Ms. BLANTON. Mr. Chairman, since that occurred, Customs Service now has authority to pay in those situations and I think the issue back when that situation was occurring, was no statutory authority to pay. Mr. FRANK. If I might say, Mr. Chairman, that grew out of a private bill which we had a few years ago, and I think we ultimately passed a statute, Mr. Gekas and I. Ultimately, we had to give them statutory authority over their objection to be able to do that. Mr. HYDE. My recollection is in this yacht or boat case, the gentleman could not prove negligence because it wasn't negligent; they intended to do what they did. Ms. BLANTON. They had a warrant, is my understanding, of that case. And when law agents are lawfully executing a warrant to search, so it was not considered negligence. Mr. HYDE. True. But the problem is, warrants are issued on probable cause and rumors, and the man's boat was ready to sink when they got through it with, and nobody is to blame. OK. Well, anyway, thank you for your contribution and your continued contribution, because we intend to work with all of you. We want you all to support the eventual product. We may have a little different approach to this, but I am sure you understand-you heard this morning's testimony. No one can be comforted by that, and we want to redress that and prevent that from happening again, without impacting negatively on criminal asset forfeiture. We all agree-I do, I know Mr. Frank does, I assume he does, and Mr. Gekas-that it is a useful weapon, resource, in the struggle against serious crime. But these abuses have to be eliminated, the possibility of them, so that the integrity of the programs and the Government's integrity is protected. So we all are serious about that, as you are, too. I thank you very much. Mr. CASSELLA. Thank you, Mr. Chairman. Ms. BLANTON. Thank you. Mr. MCMAHON. Thank you. Mr. HYDE. We have a final panel. Before they approach the table, we have Terrance G. Reed, who is chairperson of the RICO Forfeiture and Civil Remedies Committee, the Section on Criminal Justice of the ABA; and Mark Kappelhoff, legislative counsel for the ACLU, and É.E. (Bo) Edwards of the National Association of Criminal Defense Lawyers. But we have a bill on the floor. It is scheduled at-we go in at 12, and we are not sure at this moment how soon after 12 the bill will be called. I have to manage the bill. We are going to break. Mr. FRANK. I have the other half, Mr. Chairman. Mr. HYDE. You have the other. Mr. Frank will also be there. I hate to do this to you, but is 2 p.m. too late to resume? Will that work a hardship on any of you? We will give you time tois that all right? Mr. Kappelhoff. Mr. KAPPELHOFF. Fine. Mr. FRANK. Mr. Chairman, when you come to Congress the day is shot anyway, so I don't think there's a problem. Mr. HYDE. All right. Good. Then the committee will stand in recess until 2 p.m. Thank you. [Whereupon, at 11:45 a.m., the subcommittee recessed, to reconvene at 2 p.m.] Mr. HYDE. The Chair is advised that at least one other Member is en route and we have a quorum from this morning so the committee will come to order. Our final panel consists of Terrance G. Reed, chairperson of the RICO Forfeiture and Civil Remedies Committee of the Section on Criminal Justice of the American Bar Association. He will be followed by Mark Kappelhoff, legislative counsel for the American Civil Liberties Union; and E.E. (Bo) Edwards, from whom we heard earlier, will testify on behalf of the National Association of Criminal Defense Lawyers. We will commence with Mr. Reed. Thank you for your patience in waiting. I really appreciate it. I know time is something we all treasure, and unfortunately in this process it gets abused sometimes. STATEMENT OF TERRANCE G. REED, CHAIRPERSON, RICO, FORFEITURE, AND CIVIL REMEDIES COMMITTEE, SECTION OF CRIMINAL JUSTICE, ON BEHALF OF THE AMERICAN BAR ASSOCIATION Mr. REED. Thank you, Mr. Chairman. I am here on behalf of the American Bar Association and it is with great pleasure, too. I am here today to tell this committee that the American Bar Association supports the chairman's bill, H.R. 1916. We have previously provided a statement to the committee, a written statement, and I will not go over that material again, but will summarize the ABA's position of support. H.R. 1916 is a very important bill because it for the first time aims at protecting innocent property owners through the creation of fair judicial procedures. The ABA stands solidly in support of this worthy objective. The ABA has been involved since 1983 in promoting various types of forfeiture reforms, and in February of this year the ABA officially endorsed a statement of principles which was enacted by the house of delegates to urge Congress to