of places where you leave trails of evidence behind – including defense evidence that the government will not have unless you give it to them. Go over these suggestions with your lawyer and they may be able to limit the amount of work you have to do.
Organize all of this into folders or a notebook as you find them – or scan them in and put them in folders on your computer. If you scan them in, name the files for the type of record and the date, for example: BoA2015-June for your Bank of America statement for June 2015. I recommend renaming the files with this format YYMMDD-subject (where “subject” is the source of the record, such as BoA, Visa, Phonebill, etc.)
Once you’ve organized them this way you’ll easily be able to see what is missing and you can order them before the records are destroyed. If you double click the top of the list of filenames for that directory it will automatically sort chronologically.
As you put those together, draw up a timeline of important events in your case, in a Word document on your computer. Use your records to determine the exact date things happened and put a reference to those records/files in your timeline. For example you might note [150601-BoA] for your Bank of America statement for June 1, 2015.
Add the events alleged in the Complaint or Indictment to your timeline and put references to those documents as well, again with the date first in the reference and file name.
Compiling a timeline this way will allow you to see that the complaint or indictment has the wrong date for an event, or that the alleged crime occurred after you bought the property, so it couldn’t be purchased with proceeds.
Yes these things are very time consuming and it is very tiring. But if you are spending your day brooding about your case anyway, you might as well be working on it. Organizing your records and putting the evidence into a timeline will give you a sense of hope, because as you comb through your records you will find evidence that will help your case.
Find an experienced forfeiture lawyer
Don’t just hire the lawyer who did your will or your divorce. Even a highly experienced civil or criminal lawyer will probably know nothing at all about asset forfeiture defense. That is because forfeiture is a mixture of civil and criminal law with its own set of quirky procedures, and nobody learns them unless they have to.
Forfeiture statutes are complicated, and a lawyer who does not know forfeiture law my cause you to lose your case in the very beginning by missing an important step or overlooking an important defense, or inadvertantly waiving a jury trial by not demanding one in the Answer. Even when the lawyer quotes a very reasonable fee, you may be making an expensive mistake if you hire a lawyer inexperienced in forfeiture law. At the very least, he or she will have to learn forfeiture law as they go – as you pay them by the hour. Worst case scenario is they might lose your case because they miss something crucial.
Before you hire a lawyer, shop around. Ask them how much experience they have had defending forfeiture cases, what kinds of forfeiture cases they have handled (state or federal), whether they have had any cases based on the same alleged offense as yours, and how the cases were resolved. A lawyer who has handled six state cases, all ending in settlement after a few months, probably doesn’t have enough experience to handle your complex federal forfeiture case.
An experienced forfeiture defense lawyer may be difficult to find. In some areas there no lawyers who regularly practice forfeiture law. You might have to go out of town or even out of state to find an experienced forfeiture lawyer. Lawyers who regularly practice forfeiture law often handle cases in other states. Lawyers are allowed to practice in federal court in another state pro hac vice (“for this case only”) but they have to get the court’s permission. The courts usually require that you hire a local lawyer to act as local counsel. If the local lawyer won’t be doing much except allowing the out-of-state lawyer to practice there, it may not cost much to retain the local counsel. They will have to sign a few pleadings at the beginning and often they don’t have to do anything else. They are still good to have around because they can advise your lead counsel about the backgrounds and personality of the prosecutor and judge. And your lead counsel may need them to stand in for them in court for minor hearings to save you travel costs.
Make sure your lawyer listens to you and pays attention to your concerns. An attorney who acts like he/she doesn’t believe you will not work hard for you. They may take the easy way out and settle, maybe for much less of a deal than you deserve. If you feel that your lawyer is not doing an adequate job, find another lawyer before it is too late.
On the other hand if you know the prosecution’s case is strong, be realistic. At some point you may need to cut your losses and settle to avoid losing at trial, or because the cost of litigating to trial is too high for the value of the property at stake. But make sure your attorney determines that the government has a case first. Get discovery and look over it carefully with your lawyer to see what they have. You may be able to explain away some of the suspicious elements.
In your settlement letters, make sure your lawyer presents solid arguments, supported by evidence and law, showing your case is strong, and use those arguments and evidence to get better settlement offers. If they go in and just bat figures around you will end up with less than you are entitled to.
Don’t be afraid to make counter-offers. And don’t be afraid to be bold in making a counter-offer. In one settlement letter I told the prosecutor that they should give my client’s property back with my client paying nothing in exchange, and maybe the government wouldn’t have attorneys fees awarded against it. Needless to say, I supported that 25 page letter with copious documentation and cites to authorities. I would not have been so bold, except that I truly believed we would win, and I explained why in the settlement letter. The letter laid out what would have been a winning motion for summary judgment if I just put it into motion form. Obviously my letter convinced the prosecutor. After contemplating it for six weeks the forfeiture prosecutor made a counter-offer. The government would give back the house, worth in the mid-six figures, and keep the 10-year old Mercedes which had been impounded five years and probably wasn’t operable.
