Asset forfeiture

This article is about focuses on the confiscation/forfeiture of assets in common law countries. For cross-border recovery of the proceeds of crime, see international asset recovery.

Asset forfeiture is a form of confiscation of assets by the state, pursuant to law. It typically applies to the alleged proceeds or instrumentalities of crime. Some jurisdictions specifically use the term "confiscation" instead of "forfeiture".

Civil and criminal law

Most legal systems distinguish between the criminal and the civil, generally using separate courts, different procedures and different evidentiary rules. The traditional view is that crimes are public wrongs and that the criminal law addresses those who harm society through morally culpable acts in order that punishment may be imposed and potential offenders may thereby be deterred from committing similar offenses. Criminal proceedings are therefore “officially designated ceremonies of guilt designation” and the label “criminal” carries with it a social stigma, which is not imposed on the losing party in a civil action. Because of this stigma and the potential punishment, which may be imposed by a criminal court, legal systems provide procedural protections above those available to a respondent in a civil case. For example, criminal proceedings require a standard of proof. In the civil proceedings against Simon Prophet [2] no evidence was presented by the state to the courts. The court's decision to deprive Prophet of his home was based solely on affidavits. Generally it is the state that brings criminal proceedings. However, this is not an absolute rule since many jurisdictions also allow private individuals to initiate criminal prosecutions.

The bringing of civil proceedings is, by comparison, primarily the forum for a wronged private individual. Nevertheless this too is not an absolute position, as the state also may sue in the civil courts as a wronged individual, for example, in respect of a contractual dispute with a multinational company. Civil law does not aim to punish, but rather is designed to provide two types of remedy. Firstly, it provides a remedy requiring a return to the way things were, the status quo ante, so as to restore the position of an injured party. Secondly, it provides a remedy to compensate an injured party for harm done to him.

While the traditional view of civil and criminal proceedings might be described as neighboring countries divided by a common border, this dichotomy is not as distinct as that metaphor might suggest. In recent years there has been a growing homogeneity between criminal and civil procedures. Criminal cases now often involve civil, or quasi-civil, procedures and some civil litigation has become quasi-criminal. Indeed it has been said that almost every attribute associated with the criminal law also appears in civil law and vice versa. This “significant disintegration of the wall between criminal and civil proceedings” has occurred on a number of fronts and is due, at least in part, to the fact that multiple strategies are now used to deal with crime. An early example was the use of injunctions to protect victims of domestic violence, even though, to obtain such an injunction, the plaintiff may be alleging the commission of a criminal assault. Rather than the traditional dichotomize perspective therefore, legal proceedings might be better seen as a continuum, with distinctly civil proceedings at one end and clearly criminal proceedings at the other. Between the two ends of the continuum are a range of possibilities, each of which may be more or less criminal or civil.

The trend towards civil forfeiture

The traditional approach to serious criminality has been arrest, followed by the institution of criminal proceedings with a view to conviction and imprisonment. In recent years a confiscation or forfeiture element has been added to the criminal process in many jurisdictions. The US President’s Commission on Organized Crime argued for a broader response than a solely criminal one in 1986:

To be successful, an attack on organized crime in our mainstream economy cannot rely solely on the enforcement of federal criminal laws…The Commission believes that a strategy aimed at the legitimate economic base of organized crime must build upon the recent successes of law enforcement, and must be based upon intervention measures as broad-based as the nature of the threat posed by organized crime. A strategy in this area should also rely upon civil and regulatory measures tailored to the specific problems confronted...

Although most prevalent in the USA, jurisdictions that have introduced civil forfeiture legislation include Italy, South Africa, Ireland, the United Kingdom, Fiji, most of the Canadian provinces, Australia and its individual States, and Antigua and Barbuda. In addition, the Commonwealth has produced model provisions to serve as a template for jurisdictions that wish to introduce such legislation.

Advocates justify this trend towards civil forfeiture by citing the nature of organized crime. Organized crime heads use their resources to keep themselves distant from the crime that they are controlling and to mask the criminal origin of their assets. Thus it is thought to be too difficult to carry out successful criminal investigations leading to the prosecution and conviction of such individuals, so that finances derived from crime are often effectively out of the reach of the law and are available to be used to finance more crime. Criminal confiscation regimes may be seen as inadequate and ineffective in these cases.

Civil asset forfeiture has been harshly criticized by liberals and civil liberties advocates for its greatly reduced standards for conviction, reverse onus, and financial conflicts of interests arising when the law enforcement agencies who decide whether or not to seize assets stand to keep those assets for themselves.

Effectiveness

Proponents of seizure suggest that it is a necessary tool to prevent drug trafficking or other crimes. Statistics indicate that asset forfeiture has failed to prevent methamphetamine drug crime in South Africa [3]. Former United States president George H. W. Bush said, "Asset forfeiture laws allow [the government] to take the alleged ill-gotten gains of drug kingpins and use them to put more cops on the streets."