engage in a series of reforms of the forfeiture laws. The bill H.R. 1916 fits closely within the objectives of the ABA's statement of principles. I would like to focus briefly on what may be the most important contribution of the act to the civil forfeiture law, and that is section 4, the section which deals with the standard of proof by which private property becomes confiscated and forfeited to the U.S. Government. Currently, as the Chair is aware and as was discussed this morning, the standard of proof on the Government is hardly a standard at all. That is the probable cause standard. That has been defined as sufficient evidence and not to be more than a prime facie case. So here under the probable cause standard the Government can civilly forfeit property of private citizens for a far lesser showing than is necessary to convict someone of a crime and on a lesser showing than is necessary to hold an individual civilly liable in such an action in torts. This is an unfair standard of proof. The standard of proof that the Government is put to the probable cause standard, is that standard which is sufficient to justify a search. It is also that standard which is sufficient to justify an indictment, which is simply an allegation is not particularly proof of a crime. Now it is true that the search of a home is not nearly as intrusive as the loss of a home, but that same standard is used for both in the civil forfeiture laws. If the Government can establish through hearsay that a private property owner, the home of a property owner has been in any tangential way associated with criminal activity, they lose the home, notwithstanding the fact that they are not accused of a crime themselves. Similarly, the probable cause standard is considered sufficient in the Constitution to justify an indictment which is a mere allegation, and every day throughout this country juries are told that an indictment is not evidence of anything. It is not sufficient on its own to justify a conviction or for that matter is not even evidence of a crime. Yet this is the standard by which the Federal Government is held and it is, frankly, far too inadequate a standard. The probable cause standard is in many ways the root problem in the civil forfeiture laws, a standard so low as to be a siren for the abuse of the civil forfeiture laws. It allows the Federal Government to seize and confiscate homes on the standard of proof necessary solely to justify searches. And as this committee is probably aware, that standard has been reduced somewhat over time. We find courts authorizing the search of individuals and of homes based on profiles, drug courier profiles, which we heard so much about this morning. That balancing test which is done by courts is a little more understandable when the consequences of fitting a drug courier profile are that you are stopped for a discussion as to whether there is sufficient evidence to go further to detain someone. Here that standard has been held sufficient, satisfying the drug courier profile to justify losing a home. When someone spends 20 or 30 years paying off a mortgage on a house, which is something that is part of the American dream, it should not evaporate with a mere satisfaction in the eyes of a law enforcement official that that person's demeanor fits a drug courier profile. The other aspect of why the probable cause standard is an invitation to abuse is it allows civil forfeiture af property without use of admissible evidence. Forfeiture can be justified solely based on hearsay, meaning that civil forfeitures are implemented outside of the adversary process, which is what our civil system of justice and criminal system of justice is based upon, where the party making the claim bears the burden of proof. In that respect, the bill H.R. 1916 will work a significant improvement on the current system of civil forfeiture. There are other provisions of the act which I will not address at this time given the shortness of time, but in summary, the American Bar Association stands solidly behind the bill and would urge that this committee take swift and prompt action on it. Mr. HYDE. Thank you very much, Mr. Reed. PREPARED STATEMENT OF TERRANCE G. REED, CHAIRPERSON, RICO, FORFEITURE AND CIVIL REMEDIES COMMITTEE, SECTION OF CRIMINAL JUSTICE, ON BEHALF of THE AMERICAN Bar AssocIATION Mr. Chairman and Members of the Committee, the American Bar Association ("ABA") is pleased to appear before you to express our views on H.R. 1916, the "Civil Asset Forfeiture Reform Act” (the “Act”). My name is Terrance G. Reed, and I have been designated by ABA president Roberta Cooper Ramo to represent the ABA. I am an attorney in private practice with the law firm of Reed & Hostage, P.C. in Washington, D.C., and