Some practical suggestions to keep you sane during this process:
1. Get involved in trying to change the law
Vent your frustration with the process to your state or federal legislators. Don’t tell them about the confidential things in your case, but tell them what an ordeal you are being put through and any unfairness you see in the system that they could fix by changing the law. This will serve several purposes. Getting outside yourself and trying to improve things for everyone will help you cope – and empower you. If you get involved in a grass-roots effort to reform the law you may meet new friends in the same boat who will empathize with you – and that makes your plight less terrifying. One of my clients told me that the whole ordeal of being a forfeiture victim was almost worth it for the great friends he met through FEAR (Forfeiture Endangers American Rights). He became one of our most powerful volunteer lobbyists.
2. Forgive and let it go
This may sound crazy, but forgive the police and forfeiture prosecutor. Don’t forget what they did, but forgive them and let the hostility and anger go. It is easier said than done, but it is worth the effort to try.
That anger and resentment could become a weakness they will exploit if you have to confront them in court. You don’t want to give them a trigger that can make you go unhinged whenever they pull it. More than once when my clients have faced off with the prosecutor without anger and hostility, they won the enemy over to their side. I have had cases where the agent sided with my client and asked the judge for leniency. More often they do the opposite though – so don’t let down your guard. Just let the animosity go. It will keep you awake at night and make you sick.
3. Turn the case off daily
Take time away from thinking about your case – every single day. Think of it as a job that you don’t bring home on the weekend or evenings. Tell your worried spouse “it’s after five. Case is closed.”
Unless you have to work on your case then, spend the evenings and weekends doing fun and relaxing things with the people you love and trust. This will help you sleep well at night, and nothing will weaken you faster than losing sleep over your case. As one forfeiture survivor named Sunni always said, “living well is your best revenge.”
4. Tune out your negative friends or family
If friends or family have turned against you because of their prejudiced attitudes about your case, let them go. Try not to think about them. Make new friends to replace the faux friends who deserted you in a time of need.
5. Stop thinking of yourself as a forfeiture victim
Even while your case is pending, start thinking of yourself as a forfeiture survivor. And that is what you will become.
(c) Brenda Grantland, 2017
published 3/5/2017 on brendagrantland.com reprinting permitted with attribution
A brouhaha has arisen over brand new Attorney General Jeff Sessions’ testimony under oath during his Senate confirmation hearing.
When Senator Al Franken asked him whether there was
“any evidence that anyone affiliated with the Trump campaign communicated with the Russian government in the course of this campaign?“
“I’m not aware of any of those activities. I have been called a surrogate a time or two in that campaign and I did not have communications with the Russians, and I’m unable to comment on it.”
Sessions later admitted that he spoke to the Russian ambassador, Sergey Kislyak, twice during the Trump campaign.
According to Fox News, one of the meetings occurred in Session’s Senate office. The Justice Department — over which Sessions is now boss — said Sessions was conducting that meeting in his capacity as a member of the Senate Armed Services Committee.
His second meeting with Kislyak occurred after a Heritage Foundation speech, when Sessions met with Kislyak and a group of other ambassadors.
Sessions has sort of suggested he may recuse himself from any investigation of the connection between the Trump campaign and the Russians. Many think that is not enough. Some are calling for Sessions to resign as Attorney General. Others call for appointment of a special prosecutor to investigate the matter.
Is recusal enough to cure Sessions’ problem?
Recusal from any investigation of alleged contacts between the Trump campaign and Russian officals during the campaign might help address Sessions’ conflict of interest in investigating Russian influence on the Trump election — a serious conflict if Sessions was involved in the dialog between Russia and the Trump campaign.
Clearly letting Sessions be the big boss overseeing that investigation would be akin to letting Attorney General Loretta Lynch investigate the alleged interference of the Hillary Clinton campaign (for which Bill was a surrogate) with the FBI investigation of Hillary. During the FBI investigation of Hillary Clinton, when Bill sprinted to Lynch’s airplane on the tarmack and had a private conversation with her and was caught by the press, Loretta Lynch recused herself from Hillary’s FBI investigation, delegating her authority as Attorney General to the FBI chief, a delegation some said was not enough to cure the problem.
No doubt Sessions may try to follow Loretta Lynch’s lead in delegating his prosecutorial oversight as Attorney General to the FBI chief. To most of us, that didn’t cure the conflict with Lynch and it won’t with Sessions because the FBI chief is an underling of the Attorney General. Having the Attorney General delegate his/her power to a subordinate doesn’t cure anything. Subordinates are subject to the control of their bosses, whether overt or subliminal. Who would dare defy their boss on such a matter, especially a controversy which impugns his boss’s integrity?
Recusal won’t solve Sessions’ problem for another reason as well — it doesn’t address the question of whether he lied under oath, as House Minority Leader Nancy Pelosi charged. Because Sessions made that statement in his sworn testimony to Congress, if he lied under oath, he may have committed perjury, a felony, carrying a sentence of up to 5 years in prison.
Is Sessions’ statement perjury?