Canada

Part XII.2 of the Criminal Code of Canada provides a national forfeiture régime for property arising from the commission of a designated offence (i.e., most indictable offences), subsequent to conviction. Provision is also made for the use of restraint and management orders to govern such property during the course of a criminal proceeding.

All provinces except Prince Edward Island , The Yukon Territory and Newfoundland and Labrador have also enacted statutes to provide for similar civil forfeiture régimes. These generally provide, on a balance of probabilities basis, for the seizure of property:

• acquired from the results of unlawful activity, or
• is likely to be used to engage in unlawful activity

Ireland

Ireland was one of the first countries to introduce Asset Forfeiture in the form of the Criminal Assets Bureau which initiates civil forfeiture proceedings and the Director of Public Prosecutions who initiates confiscation proceedings. It was set up under the Criminal Assets Bureau Act,1996 by the Irish Government in response to the murder of investigative journalist Veronica Guerin who was actively digging up dirt on the Irish Criminal Underworld.

United Kingdom

In the UK asset forfeiture proceedings are initiated under the Proceeds of Crime Act 2002. These fall into various types. Firstly there are confiscation proceedings, which may follow a criminal conviction. Secondly, there are cash forfeiture proceedings, which take place (in England and Wales) in the Magistrates Court with a right of appeal to the Crown Court, having been brought by either the police or Customs. Thirdly, there are civil recovery proceedings that at the moment are brought by the Assets Recovery Agency "ARA". Under the Serious Crime Act 2007 ARA's functions will be transferred to the Serious Organized Crime Agency and the National Policing Improvement Agency. Neither cash proceedings nor proceedings for a civil recovery order require a prior criminal conviction.

In Scotland, confiscation proceedings are initiated by the procurator fiscal or Lord Advocate through the Sheriff Court or High Court of Justiciary. Cash forfeiture and civil recovery are brought by the Civil Recovery Unit of the Scottish Government in the Sheriff court, with appeals to the Court of Session.

United States

There are two types of forfeiture cases, criminal and civil. Approximately half of all forfeiture cases practiced today are civil, although many of those are filed in parallel to a related criminal case. In civil forfeiture cases, the US Government sues the item of property, not the person; the owner is effectively a third party claimant. The burden is on the Government to establish that the property is subject to forfeiture by a "preponderance of the evidence." If it is successul, the owner may yet prevail by establishing an "innocent owner" defense.

In civil cases, the owner need not be judged guilty of any crime; it is possible for the Government to prevail by proving that someone other than the owner used the property to commit a crime. In contrast, criminal forfeiture is usually carried out in a sentence following a conviction and is a punitive act against the offender.

The United States Marshals Service is responsible for managing and disposing of properties seized and forfeited by Department of Justice agencies. It currently manages around $1 billion worth of property. The United States Treasury Department is responsible for managing and disposing of properties seized by Treasury agencies. The goal of both programs is to maximize the net return from seized property by selling at auctions and to the private sector and then using the property and proceeds for law enforcement purposes.

Notable United States forfeitures

• After the Madoff investment scandal had surfaced, Bernard Madoff was ordered to forfeit $170 billion, although it is believed that he did not have anywhere close to that amount. His wife, Ruth, although not charged, agreed to forfeit about $80 million in assets.
• In 2009 Lloyds Bank forfeited $350 million in connection with violations of the International Emergency Economic Powers Act (IEEPA) (falsified outgoing wire transfers to persons on U.S. sanctions lists).
• In 2009 Credit Suisse, a Swiss corporation, forfeited $536 million in connection with violations of IEEPA.
• In 2010 Barclays Bank forfeited $298 million in connection with violations of the IEEPA and the Trading with the Enemy Act.
• In 2010 ABN Amro Bank forfeited $500 million in connection with violations of the IEEPA and the Trading with the Enemy Act.

See also

• Eminent domain
• Forfeiture Endangers American Rights – U.S. anti-forfeiture activist organization
• Operation Protect Our Children
• Sheriffs in the United States
• USA v. $124,700 August 18, 2006 case from the Eighth Circuit Court on civil forfeiture of $124,700
• United States Marshals Service
• Asset freezing

Further reading

• Levy, Leonard Williams (1996). A License to Steal: The Forfeiture of Property. Chapel Hill: University of North Carolina Press. ISBN 0-8078-2242-6. 

External links

• The Looting of America, leaflet published by International Society for Individual Liberty
• Simon Prophet, victim of forfeiture in South Africa
• Introduction to forfeiture laws, by Legal Information Institute, Cornell University
• List of offenses that trigger federal forfeiture More
• Judge David Demers – Search & Seizure Outline
• South Africa's Constitutional Safeguards are in Tatters
• Civil Asset Forfeiture Reform Act of 2000