5: Incentives Matter

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00:03 Tess Terrible: Last time on The Pursuit.

00:08 Clark Neily: In 2014, which is the last year for which we have statistics, but after the advent of the Assets Forfeiture Fund, DOJ brought in $4.5 billion, that’s “billion” with a “b,” in forfeiture funds.

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00:24 Tess Terrible: This is The Pursuit, a podcast about government action and individual liberty. I’m Tess Terrible.

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00:40 Tess Terrible: This week, we are going to continue our section on civil asset forfeiture. Before we follow up on the cases we explored last week, I want to explore civil asset forfeiture a bit more broadly. We ended last week by learning that, in 2014, the Department of Justice asset forfeiture fund brought in $4.5 billion. Where is all this money going? How is it being used? Here’s Clark Neily again. He is the Vice President of Criminal Justice at the Cato Institute. He’s going to start by explaining a procedure known as equitable sharing.

01:20 Clark Neily: There are forfeiture laws, both at the federal and the state level. Law enforcement officials at the federal and state level both use them. There’s also a way for state and federal law enforcement officers to work together, and it’s called equitable sharing. And essentially what it is is it’s a federal law that enables the federal government to work together with a local law enforcement agency, investigating some crime that involves forfeiture. What’ll happen then is the state agency will do the forfeiture. Let’s say they pull somebody over, there’s $100,000 in the car, they’ll seize the money, the money that will then be taken by the federal government will go into the asset forfeiture fund. But equitable sharing enables the federal government to kick back up to 80% of that forfeiture back to local law enforcement. There’s just no question that incentives matter. And again, when you give law enforcement the ability to keep the proceeds of these forfeitures, you incentivize them to be ever more creative and ever more aggressive about seizing properties.

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02:32 Tess Terrible: As Clark explains, there is an incentive for police to seize goods knowing they will be able to keep the proceeds of these seizures. In most jurisdictions and for most types of property, all police need in order to seize is probable cause. They just need to believe that the cash, car, or property is connected to a crime. If you remember from last week, Frank Ranelli owns a small computer store in Birmingham, Alabama. Because police suspected that Frank received stolen goods, they raided his store, seizing the majority of his inventory. Here is Frank. Did you ever think something like this could happen to you?

03:20 Frank Ranelli: Never. Never. Golly. Nobody in my family has ever been arrested or anything, or had any brushes with the law. It was just something. The business that I’m in, I’m a computer store but I’m also was known as a second-​hand dealer, we buy and sell stuff all the time. We buy broke items and repair ‘em, and then sometimes we buy items that are not broken or whatever. There had been occasion where the police had come to my store looking for stuff and all that, but they never… When I say police, I’m talking about Birmingham Police, Jefferson County, Shelby County, City of Fairfield, City of Bessemer, City of Trussville. They all came in, they were all nice and everything. They looked at my stuff, said, “You’re doing business like you’re supposed to,” and whatever. I’m not gonna tell you that they never came in and found something that turned out to be stolen, but they didn’t do anything to me. They went looking for the person that I bought it from, because they were the ones that did something illegal. It was actually illegal for them to sell it to me. In my wildest dreams, I would have never thought that I would be spending three days in jail and all.

04:32 Frank Ranelli: I still have a real good relationship with the City of Birmingham and the Birmingham Police Department. As long as the people do things the right way, that’s fine. They just didn’t do it right. And after that happened, I got real leery anytime any police called me or came over here or anything ’cause I was always thinking, “What’s gonna happen now? What are they gonna do to me now?” Never ever would I have thought that you could have been picked up, kept in jail for three days, and be charged with something like this in our society. And I found out later they can come pick you up and hold you for three days and just go, “We messed up, you can go home.” I got news for you. Going to jail is traumatic. After I got out of jail, if I saw scenes on a TV show that had the guys in the orange suits and whatever, going in the cells now, it upset me. I’d have to turn it off or go do something else.

05:34 Tess Terrible: What was the value of all the assets that they seized?

05:37 Frank Ranelli: We have it a little over $40,000.

05:41 Tess Terrible: $40,000 for one stolen good that they found.

05:47 Frank Ranelli: That’s right. That’s right.