Under federal law, perjury occurs when anyone:
“having taken an oath before a competent tribunal, officer, or person, in any case in which a law of the United States authorizes an oath to be administered, that he will testify, declare, depose, or certify truly, or that any written testimony, declaration, deposition, or certificate by him subscribed, is true, willfully and contrary to such oath states or subscribes any material matter which he does not believe to be true…”
18 U.S. Code § 1621(1). The Ninth Circuit’s jury instruction breaks that criminal offense down into these elements — whether:
the person was under oath?
the testimony was false?
the false testimony was material to the matter under inquiry in the proceeding?
the person acted wilfully and with knowledge that the testimony was false?
Clearly the statement was made under oath. It occurred during Sessions’ Senate confirmation hearings for the office of Attorney General.
“ambassadors are diplomats of the highest rank, formally representing the head of state, with plenipotentiary powers (i.e. full authority to represent the government).”
Can there even be a shadow of doubt that the Russian ambassador is a Russian official?
Did Sessions know the statement was false?
Having served in the U.S. Senate for 20 years, he had to have known that the man he met with, Sergey Kislyak, was a Russian ambassador and that an ambassador is the highest ranking diplomat in the U.S. representing a foreign government.
The issue boils down to one question:
Was Sessions’ statement material to the matter under inquiry?
So what was the matter under inquiry?
Sessions was applying for a job as Attorney General, the top prosecutor in the country. Senator Franken was asking whether anyone affiliated with the Trump campaign had any contact with Russian officials during the campaign — because there were ongoing allegations from the Hillary Clinton campaign that Russia “hacked the election,” causing the election of Trump instead of her. That accusation is still being hurled by Hillary surrogates as her excuse for losing the election, and the controversy likely won’t die down until there is an official investigation that lays it to rest. And an investigation that the public trusts as being thorough and unbiased.
Senator Franken thought that issue was important enough to ask Sessions the general question, to which Sessions went further and replied that he himself “did not have communications with the Russians.”
Had Sessions not unequivocally denied it, but admitted that he had several meetings with the Russian Ambassador during the Trump campaign, Frankin would no doubt have asked follow-up questions about whether Sessions’ meetings included any mention of the Trump campaign, for which Sessions was currently serving as a surrogate.*
By denying any such communications, Sessions cut off that line of inquiry.
“Franken said he was troubled that Sessions’ response to his question was ‘at best, misleading.’ He said he planned to press Sessions on his contact with Russia.”
Richard Painter, who served in the George W. Bush White House, also questioned “why a member of the Senate Armed Services Committee was having unilateral discussions with the Russians,” and called for Sessions to resign.
Clearly there is bipartisan concern about this alleged perjury.
Was Sessions’ statement just a white lie, a slip of the tongue, a nothingburger?
Numerous right wing blogs are calling this a “nothingburger.”** Just a few months ago Hillary supporters were calling Hillary’s FBI investigation a nothingburger, perhaps not using the same quaint term.
But is it trivial, much ado about nothing? The DOJ’s explanation that he was acting in his role as a member of the Senate Armed Services Committee doesn’t overlook the fact that his actual words unequivocally stated, all in the same sentence, that he had been called a surrogate of the Trump campaign and that he did not communicate with the Russians in the course of the campaign.
When I hear Sessions’ words in his characteristic Southern drawl — “I did not have communications with the Russians” — I can’t help hearing another Southerner drawl “I did not have sexual relations with that woman.”
There are some important parallels here. Meeting with the Russian ambassador is not a crime. Neither is having sexual relations with a consenting adult, even if you are president and the woman is your intern and you do it in the oval office.
The important question is, did he commit perjury when he lied under oath?
That question cannot be answered without knowing the content of the discussions Sessions had with the Russian Ambassador, because the question still remains whether Sessions’ false statement was material. Further testimony is required.
Recusing himself from heading the investigation into the Trump-Russian connection and his own conduct won’t cut it.
Even a member of his own party, Senator Lindsay Graham (R- S.C.) called for a special prosecutor — sort of — saying:
“If there’s something there that the FBI believes is criminal in nature, then for sure you need a special prosecutor.”
Of course if Sessions’ FBI is charged with deciding whether the Russian-Trump connection or what Sessions did is something “criminal in nature” — that will be the end of the investigation. No FBI chief would dare oppose the Attorney General, as FBI Chief Comey has already shown. At least Comey had the integrity to come forward voluntarily and correct a mistaken statement he had made in his Congressional testimony, an act he caught hell for from Hillary.
This brings us to the bigger questions:
1. Should perjury be a crime?
I think everyone will agree it should be. Otherwise, trials and Senate hearings would have no way of enforcing factual integrity.
2. Should there be two different standards: one for public officials and one for the public?
Let’s face it. Much of the government corruption that the American people are yammering on and on about today is about the double standard. Well connected government officials, powerful political candidates and party officials, and powerful political party donors like the banksters who caused the banking collapse and recession and yet got bailed out with taxpayer money — got different treatment from the rest of us. “Justice for just us” does not sit well with Americans who lost their jobs or life savings due to the banking collapse.