I currently serve as the Chair of the RICO, Forfeitures, and Civil Remedies Committee of the ABA's Criminal Justice Section. I have served as the ABA's Advisor to the National Conference of Commissioners on Uniform State Laws ("NCCUSL") from 1990 to 1994, and provided the ABA's input on NCCUSL's successful effort to enact a Uniform Forfeiture Act for the states in 1994. My experience includes representation of property owners, crime victims, and criminal defendants in civil and criminal forfeiture litigation. Although the ABA has been an advocate of forfeiture law reform for more than a decade, in February 1996 the ABA endorsed a Statement of Principles calling for specific statutory revisions, including several which are contained in H.R. 1916. A copy of this Statement of Principles is attached as Exhibit A. The ABA's adoption of forfeiture reform principles reflects the fact that a consensus has emerged within the legal profession that civil forfeiture laws, while important and useful law enforcement tools, also place considerable power in the hands of the government to take private property, and that measured laws are the best mechanism to insure that these powers are not abused. As the Supreme Court has repeatedly admonished, "broad forfeiture provisions carry the potential for government abuse and 'can be devastating when used unjustly."" Libretti v. United States, 116 S. Ct. 356, 365 (1995) (quoting Caplin & Drysdale v. United States, 491 U.S. 617, 634 (1989)). In summary, the ABA supports the need for civil forfeiture reforms, and it has already endorsed some of the reforms which are codified in H.R. 1916. I. THE ABA ENDORSES THE CURRENT NEED FOR CIVIL FORFEITURE REFORM In February 1996, the ABA approved a Statement of Principles governing forfeiture laws which endorses the use of the forfeiture laws, especially to confiscate the profits of crime, but also urges a number of procedural reforms, some of which are contained in H.R. 1916, which will make civil forfeitures more fair and just. In some respects, the ABA's Statement of Principles is broader than H.R. 1916, as it addresses the need for other civil forfeiture reforms, as well as reforms of the federal criminal forfeiture laws. Nonetheless, the direction and thrust of the ABA's forfeiture policies are fully consistent with the type of procedural reforms outlined in H.R. 1916, and both represent an effort to balance the utility and benefits of civil forfeiture against the harms and potential abuses which may occur under current federal law. Hence, while the ABA has not formally endorsed every provision of H.R. 1916, it has supported the call for reform, and has urged Congress to consider remedial legislation in several of the areas covered by H.R. 1916, which will be further addressed below. Especially where, as here, many of the Act's important reforms are long overdue, this Committee should not allow the potential of comprehensive reform to delay the implementation of reforms which enjoy a broad consensus of support. As the Committee is aware, federal and state law enforcement officials have increasingly turned to civil forfeitures as a means of combating crime. Under federal forfeiture law, however, the government need not establish that the owner of the property is a criminal. Rather, the government can civilly forfeit personal property by merely showing probable cause to believe that the property was used unlawfully by anyone. Because of this low threshold of mere "probable cause," the government can civilly forfeit private property through use of inadmissible hearsay and with evidence that would otherwise only justify an allegation of criminality, not proof of criminality. Indeed, it is estimated that approximately 80% of all property owners who lose property to civil forfeitures have not been charged with a crime. Fishman, The Agenda Before Congress, 39 N.Y.L.S. L. Rev. 121, 129 (1994). The attractiveness of civil forfeitures to law enforcement officials is understandable because current federal law relieves the government of the traditional stringent burdens imposed to secure a criminal forfeiture in a criminal trial. Thus, almost by definition, the civil forfeiture laws permit the government to forfeit the property of owners who are not criminals. Indeed, the Supreme Court recently emphasized this fact in the case of Bennis v. Michigan, 116 S. Ct. 994 (1996), in which the Court held that the Due Process Clause does not prohibit the forfeiture of the property of wholly innocent persons. In so holding, the Supreme Court has highlighted the essential role that Congress must now play in reforming the civil forfeiture laws so as to mitigate the harms they cause innocent citizens. When innocent citizens are the authorized