CHAPTER 40.-PUBLIC CIVIL PROCEEDINGS

Chapter 40 is comprised of three subchapters. Subchapter A provides for civil forfeiture proceedings against property used, intended for use, or possessed in the commission of certain specified offenses. Civil forfeiture is distiguished from criminal forfeiture in that the action is taken against the property and is not intended to penalize the offender. For the most part, the provisions in subchapter A are consistent with current law.

Subchapter B makes available certain civil remedies applicable in racketeering type offenses. The purpose of these provisions is to give law enforcement authorities greater flexibility in the fight against organized crime. These provisions reenact provisions contained in the Organized Crime Control Act of 1970.

Subchapter C authorizes the Attorney General to seek an injunction against acts which constitute or could constitute a fraudulent scheme in violation of section 1734. The purpose of this provision is to protect innocent victims from being victimized by fraudulent practices while the criminal process is running its course.

SUBCHAPTER A.- -CIVIL FORFEITURE

(Sections 4001-4005)

This subchapter consolidates in one place all of the civil forfeiture provisions applicable to offenses committed under the new Code, and establishes one common procedure for the execution of a civil forfeiture.

1. Present Federal Law

At present, there are twenty-three statutes in title 18 which authorize civil forfeiture of illegal property or of property used illegally.1 Section 4001 will consolidate and replace the bulk of these statutes with the remaining forfeiture statutes currently in title 18 being moved to other titles of the United States Code. There are numerous other statutes in the United States Code which authorize the forfeiture of property, but this section will have no affect on those

2

1 In order, they are contained in sections 43, 44, 492, 544, 545, 548, 550, 844, 924, 962, 963, 964, 965, 966, 967, 969. 1082, 1165, 1762, 1955, 2274 and 2513 of title 18.

2 For example 18 U.S.C. 43 and 44 have been transferred to title 16; 18 U.S.C. 962 and 969 have been transferred to title 22; and 18 U.S.C. 1082 has been transferred to title 46. 3 Examples of such provisions are those contained in title 19 concerning the customs laws; title 21 concerning the drug laws; and title 26 concerning the revenue laws.

statutes. In sum, this subchapter merely continues existing title 18 civil forfeiture provisions.

Civil forfeiture, unlike criminal forfeiture under section 2002 of the Code, is an in rem proceeding. The concept of an in rem action is that the property is the offender and thus the action is brought against the property. This concept developed from the ancient Roman religious practice of deodands. According to this custom, when a person was accidently killed the object that caused his death was forfeited to the church. Later, the Crown replaced the church as the recipient of the forfeited object or its value and the proceeds were distributed for charitable purposes. The theory of the in rem forfeiture proceeding is that the property itself is somehow "tainted" either because its possession is forbidden or because it was used for illegal purposes.

Statutes authorizing the civil forfeiture of illegal property or of property used illegally have withstood constitutional challenge. Since the action is taken against the property, the rights of innocent owners, lienors, conditional vendors, and chattel mortgagors are subject to forfeiture procedures where the property is illegal or has been illegally used. In addition, the government is not barred from bringing a forfeiture proceeding by the fact that the owner was acquitted of the criminal charge. While a civil forfeiture proceeding is civil in form, courts have held that its nature is criminal and thus evidence obtained in violation of the Fourth Amendment may not be used to support a forfeiture proceeding. However, the government is not required to prove the allegations of the action beyond a reasonable doubt but only by a preponderance of the evidence,io

8

SECTION 4001. CIVIL FORFEITURE PROCEEDING

Section 4001 provides that the Attorney General may proceed in an in rem civil proceeding to have seized and forfeited to the United States any property used, intended for use, or possessed in violation of fifteen enumerated sections. These sections carry forward forfeiture provisions presently found in title 18. This section thus sets forth in one place all of the sections of title 18 where a civil forfeiture of the property involved will be permitted. The Committee has concluded that there is, at present, no necessity to extend civil forfeiture to violations of other sections in title 18-although the Congress may wish to do so in future years. Those offenses which have been included within the civil forfeiture provision have traditionally been subject to forfeiture provisions because they invariably involve the illegal use of property or the illegal possession of property. While subsections (a) (1) through (a) (13) and subsection (a) (15) name the specific

4 See section 104 which preserves any civil forfeitures that exist outside title 18.

5 See generally Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663 (1974).

6 Id.; Various Items of Personal Property v. United States, 282 U.S. 577 (1931); United States v. One Ford Coupe Automobile, 272 U.S. 321 (1926).

7 See Calero-Toledo v. Pearson Yacht Leasing Co., supra note 5.

8 One Lot Emerald Cut Stores and one Ring. v. United States, 409 U.S. 232 (1972).

See One 1958 Plymouth Sedan v. Pennsylvania, 380 U.S. 693 (1965); Boyd v. United States, 116 U.S. 616 (1886).