The public outcry about Sessions’ lie to Congress and the conflict of interest that it possibly uncovered should not be squelched, or drowned out by a new red scare focused on the Russians or claims that the Democrats did the same thing, but should instead be focused on cleaning up the corruption in both parties.
Allegedly lying to Congress right out of the box during his confirmation hearing means Sessions may well lack the legal ethics chops to serve as Attorney General. The Attorney General is the nation’s top prosecutor. This position requires a high degree of legal ethics and ability to apply the law fairly and without bias. Standard 3-2.1 of the ABA Standards for the Prosecution Function say that a public prosecutor “is a lawyer subject to the standards of professional conduct and discipline.” Lying to the court, or Congress impugns ones honesty. It is an act of moral turpitude that can lead to disbarment, even for the country’s top prosecutor.
Incidentally, Bill Clinton’s lie about sex with an intern did not turn out to be a nothingburger. That lie led in 1998 to perjury charges and impeachment by the House of Representatives, ending in Bill Clinton’s acquittal in the Senate after a 21 day trial. Clinton was also held in civil contempt for lying about the Lewinsky affair in testimony in the Paula Jones case and was fined $90,000 by that judge. Clinton’s license to practice law was suspended in Arkansas for five years, and has never been reinstated, and he was also disbarred from appearing in front of the US Supreme Court.
This is not a nothingburger but a really big deal.
One or more independent prosecutors should be appointed to thoroughly investigate and report to the American people on whether there was any illegal meddling or manipulation in the entire 2016 presidential election — primaries and all — by the Russians, the DNC/Hillary campaign, or any other forces.
Making it a bipartisan inquiry could help ensure that the selection of the independent prosecutors is not biased in favor of the political party in control of both houses and the Presidency. It will also put to rest the claim that the Clintons did it first, therefore it is okay.
* Sessions was well connected to the Trump campaign all along. A July 2016 article in the Washington Post said “in the party of Trump, Sessions is at the center of the action. He was an early backer of the real estate mogul’s candidacy, when most Republican officials were denouncing Trump’s comments about Mexicans and his promise to build a wall on the southern border.”
** In case you are curious, the term “nothingburger” was apparently coined in 1984 by Ann Gorsuch, Ronald Reagan’s appointee as EPA Director. She took the position with the avowed purpose of dismantling the EPA, and succeeded in cutting its budget by 22%, relaxing EPA regulations, reducing the prosecutions of polluters, downsizing its employees, and hiring new staff from the industries that the EPA regulated. Eventually, after prolonged public outrage, she resigned her EPA post under pressure of a Congressional investigation of her alleged mishandling of the $1.6 billion toxic waste Superfund. Ronald Reagan promised Gorsuch another job in his administration. When he appointed her to a three year term as chair of an advisory committee on oceans and atmosphere (where she could have learned from experts on the panel about the effects of pollution on global warming and ocean level rise), she called that position a “nothingburger,” prompting both houses of Congress to pass resolutions asking Regan to withdraw her appointment. She then declined the job.
Neil Gorsuch — Ann Gorsuch’s son — is Trump’s nominee to the Supreme Court.
In case you weren’t around in the early 1970s, COINTELPRO (short for COunter INTELligence PROgram) was a secret program of government surveillance, infiltration and sabotage against political activists, officially begun in 1956 and designed by FBI Director J. Edgar Hoover. Hoover used FBI resources to spy on, infiltrate, undermine and disrupt advocacy groups he considered subversives and those critical of his regime. Targets included activists who opposed the War in Vietnam, or who supported the Civil Rights movement, the Indian Rights Movement, and a myriad of other peaceful associations advocating societal or legislative change – activities protected by the First Amendment.
Among many other targets of COINTELPRO in the 1960s-1970s were: Rev. Martin Luther King Jr., the NAACP, Southern Christian Leadership Conference, Student Nonviolent Coordinating Committee, Senator Frank Church, Senator Howard Baker, the American Indian Movement, the Black Panthers, anti-Vietnam war groups including the Students for Democratic Society and Weathermen, among many others.
As stated by Wikipedia “FBI Director J. Edgar Hoover issued directives governing COINTELPRO, ordering FBI agents to ‘expose, disrupt, misdirect, discredit, or otherwise neutralize’ the activities of these movements and their leaders.” Many of their tactics allegedly included libelous, tortious and even criminal activities against the targets.
(c) 2013 Brenda Grantland
Truth and Justice Blog, 12/12/2013
If you are a person whose lifestyle, ethnicity, politics or past history gives a government agency a reason to suspect or dislike you, the NSA or other law enforcement agencies may already be snooping into your data stored online — without a warrant.
All an agent needs is an administrative subpoena, issued by a law enforcement agency. For most types of data it doesn’t require a search warrant. Unlike a warrant — which requires a judge to review a written affidavit containing sworn allegations and determine whether it establishes probable cause to believe a crime has been committed — an administrative subpoena is done entirely in-house by the investigating agency. No judge is involved.