05:49 Tess Terrible: Last week, we also learned about Gerardo Serrano. He’s a Kentucky resident who was crossing the border into Mexico to visit family. He was stopped and detained by Border Control. His truck was searched and seized after Border Control found five loose bullets in his center console. After he was released, he tried everything he could to get his truck back. And Gerardo was luckier than most.

06:15 Gerardo Serrano: Well, I ended up finding IJ in the internet, and so they ended up filing the lawsuit. And that’s when I… They called my attorneys and they said, “Tell him to come pick up his truck. He can come pick it up or we can deliver it.” And I said, “No, no, no. I’ll go pick it up.” And I went over to Laredo, Texas. And the funny thing about it is IJ was with me at the time, there was representatives from the Institute for Justice, and they wanted me to sign something. And the Institute for Justice said, “No, no. We’re not signing anything. They told us we can just pick up the truck and we’re walking out of here. We’re driving out of here.” And that’s what we did. And one representative said, “Wow. This is the first time this ever happened.” I said, “What?” “They gave you new tires, and they gave you new batteries.”

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07:15 Tess Terrible: This is Robert Johnson, Gerardo Serrano’s lawyer.

07:19 Robert Johnson: Now, Gerardo came to us. And about two years had gone by, and Gerardo has kept saying, “I want my day in court. I want my day in court.” He kept calling the agency and saying, “What do I need to do to get my day in court?” And they said, “First, you have to post a bond and that’s equal to 10% of the value of the property.” So, Gerardo sent them a check for thousands of dollars. And then he continued to wait, and still saying, “What do I have to do to get my day in court?” And they said, “Look, you’re in a line, you gotta wait, and there’s nothing you can do to make it go faster.” Finally, we said, “Look, this is ridiculous. The government shouldn’t be able to make you wait for years for your day in court when they’ve taken your property. You should be entitled to a hearing immediately after the government has taken your property. Really, you should be entitled to a hearing before they take your property. But at the very least, you should be entitled to a hearing within a very prompt time after they’ve taken it. And years down the line, it’s just not cutting it from a constitutional perspective.”

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08:22 Robert Johnson: So, we filed a lawsuit, and the lawsuit really sought three things. And one of those was the return of Gerardo’s truck. Maybe predictably, as soon as we actually filed a lawsuit, the government said, “Oh, that truck that we’ve been holding onto for years in our seizure lot. Oh, we didn’t really mean to take that in the first place. Here you go, you can have it back. What were we really thinking? Oh, I don’t know. We’re not gonna give you any kind of explanation and any kind of apology. Just, here’s the truck. Go away.” All well and good, I guess.

08:49 Robert Johnson: Now, the second thing we were asking for was an award of damages, not intending to make Gerardo rich but just intending to get Gerardo made whole for costs that he incurred, like having to get a rental car, having to pay the insurance for a car that he wasn’t using, things like that. And the point of that is probably to make Gerardo whole, but it’s also to make sure that the case doesn’t go away just because the government gives the car back, ’cause this is something we see a lot in these civil forfeiture cases. It’s something we almost sometimes call the whack-​a-​mole problem, where you find a case where the government is abusing the civil forfeiture laws, you go after them there and they say, “Oh, well, we’ll just give the property back.” And then you find another case. The same thing, they just give the property back. And so it just happens over and over again, and you can never get a court to say, “Is this constitutional? Is it not constitutional?” Seeking damages is a way to prevent the government from doing that.

09:41 Robert Johnson: And then the third thing we’re seeking is actually an award of a class action relief. And so we filed this suit not just on behalf of Gerardo, but on behalf of every property owner who has a vehicle seized by the Customs and Border Protection agency, the agency that took Gerardo’s car, saying that the system that they have, where you have to wait as long as the agency wants to make you wait in order to have a case in front of a judge, is just not constitutional. That when the government takes your property, you can get a hearing promptly, and that they just can’t deny that to you. And we’re asking the court to require them to provide that in every case.

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10:22 Tess Terrible: Frank Ranelli and Gerardo have one major thing in common: Neither of them were ever convicted of a crime, so getting their valuables back should not be so difficult. But in civil asset forfeiture, once property is seized, the burden is on the owners to file a legal claim to get it back to contest the seizure in court. And contesting seizures is incredibly difficult. A study by the Nevada Policy Institute found that the majority of forfeitures concern less than $1000. There is often no practical resource for suspected lawbreakers. It’s expensive to go to court. The cost of hiring an attorney and pursuing legal action outweighs the value of the assets. This is Darpana Sheth from the Institute for Justice.