10 See Lilienthal's Tobacco v. United States, 97 U.S. 237 (1877): Compton v. United States, 377 F.2d 408 (8th Cir. 1967); Martin v. United States, 277 F.2d 785 (5th Cir. 1960).

Section 4002.

Section 4003.

Section 4004.

property which is subject to forfeiture," subsection (a) (14), which deals with property used in the violation of the statute on engaging in a gambling business,12 excludes only real property from forfeiture and permits forfeiture of all other property used in the commission of the offense. This subsection carries forward the forfeiture provision, as interpreted,13 presently found in title 18 which provides that "any property, including money, used in violation of the provisions of this section may be seized and forfeited to the United States."14 Thus, with the exception of real property, subsection (a) (14) will cover all property, including money, used in a gambling business in violation of section 1841.

SECTION 4002. PROTECTIVE ORDERS

This section provides that any time after the initiation of a proceeding under section 4001, the court may enter restraining orders or prohibitions or take other action including the acceptance of performance bonds. These provisions are intended to protect the interests of the United States in the property subject to forfeiture.

SECTION 4003. EXECUTION OF CIVIL FORFEITURE

This section provides for the seizure and disposition of forfeited property. All property, except explosives or firearms, is to be disposed of as soon as commercially feasible, making due provision for the rights of innocent persons.

Explosives and firearms are handled separately when they are the subjects of a civil forfeiture. Due to the dangerousness of these items they are not to be sold commercially; rather, they are to be delivered to the General Services Administration who may order their destruction or their sale or transfer to a government agency for official use.

SECTION 4004. APPLICABILITY OF OTHER CIVIL FORFEITURE PROVISIONS

Section 4004 incorporates by reference the long tested customs law provisions concerning the disposal of forfeited property, the distribution of the proceeds from the sale of such property, and the remission or mitigation of forfeiture orders. As under the customs laws, a person may petition the Attorney General for the remission of the forfeiture and sale of any property in which he has an interest where he alleges that the forfeiture occurred without his knowledge and that it occurred without his neglect or intent to defraud the United States. 15 The Attorney General may honor such claims in whole or in part after the payment of the costs of seizing the forfeited property and the costs of disposing of the property if it has been disposed.16 In addition, the section provides that the Attorney General is to perform the duties imposed upon the collector of customs concerning the seizure, forfeiture, and disposition of property under the customs law with respect to any property forfeited pursuant to this section.

11 Included are such offenses as those involving smuggling, eavesdropping, counterfeiting, and firearms.

12 Section 1841 of the Code.

13 See DiGiacomo v. United States, 346 F. Supp. 1009 (D. Del. 1972).

Section 4011.

SECTION 4005. DEFINITIONS FOR SUBCHAPTER A

This section provides the definitions for terms used in this subchapter. It incorporates the specific definitions for some eight terms which are defined in the subchapters in which they are primarily used.

SUBCHAPTER B.-CIVIL RESTRAINT OF RACKETEERING

(Sections 4011-4013)

This subchapter reenacts the civil remedies statutes enacted by the Congress to fight organized crime in the passage of the 1970 legislation.1

SECTION 4011. CIVIL ACTIONS TO RESTRAIN RACKETEERING

1. Present Federal Law

In the Organized Crime Control Act of 1970, Congress recognized that the infiltration of legitimate organizations by organized crime presented more than a problem in the administration of criminal justice. In a real sense what was at stake was the viability of the free enterprise system. With this in mind, Congress enacted 18 U.S.C. 1964 which provided for civil remedies in the organized crime field. These civil remedies were patterned after the time-tested machinery of the antitrust laws.

In discussing civil remedies in general, and 18 U.S.C. 1964, in particular, the Senate Committee Report stated:

2

The use of such remedies as prohibitory injunctions and the issuing of orders of divestment or dissolution is explicitly authorized. Nevertheless, it must be emphasized that these remedies are not exclusive, and that Title IX seeks essentially an economic, not a punitive goal. However remedies may be fashioned, it is necessary to free the channels of commerce from predatory activities, but there is no intent to visit punishment on any individual; the purpose is civil. Punishment as such is limited to the criminal remedies, noted above. Ample precedent exists in the antitrust laws for these procedures. In the landmark decision United States v. Du Pont & Co., 366 U.S. 316, 326-27 (1961), the Supreme Court said of the remedy of divestiture:

The key to the whole question of antitrust remedy is, of course, the discovery of measures effective to restore competition. Courts are not authorized in civil proceedings to punish antitrust violators, and relief must not be puni

1 See Organized Crime Control Act of 1970, title IX, 18 U.S.C. 1964-1968, 84 Stat. 943. 2 S. Rept. 91-617, 91st Cong., 1st Sess., pp. 81-83 (1969).