The Electronic Communications Privacy Act (ECPA) of 1986 allows law enforcement to obtain the following by subpoena, no warrant required:
• email which has been on the company’s server for 180 days (if less than 180 days, a warrant is required)
• a list of the phone numbers you have dialed, or who have dialed you
• data stored “in the cloud” may also be obtained by subpoena under the same rationale as email, according to the Krebs’ on Security blog: “Help Bring Privacy Laws Into 21st Century.”
by Brenda Grantland 6-9-2011
(c) 2011, Brenda Grantland, Esq.
Copyright notice: This article may be linked to, emailed, printed, and disseminated to others so long as it is done free of charge, without changes to the text, and with this copyright notice included. However, this article may not be republished for sale, either by itself or as part of a compilation of other material, without written permission from the author.
Senator Kyl’s letter to Attorney General Holder, read into the Congressional Record yesterday, June 8, 2011 can be downloaded from the attachments above.
In essence what Senator Kyl said yesterday echos what we have been saying all along in my client, Ritchie Capital Management’s, motions in the Thomas Petters fraud case: some federal courts are not implementing the Crime Victims Rights Act, and the Department of Justice is not doing its statutorily mandated duty of using its best efforts to make sure the law is enforced, but instead is litigating against crime victims when they try to assert their statutory rights.
First, a little background for those of you who haven’t followed the Petters case.
The Minnesota federal fraud case against Thomas Petters and his co-conspirators was reputedly the biggest federal Ponzi scheme prosecution in U.S. history when the news first broke in October 2008 — until news of the Bernard Madoff Ponzi scheme case kicked it off the charts a few weeks later.
Copyright notice: This article may be linked to, emailed, printed, and disseminated to others so long as it is done free of charge, without changes to the text, and with this copyright notice included. However, this article may not be republished for sale, either by itself or as part of a compilation of other material, without written permission from the author.
The opinions stated in this blog are the opinions of the author, and do not necessarily reflect the views of any other associate of, or client represented by, the Law Office of Brenda Grantland.
The Thomas Petters fraud scheme litigation has been a big story in the Minnesota press for the past two years, providing almost daily fodder for the local news media. The Petters Receivership and related bankruptcy cases are big money-makers for Minneapolis-St. Paul area law firms, a boon to the local economy during the recession, especially after Petters empire imploded, losing many local jobs. Quite understandably, the Petters Receivers and Trustees and prosecutors were treated as heroes by the local media. Petters’ victims (most of whom were from out of state) did not fare so well – in the courts or in the local media. The local press rarely covered the travails of the victims and creditors who sought (and were denied) relief from the receivership litigation stay, or who tried to assert their statutory rights as crime victims in the criminal litigation and were rebuffed at every turn.
For the past year and a half years I have represented Ritchie Capital Management (“Ritchie”), a Petters victim, in the receivership and criminal restitution litigation. I was generally disappointed with the coverage (or lack thereof) of victims’ issues by the Minnesota press, but its recent coverage of Ritchie’s restitution litigation really showed the local media’s true colors.
On December 1, 2010 Ritchie filed a certiorari petition to the United States Supreme Court, Ritchie Special Credit Investments, Ltd., et al., Petitioners v. Thomas Petters, et al., # 10-738, seeking review of the Petters’ criminal judge’s orders denying restitution to victims, and the Eighth Circuit’s dismissal, without written opinions or any statement of reasons, of Ritchie’s mandamus petitions. The certiorari petition was the culmination of months of litigation under the Crime Victims Rights Act of 2004 and the Mandatory Victim Restitution Act of 1996, two statutes which gave victims actual enforceable rights in the criminal process that they never had before. In Petters’ criminal case when the criminal judge denied victims their CVRA and MVRA rights, Ritchie filed four petitions for mandamus [1/] in the federal Court of Appeals for the Eighth Circuit. Without even requiring the government to respond on the merits to Ritchie’s claims of CVRA and MVRA violations, the Eighth Circuit dismissed every one of Ritchie’s mandamus petitions, without a written opinion or any statement of reasons. That in itself is a violation of the CVRA, which specificially requires a written opinion detailing the reasons if the court of appeals denies the victim’s petition. The press did not cover Ritchie’s CVRA and MVRA litigation in the district court or Eighth Circuit.
Ritchie’s filing of the certiorari petition spontaneously began generating press coverage. Ritchie decided to put out a press release explaining what our certiorari petition was all about, with a link to the petition itself. The press release was picked up and distributed on the PR Newswire. A few days later I got a call from John Welbes, a reporter at St. Paul, Minnesota’s Pioneer Press. Though disappointed in the past by the local media coverage, I took the call and answered his questions. I was on the phone with Welbes for quite some time, explaining at length the issues raised in our petition. I explained that the Mandatory Victim Restitution Act requires a criminal court judge, when sentencing a criminal defendant convicted of fraud, to enter restitution judgments against the defendants in favor of all “direct and proximate” victims in the full amount of their losses. The narrow exception [2/] the criminal judge cited, the “complexity exception,” allows criminal judges to avoid determining restitution if the court finds, from facts in the record, that the burden on the sentencing process of determining restitution outweighs the harm to victims of denying restitution. I pointed out that the reason the judge stated in denying restitution — that victims had other remedies they could pursue — was not a reason listed in the MVRA’s “complexity exception”. In fact, the judge’s reliance on the availability of other remedies conflicted with a provision of the MVRA’s procedural statute, which prohibits the court from considering the victim’s entitlement to compensation from other sources in determining the amount of restitution. Currently the courts are split on whether the availability of other remedies may be considered in weighing the factors of the complexity exception.