11:16 Darpana Sheth: Contesting forfeiture is a tricky business. And it’s advisable for folks who are trying to do so to have an attorney, and that presents a huge dilemma because often the property that is seized is worth less than it would cost to fight a forfeiture and a seizure by hiring counsel and going through all these hoops. And that’s one of the key problems with civil forfeiture, is the lack of procedural protections and how all the burdens are reversed and the onus is on property owners to prove that they are innocent.

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11:51 Robert Johnson: While some of those people may, in fact, be guilty and that’s why they’re not challenging it, some of them know that there were just no point. It’s too expensive, it’s too risky, and the process is too complicated. We really don’t have any idea how much property that’s seized. That’s what happens at the outset is first it’s seized, and then once the government gets the court ruling saying it can keep it, that’s when the forfeiture occurs. So, we actually don’t have any idea how much of the property that the government seizes is ultimately returned. Transparency is a real problem. Recordkeeping is a real problem. You have to really dig in to get this data.

12:27 Tess Terrible: For me, this is the most frustrating part of civil asset forfeiture. We know almost nothing about what the government is keeping, what they are returning, and where these assets are going. This is Jennifer McDonald. She is a research analyst with the Institute for Justice. She helped author the paper “Civil Forfeiture and Transparency.”

12:50 Jennifer McDonald: Unfortunately, due to the lack of transparency across most states and within the federal government, we simply don’t know whether people are convicted of a crime when their property is taken or not. Even the Department of Justice, which tracks more details about seized property than most states, does not track whether or not forfeited property was forfeited in conjunction with any sort of criminal charges or conviction. So, when you hear that law enforcement is arguing that forfeiture is an important crime-​fighting tool, the answer is we really don’t know that because we don’t know how many crimes are associated with these property takings. We don’t know what law enforcement are taking. We definitely don’t know what they’re spending those proceeds on. Nobody is auditing these reports. There’s no public requirement to give this information to the public, and too often legislators and the public are in the dark about what’s going on, and it makes us unable to hold these law enforcement officers accountable.

13:48 Tess Terrible: I tried to dig into the data myself. It’s impossible. And those who have experienced civil asset forfeiture firsthand are impacted for life. Can you speak more about how this affected your business?

14:01 Frank Ranelli: Oh, naturally people were afraid to bring their computer to me ’cause they thought, “Well, if this happened once, it could happen again. How do I know that they’re not gonna come raid you again?” And also I was doing business with the UAB here, University of Alabama, Birmingham. We were doing a little bit of business with them, that all dried up. Immediately after this happened, my sales dropped 50% and stayed that way for four, five months. But slowly, my business has really been built on relationships and word of mouth and treating people right. So, eventually people started coming back around because they knew that it must be something wrong. I didn’t do this.

14:50 Tess Terrible: So, your business is doing well today?

14:52 Frank Ranelli: Things are not like they were back then, I’ll put it that way. But the computer industry as a whole is drying up a little bit. We’re still here, we’re still doing okay, but it’s not like gangbusters anymore.

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15:10 Tess Terrible: Research shows that asset forfeiture occurs most often in poor communities, where the value of the seized goods is less than the amount of time and money it would take to contest the seizure. The asset forfeiture fund is mostly funded by single large-​scale seizures. But we cannot discount the small seizures of property from people that will never see their day in court and will never see due process. Here’s Darpana again.

15:41 Darpana Sheth: Well, ideally civil forfeiture should just be abolished. No one in America should lose their property without being convicted of a crime. Civil forfeiture is unconstitutional and it’s bad policy.

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15:53 Darpana Sheth: It marries this lack of procedural protections with this direct financial incentive, and so it’s a tool that law enforcement use. It’s easy for law enforcement to use, and it’s lucrative. And those two things combine to create a very toxic mix for abuse.

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16:16 Tess Terrible: The Pursuit is produced and hosted by me, Tess Terrible. It is a project of the Cato Institute and Lib​er​tar​i​an​ism​.org.