subject of government confiscatory practices, Congress can fairly ask what public policy is being served by such an unjust result. More to the point, when such an unjust result is possible, Congress is appropriately concerned with insuring that the procedures and standards which govern the imposition of civil forfeitures are geared toward preventing, rather than facilitating, such an undesirable outcome. The legislative history of H.R. 1916 indicates that this is one of its objectives, and the ABA is fully in accord with this objective. The federal civil forfeiture laws date back to the early days of our country, when civil forfeiture was a tool used against piracy and customs violations, and the procedures used to implement civil forfeitures were both limited and harsh. The decision of Congress in 1978 to extend these antiquated and narrowly targeted laws to the modern arsenal of federal law enforcement undoubtedly strengthened the hand of the government, but Congress has not yet attempted to reconcile the broad modern day role of civil forfeiture with its historically limited focus and scant procedural protections for property owners. As a result, some federal courts have voiced concern over the "government's increasing and virtually unchecked use of the civil forfeiture statutes and the disregard for due process that is buried in those statutes." United States v. All Assets of Statewide Auto Parts. Inc., 971 F.2d 896, 905 (2nd Cir. 1992). The provisions of H.R. 1916 offer an important first step toward restoring a balanced use of the civil forfeiture laws. In particular, Congress should abandon the probable cause standard for justifying civil forfeitures, a standard which links federal law to the inquisitorial systems of the distant past, in favor of bringing civil forfeitures into the light of the adversary system of justice, where the government can prevail only with proof, not mere allegations. The implementation of fair civil forfeiture procedures will not only restore the necessary balance between the government and property owners essential to obtain just results, it will also help restore public confidence that the civil forfeiture laws can and will be fairly deployed to fight crime, and not merely to further fiscal interests. Public skepticism about government motives for civil forfeitures has a long history in this country, dating as far back as the celebrated defense of John Hancock's schooner Liberty against British forfeiture claims by Boston attorney John Adams. Especially where, under the federal forfeiture system, the Justice and Treasury Departments are the fiscal beneficiaries of civil forfeitures, the public perception of a fair forfeiture process remains important today. Indeed, the Supreme Court has noted the government's financial stake in the outcome of civil forfeiture proceedings as a reason for providing due process to property owners, United States v. James Daniel Good Real Property, 114 S. Ct. 492, 502 (1993), and Congress should follow suit. The ABA recommends that Congress act now to enact such an Act. II. H.R. 1916 CONTAINS SEVERAL PROVISIONS ENDORSED IN PRINCIPLE BY THE ABA The Civil Asset Reform Act is a short act, and it does not purport to address every civil forfeiture issue which has been a source of public or judicial concern. The initial section of the Act identifies its title, the final section indicates its prospective application, and the balance of the Act consists of only seven other sections. Of these seven sections, all but one section deal with procedural issues affecting the process of imposing a civil forfeiture, and all of these sections constitute efforts to make the civil forfeiture process more fair to property owners. Hence, broadly speaking, the Act is fully consistent with present ABA policy in that their mutual focus has been on improving the procedural fairness with which civil forfeiture claims are adjudicated. The sole substantive provision of the Act is section 8 which simply clarifies the intent of Congress that the innocent owner exemption of 21 U.S.C. 881(a) be con 1 While section 8 addresses what is commonly known as the "innocent owner" exemption or defense to civil forfeitures, in reality the exemption does not protect those "innocent of crime" in the sense that the government has failed to prove the property owner's guilt of a crime. As courts have noted, "Defenses to a [civil] forfeiture action are... limited, and stand in stark contrast to those available to a criminal defendant." United States v. One 1985 Mercedes, 917 F.2d 415, 419 (9th Cir. 1990). The innocent owner exemption merely protects from civil forfeiture those property owners who can sustain their burden of proving that they lacked knowledge Continued |