When the article, “Ritchie Capital Goes To High Court“, appeared in the St. Paul, Minnesota, Pioneer Press on 12/16/2010, it made no mention of the Mandatory Victim Restitution Act. Instead of explaining that Ritchie’s petition involved litigation under a criminal statute, the article made it appear that this was just some argument Ritchie had made up in a bankruptcy case. The article even went so far as to quote a “bankruptcy expert” who pooh-poohed Ritchie’s certiorari petition:
Ritchie’s “chances are slim,” said David Leibowitz, a Chicago attorney and bankruptcy expert who hasn’t worked on the Petters case. He said there isn’t a “big split” in rulings from various courts of appeals around the country on restitution cases and that Ritchie could appear to be asking for an unequal distribution of assets, favoring itself over other creditors.”I don’t think this (Supreme Court case) is going to get them anywhere,” he said.
Dismayed by the reporter’s mangled description of our case and his expert’s criticism of our argument, I emailed David Leibowitz to see what his qualifications were regarding the MVRA:
Mr. Leibowitz –
I saw your quote in a news article, and I was wondering what your experience is in criminal restitution matters? Have you represented victims in criminal cases when they file claims under the Mandatory Victims Restitution Act?
He promptly responded with this email:
Thanks for your inquiry. I have little to no experience with criminal restitution. If you want, I’ll try to find someone for you who does. Where do you live?
I then wrote him back to ask why he thought he had sufficient expertise on criminal restitution under the MVRA to criticize our certiorari petition (which did not involve bankruptcy law at all) and why he made the unkind (and untrue) suggestion that Ritchie was trying to get an unequal share of the assets. (Read entire message here.)
Leibowitz immediately wrote me back:
I am a bankruptcy expert and my opinion is rendered in that context.
Waukegan – Chicago – Kenosha
Sent from my iPhone
There was no bankruptcy context. Our certiorari petition and all the litigation that led up to it all happened in criminal court, under crime victims’ rights statutes in the criminal code (title 18 U.S.Code). Leibowitz was stating an opinion on something he admittedly knew nothing about. And he never explained the basis for his gratuitous slur that Ritchie appeared to be trying to gain an advantage over other creditors.
I cc’d John Welbes but he never responded to my email. Apparently he sees nothing wrong with attacking those who criticize the “home team” by calling in “experts” with no expertise on the subject matter on which they render opinions. I recommend that all readers of his articles take everything Welbes says with a grain of salt, especially when he quotes “experts.”
# # #
Not to be outdone by the Pioneer Press, Twin Cities Business Magazine reporter Jake Anderson wrote a similarly skewed and mangled piece of journalism — “Petters Investor Petitions Supreme Court” — without speaking to anyone representing Ritchie, and apparently without bothering to read our certiorari petition. The Twin Cities Business article begins with a subtitle in bold proclaiming:
Ritchie Capital Management says that it and other victims of Tom Petters’ Ponzi scheme have been denied restitution by the courts. A local expert said that there are “sufficient mechanisms” in place for creditors to recover valid claims.”
Ritchie “says it and other victims… were denied restitution?”
It’s not a matter of interpretation. Judge Kyle issued orders denying restitution on June 3, June 4 and July 2. You can download them above, along with a copy of the transcript in which Judge Kyle orally denied our motion to vacate his orders denying restitution.
The Twin Cities article completely botches the issues in Ritchie’s certiorari petition:
Ritchie claims that the Mandatory Victim Restitution Act of 1996 dictates that it should be awarded restitution for its losses by suing Petters’ companies directly, …
Completely wrong. The MVRA dictates that the sentencing judge award restitution to fraud victims without requiring victims to sue the defendant.
… but the courts ruled that victims must recover funds through other means—namely, by filing claims in the Petters bankruptcy case and receiving assets when they are doled out by Doug Kelley, the receiver in the case.
That is not correct either. The criminal judge declined to award MVRA restitution against Petters and his codefendants, citing the complexity exception, but relying on a reason not included in the complexity exception — the fact that victims might qualify for some compensation from the pending bankruptcy cases of Petters’ companies. The article fails to explain that there are several pools of assets that were seized from the defendants. The bankruptcy cases only involve some of Petters’ companies. None of the individual defendants declared personal bankruptcy (nor could they be forced into bankruptcy by victims or creditors, because the receivership litigation stay prohibited all lawsuits against the defendants). All of the personal assets of the co-defendants, totalling $10 – $50 million, are in the hands of the receiver Douglas Kelley. This money would have been be distributed pro rata to the victims as part of the sentencing process in the criminal cases (see Doc. 393 p. 3), but the judge denied restitution to the victims.
Mertz is also wrong in his suggestion that Receiver Doug Kelley will be doling out funds to victims. There is no statutory mechanism in 18 U.S.C. § 1345 which allows the Receiver to dole out anything to victims. If the orders denying restitution are upheld, those funds held by the receiver will be forfeited to the federal government. Judge Kyle said victims were free to ask the federal government to give them some of the assets through the DOJ remission program, but that is a completely discretionary remedy, decided by the Chief of the Asset Forfeiture and Money Laundering Division of the DOJ, without a hearing, without a judge, and with victims having no right to appeal to any court if the Asset Forfeiture Chief turns them down. The Chief of AFMLS has already indicated that they intend to distribute the “net proceeds” to “qualified victims” — obviously meaning what’s left after law enforcement agencies are paid. Regulations governing the remission process do not have the same standards for “qualified victims” as the MVRA standards defining “victims” as those “directly and proximately” harmed by the crimes for which each defendant is convicted.
Once again, the local press brought in “a local expert” to contradict Ritchie’s arguments. Like the Pioneer Press’s expert, Mertz also appears to be a bankruptcy lawyer, since he says there are sufficient mechanisms in place for “creditors” — a term used in bankruptcy cases, but not in criminal restitution cases. Although there is some overlap, creditors of the various corporate bankruptcy cases are not the same group of folks as the “direct and proximate” victims of Petters’ and his codefendants’ crimes — who are entitled to criminal restitution under the MVRA. The rights of bankruptcy creditors and crime victims are very different, and they are enforced in different courts. Ritchie will hopefully receive some compensation some day from the bankruptcy cases as creditors of some of the Petters’ companies, but that’s not the same thing as criminal restitution judgments. [3/] Defendants convicted of fraud are personally liable under the MVRA for the full amount of their victims’ losses “directly and proximately” caused by the fraud, and MVRA restitution judgments are enforceable for 20 years, against assets the defendants obtain in the future.
Mertz … said that, in his opinion, there are “sufficient mechanisms” put in place for creditors of the various Petters entities to recover valid claims from the bankruptcy case and the receivership. “It’s whether claims are valid” that will be difficult to determine, and Kelley has previously objected to some of Ritchie’s claims, he added.
True, there are the regular bankruptcy mechanisms that victims of Petters’ fraud can pursue in a bankruptcy cases if they are creditors of one of the bankrupt companies. But Mertz is wrong in suggesting there is a mechanism by which victims can file claims with Receiver Doug Kelley and get compensation from the $10 – $50 million in personal assets of the defendants held by Kelley’s receivership. The receivership case was brought under a criminal statute — 18 U.S.C. § 1345 — which only empowers the Receiver, Doug Kelley to “hold assets in place” (see Order, PCI bankruptcy Doc. 153 p. 22) until they are distributed by order of the criminal judge in restitution and/or forfeiture. Section 1345 does not allow the Receiver to decide claims or distribute the assets to fraud victims. When Mertz says Kelley has objected to some of Ritchie’s claims, he is probably referring to the Polaroid bankruptcy case, where Kelley objected to Ritchie’s claim as a secured creditor of Polaroid, as opposed to an unsecured creditor — because Ritchie’s liens were perfected less than 90 days before Polaroid declared bankruptcy. This avoidance action brought in the Polaroid bankruptcy case has nothing to do with Ritchie’s right to restitution under the MVRA. There is no dispute that Ritchie’s restitution claims are valid. The government recognized Ritchie as a victim of the fraud and correctly stated Ritchie’s losses in its Final Proposed Restitution Order, Exhibit 1. PricewaterhouseCoopers’ report (p. 11) came up with the same figure for Ritchie’s net losses as the government’s figure (see Doc. 456-1 p. 10) — $165,294,491.
And who is this “local expert”? The article says Steve Mertz is “a partner in Faegre & Benson’s finance and restructuring practice” … “whose firm represents some creditors and defendants in clawback suits related to the Petters case.” Mertz and his firm, Faegre & Benson, played prominent roles in the Polaroid bankruptcy case, first as counsel to the Committee of Unsecured Creditors, when Polaroid was in chapter 11 bankruptcy. After it was converted to chapter 7 bankruptcy and John Stoebner was appointed trustee for Polaroid, Stoebner had Faegre & Benson appointed special counsel to the Trustee. Steve Mertz served in that capacity when the Trustee helped negotiate the coordination agreement, which funnelled the assets held by the Petters receivership to the federal government while carving out the bankruptcy estates of the Petters companies to be separately administered by the bankruptcy courts. Ritchie objected to the coordination agreement.
Steve Mertz ranked near the top of the List of High Billers in the Polaroid Bankruptcy case for 2009, billing the Polaroid bankruptcy estate $605 per hour for his services to the committee for unsecured creditors. His 2010 rates went up to $625 per hour. Faegre & Benson has been paid a total of $ 288,012.81 so far from the Polaroid bankruptcy estate. (No creditors have been paid anything yet.)
Faegre & Benson also represents Frank Vennes, who was implicated as a co-conspirator in the Petters fraud scheme (see Rice affidavit p. 10, 14-16), but was never indicted. His assets and the assets of his companies — including Metro Gem and Metro Gold — were restrained in the same § 1345 civil injunction and receivership action as Petters’ assets (only with a different Receiver, Gary Hansen). Like Petters (see p. 18), Vennes and Metro Gem were given a litigation stay (see p. 13) preventing victims and creditors from suing them. Frank Vennes’ investment funds netted profits from the Petters scheme, according to the government’s Final Proposed Restitution Order (see p. 6), and they are now the target of a clawback suit brought by Doug Kelley (in his role as PCI-PGW bankruptcy trustee) seeking $2,348,317,000 ($2.3 billion). Under a settlement plan proposed by Vennes and his Receiver, Gary Hansen, and supported by the federal government (go figure!), Vennes proposed to distribute ALL of the restrained assets held by the Metro Gem Receiver to Metro Gem’s own investors — some of whom netted profits from Metro Gem — with nary a penny to Petters’ direct victims whose money was funnelled to Metro Gem. PCI bankruptcy trustee Doug Kelley objected to the Vennes’ plan, saying the Vennes defendants are the second or third largest winner from the Petters scheme, having raked in “$204 million [in] false profits and commissions,” and that some of the Metro Gem assets should be clawed back to the PCI/PGW bankruptcy estates. See objection p. 3. [Update: On January 26, Judge Montgomery approved the proposed settlement, but withheld 20% of the assets pending resolution of the clawback claims.]
The article says Faegre & Benson represents “some creditors and defendants in clawback suits” in the related bankruptcy cases, but doesn’t say who they are. We found a few. In addition to Frank Vennes/Metro Gem (both clawback defendants in the PCI/PGW bankruptcy) Steve Mertz/Faegre & Benson also represent General Electric Capital, in a PCI clawback suit seeking $293,464,000. The complaint in the GE Capital clawback suit alleges on page 14 that “[t]estimony of GE Capital employees, Jack F. Morrone and Paul Feehan, from the criminal trial of Petters shows that GE Capital had actual knowledge regarding the fraudulent scheme and wrongdoing, prior to the transfer of more than $48,000,000 to GE Capital, including knowledge of forged and fraudulent purchase orders and checks by PCI and Petters Capital, Inc.”
Steve Mertz/Faegre & Benson also represent Sun Minnesota Foreign Holdings, LLC, Sun Minnesota Domestic Holdings, LLC, Sun Credit, LLC and Whitebox Advisors LLC in a $ 4,047,000 clawback suit brought by the Committee for Unsecured Creditors in the Sun Country Airlines bankruptcy case. The clawback complaint alleges “the Defendants were a large investor group who exerted substantial influence over Petters and his companies in order to extract value from the Debtor and MN Holdings in an exit from the Defendants’ investments in the Debtor.” (See clawback complaint p. 5).
As entities that netted profits from Petters’ fraud scheme, the Vennes defendants, GE Capital and the Sun Minnesota/ Whitebox entities are natural adversaries of Petters’ direct victims who sought MVRA restitution and filed bankruptcy claims to recoup some of their net losses.
So it is easy to see the reason for his bias, but what exactly is Steve Mertz’s expertise that qualifies him as an expert in crime victims rights and restitution? “He practices in the areas of bankruptcy, business reorganization and commercial finance,” according to the Faegre & Benson’s website. Apparently, he is no more an expert on criminal restitution or crime victims rights than Leibowitz was.
1/ Mandamus is an ancient but rarely used “writ” to command a public official to do his duties as the law commands. When Congress enacted the CVRA, it made the new rights enforceable by victims by including a provision allowing crime victims to obtain appellate review of decisions denying victims their rights under the statute by filing petitions for writ of mandamus. We had to file four separate petitions for mandamus because CVRA requires them to be filed within 14 days after the order is entered denying the right protected by the CVRA (in our case, the right to “full and timely restitution”), and Judge Kyle issued four separate orders. See Mandamus #1, #2, #3, #4.
2/ There are two exceptions to the MVRA, allowing the judge to decline to award mandatory restitution: (1) when the number of identifiable victims is too numerous and (2) under the “complexity exception” balancing test which Judge Kyle cited. Courts have imposed MVRA restitution in cases involving 10,000 victims, so the handful of direct victims here would not qualify under the first exception.
3/ The MVRA prohibits a sentencing judge from taking into consideration a victim’s entitlement to compensation from “any other source” in setting the amount of restitution. But after a restitution judgment is entered, the defendant is entitled to credits against a restitution judgment for any amounts recovered by the victims for the same losses from civil litigation, which would include bankruptcy payments to victims.